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International Management Examples And Case Studies Notes

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The Meanings and Dimensions of Culture Case Studies & Examples

Toyota Case Study o

Toyota's focus on Kaizen (continuous improvement) helped Toyota become the number one seller of automobiles in the world.

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In January 2010 Toyota announced a recall of approximately 2.3 million vehicles to correct sticking accelerator plans and an additional 4.2 million vehicles would have an on-going recall for a floor mat pedal entrapment issue.

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By February 2010 Toyota had recalled "about 8.5 million vehicles for problems related to gad pedals and brakes" - CNN

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Jeff Kingston of Temple University Japan estimated the recall cost Toyota over $2 billion.

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The way Toyota managed the crisis was even worse:

The president of the company (Akio Toyoda) did not appear publicly for two weeks after the recall announcement.

When he did appear he took the path of minimising the problem - citing software issues rather than a defect as the source of the pedal problems.

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Jeff Kingston asserted that Toyota's failure to be forthcoming on critical safety issues has out "the trust of its consumers worldwide" in jeopardy.

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How Japanese Culture Influenced Toyota

In his Wall Street Journal article, Kingston explained the cultural roots of Toyota's woes.

He indicated that a culture of deference in Japanese firms "makes it hard for those lower in the hierarchy to question their superiors or inform them about problems".

In addition, the Japanese tend to focus on the consensus which can be difficult "to challenge what has been decided or designed".

In Japan Kingston noted that "employee's identities are closely tied to their company image and loyalty to the firm overrides concerns about consumers".

One can deduce how Toyota's problems arose in this cultural environment. If subordinates noticed a problem in vehicular accelerators, they would likely be hesitant to:

Report the problem to their superiors (culture of deference)

Criticise their team members who designed the accelerators (focus on consensus)

Request firm spend extra money to redesign the accelerators for greater consumer safety (loyalty to firm over concern for consumers)

Kingston noted that Japanese corporations have a poor record when responding to consumer safety issues. He described the typical Japanese response as the following:

Reluctance to recall the product

Poor communication with the public about the problem

Minimisation of the problem

Too little compassion and concern for customers adversely affected by the product

Kingston stated that Japanese firms usually respond this way because:

Compensation for product liability claims it is mostly derisory or non-existent. In other words Japanese corporations have little to lose by their minimal response.

Japan is "a nation obsessed with craftsmanship and quality". In such an environment there is significant "shame and embarrassment in owning up to product defects". Corporations may seek to deny their products have safety concerns in order to "save face".

Kingston told CNN that "Japanese companies are oddly disconnected with their consumers". In an article printed in the Wall Street Journal, Toyota president Akio Toyoda wrote "It is clear to me that in recent years we did not listen as carefully as we should - or respond as quickly as we must - to our consumer concerns".

Professor Johnson of St Mary's University stated "The American culture demands transparency and action, whereas the Japanese culture assumes that taking ownership of problems and apologies will suffice".

Akio Toyoda publically apologised at press conferences for the inconvenience caused by the Toyota recall and took personal responsibility for the consumer safety issues. For the Japanese media, that was enough. But not for the America media.

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Cultural factors can explain another aspect of Toyota's problems - public relations. Toyota has received much less negative attention in the Japanese media as compared with the American media.

Professor Johnson explained that while American corporations are expected to be transparent about their problems, Japanese firms have adopted the business practice of keeping problems in house.

Professor Johnson said that when "Toyota focused on the Kaizen culture, it was able to maintain closer links with its suppliers and ensure the quality of its components primarily because they were located in close proximity to Toyota's plants. However, when their expansion and growth strategies required them to build production facilities overseas and given intense competition in the auto industry, Toyota had to resort to a strategy where they forced suppliers to compete on price. Since it is difficult to pursue Kaizen because of geographic distance, Toyota may have inadvertently sacrificed quality for cost considerations."

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Kingston recommended that Toyota become more focused on the customer and improve corporate governance by appointing independent outside directors.

Japan's culture has always been credited with creating high quality products that are the envy of the world. Sony, Canon and Toyota are cited as exemplars in their respective industries partly because they have leveraged some of the most productive aspects of Japanese culture.

Reichel and Flynn examined the effects of US environment on the cultural values of Japanese managers working for Japanese firms in the United States. In particular they focused attention on such key organisational values as lifetime employment, formal authority, group orientation, seniority and paternalism: o

Lifetime employment is widely accepted in Japanese culture, but the stateside Japanese managers did not believe that unconditional tenure in one organisation was of major importance. They did believe however that job security was important.

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Formal authority, obedience and conformance to hierarchic position are very important in Japan, but the stateside managers did not perceive obedience and conformity to be very important and rejected the idea that one should not question superior. However, they did support the concept of formal authority.

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Group orientation, cooperation, conformity and compromise are important organisational values in Japan. The stateside managers supported these values but also believed it was important to be an individual thus maintaining a balance between a group and a personal orientation.

