|
Paper within International Management
Authors: Lauris Ancupans
Lynne Wallin
Tutor: Anette Risberg
Jönköping May 2000
|
1 Introduction
Nowadays,
globalisation is catching every single enterprise as a spider catches a fly in
its’ web. As being a big company since it’s birth through merging several
companies, Nissan Motor Co., Ltd. was caught by the expanding web of
globalisation immediately. Nissan thus has always had a strategy of
globalisation. They believe there are two issues contributing to the success of
their overseas operations: establishing an insider market position and
promoting the globalisation of the headquarters in Japan. In 1988 problems were
starting to arise however with their subsidiaries exemplifying the possible
problems that can arise with cross-cultural business and mergers.
2 Corporate Culture
When one reads
about Nissan Motor Co., the first issue that comes to mind is the high level of
decentralization of the company. From the very beginning Nissan has been a multinational
and multi-domestic company. As such, Nissan has not been able to imply a strong
corporate culture.
On another hand, high level of implementation
of corporate culture could also be a disturbing factor – if we assume ethnocentrism.
With headquarters in Japan, Nissan would then have Japanese managers in key
positions in plants, subsidiaries etc., all over Europe and United States, as
most Japanese companies do, but one cannot observe such a tendency within
Nissan. Indeed, everywhere Nissan operates, Japanese people in key positions
are the minority and local people are in the local decision-making power
positions.
Probably
appointing local managers to top positions in subsidiaries, for example Italy
and Spain, has been a wise and successful strategic decision. One has to take
in to account the European management style which varies greatly from country
to country, but in which many similarities can be said for Europe in general
(Valori & Valla, 1994). The European management style could be roughly
defined as to be an “insider”, not an “invader” as opposed to American where
the manager has to be an authority, holding high decision-making power. Or
Japanese, where one has to be totally group or collective-oriented with high
commitment to work. Europe’s style is then something in between US and Japan’s
(Calori & Valla, 1994).
A European
company working internationally, say, in Europe would apply rather diversified
management styles varying from country to country. While Japanese are
historically applying their own ideas about management, commitment and quality
management everywhere they go. We assume that if Japanese held the decision
making power in local operations in Europe, several things would have gone
wrong.
On one hand, diversified
approach from Japanese headquarters to Nissan’s businesses in Europe has helped
it to be more successful, but on the other hand the company has no strong
corporate culture as a result. Thus a problem arises with no structure in place
to define strict company goals and an explicit way to go in future. It should
be mentioned however that this way of operating has seemingly helped Nissan to
acquire competitive strength over most other Japanese car manufacturers
represented in Europe.
3 Dimensions of International Management
Considering
Nissan’s business strategies and management style, Nissan seems even more of a
European company than a Japanese one. Indeed, as the roots of Nissan in Europe
are previously European owned companies, this has made quite a strong, positive
impact on today’s successful “local” operations.
European
company managers are often civil servants from different state authorities,
mostly international – with political contacts and international experience
(Callori, 1994), which is named as crucial in today’s business world. It occurs
in the Nissan case too, although it is a Japanese company. Mr. Arai, who is the
president of Nissan Italia, had been working for the Japanese Ministry of
Foreign Affairs in Italy for 18 years, and has held top positions in several
European companies. Hiring managers with international experience and political
contacts over the last two or three decades, has been increasingly important
for any company working internationally.
Although
engaging in international business now not only requires managers to be able to
work with people from different culture frames, but also even the managers who
stay working for the domestic firm must have this ability too, because the
workforce in separate countries is also becoming increasingly diversified and
multicultural. It is enough to mention Germany or Sweden with 1,000,000 guest
workers, immigrants etc., who compose quite a considerable part of the nations
workforce (Calori, 1994).
In the Nissan
Italia there was more of an attempt to incorporate Japanese qualities into the
company. Like in Spain, where the
management style is similar to that in Italy, the Japanese had trouble with
employees’ attitudes toward work. Mr.
Arai, the Japanese president is disappointed with the lack of initiative taken
by his employees. There are problems
occurring with the retention of employees, as mobility is common in Italy. The
organization itself is quite localized with the management employed. There is an open atmosphere in the office and
informal relations with employees as they are on a first name basis. The Italian plant differs from Iberica as it
is 100 percent owned by Nissan. Olie
suggests that for maximum integration success a third culture should be created
amongst the two existing ones in the joining companies. Once employees have shared common experiences
and a shared goal, the cultural differences and hostility that may be present,
usually fades away and multicultural synergy is the result.
4 Merger Issues
The corporation
of Nissan was formed by mergers and has continued using this technique for
growth. It is not uncommon for
international mergers to fail as found by several researchers (Olie, Risberg,
etc.). One of the first issues is the
level of strategic fit between the two companies involved (Olie, 1994). Since Nissan is a car producing company, the
spread of growth to both Iberica, a manufacturing and distribution plant, and
Italia, a distributor and after-service company, are justified. In fact they follow quite closely with the
strategies of globalisation and localization.
