CHIBA CASE STUDY ANALYSIS

CROSS CULTURAL MANAGEMENT

Deblina Dutta Deepak Ray Dinu Chacko Esha Verma Flavia Rodrigues Clemence Courau

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2/20/2013

EXECUTIVE SUMMARY

The case on Chiba International Inc. deals with the challenges faced by a Japanese company manufacturing plant set up in rural Georgia to adapt the philosophy of the company to its American workforce and culture. This gives rise to the problem of cross -cultural communication issues among two vastly different cultures as the company was facing difficulty in translating their philosophy to the American work force. For Ken Morikawa, Japanese general manager the philosophy of the firm is organic and reflects the true vision and beliefs of the firm while for John Sinclair, his personal manager they are just few paragraphs.Kenis perplexed about Johns desire to translate the companys Japanese philosophy to suit the American culture and he wonders whether doing so would mar the very objective of the company to serve its employeesin the best possible manner, which is a very Japanese way of management. John, on the other hand, having joined the company with a desire to be part of a Japanese organization so as to learn the best practices followed by the Japanese and to see them in action, realizes that it is important to truly understand how the Japanese management style works in the US, which results in the decision to visit Chiba International Inc. Both the executives finds solutions and methodologies that they have to adopt to become a successful company in the United Stated without giving up its hold on the Japanese core values, principles and its culture and organizational practices The case brings out thedifferences of both the Japanese and US cultures and describes those management practices that need to be adopted for effective management purpose.

INTRODUCTION TO THE CASE

Chiba International in San Jose, California is a subsidiary of Chiba Electronics Company, Japan. The Chiba Electronics company has been acclaimed as one of the foremost companies in Japan on the basis of its management practices much ahead of Sony, Matsushita and Toyota. Both Chiba Electronics Company and Chiba International have a 70% market share in the world market and the US market respectively. Although Chiba International started with a small sales office after acquiring a manufacturing plant from an American competitor, a Canadian born Japanese reared executive really turned around the company within two years, after terminating the American management. In the present day 14 out of 24 top executives and 65 out of 70salesmen are American. The way the company manages the different aspect of management of their business is an interesting study in the cross cultural context. While Chiba has been successful, they have been careful to introduce Japanese management concepts and ways of doing things in a gradual way. Even after 12 years of effort, there is still an indication of a distinction between the Japanese management and its American employees. Interesting Management Concepts: The written management philosophy Daily meetings that include presentations by management, employee news, department briefs and group exercise Weekly meetings among various groups Equal share for all employees in company bonus program Committee hiring Kompassmall gatherings of 810 people off-premises after work No-layoff commitment Minimal job classifications System of rewards for service and performance Group performance reviews

It is important to notice that outside the company, the employees are still exposed with American culture. Thus, they will always operate with a partially American worldview. The same happen with the Japanese expatriate. They will always operate with a partially Japanese world view. General difference between AMERICAN AND JAPANESE work culture One sees a great many differences between Japanese and Americans in not only the approach to leading and managing in the work environment directly but in the approach to business as a process. . In the Japanese model, the workers are involved in the cell operation and in producing the highest-quality product possible. They expected to get it right the first time, but they are not expected to address (and culturally would not think to address) the way business decisions are made concerning the company vision or how the company is organized and run. They would not make any suggestions regarding human resources operations. American workers have a distinctly different experience. The American worker feels very free to ask questions about how the company is being run, to suggest improvements in the company vision, and to speak out on the quality of management. This last thought is particularly

interesting, as it addresses the core difference between Westerners (epitomized by Americans), and Easterners (epitomized by the Japanese). It is the democratic nature of Westerners in general, and Americans in particular, considered against the Confucianism culture of Asians in general, and for this argument, the Japanese, that marks the dividing line for this whole argument. (Note: currently, the performance of the Japanese in the international business

community is troubled by the changing demographics of the Japanese population, and it is evident that similar social ills are about to trouble the American economy. The aging population, troubled real estate market, and a weakened banking program are very disconcerting issues for the professional and academic community.)

