Hedging international risk: Renault and risk management

Résumé du document

Renault is a French vehicle manufacturer producing cars, vans, buses, tractors, and trucks. The group is well known for its motor racing (through Renault Sport department), revolutionary designs (for example: Vel Satis, Avantime, Megane) and concepts (namely the Espace, the first monospace to be developed). Renault distributes its vehicles through primary networks (dealers, branches belonging to the Renault group's business distribution unit, approved repairers) and secondary distribution network (subdealsers). For a decade, Renault's growth strategy is mainly based on internationalization (outside Europe). Indeed, even if it is the leader on the European market, it needs to conquer the American and, above all, the Asiatic markets. That's why the group is present in "risky" countries such as Chile and Turkey. Besides, Renault holds 20.74 % of the capital of AB Volvo (Sweden), 44.3 % of Nissan (Japan), and 99 % of Dassia (Romania). Renault also created Renault Samsung Motors (South Korea) after buying Samsung Motors' operational assets, and has a partnerships with local companies in Russia (Avtoframos), China (Dongfeng), Iran (Idro), Columbia (SOFASA) and Italia (Fiat).

Extraits

[...] Indeed, datas must be protected (confidentiality and integrity) and the network should not be interrupted, since most of the group's functions rely on the software tools and technical infrastructure connecting its sites Distribution risks Depending on the type of distribution channel, Renault is exposed to different risks in addition of the risk of non-payment by customers. On the one hand, at commercial import subsidiaries, sales and marketing resources can be used in appropriate goals. Indeed, Renault does not control all the promotion process. [...]

[...] That's why in 2004 the Purchasing Department created a sustainable development action plan which incorporates sustainable development criteria into purchasing processes, provides training on changes in processes based on sustainable development criteria, and investigates the position of suppliers with respect to Renault's sustainable development's requirements Industrial risk Renault has a prevention policy which covers all its production plants and applies both to employees and property. Central experts establish measures for all Renault plants all around the world and keep risk analyses up to date. These experts are supported by local teams in each plant: they all received trainings in industrial risks. Finally, each year four different insurance companies check the application of prevention and protection rules Environment risk Because of the legislation and in order to preserve its image - Renault has to put a great emphasis on environmental risks. [...]

[...] These risks can be divided in five different types : - operational - financial - legal - bank customer - dispute Let's present and discuss them. The tools developed to manage the most important risks - operational and financial - will be developed in question whereas legal, dispute and bank customer risks will quickly be presented beneath Operational risks Operational risks are various, and can be related to factors such as geographical areas, product quality, suppliers, production, environment, IT, and distribution. [...]

[...] Nevertheless, none of them is considered as “dangerous” for Renault, insofar as they won't affect its assets, financial position, activities or earnings. According to the presentation of Renault's business model (cf question the most important risks Renault has to face are the operational and financial risks. Let's analyze these two types of risks in question Analysis of the tools adopted in risk management by your company Renault has developed risk management, which aims at anticipating and controlling the risks arising from its activities and international development. [...]

[...] Renault distributes its vehicles through primary networks (dealers, branches belonging to the Renault group's business distribution unit, approved repairers) and secondary distribution network (subdealsers). For a decade, Renault's growth strategy is mainly based on internationalization (outside Europe). Indeed, even if it is the leader on the European market, it needs to conquer the American and, all above, the Asiatic markets. That's why the group is present in countries such as Chile, Turkey . Besides, Renault holds of the capital of AB Volvo (Sweden) of Nissan (Japan), and of Dassia (Romania). [...]