Guru to the Western world Japan

1. 1 Guru to the Western world Japan Week 3

2. 2 Overview � Japanese business environment Business conglomerates Zaibatsu Single family controlled Central holding company Pyramid structure In 1930�s 4 Zaibatsus controlled 25% of Japanese business Zaibatsus dissolved in 1947

3. 3 Keiretsu � key to business "Big Six" enterprise complexes (Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa and Dai�ichi Kangyo) Horizontal Type � diversify in many fields Typical structure - stable vertical cross�shareholding relationships horizontal affiliations reaching diverse markets possession of large�scale economic resources often close managerial ties executives sit on boards for several companies regular presidents meetings

4. 4 Keiretsu � key to business Common trait to all �Big Six� within complex is central city bank general trading company insurance company In 1992 �Big Six� members represented only 0.007% of registered companies but controlled 19.29% of capital 16.56% of assets 18.37% of sales

5. 5 Vertical Keiretsu Vertical type � large manufacturing company groups held together by capital ties Typically umbrella format Examples: Matsushita Hitachi Toshiba Tokyo Electric Power Toyota

6. 6 Vertical Keiretsu Commonly held together by capital ties long�term contracts financial and technological support Frequently spin off divisions to become separate companies linked to parent 1995 estimated suggested largest 30 groups were comprised of approximately 12,577 subsidiaries and affiliated entities

7. 7 Business related Keiretsu Business related - companies tied to groups by business relationships E.g. assembler � supplier relationships

8. 8 Highly protectionist activities Congressional Research Service report (1994) raises several international trade issues Keiretsu tend to buy from within their groups and may discriminate against other exporters to Japan Allegedly �Big Six� made 68% of their purchases from companies in which they had at least a 10% equity interest and bought only 5% from foreign unrelated companies Official figures are 15% inter-company purchases

9. 9 Highly protectionist activities Japanese transplant automakers, in particular, have relied heavily on their traditional Japanese suppliers who have followed them to their U.S. plants Keiretsu ties may provide an advantage to Japanese companies in developing new technology or in long-term planning Keiretsu distribution systems may discriminate against foreign producers in reaching the retail Japanese consumer Keiretsu stockholding patterns make the buying and selling of Japanese companies, let alone hostile takeovers, nearly impossible

10. 10 Keiretsu � trading links All Keiretsus have the support of a Trading Company (Sogo Shosha) These provide range of goods and services It is essentially the marketing operation of the Keiretsu But provides Links to financiers Customer and product intelligence

11. 11 Management features - 1 Lifetime employment Rigorous selection Recession has caused changes Temporary work Short-term contracts Job Rotation Increases motivation Makes workers more efficient Gives full insight

12. 12 Management features - 2 Seniority based promotion Strict hierarchical relationships Decision making process (Ringi) Nemawashi � sounding out at all levels Ringi Seido � deliberations at same level Just in Time (JIT) Maximum efficiency Cost reduction Efficiency Supplier relationships

13. 13 Management features - 3 Total Quality Control Quality is built into every process Inherent not external Quality Circles Groups of employees meet to identify and solve work-related problems Provides � Commitment Sense of ownership Improved communications Motivation

14. 14 Management features - 4 Kaizen � �the key to competitive success� Constant improvement Customer oriented Suggestion system US import Pervades all areas of work environment Not just cost

15. 15 Are there downsides to Japanese management? Is productivity improvement the result of cost cutting? Decision making processes impede creativity Once performance improvement techniques are made public all companies adopt them Japanese business culture is not transferable to western organisations Attempts to impose some of the cultural expectations on workers in UK plants owned by Japanese companies can cause friction

16. 16 The dark side of Japanese management in the 1990s Christopher B Meek � 2004 Jrnl of Managerial Psychology High commitment � low satisfaction Increase in Karoshi Ijime

17. 17 Incidents of Karoshi in Meek (2004)

18. 18 Japanese worker job satisfaction Whitehill & Takezawa (1968) asked about how central or important their commitment to their employer and their work was in comparison to other possible life priorities Statement, �I think of my company as the central concern in my life and of greater importance than my personal life,� 9 percent of Japanese respondents agreed 1 percent of American respondents agreed

19. 19 Japanese worker job satisfaction Statement, �I think of the company as a part of my life at least equal in importance to my personal life,� 57 percent of Japanese respondents agreed 22 percent of American respondents agreed only 8 percent of the Japanese agreed that they thought of their company as strictly a place to work and separate from their personal life compared to 23 percent of the Americans

20. 20 Potential reasons Ganbatte � willingness to work hard & unceasingly under extreme conditions Family oriented dependence � one looks to the family first for �comfort� Socializing effect that the outside world is to be feared The importance of not appearing foolish in front of others Company in the role of �family� � lifetime employment

21. 21 Fatally Flawed Management? Did Japanese management work because economically Japan was working? Incidents of karoshi and ijime increased at time of Japanese economic downturn Greater pressure on management to get more from workers Workers socialisation led them to accept� To a point Is western thought affecting worker conscience? Are attitudes changing?

22. 22 Karoshi in context? 37 year old engineer died of a stroke at work in 1987 � quoted in Meek My husband worked for an automobile company where his job was designing engines. For more than three years. . . he would leave home before 7 o�clock . . . and not return home until about 2:00 a.m. He worked on holidays as well . . .We got no workers� compensation from the company whatsoever because, although he died at work, he died of stroke and the workers� compensation applies only to cases of loss of limb while working with machines. Lately, when I think that if he hadn�t had to work so hard he would still be alive today and my children would still have their father, I can�t help but blame the company. Seeing our children grow up without a father is too much for me to bear. Our eldest son said; �Dad was stupid! He worked too hard all the time�

23. 23 The great management myth? Is Japanese management just a set of production techniques? Is �management� in Japan simply an application of societal norms transferred to the substitute family (ie the workplace)?

24. 24 Interview with head of KenwoodEconomist March 2004 Mr Kawahara is quick to stress that there are some tasks at which Japanese firms excel. Above all is a manufacturing philosophy that emphasises highly-trained workers, continuous efforts to eliminate defects, and lean production that minimises waste. In Japan's high-growth years, this was a world beater, so the country's management shortcomings did not matter much. Alas, he says, because of this success, business leaders "never needed to learn how to manage".

25. 25 The China Syndrome? If there was a Japanese management style that could work outside Japan Where would it be? China? Increasing academic interest in Japanese manufacturing plants in China

26. 26 Early thoughts In �Japan�s Reluctant Multinationals� Trevor (1983) divided up Japanisation process into hard and soft systems Fukada�s (1995) study of transferability suggests some transfer of techniques taking place. This looked at Japanese plants in China

27. 27 Taylor�s work - 1 Taylor (1999) studied production practices in Japanese manufacturing plants in China Plants represent Japanese manufacturing practices to reasonable high degree No common management practice No overall pattern in 20 cases We cannot meaningfully speak of Japanisation Production methods are adapted � profitably - to local and parent company circumstances

28. 28 Taylor�s work - 2 Looking at personnel practice in Japanese firms in China - Taylor (2001) The main findings were despite claims of cultural similarity (!!) between China and Japan, personnel management practices were generally not transferred from Japan to the plants in China practices that may appear as Japanese inspired were often informed by local practices there was diversity in the forms of practices used, indicating neither sophistication nor a singular recipe of management methods Hofstede scores Individuality Ch 15 � Ja 46 Power Distance Ch 80 � Ja 54