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In Japan, organisational personnel often are rewarded based on seniority, not merit. Support for this value was directly influenced by the amount of time the Japanese managers had been in the United States. The longer they had been there, the lower their support for this value.

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Paternalism often measured by a manager's involvement in both personal and off the job problems of subordinates is very important in Japan. Stateside Japanese managers disagreed and this resistance was positively associated with the number of years they had been in the United States.

There is increasing evidence that individualism in Japan is on the rise, indicating that Japanese values are changing - and not just among managers outside the country. The country's long economic slump has convinced many Japanese that they cannot rely on the large corporations of the government to ensure their future. They have to do it on their own and as a result a growing number of Japanese are starting to embrace what is being called the "era of personal responsibility".

Instead of denouncing individualism as a threat to society they are proposing it as a necessary solution to many to many of the country's economic ills.

A vice chairman of the nation's largest business lobby said at the opening of a recent conference on economic change "By establishing personal responsibility, we must return dynamism to the economy and revitalise society".

Dutch researcher Geert Hofstede identified four cultural dimensions. His initial data was gathered from two questionnaire surveys with over 116,000 respondents from over 70 countries - making it

the largest organisationally based study ever conducted. The individuals in these studies all worked in the local subsidiaries of IBM. As a result Hofstede's research has been criticised because of its focus on just one company; however, he has countered this criticism. IBMers do not form representative samples from national populations. However, samples for cross national comparison need not be representative as long as they are functionally equivalent. IBM employees are a narrow sample but very well matched. Employees of multinational companies and IBM in particular form attractive sources of information for comparing national traits, because they are so similar in respects other than nationality; their employees, their kind of work and their level of education. The only thing that can account for systematic and consistent differences between national groups within such homogenous multinational population is nationality itself; the national environment in which people were brought up before they joined this employer. Comparing IBM subsidiaries therefore shows national culture differences with unusual clarity,

In societies with high power distance, strict obedience is found even at the upper levels. For example Mexico, South Korea and India.

Countries populated with people who do not like uncertainty tend to have a high need for security and a strong belief in experts and their knowledge. For example Germany, Japan and Spain.

Cultures with low uncertainty avoidance include Denmark and Great Britain.

Hofstede found that wealthy countries have higher individualism scores and high GNP. For example United States, Canada, Australia, Denmark and Sweden. Poorer countries have higher collectivism scores and low GNP. For examples Indonesia, Pakistan and a number of South American countries.

Germany is a country with a high masculinity index. Norway is a country with a low masculinity index.

In his early research Trompenaars found that in countries such as the United States, Germany, Sweden and the United Kingdom there was high universalism. However, countries such as Venezuela, the former Soviet union, Indonesia and Chine were high on particularism.

The United States, formed Czechoslovakia, Argentina, the former Soviet Union and Mexico have high individualism.

Japan and the United Kingdom are both high neutral cultures.

Mexico, the Netherlands and Switzerland are examples of high emotional cultures.

Austria, the United Kingdom, the United States and Switzerland are all specific cultures.

Venezuela, China and Spain are diffuse cultures.

Austria, the United Kingdom, the United States and Switzerland are all achievement cultures whilst Venezuela, Indonesia and China are ascription cultures.

In the United States people tend to be guided by sequential time orientation and thus set a schedule and stick to it. Mexicans operate under more of a synchronous time orientation and thus tend to be much more flexible, often building slack into their schedules to allow for interruptions. The French are similar to the Mexicans and when making plans often determine the objectives they want to accomplish but leave open the timing and other factors that are beyond their control; this way they can modify their

approach as they go along. Trompenaars noted "For the French and Mexicans, what was important was that they get to the end, not the particular path or sequence by which that end was reached".

In countries such as the United States, Italy and Germany the future is more important than the past or present. In countries such as Venezuela, Indonesia and Spain the present is most important. In France and Belgium all three time periods are of approximately equal importance. Because different emphasise are given to different time periods, adjusting to these cultural differences can create challenges.

In the United States managers strongly feel that they are masters of their own fate. This helps account for their dominant attitude towards the environment and discomfort when things seem to get out of control. Many Asian cultures do not share these views, they believe that things move in waves or natural shifts and that one must go with the flow so a flexible attitude, characterised by a willingness to compromise and maintain harmony with nature is important.

According to the GLOBE analysis (1991) Brazilian managers are typically class and status conscious, rarely conversing with subordinates on a personal level within or outside of work. They are known for avoiding conflict within groups and risky endeavours and tend to exhibit group dynamics with regard to decision making processes. Managers in the United States, on the other hand do not focus intensely on different class or status levels. They are more likely to take risks, and while it appears as though they are more individualistic the GLOBE analysis graph implies a more tolerant attitude than direct single person decision making structure. While Americans value mutual respect and open dialogue, Brazilians may see this behaviour as unacceptable, even aggressive if discussion discloses a large amount of information and includes members from different positions. Family structures, including in group structures are very important to Brazilians, but the head of the household still has the last word. They stress short terms, risk aversive goals to maintain vision and interest in business proposals.

