Research Topics: Japanese Management Style

Japanese Management Culture

Introduction             Theory Z is one of those ideologies originated from the Land of the Rising Sun.  It is characterized by combining the autocratic Theory X and democratic Theory Y with high regards to the principle of collaboration.  Its global prominence had helped not only eastern countries but also the western development.  However, the 21st century business management landscape is more complex and continuously changing and the requirement for every competitive multinational firm is to adapt to its environment.  It is seemingly a choice between evolvement or demise particularly those in the fast cycle markets.  In this view, this paper presents a descriptive insight to Japanese management culture in order for the reader to compare its relevance to the present international business happenings.  It can be said that being unique is a source of competitive advantage.  In contrast, failure of adaptation can also be the cause of declining market share.  For our purposes, the paper will show evidences of Japanese management system, while there is a short conclusion, the bigger picture of evaluation would come from the reader.                       The Japanese Management Culture             To be able to understand the Japanese management culture, there is a need to examine critical factors that affect its international concepts.  Time explained that the distinction of Orientalism from the West emerged in the last quarter of the previous millennium resulting to relative newness and individuality of culture.  Space, on other hand, showed the geographical location of Japan, which was influenced by China, before it reached the Western thought.  Lastly, language reflected the experiences culminated across history and different political and cultural regions.  As a result, crossing a different language like keiretsu, people would reinforce its sense, where in this case, both linguistically and contextually hard to decipher particularly on the Western perspective (2003).               In  analysis, US American managers have more individualistic tendencies than Japanese counterparts building a manager’s state towards conformity with his work with less emotional attachment to the company.  In contrast, Japanese managers are more risk averse to uncertainty than their US equivalents which is compatible to their relative formal lifestyle as high uncertainty avoidance put great emphasis to tried-and-tested methods.  Further, it is found that Japanese managers are more likely to be concerned on automatic respect for authority and hierarchy than US peers.  This likelihood is supported by American individualism and Japanese Confucian tradition for un-equality in the society.  As a result, the former would tend to act according to expectations while the other exhibits inherent regard to seniority and/ or being a male from young members which are considered learners.  However, this authority has consequent responsibility to guide the learners and giving license to the latter for more mistakes (2003).                In addition, Japanese managers take a long-term time orientation whereas US counterparts settle for interim phases which was invigorate by the trust put by the former to their nearest factor to control, human resources, which has known commitment and flexibility.  This then would offset the uncertainty factor illustrated earlier.  Next, Japanese managers have high-context communication than US peers which means that implicit information and silence are more tolerable.  In high-context environments like Japan, the information is already in the person.  As a result, social cohesion observed in Japanese corporate linkages is possible as the high-context communication requires face-to-face interaction to better know the personality of the communicators.  On other hand, US negotiators are irritated in the lack of clear information due to their reliance to individualistic capabilities.  In effect, communication difference alone suggests a number of implications to the varying approach between these managers ( 2003).   In human resources management, Japanese organizations emphasize three critical issues; namely, internal labor market, concern to employee needs, and cooperation and teamwork under unique firm environment.  In effect, these issues are translated into extensive training, participative decision-making, adaptive organization, competitive appraisal system and continuous consultation.  In this arrangement, the firm seeks to employ and retain applicants that can accept and blend in the values and culture of the organization.  Fairness is also a vital factor since white- and blue-collar employees has relatively small disparity in terms of benefits (1983).                As having one of the largest shares in terms of foreign direct investments (FDI) in the United States, there was a growing attention in Japan’s multinational enterprises (MNEs) and the contribution of their unique management style overseas.  In a study, it is found that Japanese service companies are discouraged to transfer this culture in the US due to highly competitive, significant turn-over figures and ambitions of the local labor market especially in the white-collar positions.  On the other hand, Japanese manufacturing firms are aided by the local government and the condition of relatively higher unemployment rate to implement their strict recruitment policies (1994).               The study also suggested that unionized subsidiaries are likely to detach from Japanese management culture at least in the aspects such as not wearing uniform, merit-based pay, promotions and performance-evaluation systems.  Further, the greater the dependence of the parent company to the US subsidiary or the higher the integration in terms of resources and capabilities between them, the greater the likelihood that the parent company will transfer its management practices to the US subsidiary.  In the conclusion, it is held that the gathered data showed the importance of administrative heritage and managerial beliefs in the success of the management culture transfer, while at the same time, enforcing it to political and cultural environment in the country including subsidiary’s values (1994).               The Japanese automobile industry had taken its vertical keiretsu to United States that had significant contribution for being the second largest FDI contributor in the United States.  This managerial framework involved interdependence and coordination with strategic links of ancillary manufacturers that partake activities in the value chain, including the competitors, at least to the non-financial resource flow issues.  Such provided Japanese manufacturers enhancement in there OLI (Ownership, Location and Internalization) paradigm wherein suppliers and other industry players had a fair share of the positive trickle down effect.  As a result, out of 106 links between supplier/ ancillary and core Japanese firms in the US, 97 of which were keiretsu affiliated (1996).                       In a study conducted to 446 first-tier Japanese automobile ancillary manufacturers, several findings were culminated about the factors that motivate/ discourage affiliate firms to invest abroad to serve the Japanese core firms.  It is found that keiretsu affiliation was the most dominant variable.  However, core firms were anxious about too much dependence to one supplier since competition and efficiency that can aid them in cutting costs would not be attained.  As a result, the survey from affiliate firms showed that their dependence to the core firm was not significant due to the fact that they were frequently preferred to be small and in great numbers.  Nevertheless, their presence in the US automobile industry and the inherent bias and preference to them from the core firms against local suppliers suggested that Japanese core firms did not want to risks its reputation and quality of its products, thereby, making keiretsu system a means achieve this end ( 1996)             The nature of the firms in Japan is more of a community wherein they are considered entities rather property who has reputation of its own apart from its compelling stakeholders.  