Chiba Intl Inc - Case Analysis

8/2/2019 Chiba Intl Inc - Case Analysis

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ChibaInterna,onalInc.AnAnalysisofCross-CulturalIssuesinManagement

TeamMembers:

LavanyaP. 64

MadhumithaS. 66

MadhuriMurthy 67

ManivelK. 69

MeghaJain 71


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NATIONAL CONTEXT

National Culture - Japan

Japanese society is highly homogeneous.

Not only do the 127 million Japanese all speak the same language, but information

circulates much faster in Japan than in other countries.

Japan has a high standard of education and a literacy rate of virtually 100 percent.

Japans deeply rooted historical emphasis on harmony; facilitate a consensus when an issue

is presented.

At the root of Japanese national culture is a concern for the protection and perseverance of

the society as a whole.

Citizenship is no guarantee of final acceptance: No matter how well adapted he is,

a Caucasian Japanese, even with his Japanese name (a requirement for citizenship), will be a

freak his entire life

Process is often more important to the Japanese than the end result.

High context culture.

The Japanese tend to value silence and expect others to be able to interpret their feelings and

exactly what their silence means.

Japanese are kind and gentle rather than dominating.

Reluctance of the Japanese to accept women in the business world: Japanese women are

routinely hired by manufacturing firms for low-level manual labour positions. Advancement

into management is not considered appropriate for women.

Japan is a risk averse country

Rigid hierarchical structure prevails in the society.

Hierarchy is inseparable from orderliness; a group is not properly organized unless its

members are ranked.

Confucian aspect of "face," which deals with the reputation of the individual is important. If

something is done that brings disgrace upon an individual in Japan, there is not only

disgrace for him, but also for his family.

Outer directed.

Some common cultural values in Japan are: Need for belonging, Group harmony,

collectiveness, seniority is given respect, group consensus, cooperation, patience, stability

etc.

Chiba International Inc. - Case Analysis Cross-Cultural Management

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National Culture United States

Heterogeneous society with varied cultures, rituals and languages.

Literacy rate not as high as Japan. Society promises equal opportunity to all.

Once a citizen treated equal to all others.

More individualistic society than consensus seeking or society conscious.

Achievement oriented not process oriented.

Low context society as compared to Japan.

Dominating attitude.

Women are treated as equals in business world as compare to in Japan.

Less risk averse and like taking risks.

Hierarchical structure exist but not as rigid as Japan, what matters is ones achievement and

contribution not their position in hierarchical structure.

Inner directed.

Some common cultural values in unites states are: Need for Freedom, Independence, self

reliance, equality, individualism, competition, efficiency, directness, innovation etc.

HOFSTEDES CULTURAL DIMENSIONS


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Managerial Implications of Hofstedes Cultural Dimensions

Japan UnitedStates

Selec,on

Basedonsocialclassandgroupone

belongstoonesexperience(dueto

highuncertaintyavoidance)

Basedonmeriteduca,onabili,es

TrainingMakepeoplecomplianttovalueof

societyorganiza,on.

Prepareindividualsforperformance

Evalua,onand

Promo,on

Basedoncompliancetovalues

seniority.

Basedonperformance

Remunera,on

Salariesaredifferentasperones

designa,on

Intrinsicrewardsystem

Salariesrela,velyless

differen,ated

Extrinsicrewardsystem

Leadershipstyle Paternalis,c Peopleoriented

Par,cipa,ve Taskoriented

Mo,va,on

Assump,on

TheoryX TheoryY

Decisionmaking

Processand

Organiza,onal

Design

Collec,vedecisionmaking Rigidpyramidlikestructure

Individualis,cdecisionmaking

Lessrigidandflaerstructure

Strategies

Longtermoriented

Stable

Sho rt term b ut bo o m li ne

oriented.

Innova,ve

Both nations have high Masculinity which leads to the following:

Selection and Training: Based on gender i.e. males are favored to females.

Evaluation and promotion and remuneration: Males are favored for promotion and salary

hikes in both the nations.


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TROMPENAARS DIMENSIONS

Based on cultural dimensions given by Trompenaars, the following table encapsulatescomposition of values describing the U.S. and Japanese culture. A brief description has been given

below the table to understand the differences in these values.

US JAPAN

UNIVERSALISM(95) PARTICULARISM(67)

INDIVIDUALISM(67) COMMUNITARIANISM(61)

EMOTIONAL NEUTRAL

SPECIFIC DIFFUSE

ACHIEVEMENT ASCRIPTIONINNERDIRECTED OUTERDIRECTED

Individualism and Communitarianism-U.S. is characterized by individualistic approachwhile Japan lies in the opposite spectrum. This implies that in U.S. people tend to work

mainly for themselves. On the other hand, Japanese would work towards community goals.

