#5980 - International Management Examples And Case Studies - International Management

The Meanings and Dimensions of Culture Case Studies & Examples

• Toyota Case Study

  • Toyota’s focus on Kaizen (continuous improvement) helped Toyota become the number one seller of automobiles in the world.

  • In January 2010 Toyota announced a recall of approximately 2.3 million vehicles to correct sticking accelerator plans and an additional 4.2 million vehicles would have an on-going recall for a floor mat pedal entrapment issue.

  • By February 2010 Toyota had recalled “about 8.5 million vehicles for problems related to gad pedals and brakes” – CNN

  • Jeff Kingston of Temple University Japan estimated the recall cost Toyota over $2 billion.

  • The way Toyota managed the crisis was even worse:

    • The president of the company (Akio Toyoda) did not appear publicly for two weeks after the recall announcement.

    • When he did appear he took the path of minimising the problem – citing software issues rather than a defect as the source of the pedal problems.

  • Jeff Kingston asserted that Toyota’s failure to be forthcoming on critical safety issues has out “the trust of its consumers worldwide” in jeopardy.

  • How Japanese Culture Influenced Toyota

    • In his Wall Street Journal article, Kingston explained the cultural roots of Toyota’s woes.

    • He indicated that a culture of deference in Japanese firms “makes it hard for those lower in the hierarchy to question their superiors or inform them about problems”.

    • In addition, the Japanese tend to focus on the consensus which can be difficult “to challenge what has been decided or designed”.

    • In Japan Kingston noted that “employee’s identities are closely tied to their company image and loyalty to the firm overrides concerns about consumers”.

    • One can deduce how Toyota’s problems arose in this cultural environment. If subordinates noticed a problem in vehicular accelerators, they would likely be hesitant to:

      • Report the problem to their superiors (culture of deference)

      • Criticise their team members who designed the accelerators (focus on consensus)

      • Request firm spend extra money to redesign the accelerators for greater consumer safety (loyalty to firm over concern for consumers)

    • Kingston noted that Japanese corporations have a poor record when responding to consumer safety issues. He described the typical Japanese response as the following:

      • Minimisation of the problem

      • Reluctance to recall the product

      • Poor communication with the public about the problem

      • Too little compassion and concern for customers adversely affected by the product

    • Kingston stated that Japanese firms usually respond this way because:

      • Compensation for product liability claims it is mostly derisory or non-existent. In other words Japanese corporations have little to lose by their minimal response.

      • Japan is “a nation obsessed with craftsmanship and quality”. In such an environment there is significant “shame and embarrassment in owning up to product defects”. Corporations may seek to deny their products have safety concerns in order to “save face”.

      • Kingston told CNN that “Japanese companies are oddly disconnected with their consumers”. In an article printed in the Wall Street Journal, Toyota president Akio Toyoda wrote “It is clear to me that in recent years we did not listen as carefully as we should – or respond as quickly as we must – to our consumer concerns”.

    • Cultural factors can explain another aspect of Toyota’s problems – public relations. Toyota has received much less negative attention in the Japanese media as compared with the American media.

    • Professor Johnson of St Mary’s University stated “The American culture demands transparency and action, whereas the Japanese culture assumes that taking ownership of problems and apologies will suffice”.

    • Akio Toyoda publically apologised at press conferences for the inconvenience caused by the Toyota recall and took personal responsibility for the consumer safety issues. For the Japanese media, that was enough. But not for the America media.

    • Professor Johnson explained that while American corporations are expected to be transparent about their problems, Japanese firms have adopted the business practice of keeping problems in house.

  • Professor Johnson said that when “Toyota focused on the Kaizen culture, it was able to maintain closer links with its suppliers and ensure the quality of its components primarily because they were located in close proximity to Toyota’s plants. However, when their expansion and growth strategies required them to build production facilities overseas and given intense competition in the auto industry, Toyota had to resort to a strategy where they forced suppliers to compete on price. Since it is difficult to pursue Kaizen because of geographic distance, Toyota may have inadvertently sacrificed quality for cost considerations.”

  • Kingston recommended that Toyota become more focused on the customer and improve corporate governance by appointing independent outside directors.

• Japan’s culture has always been credited with creating high quality products that are the envy of the world. Sony, Canon and Toyota are cited as exemplars in their respective industries partly because they have leveraged some of the most productive aspects of Japanese culture.

• Reichel and Flynn examined the effects of US environment on the cultural values of Japanese managers working for Japanese firms in the United States. In particular they focused attention on such key organisational values as lifetime employment, formal authority, group orientation, seniority and paternalism:

  • Lifetime employment is widely accepted in Japanese culture, but the stateside Japanese managers did not believe that unconditional tenure in one organisation was of major importance. They did believe however that job security was important.

  • Formal authority, obedience and conformance to hierarchic position are very important in Japan, but the stateside managers did not perceive obedience and conformity to be very important and rejected the idea that one should not question superior. However, they did support the concept of formal authority.

  • Group orientation, cooperation, conformity and compromise are important organisational values in Japan. The stateside managers supported these values but also believed it was important to be an individual thus maintaining a balance between a group and a personal orientation.

  • In Japan, organisational personnel often are rewarded based on seniority, not merit. Support for this value was directly influenced by the amount of time the Japanese managers had been in the United States. The longer they had been there, the lower their support for this value.

  • Paternalism often measured by a manager’s involvement in both personal and off the job problems of subordinates is very important in Japan. Stateside Japanese managers disagreed and this resistance was positively associated with the number of years they had been in the United States.

• There is increasing evidence that individualism in Japan is on the rise, indicating that Japanese values are changing – and not just among managers outside the country. The country’s long economic slump has convinced many Japanese that they cannot rely on the large corporations of the government to ensure their future. They have to do it on their own and as a result a growing number of Japanese are starting to embrace what is being called the “era of personal responsibility”.

• Instead of denouncing individualism as a threat to society they are proposing it as a necessary solution to many to many of the country’s economic ills.

• A vice chairman of the nation’s largest business lobby said at the opening of a recent conference on economic change “By establishing personal responsibility, we must return dynamism to the economy and revitalise society”.

• Dutch researcher Geert Hofstede identified four cultural dimensions. His initial data was gathered from two questionnaire surveys with over 116,000 respondents from over 70 countries – making it the largest organisationally based study ever conducted. The individuals in these studies all worked in the local subsidiaries of IBM. As a result Hofstede’s research has been criticised because of its focus on just one company; however, he has countered this criticism. IBMers do not form representative samples from national populations. However, samples for cross national comparison need not be representative as long as they are functionally equivalent. IBM employees are a narrow sample but very well matched. Employees of multinational companies and IBM in particular form attractive sources of information for comparing national traits, because they are so similar in respects other than nationality; their employees, their kind of work and their level of education. The only thing that can account for systematic and consistent differences between national groups within such homogenous multinational population is nationality itself; the national environment in which people were brought up before they joined this employer. Comparing IBM subsidiaries therefore shows national culture differences with unusual clarity,

• In societies with high power distance, strict obedience is found even at the upper levels. For example Mexico, South Korea and India.

• Countries populated with people who do not like uncertainty tend to have a high need for security and a strong belief in experts and their knowledge. For example Germany, Japan and Spain.

• Cultures with low uncertainty avoidance include Denmark and Great Britain.

• Hofstede found that wealthy countries have higher individualism scores and high GNP. For example United...