Japanese firms are known to sustain long-term relationship with employees (due to lifetime employment/ seniority wage system) and suppliers (due to relational trading).  Also, whereas American antitrust law would apprehend non-competitive economic environment, Japanese firms situate their standing in the balance of competition and cooperation through non-competition in price rather advertising and sales.  This system is supported by the government’s relational regulation that aims to protect small- and medium enterprises, including consumers especially the poor although in minimal issues.  In comparing American and Japanese firms, the two conclusions cropped up; namely: the former is relatively transparent while the other is secretive and as the first the situation is the employee steals from the firm, the latter goes as the employee steals for the firm illustrated by the scandals of (, 2004).               However, these facts have slowly undergoing change.  There was the introduction of performance pay rather the seniority-constrained system.  Law sues against firm directors, overriding power of managers against shareholders (a move to property view) and weakening of trade unions.  In addition, community-like character of the firms had eroded since speculations in the stock market became the common theme of managers, the result of foreign investors’ speculation activities.  This is one indication that ownership of financial assets and money its can multiply have also disputed the previous fact that manager’s income came entirely from his salary (2004).                  In business dealings, Western sincerity means free of pretense and being honest without reservations.  However, in Japanese theme called Makoto, sincerity means properly discharging one’s obligations to maintain harmony.  In comparison, Japanese business dealings are preferred to be carried without disruptions which is deterrence to the though of being frank in Western ideology.  The latter emphasis on personal and subjective relationships in doing business has implication with a foreign-West partner.  Weaknesses and threats in the venture would not be thoroughly indicated as additional burden could be trapped in the Japanese net that will hinder responsibilities and strategic actions each side would do in case of its negative effects.  As a result, there is a need for the deal to be as formal as possible to eliminate personal factors that could undermine the objectivity of the relationship to the detriment of the competitiveness of the venture ( 2002).               The Japanese corporate model has ten inherent features.  High quality and low cost production which embraces the two-edge business-level strategy is the belief that reducing costs through elimination of defects, rework and delay could also enhance product quality in terms of consistency and timeliness.  This is intensified by multifunctional features and shorter life cycle of the Japanese products.  Lean production provided total quality control, continuous improvement, flexible manufacturing among others which allows workers to develop multiple skills as the situation of Toyota.  Employees are not only treated as assets but also made part of the firm community through the provision of rigid recruitment system, bonuses based on firm performance and participatory management.  Permanent employment guaranteed long-term jobs for employees including male being installed in the managerial positions in their careers and seniority-based compensation.  As a result, personnel department is highly respected, career development is workable, individual competition is diverted in corporate goals and unions smoothly coordinated with the middle-level management (2000).                Further, leadership by consensus promoted the harmony between formal and informal groups within the corporate structure.  As a result, highly standardized products (caused by the senior and older circles) have received considerable but gradual amount of innovation (caused by relatively young and energetic employees).  Strong inter-corporate networks through keiretsu affiliations is a promising business relationship wherein shareholders need not place their investments in the short-term fluctuations in the stock market rather invest it to other companies, banks and suppliers wherein capital and long-term gains can be obtained to sustained growth.  While US counterparts emphasized on attractive return on investment, Japanese firms’ number one priority is its pursuit of market share.  In effect, goals tend to be of long-term basis.  Lastly, internal and related diversification into high growth industries led Japanese firms to redeploy their treasured employees and keep a permanent ownership of assets for the shareholders ( 2000).                                                                 Japanese corporate governance evolves around obligation, family and concensus.  For local firms, obligation is stronger than other countries that entail returning a service for one that was rendered.  Family, the foundation of keiretsu affiliations, transforms the economic framework of firms into personal pursuits to be part of allegiance throughout corporations especially within the industry.  Consensus cripples authoritarianism of top executives in favor of winning the consent of the people even though this process results to slow and burdensome decision-making process.  In addition, banks play crucial capital roles for local firms, unlike US model of market-based financial structure, which involves not only credit facilities but also financial advice and performance monitoring.  Main-bank relationships are said to be the original stimulant for the emergence of horizontal keiretsu (2003).               The traditional values in Japanese management culture are individual recognition for effort and collective recognition for a job well done, advancement/ promotion bias on males and seniors, harmony in relations with line-managers and immediate supervisors, cooperation within groups, and employment security.  However, there are emerging challenges and issues against this traditional view.  In a recent case study, promising Japanese manager’s features are generally described as to likely resort to additional earnings for those who become dissatisfied to the current regimes and to finance quality of life (with family) that is willing to forgo employment opportunities.  Thus, security of employment is faced with an alternative in employment areas that have greater challenges and achievement for individual recognition and satisfaction for a job well done.  With Japanese managers realizing the need of self-esteem and personal achievement, risk-averse tendencies and reliance to job security and automatic promotion are becoming lesser significant (2003).    Conclusion             Can Japan compete?  This is a question that is suited to evaluate the importance of adaptation of Japanese management culture to the international trend.  For example, the traditional management practice of personal and face-to-face communication is pressured by the emergence of electronic platform as communication medium which is more efficient.  In addition, the social and cultural norms run counter to innovation and risk-taking that are considered as hallmarks of today’s competition.  As Japan proven its global presence not only to the US but to other developed and developing countries as well, the only way to continue the flame is the relaxation of cultural merits of business transactions.  Change, thus, becomes prominent.  The economic turbulence of the lost decade (1990s) could provide the motivation to do so.  Since its old model is internally consistent and integrated from the family to pillars of governance and business, a new strategy more adaptive to global trends is relatively easier to execute.                                                                                                  Credit:ivythesis.typepad.com