THE CULTURAL DIFFERENCES

This case shows a classic mixture of the cultures of Japan and the US. But surprisingly, Chiba has been able to pull off a magical blend, despite every chance of conflicts. But this does not mean that they have created a common platform and they do not have any differences. To see the differences more prominently, let us look from Hofstedes dimensions. Power distance: The American employees see power distance in a different point of view. Though their power authority is more decentralized but they always look for that key person whom they can influence for personal growth. However, Chiba assured that the top job usually goes to Japanese but they will not deprive any deserving American. Still, the interviews were taken by a group of people, indicating lower power distance. This is not exact differentiation but broad categories. Uncertainty Avoidance: Certainly the Japanese managers were more inclined towards this. Infact, when talking about their financial performance, they referred to the noodle peddler example. It showed that they wanted to be liquid, always calculated and prepared for any kind of uncertainty. The Americans were not so much inclined to this. They are relatively lesser uncertainty avoiders. Individualism: This was very clearly mentioned in the case. The Japanese managers clearly found this being the prime difference between the Americans as the Americans were more individualistic in nature Whereas, Japanese wanted to work together. An American employee did not mind extra responsibility as this showed extra power. Whereas Japanese always wanted to work in teams, they put company priority than personal lives. Masculinity:

Certainly, Chiba was more feminine in dealing with its own employees. But I feel when it came to doing business they were as masculine as any other American company. As they were straight forward, aiming for goal all the time, with the prime motto to succeed. The above sentences reveal a mixed proportion of parameters to define the two cultures. Whereas it would really be very difficult to put a fine line and tell the exact differences but with the help of Trompenaars parameters we can put them into clusters Japanese culture had the following aspects: Universalism, Communitarianism, Emotional, Diffuse and Ascription. On the other hand, American cultures scored relatively higher on the following: Particularism, Individualism, Neutral, Diffuse and Achievement.

BUSINESS ISSUES THAT KEN AND JOHN WILL FACE IN THE USA

Some of the key business issues that Ken and John may encounter as serious obstacles to achieving success in Georgia, USA are stated below: Many Japanese may not realize that most successful foreign executives living in or traveling to Japan have attended cultural training courses. Ken and John must go through the same to be culturally aware of how to deal with the American employees. It is true that, due to the influx of many cultures and races, most Americans are not as culturally sensitive to differences as are the Japanese. Nevertheless, Japanese business people should still pay careful attention to cultural differences in America. Just as a typical Osaka businessman will differ from counterparts in Tokyo or Sendai, a businessman in Los Angeles, California speaks and acts differently than a Georgian. Modes of dress and expression vary from region to region. While Japanese executives should not try to become American, they should make it a point to understand the subtle differences of business interactions in various regions. In addition, attention to one's own behavior should not be neglected. As an example, even something as seemingly minor as eating habits are important. It has been observed that certain Japanese executives forcefully talk and eat at the same time. The Japanese may think nothing of this habit, but it can make a very negative impression on a American customer who considers table etiquette a sign of status and refinement. Over-dependence on Personal Relationships: In Japanese sales situations, a personal relationship with a customer may be the single most important aspect of a sale. This is almost never the case in America. While personal relationships are important in the United States, they are not nearly as important as in Japan. North Americans are by nature more independent than the Japanese and do not have a culturally developed need to seek close personal ties.

Often Americans will feel it important to avoid any appearance of "favoritism" and do business on a strictly "arm's length" or emotionally distant basis. It is therefore important for the Japanese to recognize that business must be done primarily on a basis of price, product fit, and quality, regardless of any personal relationship. A benefit to the Japanese is that due to the natural interpersonal distance in American business relationships, the traditional Japanese requirement of presenting expensive seasonal gifts to past, current, and potential customers is not necessary. In fact, many Americans consider Japanese gift giving practices to be excessive and cause for ethical concern. Disparaging One's Own Company: Out of humility and to show proper hierarchical status, Japanese business persons have a tendency to criticize, demean, and disparage themselves, their own company and products. While such outward humility is the norm in Japan, it can kill a sale in America. The Japanese customer will automatically recognize that a Japanese person demeaning him/herself, the company, and the product, does so out of cultural behavior even when his/her product may be the undisputed industry leader. This is not the case in America. Japanese businesspeople should express confidence (while not being overbearing) in touting the strengths of the product and company they represent. Americans seek to work with the best companies, buy the best products, and consider their own companies to be the best in the industry. It is unthinkable for an American to disparage him/herself, his/her own company or product. Such rhetoric would be interpreted by customers and clients as an indication of weakness.

ISSUES AND WAYS TO ADAPT CHIBAS CALIFORNIA PRACTICES

From the reactions of John Sinclair, we could deduce how different the practices are at Chiba International Inc., California from the current practices of their company. Ken Morikawa does not expect the American manufacturing plant to be as same as the Japanese counterpart (as implied in the beginning of the case) but John is very eager to see these Japanese management practices at work in American manufacturing plant. The transition is dramatic and only a slow progress can bring the change seamlessly and successfully.