Specific and Diffuse-In U.S. the professional and private lives are kept separate (specific

relationships) while in Japan no such differentiation is made (diffuse). It is a well known

fact that Japanese managers put in long hours even after office time while U.S. managers donot like to work beyond office hours and spend time with the family.

Universalism and Particularism-This implies that in U.S. rules are applied uniformly to

everyone without any exception while in Japan the context may define how the rules will be

applied.

Emotional and Neutral-U.S. managers do not hesitate to express their emotions while

Japanese managers are neutral.

Achievement and Ascription-In U.S., merit is given importance over seniority, position,

status etc. It is not uncommon to find a young manager leading senior employees in U.S.

while it is the complete opposite in Japan.

Environment-In U.S., they strongly believe that their actions control the environment,

whereas in Japan they believe that beyond a certain point we have no control over the

environment.


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These characteristics have made Trompenaar classify the U.S. culture as part of the Anglo Saxon

country cluster while Japan falls in the Asian cluster. Other countries falling in the same clusters as

those of Japan and U.S. will display the same characteristics.

Interpretations

From Trompenaar framework we see that Japan and U.S. seem to have cultural valuescompletely opposite to each other and it seems unlikely that any common meeting ground exists for

the two cultures to work together. However, Hofstedes framework provides a key through which

both cultures can reconcile their differences. Both U.S. and Japan are masculine cultures which give

great importance to material success. However Japanese prefer community success over individual

success as compared to their U.S. counterparts. The need for ensuring success can be taken as afoundation upon which both cultures can start cooperating with each other for their mutual benefits.

Depending on which country the company is functioning in, practices need to be aligned with

respect to the local cultural values. However, success can be the uniting factor common to both the

parent and the host country.

MANAGEMENT PRACTICES

The Japanese Management Practices

The Japanese management practices are known for their completeness in quality and perfection. They are characterized by strong uncertainty avoidance and therefore there are more

written rules and a great deal of structuring in the organizational practices. The Japanese focus on a

long-range planning and collective decision making involving reaching a consensus for every

decision. This is known as the ringi system which is a system of circulating the proposals to all

managers who would be affected by the decision and getting a consensus. This is a reason behind

their slow decision making process, but in contrast, once a decision is reached, it follows a fast

implementation. High masculinity is also more prevalent in the Japanese organizations which leadto a paternalistic management style. Japanese organizations are more hierarchical and is also

characterized by a slow promotion through the ranks. Large Japanese organizations provide lifetime

employment, despite the situation of stagnancy in their occupations for the first 10-15 years in their

job. The Japanese organizations believe in input control and young, smart students are hired fresh

out of schools and there is hardly any mobility of people among companies. Training and

development is considered as a long term investment and appraisal of the employees performance

is also done on a long-term basis.


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The United States Management Practices

The United States culture is highly characteristic of individualism and every employee isindividually responsible and accountable. This comes down to decentralized and hence fast decisionmaking. Decisions are initiated at the top and flow down and this takes time for implementation,

requiring compromise and often resulting in suboptimal decisions. The US organizations have a

formal bureaucratic organizational structure. The management focuses on short-term orientation

and appraisal of ones performance is done frequently. It is primarily an achievement-oriented

culture and promotions are based on individual high performance. Rapid advancement is highly

desired and demanded. There is more loyalty towards the profession and not the organization as

such. People are hired out of schools and also from other companies and frequent company changes

happen. Job insecurity is more prevalent. The organizations have a high budget and financial

control and their performance is thoroughly monitored through outcomes. The people aregeneralists and there is no strong emphasis on the specificity of the job. The US management

culture is characteristic of a low power distance and weak uncertainty avoidance and hence the

spirit of entrepreneurship is high among the Americans. It is a low-context culture and hence they

have a standard set of rules and procedures to be followed.

Japanese Management Practices in the United States

More often than not, adaptation pays off and leads to business case. A good example wouldbe McDonalds, which adapts itself to the tastes of the locals of every nation it ventures into andthis helps them succeed. On the other hand, Ford built a single car for world export, called the

world car; it didnt succeed as expected. Though there are shortcomings of localization loss of

identity larger organizations do succeed with this strategy.

In case of management practices of a company in the parent country, being adapted by its subsidiary

in another nation is very often done for the organizational success and high performance, though it

is a gradual process and happens eventually. In the case of Chiba International Inc., the organization

tends to initially focus on making their own (Japanese) management practices flow smoothly

through the organization to whatever extent possible, but also tend to absorb in and adapt to the USmanagement practices as well. Chiba International Inc. has a majority of American nationals as its

employees and has been successful in making a great work culture for them.

