Chiba International final
Transcript of Chiba International final
EXECUTIVE SUMMARY
The case on Chiba International Inc. deals with the challenges faced by a
Japanese company’s manufacturing plant set up in rural Georgia to adapt the
philosophy of the company to its American workforce and culture. Ken
Morikawa, the general manager for administration and John Sinclair, the
American personnel head of the company are determined to find out how
Chiba International, another Japanese company based in California, has
successfully translated its corporate philosophy into action that has led to
considerably good profits for the company. Ken, having had extensive
experience in the field of personnel management is perplexed about John’s
desire to translate the company’s Japanese philosophy to suit the American
culture and he wonders whether doing so would mar the very objective of
the company to serve its employees in 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. What they learn from their interaction with the
management of Chiba International gives them an idea of the various
Japanese principles and practices adopted by the company duly suited to the
American culture. The case brings out the differences of both the Japanese
and US cultures and describes those management practices that work well in
the US and those that do not.
CHIBA INTERNATIONAL INC.
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 70
salesmen are American.
The way the company manages the different aspect of management of their business is an
interesting study in the cross cultural context.
Management Practices in Chiba International Inc
Meetings:
The company is very particular about the regularity and schedule of its meetings, where even the
lowest level employee speaks and this reflects the kind of open communication system that the
company follows. The company’s performance and plans are also shared openly, because all
employees share the company’s annual bonus at the same rate.
Sales Force:
The sharp contrast in the attitude of the sales force of the company between the Americans and
Japanese can be ascribed to their high universalism and moderate particularism, respectively,
according to Trompenaars’ cultural dimensions. The Americans have a straight “take it or leave
it” attitude in sales. Whereas the Japanese’ practices have more room for customisation and
modification to cater to the needs of individual customer needs which has been analogised to the
service of a “geisha girl”.
When this basic philosophy is communicated to the sales force, they approve of it, because this
kind of service oriented sales ensures less harassment from customers and more customer
satisfaction. The company does not have any policy of sales based commission which makes is
unfair for those who are selling in a less favorable sales territory.
U.S Management:
One of the major concerns for the Japanese managers is the individualistic nature of the
Americans who join the company. Their basic nature of being concerned about themselves and
their immediate family (reporting authority), internal politicking etc. is in sharp contrast with the
Japanese collectivist nature of working in a group for the company as a whole.
The individualistic nature of the Americans also leads to power conflicts among themselves. This
is because, when additional responsibilities are given to them, they view it as an extension of
their individual sovereignties (because of their thirst for personal achievements and
accomplishments) and this leads to power conflicts in the case of overlapping sovereign areas.
The Japanese being extremely high on the dimension of “masculinity”, the job culture is often in
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 Americans who put “personal and
family happiness first”.
This is also evident in their recruitment philosophy: It is the ability, performance and attitude of
an individual which is measured in an interview, rather than assigning a pseudo – status to one
owing to the prestige of his degree.
This often leads to a communication gap between the Japanese and the Americans, which is
literally evident in the meetings and discussions which happen at late hours when the Americans
have retired for the day, among the Japanese in their language. Needless to say, this created
apprehension in the minds of the Americans but the management tries to rectify the issue by
clarifying the fact that decisions should not be taken in the absence of the Americans and by
asking them to stay back for those meetings.
Financial People:
A very strong Japanese culture of management is followed by the financial people throughout the
company. Everything is expensed out, which includes depreciation, raw material requirement for
future. This is done with an objective of having precise knowledge about the company’s current
liquid assets.
Also, in line with the Japanese concept of “muda”, Chiba International Inc. maintains minimal
inventory level. They follow, what is known as the “noodle peddler theory” which epitomises the
lean manufacturing system (a practice that considers the expenditure of resources for any goal
other than the creation of value for the end customer to be wasteful, and thus a target for
elimination), avoiding inventory, expensing out depreciation prior to profit calculation.
However in contrast to many Japanese companies, only 20 percent of their financing is done
through debt financing.
Open Communications:
In Chiba International, open communications is cited as the main element of success in getting
the company’s philosophy penetrated to all levels. The difference in the company’s US branch is
that the workforce is not as homogenous as it is in Japan. The American workforce has not
experienced a homogenous culture as the Japanese. The Japanese more or less understand the
philosophy well because of the similarity of experiences in culture. But in the case of the
Americans in Chiba International, communication had to be very strong in order to generate a
shared culture and sense of oneness among employees.