According to
Olie (1994) there are four factors
that affect the success of merger performance and some of these can be applied
to Nissan. One is the degree of compatibility between the management,
organizational structures and cultures of the two companies. Nissan has for the most part allowed the
Spanish Iberica plant to run autonomously.
Japanese workers make up only 0.3 percent of the total and hold
positions of coordinator, advisor or assistant in the organization. Since all of the department directors are
Spanish, native employees and not the Japanese make the larger decisions. Problems are occurring between the
headquarters and Iberica because of communication style differences and attitudes
to work. The absence of horizontal
communication in the organization leads to many difficulties implementing the
strategies originating from headquarters.
One of the differences between the two countries’ management styles
leads to difficulty with definition of tasks and responsibilities. Overall the combination of cultures is very
low, which has resulted in less conflict.
One of the
reasons the mentioned problems arose was also the high distance between
headquarters of Nissan and the local operations in Spain and Italy. Therefore
people in headquarters often did not understand the local situation in
subsidiaries and priorities were sometimes not given to the subsidiary that
needed it most.
5 Cross-cultural management
When managing
across cultures there are several problems that usually arise because of the basic
assumptions of people and the way that they perceive things. The cultures of Spain and Italy are quite
similar as they are geographic neighbours and are part of the Latin group in
southern Europe. However, the Japanese culture is extremely different than both
of these. For this reason an analysis of culture, comparing the three countries
along the way is quite useful.
There are other
cultural dimensions that affect the way that multicultural groups interact with
one another. The communication accommodation theory (CAT) is a description of
the manner that this communication takes place. It is based on the idea that
two kinds of communication exist: divergent and convergent. Divergence is the
“adherence to cultural communication patterns in the face of difference” (Larkey, 1996) while
convergence is when the communication style is adjusted to match the message
receiver’s style. When one feels they are inferior, for example if they feel
their manager is from a better culture or if the manager is acting more
authoritative then they expect, then they communicate convergently. They match
their communication patterns with their manager, in turn changing the standard
method of communicating. If an organization is closed to cultural assimilation,
then this convergence will occur more frequently. This is a negative effect of
when companies merge from different cultures. It was demonstrated in the case
that the Japanese converged to the communication patterns of the Italians and
Spaniards. Perhaps another reason for
this adaptation on the part of the Japanese has to do with the difficulty of
the Japanese language and their strategy of localization.
As an important
element of culture, differences between low and high-context cultures must be
mentioned, where Japan is an opposite of Spain and Italy. It was clearly
expressed in the Nissan case where Japanese managers initially had difficulties
with instructing workers before the operations. Japan is an extremely
high-context culture where everything is based on negotiations: Japanese
management style can be characterized as agreement-centered, highly intuitive.
A Japanese worker is usually equipped with deep knowledge not only about the
specific part of the work he has to do, but also about preceding and following
operations (Limaye, 1991). Working overtime is not unusual and workers thus
gain higher professional knowledge.
Spain and
Italy, on the contrary, are low context cultures. Workers there need direct and
explicit instructions for the work to be done. Also relationships tend to be
short term based and there is a high rate of job mobility. A Japanese manager, especially an inexperienced one, could be
confused about such cultural differences. However according to Holt (1998), it
is much easier for foreigners to assimilate to low context cultures.
The way in
which a culture views time greatly effects the work atmosphere. Italian and Spaniards are both polychronic,
meaning that time is seen as a renewable resource. There is a lack of long term planning in
these countries by nature. The
uncertainty of tomorrow leads to strategic plans usually known only by the top
management (Mole 1990). This is in high
contrast with the Japanese, who normally view long term planning as vital to
success. The reporting of details and
variables affecting these plans are strictly monitored.
6 Hofstede’s Dimensions
A survey
conducted by Geert Hofstede in the 1970s on IBM with more than 150,000 responding
managers in more than 50 countries, concluded four important dimensions that
has had quite a large impression on international managers in terms of cultural
relations. The four dimensions are: Power Distance, Individualism, Uncertainty
Avoidance, and Masculinity (Holt 1998).
The first
dimension, Power Distance describes
the relationship between the manager and his subordinates. When the distance is
short, such as in Japan, the decision making process is more of a negotiation.
When the distance is large, like in US, the decision made by the manager is
authoritative and accepted. Spain, Italy and Japan, all are closely ranked on
the scale of this dimension, minimizing the number of problems when in a
multicultural work environment.
Individualism is the second dimension. Japan is a collectivist
culture, as opposed to Italy and Spain who are less so. The Japanese tried to
improve horizontal communication on their Spanish subsidiary by redesigning the
office with glass partitions. However, the Spanish managers built an additional
office to house the chairman, president and Japanese assistant to the
president. The Spanish people are used to being directed by a authoritative
figure, rather than a “team member”. This combination is a beneficial balance.
