Crisis at Renault Company

The companies decision is to transform the production of the Vilvoorde plant to other plants of France and Spain. In this situation, the company only needs 1900 employees for continuing their production function. This decision helps the company to save $ 160 million annually. One of the major reasons behind this is a powerful global competition in industries with substantial or extensive overcapacity. he major reason that existed behind the success of this plant is the consolidation of production at fewer plants. Renaults chairman said that the reason for the sudden decision is to reduce the cost of production. The labor cost in Belgium is comparatively high. Higher social charges and tax rates make production in Belgium is more expensive compared with Spain and France. There is a lot of cultural problem behind the plant closure some employees is Vilvoorde says that the company discriminates them and the company’s decision is to save the jobs in France.The major reason for the elimination of plants is the nonfulfillment of its project feasibility. Every business is functioning with the aim of maximizing profit by minimizing the cost of production. At the time of setting up a business, a proper plan, or forecast about the future business activity is undertaken, but the expectation never equalizes with the actual results. The variation in the budgeted and actual goal of the enterprise may some times leads to make an end of the business function to some extent. Due to the nonattainment of predetermined targets, several businesses are going to take an inappropriate decision to turn off its business activities.The key stakeholders are the employees, Government, shareholders, customers, in the closure is employees there are more than 3000 employees they are in a threatening position to lose their job. “Stakeholders are defined as “individuals or organizations who stand to gain or lose from the success or failure of a system.” (Jonathan Boutlette 2004).