Japanese Management Culture

Introduction Theory Z is one of those ideologies originated from the Land of the Rising Sun. It is characterized by combinin...

Corporate Strategy

Honda Corporate Strategy   Introduction             Honda Motors, initially a maker of motorbikes, succeeded in becoming an automobile producer after all others, in the mid-1960s, by implementing a strategy of innovation and flexibility and by constructing an industrial model enabling it to avoid or limit the risks peculiar to that strategy. The firm’s success owed much to the mechanical and commercial imagination of Soichiro Honda himself. Based on the long-standing philosophy of, “building products in the markets where they are sold,” Honda now has more than 100 manufacturing facilities in 33 countries.             The successful Honda model as a whole could continue to function dynamically without strong high-technology challenges that engineers could meet in the form of automobiles that succeeded in the market. But still, there is a need for a continued search for ‘holy grail’ technologies that would be needed to make the Honda model work through the fast changing times. Notwithstanding Honda’s leading technological position in the world automobile industry, it remained to be seen whether the Honda research and development engineers could at last create a ‘breakthrough product’ which would translate this leadership into significant competitive advantage; there were now strong echoes of the late 1960s, which produced the CVCC engine. If there was to be no such breakthrough, a key element of the industrial model that had guided Honda’s trajectory for fifty years would remain unproven.             The aim of this paper is to carry out a critical analysis and evaluation of the strategies adopted by Honda Motors to date, with the information provided and other materials researched.   Context             Honda was unusual in having already created an industrial model by the time it entered the automobile industry. Twelve years after it was founded in 1948, Honda had become the world’s largest motorcycle manufacturer, on the basis of a strategy which focused on product innovation and production flexibility and on the mass production of products which had in effect opened new market segments.             Other non-Japanese carmakers ask: why do the Japanese learn better from experience than we do? Is it because they stress company wide continuous improvement? For example, Japanese executives worry less about whether overhead allocation reflects the precise demands that each product makes on corporate resources than about how it affects the cost reduction priorities of middle managers and shopfloor workers. American executives often dismiss Japanese management accounting techniques as misguided, or even simplistic (1995). Yet, these same Japanese management styles were the ones that helped Honda become successful in today’s fast changing world.             The issues that Honda handled so successfully are the central questions of strategy. Honda had to consider what markets to enter, how to position their products within these markets, how to build relationships with dealers and component manufacturers. The subject of strategy analyses the firm’s relationships with its environment, and a business strategy is a scheme for handling these relationships. Such a scheme may be articulated, or implicit, pre-programmed, or emergent. A strategy–like that of Honda –is a sequence of united events which amounts to a coherent pattern of business behavior ( 1995). The firm’s success owed much to the mechanical and commercial imagination of Soichiro Honda himself. His associate, Takeo Fujisawa, who was in charge of the organization and its finances, had been concerned from the start to find the resources needed to overcome the difficulties inherent in this profit strategy. Besides loss of capacity to innovate over the long term, the risks of the strategy included of course the inevitable failures, the over- or under-estimation of demand and the refusal of investors in banks to finance projects. Industrial models which are to be consistent with part of a strategy of ‘flexibility and innovation’ must therefore give the firm the resources to counter these risks or reduce their impact (1998).             As a means to encourage creativity and get flexibility accepted, Honda and Fujisawa developed a company compromise which was not dependent upon group spirit and loyalty as at Toyota but rather on the recognition and gratification of individual talents as well as good work and employment conditions. Inventiveness and expertise were first valued by a promotion path and wage scale, named the expert system, which ran in parallel to the traditional lines and scales. This seemed a good idea since reliance on promotion has affirmative incentive properties because workers can anticipate that differential talent and degrees of cooperativeness will be rewarded (Druker & White, 2000)             By 1967 Honda had become a proper car manufacturer. It opted for an innovative automobile niche and exportation in order to create a place for itself among Japanese producers. Given that Honda cars were seen as practical and fuel efficient, the company was ideally positioned to exploit global (and, above all, US American) markets during the 1970s oil price crises (2003)             Honda also had a strategy consistent with the Japanese mode of growth, although for other reasons. Honda had chosen to respond to new types of demand and to export its products as the means to stake its place as an automobile manufacturer. Its export success was due in part, of course, to competitive prices and to the quality of its cars, but more so to its innovative car model, the Civic, of which 3 million units had been produced by 1982. Honda was able to expand its range to six models without commonizing their platforms, to give each its own clear personality. By 1985 it exported or produced abroad 63.4 per cent of its worldwide production. Before being obliged to invest in the USA to increase its sales, Honda had already decided to do so. The company made its first cars in the USA in 1982 ( 1998). For its part, Honda continued to seek ways to maintain and indeed increase its capacity to innovate and to make its production apparatus more flexible. In particular, Honda decided always to seek two solutions to the same problem, so as not to become prisoner to a premature decision. Conversion of its production lines to other models was made easier, and the principle of producing homogeneous lots of thirty to sixty vehicles was retained (1998).             