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Abstract:
In 1998, after a period of ten years just prior to the decision of forming an alliance with Nissan, Renault SA had transformed itself from a loss-making French government-run social welfare organisation to a profit-oriented company. This had been possible because of the redesign programme that Renault undertook in 1996 when it laid off 40,000 employees, closed its Belgian Vilvorde factory and was privatised. The research case discusses the restructuring of Renault under the stewardship of Carlos Ghosn. By 2000, Renault met its objective of becoming the most profitable and competitive European car manufacturer in terms of quality, cost and time. In 2003, the turnaround of Renault SA and its success in the Renault-Nissan alliance was termed as 'radical transformation' as the redesigning at Renault reflected on its organisational chart, on new policies, creation of an alliance board and transforming the once French company to a bi-lingual internationally reputed company. The case discusses the rationale behind the restructuring initiatives of Renault (with which it later on restructured Nissan successfully), costs and consequences of restructuring programmes, changes in organisational structure in response to changes in business environment on performance and profitability, role of human resources during organisational restructuring process and in the French context, 35 hour work rule and role of unions and legislation in the restructuring process.
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