Meetings of different types is one way of communicating matters of great and less importance in
the company. Suggestions made by the employees are addressed in the company’s newspaper.
There is a great sense of involvement of the personnel department in matters of the employees as
one person from the personnel department tours the plant all day once a week. This portrays how
informal communication channels are in place to make the employees feel important and that
they are being heard. Informal channels of communication are more receptive in the American
culture than in the Japanese culture in which more emphasis is given to formal channels of
communication. Not being unionized has helped the company with flexibility and job changes
among the workforce. A system called kompas, which is an objective-driven off-premises
gathering, has also helped in communication, conflict resolution and discussion of problems
related to production and company philosophy. All these methods emphasize the importance
given to open communications in the company which had to be adapted in order to suit the
American culture. This also shows how open communications served as a tool for motivating
employees to do their best in the job and to participate in decision making.
Appraisal and Reward Systems:
Though the Japanese culture places a lot of importance on lifetime employment, Chiba
International did not do so. Instead, it stresses on the importance of job security. According to
Hofstede’s model, this emphasizes the Japanese culture’s high uncertainty avoidance character.
Lay-offs are not part of the system unlike the American culture which does resort to lay-offs
under pressure. The number of pay grades is kept to a minimum to reduce differences among
employees. According to Hofstede, this is more of a Japanese philosophy which is centred on
collectivism and the greater good of the group, as against the American culture which
emphasizes differentials among employees to satisfy individualistic desires. In Chiba
International, employees are encouraged to do even menial jobs or jobs of less importance
without fearing the possibility of losing their jobs or pay. Such a system does not exist in the
American context.
Hiring from external sources is kept to a minimum and is done only if the required skills are
unavailable in-house. Bulk of the training is on-the-job and job postings are not utilised.
Promotions are given only when a person is identified as having the required competencies. An
important point to note is that rewards are based on the services provided and the performance of
the employees rather than on seniority as is the case in most Japanese companies. This system is
suited to the American culture which rewards only for performance. To keep team leaders
motivated, they are given a different colored smock and are given a few extra cents an hour.
Demotion of the team lead occurs only if a specific need for him does not exist and never for
lack of skills or leadership ability. Acknowledgement of the team lead in this manner is an
effective motivational tool.
Performance appraisal takes place twice a year. After careful review of the scores by comparison
across departments and with the help of the personnel department and managers, the scores are
tied to the compensation. The highlight of the appraisal system is the continuous feedback given
to employees all-round the year. This results in lesser surprises to the employees at the time of
review. All these aspects highlight the company’s responsibility towards the employees.
Quality and Service:
A major difference between the Japanese and the American philosophy is with respect to quality.
While the Japanese lay great stress on the importance of quality throughout the entire production
process, the American mindset is slightly relaxed and accommodates defects. The Japanese
follow a zero defect policy. They expend more resources to check defects and inspect rather than
face loss of customers after the defect passes on to the customer. This is one of the main reasons
for the success of the Japanese. Chiba International has made this zero defect principle a key
element of their philosophy. They are highly dedicated to serving customers by striving to
develop products as per customers’ needs.
From the above aspects, it is clear that Chiba International has adapted its Japanese management
style to suit the American culture without compromising heavily on the values held dearly by the
Japanese.
QUESTIONS
Question 1
Can Japanese management practices work in the United States without adaptation? Why
or Why not? What cultural values are relevant?
It is very difficult to use Japanese management practices in the United States without much
adaptation. The problem lies in the cultural differences between the two countries. So we should
not force Japanese management principles in American companies otherwise it will lead to chaos
and finally overall performance of company will go down. So we can say that management
practices are most important for company to grow. There are some Japanese management
principles which are not applicable in an American context. All such principles are listed below
with proper illustration.
1. Lifetime Employment: It is main Japanese management principle. Employees are hired
directly upon graduation from high school or college, and are retained until a mandatory
retirement age of fifty-five. Upon retirement, an employee will receive a large severance
payment. The effect of this policy is that there will be very high employee commitment to the
company.
2. Evaluation and Promotion Process: The Japanese process is very steady and slow. A new
hire may take ten years to get automatic pay increases and promotions (along with all others
hired at the same time) before a formal evaluation of his performance is made. Only after this
evaluation do promotions and pay increases vary among employees. The result of this practice
is a long-term management outlook toward the employee and an attitude of cooperation and
non-competition between employees, resulting in individual performance aimed to serve the
company rather than oneself.
3. Participative approach to decision making: In the Japanese firm, everyone is involved in
making decision. They take long time in decision making but after that implementation are
very fast. On other hand decision making in United States is very fast but implementation
process is very slow.