Honda claims to have a ‘human-centered’ approach to work, less rigid in defining standard operations than Toyota. Employees rotate tasks; indeed they must be flexible, changing posts, models, departments, and product types. But the HPS does not rely on unplanned long shifts to make up lost production. When needed, Saturdays are used. Working hours are the lowest in the Japanese automobile industry (1998). Focusing on employees is a good strategy. Employees after all are the backbone of a company, and without them it is impossible for any company to succeed (1987). Employees at Honda Motors were therefore viewed as a ‘fixed’ asset, consistent with the ‘flexi factory’ operations strategy.             Honda also continued to promote individualism, youth, and a certain equality while Japanese culture emphasized the opposites – groupism, respect for age, status. The constant theme at Honda remained how to overcome the organizational rigidities that Japanese culture was believed to foster – ‘big business disease’ (1998). Honda the business leader appears to have a contemporary and dynamic appeal. Striking remains the extent to which his and his company’s approach to business and management – and indeed to life generally – so contradict many of the stereotypical images of Japanese management styles (2003). Yet conditions of employment at Honda remained typical of other large companies in Japan (with the notable exception of fixed working hours in the factories), and were still viewed as consistent with Fujisawaism.             There are two views on Honda’s achievement in the U.S. market. In one, Honda‘s strategy was an archetype of Japanese penetration of Western markets. The aggressive pursuit of domestic volume established a low-cost base for expansion overseas. This was the conclusion of a Boston Consulting Group study for the British government. A rather different account was given by Richard Pascale, who went to Tokyo to interview the elderly Japanese who had brought the first Honda machines to the United States. As they recalled it, Honda had aimed to secure a modest share of the established US motor-cycle market (1995).             In Europe, by contrast, Honda’s strategy required few resources. There were persistent problems in Europe. Honda found it difficult to understand the subtle differences among European markets. Further, unlike their American counterparts, European competitors already offered high-quality, small, and low-cost products (though not always in the same vehicle). These factors, combined with lower levels of Honda sales in Europe (11% of global turnover in the early 1990s) than in Japan (33%) or North America (43%), meant that fewer resources were devoted to product development for Europe. Rover entered into collaboration with Honda in order to secure new model designs and engineering capabilities without which it could no longer survive. Honda’s main interest in the collaboration was more offensive, seeing Rover as providing a bridge into the European market. Moreover an alliance which starts off with primarily defensive intentions can become offensive in nature if it is successful in the market (1998). The latter is an alliance in which each partner possesses expertise, information, or skill which is of value to the other, an example being General Motors’ cooperation with Toyota on lean production manufacturing in the USA which benefited the latter’s access to the American market. Applying the logic of game theory, Kay concludes that, in a common objective alliance, cooperation is a dominant strategy for both partners–it pays both partners to put the maximum effort into attaining the common objective. In the case of a mutually beneficial-exchange alliance, however, the dominant strategy for both partners is to hold back–in other words, to get as much as possible while giving as little as possible ( 1998).             The key to the Honda new system was ‘single status’ employment, in which all employees shared the same uniforms, parking lots, restaurants, and private health-care. All offices were open-plan and many had windows so that they could be viewed from production areas. All production workers were placed in one category (with separate categories only for maintenance workers and team leaders) and received the same wage with no allowance for seniority, job done, or individual merit. This un-Japanese system was consistent with Western principles of equality. Consistent with Fujisawaism, it reduced obstacles to managerial authority, individual initiative, transparency of merit, and open communications. Also consistent with Western ideologies, there was a measure of democracy. Workers voted on the organization of the working day (breaks, leaving hours), holidays, and when to make up for any lost output. A panel of production associates reviewed management dismissals of workers and had the power to reinstate; one in five were reinstated. More challenging than getting American workers to accept this system was to ensure that American managers could work in it (1998).             