by : Anthony Fontanelle

Carlos Ghosn, the CEO of both Nissan Motor and Renault S.A., became famed when he salvaged the Japanese automaker from bankruptcy.

As the global trend of mergers and acquisitions gathers momentum, the key to a successful M&A lies in keeping the traditions and cultures of each organization alive, said Ghosn. The momentum sped up like performance parts. Now, the partnership between the Japanese and French automakers is producing a noteworthy aftermath.

''We are two organizations and under two different operational systems. When I am in Tokyo I do not make decisions for Renault and when in Paris I do not make decisions for Nissan,'' said Ghosn, who successfully engineered what analysts predicted was an improbable merger between the French and Japanese automakers.

At the Sasin Graduate Institute of Business Administration at Chulalongkorn University, addressing 400 students and businessmen, the Brazilian CEO said that the two organizations continued to perform well because each had been given the freedom to continue its traditions. ''Merging two organizations into one would be mission impossible as they both are very different,'' he added. ''The two organizations are very proud of their history and their achievements.''

Ghosn said that heading a company with combined sales revenue of more than $89 billion is a tough job and there are always questions about when the two ventures would merge into one. ''I say there is never that day as we want to preserve the identity of each organization as identity is the base for motivation. If you do not know who you are fighting for you will lose the motivation as well,'' he said.

A merged entity, he said, should be to look at shoring up confidence among the employees as no employee would want to deliberately bring down the company he or she works for. ''If people are frustrated then they could lose 80 percent of their energy and then the challenge is, how do we bring back that energy?''

Globally, both Nissan and Renault have combined sales of 5.9 million vehicles from the nearly 65 million vehicles sold each year, but their partnership, Ghosn said, grew out of compulsion. Nissan, once one of the mightiest Japanese automakers, had fallen on hard times with over $20 billion in debts and a slipping market share and revenue. Meanwhile, Renault wanted to move out of the European market and diversify its income base. So the two companies merge. Under the deal, the French automaker will fund Nissan in 1999. Renault took up a 44 percent stake and started to manage Nissan's turnaround.

Ghosn said that a good indicator of whether a deal has been successful or not is to keep tabs on the market capitalization of the merged entity or the two entities as in the case of Nissan and Renault. Nissan's market cap has risen by five times since the merger while Renault's has tripled. ''There has been a lot of value that has been created by this move and we see it as a win-win for all parties,'' he said.

Ghosn noted that the new management had to be steadfast in its resolve and not worry about criticism. ''Having a thick skin is very important,'' he said. ''I was greeted with thousands of negative press [reports] when I walked into Nissan, but I had the advantage of not knowing the language or the culture, so I undertook drastic measures that are now showing results. 'Such moves, when done by a new entrant, cost huge sums of money and there are lots of mistakes that are made, but we have managed to do it very smoothly."