january 2005 intake echenne vincent donescu stefan graham russell petrucci massimo zhu yinfeng soto...

January 2005 intake

Echenne VincentDonescu StefanGraham RussellPetrucci MassimoZhu Yinfeng

SOTOBest In France 2005

HEC MBA, Best In France, Soto Corporation / 2

Report Note

At the request of the company investigated, “Soto”, is not their real name. Also, certain details have been omitted which would otherwise indicate the identity of the company or individuals.

This request was since the company is going through a sensitive start-up period in France and publicity of this nature is not desirable in the eyes of the Japanese headquarters.

On Wednesday June 14th we met with Mr. Myers the General Manager, Business Development for Soto in France. Mr. Myers explained to us at this meeting and via previous telephone discussions Soto’s activities in France and approach to working here.

The team wishes to thank Mr. Myers for his willingness to share with us his insights into Soto and it’s experiences coming to France.


Background Précis

Soto corporation manufactures automotive sub assemblies for supply to automobile Original Equipment Manufacturers (OEM’s). Soto is a Japanese company which has traditionally sold 80% of its production to Nissan, a Japanese OEM.

With the recent merger between Renault and Nissan, Soto has been forced to begin operations in France to supply Renault plants here components which are now shared between Nissan and Renault.

Soto faces challenges to integrate a largely Japanese workforce into the French culture and vice-versa for their French workers to understand how to succeed in a company with strong ties to Japan and Japanese business culture.

Primary among these challenges has been the transition of control from Japanese transplanted workers to French counterparts. This ongoing need has forced the Soto management to work with it’s employees to instil new values and expectations to ensure success in France.


Report Structure

Background Précis

Company background• Products• Markets Served • Growth Objectives

Best In France findings• French objectives• Difficulties Faced• Adaptation to France• Key Benefits of France• Essential Advice


Name « Soto Corporation »

Headquarters Tokyo

Established Aug. 25, 1938

Capital ¥40,606 million (as of March 31, 2005)

President & CEO ~ omitted

Employees 16,347 (as of September 30, 2004)

Consolidated subsidiaries 47 (as of September 30, 2004)

Affiliates accounted for under the equity method

12 (as of September 30, 2004)

Stock Exchange Listings Tokyo Stock Exchange

Soto Organisation


Basic PhilosophyWe shall contribute to the people around the world by creating a comfortable environment through the interactions of the earth and the human beings.

Management Policy We aim to:

1.Coexist with the environment and treasure the nature and lives of all human beings.

2.Lead the market by producing attractive products. 3.Promote an open and visible management style with integrity and

fairness. 4.Become an organization that can make continuous improvements

by making the best of each individual uniqueness and capabilities.

Action Guideline 1.Strive to make one's best without avoiding difficulties. 2.Respect each individual humanity and culture. 3.Think freely and act speedily.

Soto Corporation company mission


Major Products Produced

Main Automotive Products

Cockpit Modules, Front End Modules, Car Air Conditioners, Compressors, Condensers, Instrument Panels, Meters, Electronic Components, ITS, Radiators, Mufflers, Converters


Audi AGIsuzu Motors Ltd.

Suzuki Motor CorporationGeneral Motors Corp.DaimlerChrysler AG

Nissan Motor Co., Ltd.Nissan Shatai Co., Ltd.

Nissan Diesel Motor Co., Ltd.BMW AG

Ford Motor Co.Volkswagen AG

Peugeot S.A.Fuji Heavy Industries, Ltd.

Honda Motor Co., Ltd.Mazda Motor Corp.

Mitsubishi Motors Corp.Renault S.A.and others

Major Clients


Soto Company key objectives

The following 8 slides detail the opportunities that Soto has identified as

being critical to its future growth. This presentation was made by Soto to

investors in late 2004.


Growth Targets


The world's automakers are targeting the global optimization of their

procurement systems. In other words, they seek to achieve one global standard

for quality, cost, and timely delivery. Soto has met that challenge. Through

modularization made possible by our industry-leading development and

production technologies, we are meeting our customers' needs at locations

around the world.

Soto aspires to be the No. 1 module supplier globally. We are continuing to refine

our overall technology capabilities in development, production, procurement,

and other areas. We also are boosting our competitiveness by progressing with

the globalization of all aspects of our business activities. Based on these efforts,

we intend to make a leap forward onto the global stage as a company with a

superior ability to make speedy and strategic business proposals.