Managing Across Cultures Case Studies & Examples

For years Renault, the French auto giant manufactured a narrow product line that sold primarily in France. Because of this limited geographic market and the fact that its cars continued to have quality related problems, the company's performance was at best mediocre. Several years ago however, Renault made a number of strategic decisions that dramatically changed the way it did business. Among other things it bought controlling stakes in Nissan Motor of Japan, Samsung Motors of South Korea and Dacia the Romanian auto maker. The company also built a $1 billion factory in Brazil to produce its successful Megane Sedan and acquired an idle factory near Moscow to manufacture Renaults for the Eastern European market. Today Renault is a multinational automaker with operations on four continents.

Warner Lambert has manufacturing facilities in Belgium, France, Germany, Italy, Ireland, Spain and the UK. Each plant is specialised and produces a small number of products for the entire European market; in this way each can focus on tailoring products for the unique demands of the various markets.

Marketers sell toothpaste as a cosmetic product in Spain and Greece but as a cavity fighter in the Netherlands and the US. Soap manufacturers market their product as a cosmetic item in Spain but as a functional commodity in Germany.

Germany want advertising that is factual and rational; they fear being manipulated by the hidden persuader.

The French avoid reasoning and logic. Their advertising is predominantly emotional, dramatic and symbolic.

The British value laughter above all else. The typical broad, self-deprecating British commercial amuses by mocking both the advertiser and the consumer.

In some cases however both the product and the marketing message are similar worldwide. This is particularly true for high end products where the lifestyles and expectations of the market niche are similar regardless of the country. Heineken beer, Hennessey brandy, Porsche cars and the financial Times all appeals to consumer niches that are fairly homogenous regardless of geographic locale.

The same is true at the lower end of the market for goods that are impulse buys, novel products or fast foods such as Coca cola's soft drinks, Levi's jeans, pop music and ice cream bars,

Advertising in the US should target individual achievement, be expressive and direct and appeal to US values of success through personal hard work. On the other hand the focus in chine and other Asian countries should be much more indirect and subtle, emphasising group references, shared responsibility and interpersonal trust.

Cultural highlights that affect doing business in China can be summarised as follows: o

The Chinese place values and principles above money and expediency.

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Business meetings typically start with pleasantries such as tea and a general conversation about the guest's trip to the country, local accommodations and family. In most cases the host has already been briefed on the background of the visitor.

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Once the Chinese decide what is best they tend to stick with these decisions. Therefore they may be slow in formulating a plan of action but once they get started they make fairly good progress.

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In negotiations reciprocity is important. If the Chinese give concessions they expect some in return. Additionally it is common to find them slowing down negotiations to take advantage of Westerners desire to conclude arrangements as quickly as possible. The object of this tactic is to extract further concessions. Another common ploy used by the Chinese is to pressure the other party during final arrangements by suggesting that this counterpart has broken the spirit of friendship in which the business relationship originally established. Again, through this ploy, the Chinese are trying to gain additional concessions.

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Because negotiating can involve a loss of face, it is common to find Chinese carrying out the whole process through intermediaries. This allows them to convey their ideas without fear of embarrassment.

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During negotiations it is important not to show excessive emotion of any kind. Anger or frustration is viewed as antisocial and unseemly.

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When a meeting is ready to begin the Chinese host will give that appropriate indication. Similarly when the meeting is over, the host will indicate that it is time for the guest to leave.

Negotiation should be viewed with a long term perspective. Those who will do best are the ones who realise that are investing in a long term relationship.

The following suggestions are thought of as helping to be successful in Russia: o

Build personal relationships with partners. Business laws an contracts do not mean as much in Russia as they do in the West. When there are contact disputes there is little protection for the aggrieved party because of the time and effort needed to legally enforce the agreement. Detailed contracts can be hammered out later on; in the beginning all that counts is friendship.

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Use local consultants. Because the rules of business have changed so much in recent years, it pays to have a local Russian consultant working with the company. Russian expatriates often are not up to date on what is going on and quite often are not trusted by local business people who have stayed in the country. So the consultant should be someone who has been in Russia all the time and understand the local business climate.

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Consider business ethics. Ethical behaviour in the US is not always the same as in Russia. For example in Russia it is traditional to give gifts to those with whom one wants to transact business , an approach that may often be regarded as bribery in the US.

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Be patient. In order to get something done in Russia it often takes months of waiting. Those who are in a hurry to make a quick deal are often sorely disappointed .

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Stress exclusivity. Russians like exclusive arrangements and often negotiate with just one firm at a time. This is in contrast with Western businesspeople who often shop their deals and may negotiate with half a dozen firms at the same time before settling on one.

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