EXECUTIVE SUMMARY

The case on Chiba International Inc. deals with the challenges faced by a

Japanese company’s 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 John’s

desire to translate the company’s 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.

CHIBA INTERNATIONAL INC.

Chiba International in San Jose, California is a subsidiary of Chiba Electronics Company, Japan.

The Chiba Electronics company has been acclaimed as one of the foremost companies in Japan

on the basis of its management practices much ahead of Sony, Matsushita and Toyota. Both

Chiba Electronics Company and Chiba International have a 70% market share in the world

market and the US market respectively. Although Chiba International started with a small sales

office after acquiring a manufacturing plant from an American competitor, a Canadian born

Japanese reared executive really turned around the company within two years, after terminating

the American management. In the present day 14 out of 24 top executives and 65 out of 70

salesmen are American.

The way the company manages the different aspect of management of their business is an

interesting study in the cross cultural context.

Management Practices in Chiba International Inc

Meetings:

The company is very particular about the regularity and schedule of its meetings, where even the

lowest level employee speaks and this reflects the kind of open communication system that the

company follows. The company’s performance and plans are also shared openly, because all

employees share the company’s annual bonus at the same rate.

Sales Force:

The sharp contrast in the attitude of the sales force of the company between the Americans and

Japanese can be ascribed to their high universalism and moderate particularism, respectively,

according to Trompenaars’ cultural dimensions. The Americans have a straight “take it or leave

it” attitude in sales. Whereas the Japanese’ practices have more room for customisation and

modification to cater to the needs of individual customer needs which has been analogised to the

service of a “geisha girl”.

When this basic philosophy is communicated to the sales force, they approve of it, because this

kind of service oriented sales ensures less harassment from customers and more customer

satisfaction. The company does not have any policy of sales based commission which makes is

unfair for those who are selling in a less favorable sales territory.

U.S Management:

One of the major concerns for the Japanese managers is the individualistic nature of the

Americans who join the company. Their basic nature of being concerned about themselves and

their immediate family (reporting authority), internal politicking etc. is in sharp contrast with the

Japanese collectivist nature of working in a group for the company as a whole.

The individualistic nature of the Americans also leads to power conflicts among themselves. This

is because, when additional responsibilities are given to them, they view it as an extension of

their individual sovereignties (because of their thirst for personal achievements and

accomplishments) and this leads to power conflicts in the case of overlapping sovereign areas.

The Japanese being extremely high on the dimension of “masculinity”, the job culture is often in

contradiction to the American workers who lay equal emphasis to personal life as to

professional, and their work life balance is imbalanced. The excessive importance given to

dedication and devotion to work can create work stress for the Americans who put “personal and

family happiness first”.

This is also evident in their recruitment philosophy: It is the ability, performance and attitude of

an individual which is measured in an interview, rather than assigning a pseudo – status to one

owing to the prestige of his degree.

This often leads to a communication gap between the Japanese and the Americans, which is

literally evident in the meetings and discussions which happen at late hours when the Americans

have retired for the day, among the Japanese in their language. Needless to say, this created

apprehension in the minds of the Americans but the management tries to rectify the issue by

clarifying the fact that decisions should not be taken in the absence of the Americans and by

asking them to stay back for those meetings.

Financial People:

A very strong Japanese culture of management is followed by the financial people throughout the

company. Everything is expensed out, which includes depreciation, raw material requirement for

future. This is done with an objective of having precise knowledge about the company’s current

liquid assets.

Also, in line with the Japanese concept of “muda”, Chiba International Inc. maintains minimal

inventory level. They follow, what is known as the “noodle peddler theory” which epitomises the

lean manufacturing system (a practice that considers the expenditure of resources for any goal

other than the creation of value for the end customer to be wasteful, and thus a target for

elimination), avoiding inventory, expensing out depreciation prior to profit calculation.

However in contrast to many Japanese companies, only 20 percent of their financing is done

through debt financing.