Honda’s practice is explored along numerous dimensions of corporate globalization—localization strategies: products, research and development (R&D), production, parts sourcing, production methods, employees, and so on. There is some localization of R&D, as in product design appropriate to particular local road conditions, but basic research and product technology have been retained in Japan. There is some localization of production with respect to particular markets, but some production is also for markets elsewhere, depending in part on the global output of particular models. Disaggregation of the different dimensions themselves also helps in understanding parts sourcing strategies: in the United States and in general, the more sophisticated parts, like the electronic, are brought in from Japan. And while hard technology and organization have been globalized, local incentive structures are molded significantly by on-site managerial staffs with the local cultural environment in mind (1997).             There is, in brief, a pattern of what is called as “strategic localization,” rather than the melting away of national boundaries foreseen by the more vigorous of advocates of a new globalized economic geography. National-specific practice remains significant. Some aspects of production have been globalized and others are less so (1997).             The globalization model is represented by the “world product” (for instance, “world car”) concept, in which the same product is produced for sale in all (or at least many) world markets. The alternative localization model involves production of distinct products for each market, which was the traditional pattern in the automobile industry (1997).             In this process of creating a global local car, similarity of design lines and sharing of components is taken as far as possible. The various aspects of car design are logically separated into (schematically) (1) the power train technology (engine and transmission), (2) the engine compartment (which gives the dimensions of the front of the vehicle), (3) the basic design shape (aesthetics), (4) detailed aspects of seats, suspensions (handling characteristics), and (5) other expensive components like instrument panels and exterior lights. The engineering and managerial puzzle, and hence the key issue in the strategic localization of product design, is to put all the pieces together for each local market in a way that both meets requirements in that market—fitting the demands of localization—and also permits economies of scale and acceptance of the product in other Honda regions—fitting the demands of globalization. Thus an American model, for instance, may share power train technology and expensive components with a Japanese model but differ in all other respects. Or a European model may share everything but handling characteristic components and minor style cues with a Japanese model (1997). Until the late 1980s, Honda adopted a strategy of conquering the “most difficult” markets first with its automobiles, in the expectation that the others would follow “naturally” (2003). The company’s view was that the United States was the most difficult market in the world until the mid-1980s, and that Japan took its place in the late 1980s. Far from creating a post national company, strategic localization at Honda has meant the adoption of a series of new nationalities, as suggested in the citation from Honda itself. Some of these nationalities are themselves being reinvented along the way, delivering that cutting edge of sociopolitical and economic change for which multinational enterprises have long been well known. Set against this deeper understanding, simple and reductionist ideas about post national enterprises and global corporations operating in borderless worlds do not offer very helpful interpretations of Honda’s international strategy. Moreover, other potential routes to globalization of operations, such as the “world car” and global sourcing strategies pursued by some of Honda’s Western rivals during the 1980s and 1990s, have run into serious difficulties. Honda’s new global local corporation, by contrast, helped the company to weather the storm caused by the collapse of the Japanese bubble economy in the early 1990s ( 1997)             Honda therefore built effective strategies in support of their competitive strategies. Honda has not only extended its distinctive capability into other markets but has added new distinctive capabilities. Honda has added reputation to its critical distinctive capability. By specializing in engine technology, it has achieved some success in innovation as well. The company has chosen a positioning somewhat up-market of its principal Japanese rivals, and supported its entry into most major geographical markets with a plant in the United States and an extensive relationship with Rover in Europe (1995).             Many works describe the application of systems theory to production planning. Based on works, authors group organizational problems into four kinds. Its principle is that an organizational problem may result from having erroneously specified either one of or many among the output of the system, the input to the system, the production process itself, or even the entire system. Within a firm, problems can occur singly or in combination as well as within specific organizational tasks, such as quality control. This grouping scheme can help managers and planners characterize most business problems (1995).             Managers have some idea of what’s hooked up to what among the variables pertinent to a firm’s strategic situation. This knowledge constitutes their mental models of the connections among variables as well as among variables and their consequences. Yet, the dynamic consequences or implications produced by a system’s causal relationships are virtually impossible to predict through simple observation. Managers need tools to help them gauge the assumptions that underlie their mental models about the future (1995).             To improve Honda’s decision quality, they became more aware of their assumptions, including assumptions about the way strategic variables are affected by and cause changes in other variables over time. The resulting confrontation between devil’s advocates and proponents of a particular system structure that causes a dynamic behavior pattern becomes a learning experience for Honda Motors. Institutional learning opportunities abound when rational confrontation becomes lively in a team because of an analytical approach ( 1995).             