ASIAN CASE RESEARCH JOURNAL, VOL.
7, ISSUE 2, 167–172 (2003)
ACRJ
This case was prepared
by Dr C. Carl Pegels of
the School of Management,
SUNY at Buffalo as a basis
for class discussion rather
than to illustrate either effec-
tive or ineffective handling of
an administrative or business
situation.
This case has been prepared
with information provided
by individuals in the organi-
zation on which this case
is based. However, all
names, places, and locations
in this case are fictitious to
ensure the anonymity of the
organization.
Please address all correspon-
dence to: Dr C. Carl Pegels,
School of Management,
SUNY at Buffalo, Buffalo,
NY 14260-4000, USA. E-
mail: cpegels@acsu.buffalo.edu.
© 2003 by World Scientific Publishing Co.
Gentran Machinery, Inc. (B)
INTRODUCTION
William Stevenson had just completed a ten-day visit to GM
China, a joint venture in China by GM Pacific and Hangzhou
Heavy Machinery located in Hangzhou, China.
GM Pacific was headquartered in Hong Kong and was
the Pacific Rim subsidiary of Gentran Machinery, Inc., head-
quartered in Philadelphia, Pennsylvania, USA.
Stevenson had completed a report outlining the orga-
nizational and operating problems of the GM China joint
venture that he had observed (See Gentran Machinery, inc.
(A).). The report shown below is Stevenson’s report outlining
his recommendations to Gentran Machinery management.
TO: Mr. James Thompson, President, GM Pacific,
Hong Kong
FROM: William Stevenson, Executive Assistant, JV
Operations
DATE: September 20, 1998
SUBJECT: Recommendations — Joint Venture GM China
The report consists of two main areas: general recom-
mendations and overall summary. The details follow below.
I. General Recommendations
A. General manager’s position, power, and
authority in the JV
1. A meeting between the General Manager and the Board of
Directors should be convened in order to discuss and
168 ACRJ

specify the position, power, and authority of the GM

China General Manager.
2. It is of vital importance to the JV that the general manager
be given the clear mandate to make all decisions relating
to the tactical operation of the JV.
3. The members of the Board of Directors should assume
roles similar to those of a Western Board of Directors and
should only involve themselves in the business at that
level.
4. All managers of the JV, both American and Chinese,
should be made subservient to the chain of command sys-
tem, which will result from this process.

B. Organizational design

1. Review organizational structure and the inherent capabili-

ties of that organization.
2. Restructure the design and density of the organization
based on: (a) the needs of the business, and (b) the avail-
ability of required managerial talent.
3. Educate in-depth the JV management group on competi-
tive strategy, business plan, and short and long-term
direction of the business.

C. “Responsibility system”

1. Clean-up and finalize the organization.

2. Clarify organizational design.
3. Write a very specific job description outlining responsibili-
ties and authority.
4. Educate people on this system
5. Chinese top managers must “champion” and support this
progress.

D. Reward and appraisal system

1. Once the new organization and responsibility system are

in place, a new reward system must be implemented.
 GENTRAN MACHINERY, INC. (B) 169

2. The reward system has to be coordinated with the imple-

mentation of the “responsibility system.”
3. An education system and process must accompany the
implementation of the reward system.
4. A formalized, annualized, managerial appraisal system
must be implemented and utilized by the entire manage-
ment group.

E. Incompetent managers and workforce

1. An organized evaluation and review of each manager’s

performance and qualifications relative to the needs of
business should be carried out.
2. The Main Factory should be asked to take back those cur-
rent JV people who do not fit into the JV’s organizational
plans.

F. American managers

GM Pacific should suggest the following to enhance Jack

Bartlett’s positions:
1. Create a written business plan delineating the changes
necessary to make the JV successful.
2. Provide much stronger physical leadership of the JV, uti-
lizing the mandate provided by the Board of Directors.
— Two options are available to solve the situation:
a. Direct Jim Olenuk to accept his position in the organi-
zation and explain to him why it is important for him
to work with and support Wang Peng. (I believe that
Jim Olenuk should take the initiative and deal posi-
tively with Wang Peng.)
b. Move Jim Olenuk to a position reporting directly to the
General Manager with a responsibility for consulting
with the manufacturing organization.
170 ACRJ

3. Two options are available for dealing with the Hamel

situation:
a. Counsel Ray Hamel and attempt to improve his perfor-
mance.
b. Replace Ray Hamel.

G. Chinese managers

1. An education program to provide English language train-

ing should be implemented.
2. Additional competent translators should either be re-
cruited or trained.
3. A program outlining the business plan including the nec-
essary changes should be provided to the entire Chinese
management group.
4. More Chinese managers should be allowed to visit West-
ern manufacturing facilities and other JV’s in China.

H. Interaction with American managers

1. Help create an environment of trust by providing under-

standable education on the mission, objectives, and plan
for the JV.
2. Create scheduled meetings designed to facilitate the trans-
ference of key information within the management group.
3. Through counseling, train and make Chinese managers
aware of communication problems with American manag-
ers. Develop a plan to overcome these obstacles.

II. Summary

The American and Chinese managers shared several key

concerns:
1. Communication /language/culture barriers.
2. The need for strong leadership and a specific business
plan.
 GENTRAN MACHINERY, INC. (B) 171

3. The need for a Western style “responsibility system”.

4. The need for a more appropriate “reward system”.
It is my general perception, at least superficially, that
both the American and Chinese management share most of
the same goals and aspirations for the JV.
When one factors the reality of expectation into the
Chinese equation, certain conclusions become evident:
1. The Chinese business culture has had over forty years to
create the JV manager’s thinking.
2. The Chinese middle managers have virtually no manage-
rial experience, although they are, for the most part, tech-
nically competent from a Chinese perspective.
3. The American managers have no experience dealing with
the entire Chinese business/cultural experience.
4. The JV is on a relatively even pace with other Chinese
JV’s.
5. The Gentran Machinery JV is only six months old.
Upon analyzing these conclusions, certain facts be-
come important in viewing the relative success of the JV:
1. It is difficult, at this stage of its development, to measure
the progress of GM China by standard Western criteria.
2. We understand the necessary managerial development to
move a traditional Chinese business to a Western type
system.
3. Culture change is not a short-term process and it really is
too soon to make in-depth evaluations of success.
The GM China JV in my view has terrific potential. I
do believe that significant U.S. support is necessary to speed
up the transition to a more modern and competitive organi-
zation. Education is the key ingredient in this change. It is
my view that ongoing education in the areas of business
plan, language, and management will be the foundation
from which the JV will grow and prosper.
 Exhibit 1. Organization Chart — Gentran Machinery– China Joint Venture

172
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Chairman of the Board
Dong Hong Board of Directors
Zhu Bin
Dong Hong
James Thompson
President Jack Bartlett
James Thompson

General Manager
Jack Bartlett

Asst. Gen. Mgr. Asst. Gen. Mgr.

Operations & Sales, Marketing
Engineering Accounting and Personnel

Wang Peng Qian Hua

Mgr. Of Mfg. Manufacturing Controller Controller Personnel

Operations Manager Manager
Jim Olenuk Zhang Yan Chen Ping Richard Hamel Li Ping

Mgr. Of Eng. Mgr. Of Mfg. Marketing Sales

Engineering Manager Manager
Jin Deli Zong Bin Deng Li Liu Hong