Open Communications:

In Chiba International, open communications is cited as the main element of success in getting

the company’s philosophy penetrated to all levels. The difference in the company’s US branch is

that the workforce is not as homogenous as it is in Japan. The American workforce has not

experienced a homogenous culture as the Japanese. The Japanese more or less understand the

philosophy well because of the similarity of experiences in culture. But in the case of the

Americans in Chiba International, communication had to be very strong in order to generate a

shared culture and sense of oneness among employees.

Meetings of different types is one way of communicating matters of great and less importance in

the company. Suggestions made by the employees are addressed in the company’s newspaper.

There is a great sense of involvement of the personnel department in matters of the employees as

one person from the personnel department tours the plant all day once a week. This portrays how

informal communication channels are in place to make the employees feel important and that

they are being heard. Informal channels of communication are more receptive in the American

culture than in the Japanese culture in which more emphasis is given to formal channels of

communication. Not being unionized has helped the company with flexibility and job changes

among the workforce. A system called kompas, which is an objective-driven off-premises

gathering, has also helped in communication, conflict resolution and discussion of problems

related to production and company philosophy. All these methods emphasize the importance

given to open communications in the company which had to be adapted in order to suit the

American culture. This also shows how open communications served as a tool for motivating

employees to do their best in the job and to participate in decision making.

Appraisal and Reward Systems:

Though the Japanese culture places a lot of importance on lifetime employment, Chiba

International did not do so. Instead, it stresses on the importance of job security. According to

Hofstede’s model, this emphasizes the Japanese culture’s high uncertainty avoidance character.

Lay-offs are not part of the system unlike the American culture which does resort to lay-offs

under pressure. The number of pay grades is kept to a minimum to reduce differences among

employees. According to Hofstede, this is more of a Japanese philosophy which is centred on

collectivism and the greater good of the group, as against the American culture which

emphasizes differentials among employees to satisfy individualistic desires. In Chiba

International, employees are encouraged to do even menial jobs or jobs of less importance

without fearing the possibility of losing their jobs or pay. Such a system does not exist in the

American context.

Hiring from external sources is kept to a minimum and is done only if the required skills are

unavailable in-house. Bulk of the training is on-the-job and job postings are not utilised.

Promotions are given only when a person is identified as having the required competencies. An

important point to note is that rewards are based on the services provided and the performance of

the employees rather than on seniority as is the case in most Japanese companies. This system is

suited to the American culture which rewards only for performance. To keep team leaders

motivated, they are given a different colored smock and are given a few extra cents an hour.

Demotion of the team lead occurs only if a specific need for him does not exist and never for

lack of skills or leadership ability. Acknowledgement of the team lead in this manner is an

effective motivational tool.

Performance appraisal takes place twice a year. After careful review of the scores by comparison

across departments and with the help of the personnel department and managers, the scores are

tied to the compensation. The highlight of the appraisal system is the continuous feedback given

to employees all-round the year. This results in lesser surprises to the employees at the time of

review. All these aspects highlight the company’s responsibility towards the employees.

Quality and Service:

A major difference between the Japanese and the American philosophy is with respect to quality.

While the Japanese lay great stress on the importance of quality throughout the entire production

process, the American mindset is slightly relaxed and accommodates defects. The Japanese

follow a zero defect policy. They expend more resources to check defects and inspect rather than

face loss of customers after the defect passes on to the customer. This is one of the main reasons

for the success of the Japanese. Chiba International has made this zero defect principle a key

element of their philosophy. They are highly dedicated to serving customers by striving to

develop products as per customers’ needs.

From the above aspects, it is clear that Chiba International has adapted its Japanese management

style to suit the American culture without compromising heavily on the values held dearly by the

Japanese.

QUESTIONS

Question 1

Can Japanese management practices work in the United States without adaptation? Why

or Why not? What cultural values are relevant?

It is very difficult to use Japanese management practices in the United States without much

adaptation. The problem lies in the cultural differences between the two countries. So we should

not force Japanese management principles in American companies otherwise it will lead to chaos

and finally overall performance of company will go down. So we can say that management

practices are most important for company to grow. There are some Japanese management

principles which are not applicable in an American context. All such principles are listed below

with proper illustration.