The list of practices of Chiba that has been discussed are: 1. Communication of company philosophy 2. Daily meetings that include presentations by management, employee news, department briefs and group exercise 3. Sales force and marketing 4. Sales on non-commission basis 5. Equal share for all employees in company bonus program 6. Hiring and Power concentration 7. Minimal job classifications 8. Kompa and other after work meetings 9. Noodle Peddler Theory

These practices can be adapted by Ken and John in the following way to be effective and efficient:

1) The first and foremost important step is to have a clear-cut company philosophy. Assuming that the company already has one adapted across its plants in Japan, the next step would be to convey the company philosophy to the employees in a clear and consistent manner. The awareness should be created in a slow and gradual manner like that of Chibas. The best way to implement this is through Internal Marketing of the company philosophy whereby the functional processes aligns, motivates and empowers employees to decide how to implement and work on the company philosophy. Internal
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Marketing can be done through distributing leaflets, sending emails, having banners are workplace etc.

2) Implementing the daily meetings is tricky as it can turn out to be non-productive. Employees might also find it as a waste of time as in the case of Chiba during its introduction. Putting it to good use and persisting on it through the involvement of the management can help turn it into more productive. These meetings also hold the benefit of creating a collectivist culture by caring for the employees feedback and make them feel needed. These meetings should provide an equal opportunity to all those in various level in the organization and in still confidence in their work for the betterment of the company.

3) The American sales force function and attitude is totally different from what Chiba follows. Few of the practices of Chibas sales force like not having to lie about the products, having a motto and setting their own goals along with the boss inputs are impressive and may readily be accepted as well. Whereas, the practice of having no marketing department may need some changes before implementation. First, it would be difficult to get rid of the marketing department which can lead to conflict with the practice of no-layoff that Ken and John would want to have. There are other aspects like the industry both operate in, the growth phase in which they are in, the type of customers etc. Should match well so that elimination of the marketing department does not affect the business. The elimination can be gradual by closing down the positions being vacated.

4) Having no commission basis may not hinder the efficiency of sales but sure to miss to tap its full potential. Having no incentive to overachieve leads to opportunities missed or delayed (manipulative) so that it can be accounted for in the next years sales target. Rather than avoiding commission based sales practice for the reason that different products and different geographies behave differently affecting the sales volume, it is better to set the goals according to these factors and have commission for those who overachieve. For e.g. A difficult to promote product can have a lower sales target and an
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easy geographical target can have higher sales target. A scientific method is needed to design the goals, in this case. 5) Equal share in companys bonus program is probably easiest to implement but doesnt come without the objection from the finance department. A workable solution can be achieved through meetings with all stakeholders at the management level.

6) The hiring method is unique wherein the candidate is left to wonder whom he would be reporting to. Chiba purposefully does it so that the Americans practice of seeking and running behind power is discouraged. Ken and John can implement this for new hires but for the existing workforce which is majorly American, organizational restructuring exercise might be required to break the power concentration at various levels.

7) Reducing job classifications as a part of the organizational restructuring and diluting the power concentration at various levels need to be carefully crafted and executed. Consolidating job positions and broad-basing them make the employee skeptic about the companys philosophy and might appear inconsistent with the no-layoff policy.

8) Japanese put work before personal life whereas Americans like to separate their personal and professional life and spend enough time with family. This could create resistance to after work meetings and Kompa. The fundamental cultural change is required and can be achieved through open communication and emphasis on team work & benefits. Individualistic accomplishment, remuneration and power can be discouraged for team work and benefits. 9) Implementing the Noodle Peddler Theory is going to be tough on the companys long term strategy. Stakeholders like suppliers, customers, dealers and employees should discuss and a consensus on how the theory is going to be implemented can be drafted.

10) The other practices like No-layoff commitment, System of rewards for service and performance, Group performance reviews, Quality and Customer Services are quite easy
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to implement as there are not much differences among the Japanese and Americans in these aspects of business.

APPROACH USED BY CHIBA: which are Chiba's interesting and unusual practices, which can be used by Ken and John and which cannot.

Chiba International represents a good example of integrating American employees in a Japanese company, as it had developed a large range of unusual practices for the last twelve years.

First, Chiba International did its best to develop the company policy in a very gradual way among the employees. When being hired, each and every employee gets a leaflet explaining Chibas policy. Chiba is seen as a family, in which every member shares the same bonds and goals. However, the employees are not forced to get all the companys policy straightaway. Ken and John should also develop a company policy very gradually in order to respect the time it takes for people to fully understand the culture of a company.