To encourage and to make learning an integral part of management technology, we must lift our sights from the short term. To design strategy, we must learn to search for and to identify patterns of change over time. To practice strategy design and to act proactively, we should replace our transaction-driven calculus with scenario analysis. Learning is not a luxury; it is how firms create their own future. Creating the organizational capability of and ambiance for learning will lead to a truly sustainable advantage.             Both the mind-set of scenario-driven planning and the emerging understanding in the strategic management literature contend that, to speed up institutional learning, we must articulate our mental models through formal analysis. A recent article argues that formal analysis of managers’ cognitive maps will help them to overcome personal assumptions and to assess possible ramifications ( 1995).             A product’s Market Perceived Quality is a driving force that increases market share. They further it is argued that when superior quality and large market share are both present, profits are virtually guaranteed, changing the “competitive positioning” of the product (1994).             To increase its aggregate market share, Honda introduced high-quality, high-priced Accura models through dealers different from those that handled its regular Honda models. Other Japanese automakers are now emulating Honda’s example. Japanese auto makers are successfully competing with European auto makers like Mercedes Benz and BMW, thus getting a lead in their market positioning.             A company like Honda with widely recognized and appreciated brand has positional advantage over other companies in the automobile industry whose brands are weaker. A strong brand lets the firm command premium shelf space, wider customer attention, and higher prices (2002). A company such as Honda which is with an established reputation for “fair trading” and consistent high quality has a positional advantage over firms whose customers think that the firm is being opportunistic. These are just some of the many factors that give Honda its competitive marketing advantage. Since the inception, Honda used one of the most competitive strategies in order to increase market share by having a first mover’s advantage in the development of core products using their core competency in engine technologies.             Many of the changes that have taken place in the strategy field of Honda Motors have been a matter of shifting attention between external and internal analysis, and it has been a characteristic of most approaches to strategy that they have primarily emphasized either an externally oriented perspective or an internally oriented perspective. Honda also focused on developing its internal resources.             To the essentially conservative posture of the responsible leader there is a concern for change and reconstruction. This creative role has two aspects. First, there is what is called the ‘institutional embodiment of purpose.’ Second, creativity is exercised by strategic and tactical planning, that is, analyzing the environment to determine how best to use the existing internal resources and capabilities of the organization (1997).             Honda’s expertise in engines gave the company an opportunity to be able to exploit this core competency to develop a variety of quality products from lawn mowers and snow blowers to trucks and automobiles.             There are three factors to identify the core competencies in any business. First, a core competence provides potential access to a wide variety of markets. Second, a core competence should make a significant contribution to the perceived customer benefits of the end product. Finally, a core competence should be difficult for competitors to imitate (2002).             To explain further, Honda’s expertise in engine technology as a core competency satisfies all the above three factors. Honda used their expertise in engines to come up with gasoline engines for different industries such as automobiles, motorcycles, boats, and generators. To top all of that, Honda’s reputation satisfies the third factor which makes hard for competitors to keep imitating.             Conclusion   Many industry observers have wondered how Honda is able to respond to the increasing competition it constantly faces from traditional rivals and new start-ups. The answer sounds relatively simple – through its strong and effective corporate strategy. It may sound simple but it definitely is not. The Honda models underwent crisis was real, but was due largely to one vital element; and other elements in fact helped Honda overcome the crisis. Most significant is that the element in crisis was the one most associated with Mr. Honda: the self-image of a company led by product technology and sporty vehicles. Fujisawaism with its organizational creativity and flexibility, the HPS with its flexible mass manufacture of high quality cars, and the global local corporation with competitive advantage from global interaction between local production and marketing bases all triumphed.             How Honda was able to survive through all the years despite strong rivalry and competition from other Japanese and Western automakers can solely be attributed to their corporate strategy. Honda built effective strategies in support of their competitive strategies. Honda has not only extended its distinctive capability into other markets but has added new distinctive capabilities. Honda has added reputation to its critical distinctive capability. By specializing in engine technology, it has achieved some success in innovation as well. Honda the business leader therefore appears to have a contemporary and dynamic appeal   Credit:ivythesis.typepad.com