4. Collective Values and a Collective sense of responsibility: They reject the idea that some
persons may be more productive than others, and prefer to be collectively accountable for
company performance. Thus, piece-rate compensation is considered personally humiliating,
and suggestion boxes and individual rewards are not regarded favorably.
But transferability of Japanese management principles is a bit of a controversial issue as some of
the most famous successful Japanese companies have been successful mainly due to adoption of
management principles which have originated in America like Quality Circles and Scientific
Management. The difference lies in the fact that Japanese are better in implementation and the
Americans are better in Idea formulation.
Theory Z:
Theory Z tries to incorporate Japanese management principles into western management styles.
Theory Z is an adaptation of Theory X and Theory Y propounded by Douglas McGregor, based
on Maslow’s hierarchy of needs. An explanation of Theory Z could be understood from the
second question.
Relevant Cultural Values
1. Planning and Decision Making: In Japanese culture, planning is done with a long term
perspective and it involves all stakeholders who are directly or indirectly related to impact of
decision. Although the decision making is very slow, the implementation of the same is very
fast and efficient. On the other hand, United States companies primarily plan for a short term
orientation and it is a very individualistic form of decision making. Decisions are initiated at
the top and it flows down. Fats decision making is a characteristic of U.S. management style.
However, the slow implementation causes compromises in efficiency.
2. Staffing and Organizing: Japanese Management style advocates collective responsibility
within the company. The informal organization structure brings about ambiguous decision
responsibility. The organization culture and philosophy are well known and there would be
visible competitive spirit towards other enterprises. In contrast, U.S. management styles
advocate individual responsibility and accountability. There is a clear and specific decision
responsibility. The organization structure is formal and bureaucratic. However, there is a lack
of common organization. Employees identify themselves with their job role rather than the
company itself.
3. Leadership and Control: In Japan, the leader acts as a social facilitator and group member.
The leader’s style is paternalistic. Common values facilitate cooperation. The leader
sometimes avoids confrontation and this sometimes leads to ambiguities. The leader in Japan
is focused on harmony. Critical communication is top down and both bottom up. Non critical
communication is usually bottom up. In the U.S., the leader acts as the decision maker and
head of the group. The leader’s style is usually directive, strong and firm. Individualism and
divergent values hinder cooperation. Face to face confrontation is common and the main focus
is on clarity. The communication pattern is usually top down.
Question 2
How should Ken and John adapt Chiba’s California practices to their situation? What
problems will they run into (cultural and otherwise)?
Ken Morikawa, the general manager for administration and John Sinclair, his American
personnel manager of a Japanese manufacturing plant under construction in rural Georgia wanted
to bring in the best practices of the Japanese company philosophy into the company so as to have
an efficient and effective management system that can be used even by the Americans and hence
can lead to the path of profitability. In their quest for a better fit of the company philosophy with
the employees, they researched many similar companies who have succeeded and found Chiba
International Inc. to be one such highly successful company that had implemented the Japanese
company philosophy and way of working into the American counterparts in an effective manner.
Chiba’s practices can be adapted by Ken and John so as to run a successful organization in the
following way:
1. The most important step for any organization is to convey the company philosophy to the
employees in a clear and consistent manner so as to obtain an integrated approach to the
growth of the company. Like Chiba, Ken and John need to create awareness about their
company philosophy (Japanese way of working) in a slow and gradual manner to the
employees. The best way is to make the people aware of it by distributing leaflets or sending
personal mails and leaving it to them to decide how to implement and work on it. It also
depends on the type of plant and as this company is also labor intensive like Chiba, following
the philosophy by employees won’t be much of a problem.
2. The Japanese philosophy in total is that of collectivist culture and hence their main focus is to
care and work for the employees and include them in all the working of the company. Hence
to implement this attitude and to make the employees feel needed, the method of doing daily
meetings is an important approach. In the meetings giving equal opportunity for every
employee to speak his/her mind is an important method of making them aligned to the
philosophy and instilling confidence in them to work for the betterment of the company.
Along with the usual work discussions, these meetings can also be the means of other out-of-
work discussions and entertainment get-togethers that can help in bring the people together.
3. Sales force is an important function of every organization and having an effective and
efficient team is a prerequisite. The Japanese philosophy is towards caring for customers and
working wholly to make them happy not thinking about self-benefit. But the Americans lack
this by having an arrogant take-it-or-leave-it attitude. Ken and John need to work in this area
by making the employees aware about the importance of satisfied customers and the added
profit and growth associated with that. Chiba’s motto of “Sincerity, Ability, Love, Energy,
and Service” should be adopted by all the companies in achieving a loyal customer base.