Another major point at Chiba is their very frequent use of meetings. The company meeting held every morning is followed by a 5 minute departmental meeting, in which there is even 1 minute of exercise. However, these meetings are not compulsory, but they are a factor of great motivation and integration for the employees, as they appear to be joined by a majority of employees. In addition to this, the company organizes many sponsored activities

Therefore, Ken and John should use such gatherings in order to integrate and motivate their teams. Employees have to feel completely part of the company in order to be proud of it. However, it might be difficult to organize as many meetings per day, especially at the beginning.

Loyalty on the company is a must-have at Chiba. Devotion and dedication are important criteria when hiring a manager and interviews are organized with a large number of interviewers, to show that it is the company and not the manager which counts. However, loyalty goes much
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further than what is commonly seen in America, as the managers should be ready to put the company on the same level as personal happiness. Ken and John should take devotion and dedication into account, even if personal happiness can be more important as the company for many managers.

Communication is central at Chiba. Suggestion boxes can be found everywhere, with every suggestion being answered in the company newspaper. Moreover, kompas, these after work gatherings paid by the company, are organized in the name of better understanding between the teams. Ken and John need to use communication as a key means to integrate people to the companys policy. However, the different means of communication should always be adapted to the companys particularity.

As for the reward system, Chiba wants to be as fair as possible. Every employee is therefore reviewed by two managers, every 6 months, with criteria such as loyalty, zeal and cooperation being on the top of the list. Ken and John should work for a fair reward system as well, even if the one used at Chiba might be too complicated.

Skills are therefore developed in-house at Chiba. By developing expertise internally, Chiba does not face a lack of technically trained people anymore. Ken and John should follow such a practice as they might face the same difficulty, since very few workers had an industrial experience in their plant.

Another major point at Chiba is the quality control and customer service. In the name of the zero defect theory, Chiba inspects every finished package. Even if this quality control is a cost, it gives a long term orientation that John and Ken should follow.

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Finally, Chiba still needs to accept the different way of thinking and manage them accordingly. John and Kerry should always keep in mind the necessity to adapt their company policy and its abstract ideas to their teams.

HOW CAN JAPANESE COMPANY GAIN THE LOYALTY OF AMERICANS? One of the major concerns for the Japanese managers is the individualistic nature of the American who joins the company. Their basic nature of managing themselves and their immediate family and internal politicking is a direct contrast with the Japanese collectivist nature of working in a group for the whole company. The individualistic nature of Americans also leads to power conflicts among themselves. The Japanese being extremely high on the dimension of masculinity, the job culture is often contradiction to the American workers who lay equal emphasis to personal life as to professional, and their work life balance is imbalanced. The excessive importance given to dedication and devotion to work can create work stress for the American who personal and family happiness first. The major defects between the Japanese and American philosophy is with respect to quality. While the Japanese lay great emphasis on the importance of quality throughout the entire production process, the American mind set is slightly relaxed and it accommodates defects. The Japan way of thinking cannot be easily taken in by an Anglo-American workforce; therefore, great care must be taken before any changes are implemented. In Chiba's case, they took it a step at a time, and was successful in the endeavour they chose to take. A Japanese company can gain the loyalty of Americans by providing them with autonomy of choosing their own sales target in consultation with their superiors. This will enhance the idea of belongingness towards the company. A very important characteristic is open communication. To implement any practice, the employees need to be properly communicated and two way communication between the

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employee and the superior should be encouraged, so that there is a smooth mapping of employee beliefs and company philosophy. Rewards should be given on the basis of performance and service done during the work along with the straight salary. The company should be such that it should take care of its employees more than anything and should work for their betterment so that they can create loyal employees so that they can give their hundred per cent to their work and hence lead the company towards better future.

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CONCLUSION

As per the above discussion on the general differences between American and Japan culture and the detailed analysis of The Hofstede and Trompenaars cultural dimensions to explain themanagerial implications of these cultural dimensions. And howthe practices of Chiba is different from that of the other company it is important to notice that outside the company, the employees are still exposed with American culture. Thus, they will always operate with a partially American worldview. The same happen with the Japanese expatriate. They will always operate with a partially Japanese world view. In this case, the key is to work toward an environment where they can work together and be effective while appreciating their diverse points of view. The company should strive to adapt a culture that brings out the best aspects of both groups to create an appropriate and successful environment. Success in doing this will bring the company an additional bonus: increase performance and better decision making due to diversity.

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