Corporate Strategy

Honda Corporate Strategy Introduction Honda Motors , initially a maker of motorbikes, succeeded in becoming an autom...

JAPANESE MANAGEMENT TECHNIQUE

Japanese Management Technique The Japanese technical and management skills are the reflection of its culture. Japanese management’s one type of strategy is based on the education and training services (, 2006). It is like the combination of the cultural awareness in an informative-technological way. The Japanese Management Practices The Japanese Management was rooted in other historical traditions. Some of the key practices associated with the Japanese Management Techniques are the in-house training of managers, consensual and decentralized decision-making, extensive use of quality control methods, work standards, emphasis on creating harmonious relations among workers, and lifetime employment and seniority-based compensation. Management Education The education of managers in Japan traditionally takes place on a relatively informal basis within firms. Many firms viewed that undergraduate education is not a means of attaining business skills, and firms based their hiring decisions less on a recruit’s knowledge than on general attributes such as character and ambition. Firms believe that they do not hire to fill specific occupations but rather, recruits are expected to handle their specific roles within the organization. The early training of management recruits involves the middle-level and senior managers to serve as teachers and role models, which is often called as the mentor system and is widely used. The emphasis on in-house education is related to the traditional lifetime employment system in which an employee will be hired after the graduation and would stay in the firm until retirement. The lifetime employment system makes it probable that a firm will benefit from its investment in training, and also enables the firm to develop long-range plans for the training recruits. The management training is based on the broad range of a firm’s operations and the recruits may also begin their careers as ordinary works on a production line. It is part of understanding the details incorporated in the whole management and through time, attain a rich general knowledge of the firm.  Japanese managers typically take a more long-tem interest in their firms that result of the lifetime employment and seniority systems. This long-term view of the Japanese is based on sources of finance and focused on productivity, growth, and market share, whereas the other foreign firms are concentrated on the profitability. The decision-making of the Japanese are decentralized unlike the foreign firms. Both middle and senior management serve as directors for which they turn down the idea of incorporating the decision with the board of directors. In this case, Japanese directors typically retain production-line responsibilities which represent another face of a strong production orientation of Japanese management. Toyota From product development to supplier relations and distribution, Toyota is a winning car manufacturer for over the years and nobody delivers the same way as they do. In fact, the car manufacturer is open for tours, including their competitors, and not worried about the threats or sabotages.  Despite the years of imitation, nobody has succeeded to displace Toyota as the world’s most proficient auto company. Mercedes-Benz introduced its sophisticated engineering, Honda is equipped with its engine technology, and Chrysler together with its functioning design and style, still Toyota sets the standard efficiency, productivity, and quality ( and , 1997). Inside the plant, the success depends on highly experienced managers working unselfishly with a motivated, well-trained work force. Outside the plant, it requires a network of dedicated, capable suppliers that can run the operations completely. For all its success overseas, Toyota hasn’t developed a single facility that is efficient but the company is working hard to answer the production system globally. Japanese Management Techniques on Toyota The productivity and continuous improvement of the Toyota makes the company as an effective leader in auto manufacturing and competition. Maybe this is the main reason why does nobody can imitate the production of the Toyota, although many engineers took the years with them and left to serve other companies. It may appear simple to maximize the flow of production, eliminate waste, and respect the people, but Toyota’s concept requires blood, sweat, and tears for implementation and coordination of the requirements. Toyota’s assembly facilities can be described as having three levels: techniques, systems, and philosophy (  and , 1997). Unlike the other car manufacturers, workers tend to overproduce to reach their quota but on Toyota, overproduction is the worst scene of waste. To work without process is not valued by the customers and it will make the company loose its competence. The company is open for any product innovation but the concentration in making the production more efficient is the basic requirement. Potential Pitfalls Indeed, for the global ambitions of Toyota, they make it hard to incorporate by the outsiders for they are Japan-centric Company ( and , 1997). To the outsiders, there is so much criticism that evolves in the Japanese Management Techniques and this criticism might contribute in the traditional employment of the Japanese as well as in its success (, 2001). The dictation of different management theory that tries to measure the supremacy and competitiveness of the Japanese ideas is a threat to the management skills and techniques. Conclusion One of the big problems that the foreign car manufacturers face is the lack of well-trained local managers, while Toyota’s Japanese plant managers typically have 20 years of experience. With the combination of superior skills in all critical areas in manufacturing, engineering, and marketing, Toyota leads the market throughout the competence. Senior officers took over the years to master the art of car manufacturing and deliver it to the market with so much promise. Western Companies rely too much on the power of the banks and their shareholders that leads to an unstable business because they depend on the stock market, investment and currency. While Japanese are very serious in their internal labor market, even though a company experienced recession they will still survive in the competition with an organizational slack. References: Credit:ivythesis.typepad.com

JAPANESE MANAGEMENT TECHNIQUE

Japanese Management Technique The Japanese technical and management skills are the reflection of its culture. Japanese management’s one ...