Measured by the
third dimension of Hofstede’s survey, Uncertainty
Avoidance, the three countries are quite close. This once again proves the
correct choice of them working together. Workers are more willing to follow the
directives of the management and less likely to break out of the established
structure.
We also assume
that Nissan could have had significant problems in Spain concerning the Masculinity issue – the fourth dimension
of Hofstede. Masculinity level talks about the predominance of male workers in
industry, management and other posts. The higher the masculinity level is, the
more predominant male workers are. Japan is a country with high masculinism
whereas Spain, on the contrary, ranges low in terms of masculinity. Although it
was not mentioned in the case, Japanese managers presumably came upon this
issue in the early days of Nissan.
Appointing
local managers thus, has been a wise step from the Nissan headquarters in
Japan. As we see then, it is almost impossible to have a strong Japanese leader
in such a company as Nissan, who would create a strong corporate culture with
distinct aims and directions. It would probably cause more operating problems
than benefits. As of now, Japanese people in Nissan are usually appointed to
consultant, advisor and assistant jobs with the purpose of consulting and
giving directions to managers about advanced technologies and innovations in
Japan. Since Japan is widely assumed as
one of the best in this field, this is a good strategy.
7 Human Resource Management
It was
discovered by the Japanese management that the Italian and Spanish employees
did not have self-motivation to take the initiative to give feedback and
contribute new ideas. To solve this Nissan needs to define a way to motivate
these foreign employees. For Spanish employees job security is more important
than advancement (Mole, 1990), this creates high uncertainty avoidance as
deduced by Hofstede. To motivate this type of employee, a company needs to
reward the workers for going beyond their job description and providing new
ideas. An economic incentive will encourage people to contribute again and
again, and a sense of an open atmosphere will provide the employee with a sense
of job security no matter what they suggest. This was another barrier to
overcome for the Japanese and the lesson learned should be observed in the
future by other Japanese companies expanding their business to Europe.
Within Nissan
there is a problem with the Human Resources and retention of quality employees.
Japanese expatriates accept the duty of hosting guests in the subsidiary, but
their families often place pressure on them. In addition to this, Nissan sees a
problem with the international training of employees efficiently. Our solution
is to rotate the Japanese expatriates in order for them to learn what they can
from their time in Europe and bring these ideas back to the Japanese
headquarters. This will have a three-fold effect: ease the pressure placed on
the expatriates by their families, a natural global training for the managers
who go abroad and then teach their new skills to the workers in Japan, and both
of these issues will create a more innovative and exciting work situation
raising the feeling of commitment to Nissan. When a Japanese expatriate works
abroad in Europe, in Italy for example, the society asks him to adapt to the
local culture. This inevitably makes the manager aware and gives them knowledge
about the culture.
8 Conclusions
In this paper
we have analysed the corporate culture and international management strategies
of the Nissan Motor Co. As the analysis has showed, Nissan has been balancing
until lately between having a corporate culture and being highly decentralised.
Indeed, their ways of operating vary greatly from country to country. As such,
the company has gained some competitive strengths over its counterparts. This
case then shows that a company does not always need to develop a corporate
culture or to have a charismatic leader to be successful. Although without
these aspects one can doubt the operational functionality of the company in the
long-term. As the great researcher Hofstede (1993) once wrote “All great ideas
in...management have travelled from one country to another, and been enriched
by foreign influence.”
References
Asakura, A.
1989. Nissan Motor Co., Ltd. INSEAD. Fontainebleau: INSEAD
Calori, R., Vall, J-P., & de
Woot, P. 1994. Common characterisitcs: the ingredients of European
management. In Calori, R. & de Woot, P. (eds.). A European Management Model. Beyond Diversity. New York: Prentice
Hall.
Hofstede, G. 1993,
Cultural constraints in management theories,
The Executive. Vol. 7, No.1. In Calori, R. & de Woot, P. (eds.). A European Management Model. Beyond
Diversity. New York: Prentice Hall.
Holt, D.H.
1998. International Management. Text and
Cases. The Dryden Press.
Larkey, L.K.
1996. Toward a Theory of Communicative Interactions in Culturally Diverse
Workgroups. Academy of Management Review,
Vol. 21, No. 2.
Limaye, M.R.
& Victor, D.A. 1991. Cross-cultural Business Communication Research: The
State of the Art and Hypotheses for the 1990s. The Journal of Business Communication, Vol. 28, No. 3.
Mole, J. 1990. Mind Your Manners, Managing Culture Clash in
the Single European Market. London: Nicholas Brealey Publishing.
Olie, R. 1994.
Shades of Culture and Institutions on International Mergers. Organization Studies, Vol. 15, No. 3.
Nav komentāru:
Ierakstīt komentāru