1. Lifetime Employment: It is main Japanese management principle. Employees are hired

directly upon graduation from high school or college, and are retained until a mandatory

retirement age of fifty-five. Upon retirement, an employee will receive a large severance

payment. The effect of this policy is that there will be very high employee commitment to the

company.  

2. Evaluation and Promotion Process: The Japanese process is very steady and slow. A new

hire may take ten years to get automatic pay increases and promotions (along with all others

hired at the same time) before a formal evaluation of his performance is made. Only after this

evaluation do promotions and pay increases vary among employees. The result of this practice

is a long-term management outlook toward the employee and an attitude of cooperation and

non-competition between employees, resulting in individual performance aimed to serve the

company rather than oneself.

3. Participative approach to decision making: In the Japanese firm, everyone is involved in

making decision. They take long time in decision making but after that implementation are

very fast. On other hand decision making in United States is very fast but implementation

process is very slow.

4. Collective Values and a Collective sense of responsibility: They reject the idea that some

persons may be more productive than others, and prefer to be collectively accountable for

company performance. Thus, piece-rate compensation is considered personally humiliating,

and suggestion boxes and individual rewards are not regarded favorably.

But transferability of Japanese management principles is a bit of a controversial issue as some of

the most famous successful Japanese companies have been successful mainly due to adoption of

management principles which have originated in America like Quality Circles and Scientific

Management. The difference lies in the fact that Japanese are better in implementation and the

Americans are better in Idea formulation.

Theory Z:

Theory Z tries to incorporate Japanese management principles into western management styles.

Theory Z is an adaptation of Theory X and Theory Y propounded by Douglas McGregor, based

on Maslow’s hierarchy of needs. An explanation of Theory Z could be understood from the

second question.

Relevant Cultural Values

1. Planning and Decision Making: In Japanese culture, planning is done with a long term

perspective and it involves all stakeholders who are directly or indirectly related to impact of

decision. Although the decision making is very slow, the implementation of the same is very

fast and efficient. On the other hand, United States companies primarily plan for a short term

orientation and it is a very individualistic form of decision making. Decisions are initiated at

the top and it flows down. Fats decision making is a characteristic of U.S. management style.

However, the slow implementation causes compromises in efficiency.

2. Staffing and Organizing: Japanese Management style advocates collective responsibility

within the company. The informal organization structure brings about ambiguous decision

responsibility. The organization culture and philosophy are well known and there would be

visible competitive spirit towards other enterprises. In contrast, U.S. management styles

advocate individual responsibility and accountability. There is a clear and specific decision

responsibility. The organization structure is formal and bureaucratic. However, there is a lack

of common organization. Employees identify themselves with their job role rather than the

company itself.

3. Leadership and Control: In Japan, the leader acts as a social facilitator and group member.

The leader’s style is paternalistic. Common values facilitate cooperation. The leader

sometimes avoids confrontation and this sometimes leads to ambiguities. The leader in Japan

is focused on harmony. Critical communication is top down and both bottom up. Non critical

communication is usually bottom up. In the U.S., the leader acts as the decision maker and

head of the group. The leader’s style is usually directive, strong and firm. Individualism and

divergent values hinder cooperation. Face to face confrontation is common and the main focus

is on clarity. The communication pattern is usually top down.

Question 2

How should Ken and John adapt Chiba’s California practices to their situation? What

problems will they run into (cultural and otherwise)?

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.

Chiba’s 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 won’t be much of a problem.

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-of-

work 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. Chiba’s 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. Chiba’s 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 can’t” 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.

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 won’t 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 wouldn’t 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 don’t 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

wouldn’t 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 won’t 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.

Question 3:

What aspects of the Japanese approach used by Chiba are the most unusual to you? Why?

The following approaches of Chiba appear to be most 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. Chiba’s financing depends on debt only to the extent of 20%. It’s 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. Chiba’s 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 don’t 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. It’s 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 Zen-

“Defilement 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

company’s philosophy according to the environment they are working in.