The Corporate Philosophy: As one of its officials say, the corporate philosophy has been

transmitted slowly and carefully. There are no training sessions for it and only a leaflet elaborating

on it is given to them when they start work. It is not forced on them. Thus the Japanese management

philosophy is transmitted through the organization, to start with. Some of its principles, more

expressive of the Japanese practices than the USs, are:

Considering the organization as a family united with common bonds and goals


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Customers first (not shareholders, as in the case of the US practice)

Not so profit-oriented but aimed at delivering the best quality and satisfying the customers

Meetings and Kompas: The practice of holding many meetings indicates the collective nature ofthe Japanese as against the individualism which is highly prevalent in the United States. Though

this is not forced on the employees, there seemed to be an increase in the voluntary meetings that

were conducted very frequently. Kompas are off-campus gatherings after work for which the

company pays for all the refreshments. They are most often held with an objective. It is another

example of instilling the Japanese culture on to the American workforce in a very positive way.

The Sales Force: The Japanese culture is also imbibed into the American sales force which has

great professional pride and a take-it-or-leave-it attitude. The Japanese culture changed their

perspective of the sales being a task to love the products to sell it better. This enabled them to avoidharassment from the customers.

Hiring: Japanese management culture is more oriented towards input control and they hire

graduates from top business schools, whereas the executive from Chiba International Inc. says that

a graduate from a top school is always welcomed but they do hire people from other companies as

well. Also, there are no private offices to indicate that they are the elitists. This signifies that there is

not as much power distance as in the case of the Japanese parent company. This practice highlights

the adaptation that they had done to suit themselves to the US management culture. Where there is a

need to adapt, the Japanese do not hesitate to.

Appraisal and Rewards Systems: The Japanese subsidiary at the United States follows a system

of performance review every 6 months; whereas the performance system is based on the long term.

This is another example of the Japanese adapting to the management practices of the United States.

A judicious evaluation system is done involving the lead and the supervisor checking and

confirming the same.

Therefore many of the Japanese practices do work in the United States if and when it is

implemented in a way such that it is well-accepted by the American workforce. The primary reason,

according to our group is that the American workforce is open-minded and is always willing to

learn. Their pride is in the profession they are in and they would accept any difficulties in the

process of overcoming challenges at work. At the same time, Japanese are equally willing to accept

and adapt all the good practices of the Americans as they are also open to learning. Ultimately, the

common intention of building the organization is also fulfilled.

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


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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 program6. 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 Marketing can be done through distributing

leaflets, sending emails, having banners are workplace etc.

2. Implementing the daily meetings is tricky as it can turnout to be nonproductive. Employeesmight 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 holds 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 instill 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


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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 wouldwant 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 differentgeographies 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 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 let 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 jobpositions 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.


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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 to

implement as there are not much differences among the Japanese and Americans in these

aspects of business.

UNUSUAL PRACTICES AT CHIBA

Japanese companies have always been following altogether different approach from the restof the world to do the business. The worldwide business-practices are mostly driven based on thetheories which are proposed by western world. Carrying this notion, we find that most of the

aspects in Japanese management are exactly opposite to that of western world, particularly US.

Japanese practices are essentially application oriented, rather than idea oriented. Many ideas come

from US but the Japanese concentrate on applying them carefully. Americans emphasize creating

something new and then moving on. The Japanese meticulously analyze a problem from all angles

and see how a solution might be implemented.

Meetings: Japanese people spend quite a lot of their time in the meetings. At Chiba, daily meetings

are held before the shift begins. Each day, different members of management speak for about five

minutes. Departmental meetings are held and even the people at the lowest exempt level find

themselves speaking. This is in contrast with US management style which believes in fast decision

making, so they have fewer meetings. Their meetings are also specific. Thus, what seems

interesting is the ability of the Japanese team at Chiba to implement this practice of group

consensus in a company where there are many American employees. Also, once in a month, there is

an announcement of total company performance against the plan. Exercises are the part of the

rituals and symbols to get better mutual understanding. So this clearly indicates the participative

management where each and everyone have a voice to be heard. It is interesting that thesecollectivist practices have been applied in a country which is the largest individualist.

Commission: No one in Chiba works on a commission basis. It is interesting to note that not even

salesmen work on commission basis on the logic that the company would lose market share for the

products that are difficult to promote. Chiba doesnt have a marketing department also which is so

unusual. The apparent reason behind this is that they dont have time to examine opportunities lying

elsewhere. The underlying fact is that the company is so better off to cater to its present that it

doesnt need to (or rather it cannot) look beyond its current scope. This is counter argument to the

basic principle of constantly exploring and venturing into new markets or creating new markets and


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achieving the growth. It is interesting to note that Japanese companies have achieved the growth

throughout the world without marketing excessively but positioning them in an invulnerable

position based on quality products and processes.