The effects of Kaizen management and practices on organizational performance

The effects of Kaizen management and practices on organizational performance Kaizen is  the Japanese strategy of continuous improvement.  The direct translation of the word Kaizen from Japanese to English is improvement.  There are two components in Kaizen management- maintenance and improvement.  The objective of the maintenance function is to maintain current technological, managerial, and operating standards whereas the improvement function is aimed at improving current standards.  (Kotelnikov)  Japanese companies distinguish between innovation and Kaizen.  The foundation of the Kaizen method include 5 elements: 1.    Teamwork 2.    Personal discipline 3.    Improved morale 4.    Quality circles and 5.    Suggestions for improvement Out of this foundation three key factors in Kaizen come up: 1.    Elimination of waste and inefficiency 2.    The Kaizen five-S framework: a.    Seiri- tidiness b.    Seiton- orderliness c.    Seiso- cleanliness d.    Seiketsu- standardized clean-up e.    Shitsuke- discipline 3.    Standardization Kaizen management is good management practices.  The success of this model has very little to do with cultural factors hence it is applicable to all companies who are willing to adopt this practice to better their company’s performance.  Everyone in the company needs to adopt the 3 principles of kaizen in order to make it work. Kaizen can be formatted individually, within a small group, a large group, or as a suggestion system. Toyota Production System is well known for utilizing kaizen. Within Toyota, all personnel is expected to stop moving production lines if there is any slight notification of abnormalities. The employee is then expected to suggest an improvement to resolve the abnormality (this initiates kaizen). Toyota has several small groups work at improving their area for productivity and overall efficiency. The group is overseen by a line supervisor who reports to upper management. Within Toyota kaizen delivers small improvements that add up to make larger improvements. This is why kaizen is called a “continuous process improvement” system or a “continual improvement“. According to business knowledge source.com, management is in charge of maintenance and improvement within the company. Maintenance is about maintaining the current managerial, technological, and operating standards. Improvement focuses on improving the current standards. With kaizen thinking, the maintenance function will establish a set of rules, policies, directives, and standard operating procedures. From here, management must make everyone work at following the standard operating procedures. Typically this assignment is given to human resources to develop a letter that will site discipline for failure to adhere to the standard operating procedures. As far as improvement goes, management will always towards revising the current standards and establishing better ones. Kaizen uses small improvements over a specific period of time and result in coordinated continuous efforts by every employee at the company. Quick and Easy Kaizen  (or Mini-Kaizen) is aimed at increasing productivity, quality, and worker satisfaction, all from a very grassroots level. Every company employee is encouraged to come up with ideas – however small – that could improve his/her particular job activity, job environment or any company process for that matter. The employees are also encouraged to implement their ideas as small changes can be done by the worker him or herself with very little investment of time. (Kotelnikov)  Some companies have taken a quick and easy approach to kaizen. Mini kaizen still aims at increasing productivity and quality, but it also works at improving the satisfaction of workers. This methodology teaches that every employee should be encouraged to come up with new and innovative ideas, no matter how big or small they are. These ideas should directly improve this employee’s job, whether it is the job environment, job activity or another company process. The employee is then encouraged to implement their ideas as a small change. This change should be done by the employee, with a minimal investment of time. The reason many companies have adopted mini kaizen is because it encourages the development of their employees along with the reduction of waste. Mini kaizen teaches employees to grow within the company. Though the mini kaizen ideas are small, with each employee implementing one idea, the cumulative effect is remarkable.   References: Continuous Process Improvement- The Kaizen Approach: Extended Entry.  Business Knowledge Source.com  Retrieved 7 June, 2011 from http://www.businessknowledgesource.com/manufacturing/continuous_process_improvement_the_kaizen_approach_extended_entry_026152.html Kaizen philosophy and Kaizen method.  Value Based Management.net.  Retrieved 7 June, 2011 from http://www.valuebasedmanagement.net/methods_kaizen.html Kotelnikov, Vadim.  Kaizen.  Retrieved 7 June, 2011 from http://www.1000ventures.com/business_guide/mgmt_kaizen_main.html Credit:ivythesis.typepad.com

The effects of Kaizen management and practices on organizational performance

The effects of Kaizen management and practices on organizational performance Kaizen is the Japanese strategy of continuous improvemen...