GROUP CASE 2: MABUCHI MOTOR CO' INC'

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GROUP CASE 2 MABUCHI MOTOR CO. INC.
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WHY THE DECLINE IN THE NUMBER OF JAPANESE
EXPATRIATES?

• Increased number of Japanese subsidiaries
• Demographic shift in Japan
• Performance advantages associated with using
  local managers
• Cost
• Increased supply of qualified local managers
• Dismantling of rice paper ceiling

• Local government preference for local managers
• rank and file preference for local managers
• Easier to manage from a distance
• Parent companies have gained more experience with
  skill/technology transfer

3
WHAT ARE THE KEY ELEMENTS OF MABUCHIS STRATEGY
STRUCTURE?

• Centralized management control
• Strong head office/subsidiary manager
  interpersonal relations
• Multiple locations
• Business strategy
• Single product focus
• Minimize costs of production
• Maintain consistently high quality output at all
  factories through standardization of best work
  practices procedures
• Diversify market segments, geographic markets,
  production location

4
STRENGTHS OF MABUCHIS STRATEGY STRUCTURE

• Qualified senior management
• Low costs of production
• Quality control
• Diversified strong market positions in
  established growing markets
• Good reputation early leader in small motors
• Good fit between organization structure
  competitive environment

5
WEAKNESSES OF MABUCHIS STRATEGY STRUCTURE

• Limited scope for continued expansion with
  existing managerial capacity
• Relative difficulty in transferring Japanese
  management style across cultures
• Ramifications continued growth will be
  difficult long term problem is new competitors
  allowed to establish themselves or if existing
  competitors were allowed to grow in strength

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WILL NIHAO CHANGE MABUCHIS STRATEGY STRUCTURE?
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JAPANESE MANAGEMENT OVERSEAS

• Japanese firms more expatriates than firms from
  other countries
• Manufacturing subsidiaries average of 4 Mabuchi
  had almost double
• Electronics industry mean was 5.03 Mabuchi had
  7.64
• Overall average in Asia 3.25 Mabuchi more
  than double

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COMMON PROBLEM FOR JAPANESE SUBSIDIARIES
INSUFFICIENT MANAGEMENT RESOURCES

• Belief Japanese management system is so unique
  that it cannot be easily transferred overseas
  because these processes of management are culture
  bound

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HUMAN RESOURCE PRACTICES IN JAPAN FOR MANAGERS
(MALE)

• High wages based on seniority (including
  substantial bonuses)
• Structured managerial career paths
• Employment security (for regular employees)
• Company-sponsored welfare systems (I.e.
  subsidized housing, recreational facilities,
  etc.)
• Wide involvement of middle management in decision
  making

10
HUMAN RESOURCE PRACTICES FOR LOCALLY HIRED
MANAGERS OUTSIDE OF JAPAN

• Prevailing market rates no attention paid to
  seniority bonuses rarely paid
• Employee welfare system usually absent future
  of employees depended upon the market performance
  of the subsidiary

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MABUCHIS RECORD OVERSEAS

• Firm desired to offer job security
• Established bonus system modeled on its own
  Japanese program
• Welfare system offered only the basic benefits
  required by Chinese law
• Lower management not involved in decision
  making

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POTENTIAL OF NIHAO TO AFFECT MABUCHI

• Program intended to enable the firm to maintain
  its strategy of
• minimizing costs
• occupying the maximum competitive space
• Allowing continued diversification of production
  locations
• Impact upon the firm
• Expectations from the local managers
• Communication problems since Japanese are not
  very bilingual
• Possibility of ties weakening between head office
  subsidiary

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WHAT ALTERNATIVES TO NIHAO WERE AVAILABLE?

• Increase recruitment of Japanese managers
• Reduce requirements for expatriate managers
• Alleviate pressure on cost control
• Diversify upstream, out of small motors

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ARE THESE ALTERNATIVES CONSISTENT WITH MABUCHIS
CORPORATE STRATEGY?
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IN 9/1995, WHAT SHOULD MABUCHI DO?
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WHAT HAPPENED?

• The market for small motors continued to expand
  rapidly
• Decision implement NIHAO one plant at a time
• As local managers took on greater roles in
  inter-subsidiary communication, language became
  more of an issue
• Difficult issue local manager commitment to the
  goals of the head office

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ASSIGNMENT FOR 13/2/2007

• TOPICS
• Organizational Cultures Diversity
• Cross-Cultural Communication Negotiation
• ACTIVITIES
• A Good Faith Effort Is Needed
• Case Johannes van den Bosch Sends an E-mail
  Receives a Reply

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CLASS ON 15/2/2007

• THE INTERNATIONAL COLA ALLIANCE (pp. 540-543)
• Class divides into groups of countries
• Outside of class meet for steps 1 and 2
• Steps 3 4 will be done in class