Recruitment: In terms of recruitment, employee is expected to be loyal to the company and not to

the individual who is senior in the company. The Japanese recruiters focus on candidates way of

thinking and not necessarily his ability to take up the job. They look for the devotion and dedication

and aggressive attitude which are conflicting to the general expectations from the potential

employee in the form of skill, talent and experience which most of the other companies in the world

seek. They analyze the way of thinking of the interviewee rather than his answers. This is a unique

Japanese culture of recruiting the people. Also in the case of Chiba we can see that in the interview

process, about 7 of them interview. This displays the attitude of the company that there is no clear

boss and apple polishing does not work here. They send the message loud and clear to potentialcandidates about the kind of culture they will find when they join Chiba.

Communication: The Chiba culture is to make communication open. Japan being a high-context

society, following an open communication practice is highly unusual. But in Chiba, this practice is

essential because they had a potential problem when the Japanese took decisions after the

Americans left for the day. By making communication open, Chiba management tries to solve this

problem. Open communication is the most important and differentiating factor as far as Japanese

companies are concerned. Kompa is a very noticeable thing to understand. Kompa is a small

gathering outside premises after work which is not social in nature but is very much objective. So

communication plays a crucial part in the progress of any Japanese company. (This is applicable to

all the companies in the world but Japanese have their own unique ways of conducting the

discussions and making the matter transparent.)

Management philosophy and policy: It is a common Japanese custom to instill the management

philosophy and policy. By making this process voluntary, Chiba has succeeded in integrating the

company philosophy, practices and policies by the employees. By realizing that the workforce is

largely American and thereby not enforcing the company philosophy they ensured that it was

gradually taken up by the employees.

Motivation: Americans are more interested in individual accomplishment, remuneration and power

which lead to the power conflicts amongst US managers. Japanese people give more emphasize on

the company growth and less on the individual achievements. They treat the individual growth as

the consequence of the company growth. For example, CEO of Japan Airlines received less salary

than any pilot in the organization in order to cope up with the recession. But this kind of scenario

we can hardly find in any other part of the world. In Chiba, by fostering practices which favor the

group the management tries to reduce the internal politics which take place.


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Handling costs: Chiba has a unique way of handling raw material. They expense everything out

and then they come up to the net profit calculation. In order to maximize output and minimize

expenditure, every effort is made to keep the track on daily basis of sales, returns, net shipment

costs and expenses. This is so different from common practices in the world where companies tracktheir expenditure yearly if not quarterly. By means of this daily financial calculation, Chiba can

track their expenditure meticulously and regularly.

Debt management: Chiba maintains extremely low levels of debt compared to other Japanese

companies. This is also in stark contrast to American companies which are characterized by high

debt levels. By focusing on low debt levels, Chiba is insuring itself against any calamity which

might occur in the future in terms of interest rates rise, repayment difficulties etc. This practice of

Chiba to keep low debt levels is highly unusual.

Lifetime employment: The factor which characterizes most Japanese companies is life time

employment. It is interesting to note that Chiba does not stress life time employment but they still

follow the Japanese philosophy of no layoffs. American employees who are used to the concept of

contract labor, no job guarantee, would find this system of no layoffs a motivation to do well.

Power distance: Japanese systems are usually characterized by power distance and hierarchy. In

Chiba, we see that they have reduced the number of grades to two. This shows that Chiba,

contradictory to normal practices is trying to reduce the power distance and masculinity. This also

helps in group consensus and fostering collectivism.

Past orientation: Japanese believe in past orientation, learning from seniors etc. Chiba advocates

learning from books. This is in contrast to the American system of future orientation. It is

interesting to see Chiba applying this in a company which has predominant American employees.

Work life balance: Japanese believe that work is central to life and family comes next. In Chiba

this concept is not enforced and our attitude towards work and preference to stay in office or leave

is left to the individual to decide.

Interpretation

To conclude, considering all the aspects of management, Chiba have very much unique setof rules which they abide by very strictly. Considering that they have established these methods in a

culture which is diametrically opposite to theirs, what is interesting to note is that the way they have

tweaked certain practices and the way they have stringently applied Japanese management practices

to create the best of both worlds.


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CONCLUSION

In the case analysis, we have provided details about the Japanese approach to managementand American approach to management deriving them from the national context of these two

countries. The Hofstede and Trompenaars cultural dimensions are further used to explain the

managerial implications of these cultural dimensions. After analyzing the practices of Chiba and

how it is different from that of the other company, we have provided on ways for Ken and John to

adapt Chibas practices, the issues (both cultural & others) that they might face and ways to

eliminate or minimize the impact of such issues. By following these, Ken and John can successfully

imitate Chibas practices and resolve the current issues.


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Chiba Intl Inc - Case Analysis

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