CHIBA INTERNATIONAL INC.

A Case Analysis

Submitted By Anupam Gogoi 27 Anurag Mishra 29 Arjun Monga 30 Ashwini G Bhat - 36

EXECUTIVE SUMMARY The case on Chiba International Inc. deals with the challenges faced by a Japanese companys 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 Johns desire to translate the companys 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.

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. LEADERSHIP AND MOTIVATION Analysis of Leadership in Japan and USA A comparison The USA and Japan have a long economic and political relation with each other; it is natural for an exchange of values and beliefs to take place. William Ouchis Theory Z, which combines Japanese and US assumption and approaches, a comparison of seven key characteristics, can be drawn. On the one hand Japanese leadership approach is heavily group oriented, paternalistic, and concerned with the employees work and personal life, and on the other, US leadership approach is the opposite. DIMENSION JAPANESE APPROACH AMERICAN APPROACH

Employment (Uncertainty Employment for life; layoffs Usually short term; layoffs avoidance) Evaluation and promotion are rare are common

Very slow; big promotions Very fast; those not quickly may not come for the first 10 promoted years often seek

employment elsewhere Specialized via group Carried out by the individual manager

Career Path

Job rotation out

Decision Making (Power Carried distance) Control mechanism

decision making

Very implicit and informal; Very explicit; people know people rely heavily on trust exactly what to control and and goodwill how to do it

Responsibility Concern for employees

Shared collectively Managements

Assigned to individuals concern Management concerned with

extends to the whole life, the individuals work life business and social only

Based on the cultural dimensions, the following observations can be made with respect to leadership in both these countries US: Low context, Low power distance, high individualism, masculine, low uncertainty avoidance and short term orientation. Thus, the US leaders use participative and supportive leadership, and implement reward and punishment Japan: High context, High power distance, moderately collectivist, more feminine, low uncertainty avoidance and long term orientation. Thus, the Japanese leaders use supportive and directive leadership, and implement only reward system. Analysis of Motivation in Japan and USA A comparison VALUES IN JAPAN National service through industry Fairness VALUES IN USA Belief in the best Belief in the importance of details of execution Harmony and co-operation Belief in the importance of people as individuals Struggle for betterment Courtesy and humility Belief in superior quality and service Belief that most members of the organization must be innovators Adjustment and assimilation Belief in the importance of informality to enhance communication Gratitude Explicit belief in and recognition of the importance of economic growth and profits

In affluent countries like Japan and USA, most citizens generally satisfy the lower level of biological and safety needs. Thus, they need to focus on meeting higher levels of ego, social and self-fulfillment needs Based on these characteristics, the following observations can by drawn from Chiba Internationals motivational practices 1. The companys philosophy has the potential to increase the motivation of the employees as it encompasses all the elements that are dear to the Japanese country (Japan is called the Land of the Rising Sun), industry, customer, and more importantly the passion and commitment of the employees to be the industry leaders. 2. The Management Philosophy and Management Policy also emphasize more on group effort and goals for the whole group. Since Japan is a collectivist society, this would be a motivational factor. 3. Affiliation needs, in terms of co-worker support works well as a motivator in Japan. 4. The sales quota set after mutual agreement with the employee and supervisor is the basis for measuring good performance against goals for a merit increase the next year. 5. Quality and hence customer service was an integral part of the company philosophy.

Although the motivation practices can be made to work in US, some adaptation is required. Although both are developed economies, the way they perceive business and all its aspects differs. For example, the USA is low on uncertainty avoidance, while Japan is diametrically opposite. Thus, in the process of the whole understanding and imbibing of the company

philosophy and culture, an US employee might feel frustrated due to lack of growth, and may start looking for options elsewhere. Since job security is almost a given in the developed economies, the main need that has to be satisfied is esteem to a certain extent, but for most parts it is self-actualization. Also, Japanese would respond well to group affiliation needs, more than the Americans. The reason for this is the highly individualistic nature of the American society. They are more interested in individual accomplishment, remuneration and power. They

welcome more responsibility, as it is seen as an indication of power, which creates conflicts in

the collectivist Japanese workforce.

Also, high uncertainty avoidance implies consensus

becomes paramount, and people tend to avoid conflicts. Japan is a high context culture, while US is a low context culture. This plays an important role in communication to the varied workforce. Chiba has faced issues in dealing with the Americans who form the salesforce. While they have an arrogant take-it-or-leave-it attitude, Japanese serve the customer needs, and make the customers feel important. For this, Chiba came up with the SALES motto that focused on sincerity, ability, love, energy and service. In terms of recruitment and selection, Chiba has to recruit people, and train people internally, rather than look at skilled workforce from outside. The important aspect of training would be quality control in general, and zero defect theory, in particular. This has helped them in attaining productivity levels on similar lines as Japan. Since American companies do not emphasize on this, it is observed that Japanese principles do work in America as well. Also, it is an extension of the business culture; we can say that Japanese practices can be implemented without much adaptation. Chiba also on its part is doing its best to consider the better of the two worlds, as seen in the analogy of Japanese and Chinese swords. philosophy. JAPANESE PRACTICES IN AMERICA Chibas 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 wont be much of a problem. Thus, they have accepted the differences within a shared

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-ofwork 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. Chibas 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. Chibas 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 cant 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.

CULTURAL DIMENSIONS

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 wont 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 wouldnt 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 dont 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 wouldnt 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 wont 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. JAPANESE MANAGEMENT APPROACH A CASE OF CHIBA There are some approaches of Chiba which are very 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. Chibas financing depends on debt only to the extent of 20%. Its 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. Chibas 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 dont 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. Its 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 ZenDefilement 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 companys philosophy according to the environment they are working in.