Message from the president


Report Structure

Background Précis

Company background• Products• Markets Served • Growth Objectives

Best In France findings• French objectives• Difficulties Faced• Adaptation to France• Key Benefits of France• Essential Advice


French Activities

Soto is an extremely traditional Japanese company.

Historically most of it’s business (80%) has been in Japan with

Japanese customers. As a result, the challenges posed by a

significant expansion in France with new customers and a new

culture to adapt to will be challenging.

In January 2001 a holding company was setup in France to

prepare for the French operations. In January 2004 this was

first registered as a French company to begin operations

serving a joint Nissan / Renault platform.

The French company presently employs 60 people, 35 of whom

are Japanese nationals.

Guys, you will have to check

some of my figures on start-up

dates and # of employees etc as

I did not take them all down


Why France?

Soto, like most tier 1 automotive suppliers is forced to follow the production strategy of it’s major customers into new markets Due to the merger between Renault motors of France and Nissan

Corporation of Japan, Soto’s major customer Nissan is now sharing considerable technology and joint platforms with Renault.

This means that Soto must now serve Renault operations in Europe more than in the past and France was the obvious choice for expansion as Renault is headquartered here.

Soto has limited production and distribution facilities in Wales, however these were deemed to be insufficient to meet Renault’s needs so over the next 3 years much of the services offered from Wales will be transferred to France.


Difficulties Faced

Cultural difference

This is the most significant challenge faced by Soto in adapting it’s workforce to the European business and French culture in particular

Integration of Japanese employees into the French societyEg. Necessary to encourage them to consider France as a long term

assignment worth adapting to rather than just a temporary leave from Japan

Integration of French employees into SotoEg. Difficulties faced by new employees who do not have experience

working in Japan or with Japanese who may have different expectations and methods

Expectations of Japanese head office Eg. Tendency to not embarrass managers with the faults of their division

had repercussions when European customers expected to discuss these face to face. Obedience to management above all else difficult in Europe


Difficulties Faced

Company culture Japanese employees are less likely to volunteer to embrace

responsibilities unless directed to by their manager Tendency to obey without considering the implications of the action

because it was a management directive. These two cultural differences stood out initially until the French

General manager was appointed who understood western management

35 hour working week Japanese culture is for employees to occasionally work extremely

long hours whether to impress management or to fulfil a difficult assignment

French employees who left at 5pm were questioned on their commitment initially by Japanese colleagues

This has had to be discouraged by management as it contravenes French industrial law


Difficulties Faced

Cultural differences result in Soto-developed solutions Very few external consultants have been hired to assist with

development of operations in France

Communication Predominantly only Japanese language used with communication

between head office in Tokyo

English is the second language therefore French workers must be proficient in it

Language barriers cause many problems to be handled internally within the organisation rather than using external resources


Adaptation to France

Recruitment There currently is no HR department

Recruitment is done directly by managers

Tendency to hire only Japanese (75% of the total number of employees)

Actions taken and plans for the future Recruitment of a French development manager

Invert the proportion of Japanese employees working for the company

Providing training sessions on Japanese culture for new French recruits



Performance appraisal To-date has been subjective appraisals by immediate manager No set evaluation sheets

Compensation policy Fixed salary plus limited bonuses Company car, apartments and other benefits No salary based on performance from Japanese background

Job design No use of job description

Has been necessary to create role descriptions and use in appraisal HR manager to be appointed will develop this appraisal system



Training Japanese headquarters in Tokyo, but no training for employees

transferred to Europe yet

International transfer and use of expatriates Transfer of Japanese from the headquarters

English language requirement but no French requirement for Japanese expatriates assigned to France

Development manager is a French expatriate with 35 years experience with Japanese company

Ad-hoc training and immersion programs developed within the office to help immersion


Key Benefits of France

R&D grants given by French government These have resulted in the transfer of the European R&D headquarters

to France

Highly educated workforce – Japanese have been impressed so far with the skills of the French engineers particularly in product design

Location benefits Proximity to major European clients

Understanding of the European market

Expansion opportunities


Essential Advice

Integration of cultures The most obvious impediment to efficient growth has been the

barriers which have existed between the Japanese and French business cultures and a lack of commitment of either party to embrace the other

This has begun to change now that the senior French management is Japanese and understands the western business culture and how to succeed in Europe

Hiring of more French employees with Japanese experience Establishment of a shared team culture within the French workforce

rather than two different groups – Japanese and French.

For an Asian company coming to France:

Do not underestimate the effort necessary to communicate with and understand the western / French «business philosophy »

january 2005 intake echenne vincent donescu stefan graham russell petrucci massimo zhu yinfeng soto...

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