4. Commission-free basis of work is an important philosophy that can be adopted by Ken and
John so as to give equal importance to all the products and getting equal work towards the
sale of both the fast and slow moving products. This would not create a very competitive
environment that the Americans are used to and would let them concentrate in all the
products in a fair manner.
5. Another important Japanese philosophy is giving autonomy of work to the employees. The
employee, like in Chiba International, should be given autonomy to set their own sales target
in consultation with their superiors so that they would be driven towards achieving a better
number than what is promised by them. This would enhance the idea of belongingness to
wards the company by the employees.
6. Americans have the attitude of manipulating and running behind power. This is totally
opposite to the Japanese philosophy which believes in lesser power distance and more
equality. To embody this attitude within the employees, the company should work towards
reducing the internal politicking practices indulged by the employees. The employees should
be made aware of the benefit of working in teams rather than individually and hence
implement group achievement attitude in them.
7. The important practice that needs to be implemented should be that of projecting the
company as a whole and the sole powerful authority rather than portraying individuals as the
power-holders. It should be the company who hire the employees and it should be the
company who should solely take care of them and not any individual person. This help in
reducing the politicking factors to a great degree and maintains harmony and unity among the
employees.
8. The Americans are usually stricture of a definite schedule of daily work and it usually is
shorter than the Japanese companies. Hence to implement the Japanese company philosophy
in the Americans, they should also be made aware of the extra working hours that need to be
put in so as to give more time to the work and hence create more benefit for the company.
9. As mentioned, the Americans are more individualistic and the Japanese more collectivistic.
To implement the company philosophy among the Americans, they need to be properly
educated to keep group achievements much above their individual achievements. This is a
very important practice that needs to be implemented to work the Japanese way.
10. The company should be such that it should care for its employees more than anything and
should work for their betterment so that they can create loyal employees that can give their
hundred percent to the work and hence can lead the company towards high growth path.
11. Ken and John should also implement the “noodle peddler theory” followed by Chiba as it is
one of the bases of high productivity in the Japanese company. The practice of keeping
inventory level zero or bare minimum and implementing just-in-time approach that can help
in incurring much less cost is a fundamental principle. The damages and wastages should be
kept to bare minimum so as to obtain more profit and lesser loss.
12. A very important characteristic of a collectivist culture is open communication. To
implement all the above best practices, the employees need to be properly communicated and
should be encouraged to have a two-way communication between the superiors and the
subordinates so that there will be smoother mapping of individual beliefs and company
philosophy. The various approaches towards communication are through meetings,
suggestion box, and personal tours by the superiors during the working hours etc.
13. Chiba’s innovative practice “kompa” is also another approach that could be used by Ken and
John in their company through which they would be able to build more understanding and
trust within their employees for each other through the various discussions and interactions
held between the conflicting groups.
14. An important philosophy of Chiba was providing job security to the employees by signing
no-layoff commitment forms so that employees could be secure enough and work to give
their level best in the work. Also reducing the job classification could be an important tool by
which the disparity between employees’ pay structure could be reduced.
15. An important practice that could be adapted by Ken and John is that off developing internal
technical expertise for the work requirements rather than spending money with external
assistance. This help in building a strong base for the company and help in standing up to the
competition.
16. Rewards to be given to the employees only on the basis of the service and the performance
shown in the work done with having a straight salary structure. There should be periodic
review of all the workers and staff performance so as to reward or improve the performance
of employees.
17. Excellent customer service should be the main motto of the company and hence steps should
be taken in that front. Proper quality control measures need to be implemented so that the
tiniest of the mistakes and defects could be avoided.
18. The company should adapt the “never-say-no or can’t” attitude towards any challenge and
work their best to make even an impossible task possible.
There would be many types of problems that Ken and John would run into while implementing
these practices in their company. These problems are briefly described below with the help of the
Hofstedean model.
Individualism vs. Collectivism:
Americans are individualistic in nature and Japanese have a strong collectivist culture. Hence
when there is a situation of conversion this individualistic attitude to collectivist attitude,
there would be huge problems in making the Americans adapt that. The Americans by nature
are more self-driven bout the Japanese company philosophy talks about taking everybody
together and moving forward. It emphasizes on the team aspect rather than an individual
work and hence where there would be the issues of sharing bonuses or working towards
achieving group rewards rather than individual incentives, Ken and John would face
problems convincing this philosophy to the American workers. Also when there won’t be any
visible upliftment of their status in comparison to their colleagues, it might create discontent
among the employees.
