Question

"Renault's partnership with russian automaker avtovaz benefits both parites"

The AvtoVAZ car factory in the central Russian city of Togliatti is a decrepit, mile-long building where the company’s Lada sedans are turned out by 40-year-old equipment. Nevertheless, the French carmaker Renault-Nissan recently paid $1 billion for a 25 percent stake in AvtoVAZ. Even after invest- ing more millions to modernize the plant, Renault figures that Russia’s low labor and energy costs will make the plant ideal for producing the Logan lineup of cars that the firm introduced in 2004. The no- frills Logan, starting at about $9,000, has become the world’s most successful cheap car. Its partner- ship with AvtoVAZ should also help Renault appeal to Russian car buyers and capture a larger share of that country’s rapidly growing market. But AvtoVAZ will also benefit from the partner- ship, especially on the production side. A key reason the firm agreed to the deal with Renault was “the modern technology and know-how that the company will provide us,” according to Chairman Sergei Che- mezov. The partnership may also encourage global auto parts suppliers to build new, more-efficient plants near the AvtoVAZ factory.

Russian automakers are clearly behind in terms of technology versus European or American car makers. In fact the Lada is a very old model still sold today in Russia.

1. What benefit did Avtovaz receive from this partnership?

2. Who are the major players in the Russia in this category and what are their objectives?

3. Does this partnership make sense for Renault?

When you asnwer those three questiosn:DQs(modules) are important; it is especially important that you provide specific evidence, gleaned from your independent research (see below) to substantiate your views. While your opinions may be fascinating, this is an academic forum, the goal of which is to expand your knowledge regarding the topics we discuss. I want you to feel completely comfortable expressing yourself in the discussion forums and in the papers you submit, but you will be graded on critical thought -- which is demonstrated by shining the bright light of relevant research on your perceptions, assumptions, and biases. (he wants at least one source on each questions, from the library with quotation mark) APA style

Answer 1

SOLUTION

What benefit did Avtovaz receive from this partnership?

(1) Renault-Nissan is equipped with the best expertise and uses one of the modern technology in the automobile sector which will help Avtovaz also in their business and thus will also helped them in increasing their market share because it's competitor are not equppied with modern day technology and expert workforce.

(2) Due to the presence of Reanault-Nissan more and more suppliers will open their plants near to Avtovaz which will reduce the lead time as suppliers will quickly deliver parts ordered by Avotvaz and thus makes Avotvaz Supply chain most effective and efficient.Lot of transportaion cost is also saved as now parts will be manufacture close to the factory.

(3) With the increase in market share,they can also sell more of the Lada which is still more popular in Russia and once they get the customer base they can surely launch new product in the market as some higher price.

Who are the major players in the Russia in this category-

• Ford Motor Company-Objective is to deliver full family of vehicles that meets and exceed cutomer expectation in quality,green,safe,smart.
• Toyota Motor Company-Objective is to Innovate and Lead Automobile company.
• Hyundai Motor Company.-Objective is to become leader by increasing its worldwide production and sales.

Does this partnership make sense for Renault?

It definitely makes sense considering how big the Russian market is and how much passionate the Russian's are for the Cars. Since AvtoVAZ is old player in the russian market it will help Renault in getting the visibility in the local market and also in case it does not succeed initailly risk can be shared with the AvtoVAZ.

Renault is following RISK-AVERSE technique in Russia so that risk can be mitigated and in case of failure they don't suffer much financially.

Since AvtoVAZ has strong customer base,in the near future Renault can launch its own new product without much investing in advertising.