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334 CHAPTER 9 • THE PRoCEss of oPERATions sTRATEgy – foRmulATion And imPlEmEnTATion

responsibility is to make money, because that is the only way we can survive as a business’, he explains.
‘Once we have that basis, we can start to think about other factors. And many of the fired workers were
retrained and subsequently found jobs with the suppliers that had moved their production to the area.’
In Romania, given the turbulence of the move from a centrally planned economy towards a
market economy, it was also particularly important to work closely with state and local govern-
ments, especially over social issues. The company has had to address environmental concerns
and develop a network of local suppliers that can produce to an international standard of qual-
ity. Many of the firms, including multinationals such as Valeo, are now based on-site. Renault
also put continuous training at the heart of Dacia’s business, although at first it was a challenge.
But, argues Fourmont, ‘the more efficient and better trained the workforce is, the more likely they
are to withstand competition from abroad, allowing the company to reward staff better for their good
performance and quality product’. One worker, who had been with Dacia for more than a decade,
remembered what life was like before Renault took over:
‘It was hard work, with a lot of effort and very little satisfaction. People were suspicious (of the
changes) at first, especially when the job cuts came. But then they saw the company was serious and
they began to trust Renault.’
The design of the car was critical to its low cost. Renault designed a car that was modern but
without costly design elements and superfluous technology. Production costs for the Logan
were estimated at $1,089 per car – less than half the $2,468 estimate for an equivalent Western
auto. ‘The Logan is the McDonald’s of cars’, says Kenneth Melville, who headed the Logan design
team. ‘The concept was simple: reliable engineering without a lot of electronics, cheap to build and easy
to maintain and repair.’ To keep costs low, Renault adapted the platform used for its other small
cars and then slashed the number of components by more than 50 per cent. The dashboard is
one continuous injection-moulded part vs. up to 30 pieces for a top-of-the-line Renault. The
rear-view mirrors are symmetrical, so they can be used on both the left and right side of the
car. Renault also opted for a flat windshield as curves result in more defects and higher costs.
Sourcing from local suppliers was another critical factor, as was encouraging Renault’s exist-
ing suppliers to set up shop on a new supplier park within the Dacia factory complex. This was
not easy, because many suppliers were sceptical about the whole project. But they were won
over, and now 65 per cent of parts bought in from suppliers are produced locally, with 26 of
Renault’s existing suppliers having agreed to set up nearby – 7 of them inside the supplier park.
Partly as a result of the Logan’s low-cost objectives and simple design, assembly at the Roma-
nian plant was implemented almost entirely without robots. This overcame some of the problems
of using state-of-the-art technologies in a region where support services are relatively underde-
veloped, and it let Renault capitalise on the country’s low labour costs. Now, Renault is ramping
up production of the Logan from Russia to Morocco. ‘The investment in manufacturing is relatively
low, so you can have factories that don’t have to produce huge volumes to finance themselves’, says sen-
ior analyst at researcher Global Insight in Frankfurt. Renault has already expanded its output in
Romania and is creating the world’s largest logistical project that will ship Logan cars in bits so
that they can be assembled in Russia, Morocco, India, Iran and Columbia.

participation in operations strategy implementation

More than 60 years ago Coch and French argued that a key mechanism for overcom-
15
ing resistance to change was to include the people to whom the change would happen
in the process, and allow them to influence what changes would take place. After all,
by including people in the decision process, they are more likely to ‘buy in’ to the

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