Power Distance
The Americans culture strives towards large power distance where reaching the superior is
really difficult and there is huge hierarchy in the organization. There is always a struggle for
power and people have the attitude to run over others to get benefited and rise up in the
organization. Japanese on the other hand have very less power distance and hence reaching
the superiors and run for power the minimum over here. People learn to live in harmony
without craving for unlimited power. When the Americans would be introduced to such a
situation, there would be huge confusion and many clashes among them in understanding and
getting used to such a culture. The strive for more wouldn’t be easy to take away from the
Americans.
Uncertainty Avoidance
The Japanese are more on uncertainty avoidance than the Americans and hence they work
with formalized rules and work habits, have greater specialization, and avoid taking risk and
more towards achieving stability than flexibility. The Americans rather prefer more freedom
and flexibility and more challenging roles and way of working which keep them motivated
and driven. They would like to implement more innovative approaches and get more risky
jobs that would get them personal recognition. So in this situation it would be very difficult
for Ken and John to manage their initiative towards work in a restricted environment and
might also lead to discontent and unrest, ultimately leading to job dissatisfaction and lower
growth. The task-oriented approach would be difficult for the American employees to follow.
Masculinity vs. Femininity
The Japanese company philosophy is based on high masculinity index where the emphasis is
more on the job and company growth and less on the personal life. They consider their first
duty towards their company and then towards their family. They have long working hours
(such as from 8 in the morning to 10 at night) and are still happy and their family understand
this. The Americans on the other hand are not so much masculine and like to devote time and
draw a boundary between their work and personal life. They don’t like to work long hours
and place their family in equal status or above their work. Hence when these Americans
would be insisted to work in a company running on high masculinity, the Americans
wouldn’t be able to sacrifice their work-life balance just for the company and their work.
This would create huge problems and also would demotivate the employees and increase the
attrition rate.
All these factors indicate that it won’t be an easy task to map the Americans to the Japanese
company philosophy and hence Ken and John need to be well prepared to deal with such
problems and difficulties.
Question 3:
What aspects of the Japanese approach used by Chiba are the most unusual to you? Why?
The following approaches of Chiba appear to be most unusual:
1. Chiba does not have a system of variable pay; it pays on straight salary only. The goals are
set high and the individual performance is compared with the planned performance. There
must be some motivating factor throughout the year so that employees would get motivation
to achieve higher performance.
2. Chiba does not have a marketing department. They consider marketing department as an
expensive luxury. According to them the successful entrepreneur does not have time to
examine opportunity in the next town. The unusual thing is, how else do they expect to grow
in a competitive environment? How will they create their name and fame, brand value?
3. Chiba’s financing depends on debt only to the extent of 20%. It’s well known that debt is
cheaper that equity. The strange point is that while they are so meticulous as far as their
inventory management is concerned, taking the entire inventory as an expense, why is it that
they are conservative in their cash management, when most of the other Japanese companies
are not?
4. Chiba’s employees work for long hours often sacrificing their family life. A normal human
being should work to the extent so that he could spend quality time with his family.
5. The employees in Chiba don’t consider any work as menial. An employee doing a better job
may well do a menial job next day, without any pay cut or a dent in pride. For them getting a
work done is important no matter who does it. It’s unusual how a person can keep himself
motivated as he observes the rating of the kind of work assigned to him is unstable. Why is it
that Japanese consider all kind of work equally important? This again seems inspired by Zen-
“Defilement is Enlightenment”.
6. A lead can get demoted if a specific need for them do not exist, but would rarely get demoted
for the lack of skill. Here the unusual thing is that the Japanese give a lot of importance to the
respect for human being, and the notion of completion of work, no matter who does it. This is
coupled with an explicit no layoff commitment which makes it impossible to sack an
employee. That is why an incapable employee ends up being in the same place in spite of the
fact that there may be a better person outside the organization who could do the job better,
and a capable person gets demoted if his kind of work is not available in the organization. It
seems strange how a demoted yet capable employee worker keeps himself motivated when
he observes a comparatively capable worker, working at a higher capacity.
The most unusual part in these arguments however is that although Chiba is looking forward to
become transnational by employing American employees, and even considering a slight chance
for an American to become a president if he is really capable, they have just not modified their
company’s philosophy according to the environment they are working in.