INTRODUCTIONDiamlerChrysler is an Anglo-German motor corporation formed out of Diamler-Benz of Germany and Chrysler of America. It is the world’s fifth largest car manufacturer, best known for its Mercedes and Maybach brands. Jurgen E. Schrempp, the company’s Chairman wanted to create a “Welt AG”(global corporation) with widespread presence across all major markets.
He unsuccessfully courted Nissan and Honda (Miller, 1998) before finally settling on Mitsubishi Motors. Mitsubishi was hit hard due to the East Asian Financial crisis and was under a debt of 1.7 trillion Japanese Yen (Bremner, 1999). Finally DC acquired a 34% controlling stake in Mitsubishi Motors, the deal between the two companies was billed at 2.1 billion Euro. Although DC had Veto Powers in all board decisions, most of the older management in Mitsubishi was retained (Schmid, 2000).
The Germans were confident of turning the company around with a stress on quality and a standard restructuring job. The deal was expected to give the company access to many more markets and models. Yet the Mitsubishi mess was much worse than expected and put the company’s global strategy at risk. The damage was particularly bad in Australia. There was wide spread dissatisfaction with the employee morale at a low point. There was high rate of absenteeism and the company’s image in the eyes of the government, public and customers took a beating.
This situation could have been avoided if more emphasis was paid on the cultural aspect and the problems were identified earlier. The internal and intra company problems are generally overlooked by MNCs while targeting global policies. These in turn hurt the company and its finance. A detailed study is required for this purpose and thus the senior management should predominantly be from the region of operation so that employee sentiments and preferences can be better understood.
METHODOLOGY USED:This report mainly focuses on the organizational culture and the national culture that was present in the company. The organizational culture will cover the management part and the behavior of the individuals will be covered by national culture. Theoretically, the method chosen should reflect the problem investigated. For example, one can look at cross-cultural issues at a national level, an organizational level or at an individual level (Fontaine, 2003).
As Mitsubishi Australia’s senior management was nominated by the parent company and belonged to Japan, thus the national influence on the management is obvious. They would be seeped in their own traditions and culture and would have been in stark contrast to their Australian counterparts.
The main factors influencing organizational culture are Nationality, Employee demographics, Structure and control system of the firm & industry and market factors (Hodgetts, 2006). The cultural difference between Japan and Australia thus will be discussed. After the points of conflict have been identified and the report concluded, a set of recommendations will follow.
Australian and Japanese Cultures – An analysisJapanese has its own unique culture which has been a source of national pride and has been a catalyst in their economic growth. Australia on the other hand is very westernized in its culture. It is influenced by English Culture and was a colony at a time. Recently, America is creating its mark on Australia with movies, television and internet the sources.
Thus the two cultures are vastly different with their own set of languages, major religions, rituals, traditions, scripts etc. The Japanese have a deep sense of duty and generally follow orders by superiors without a second thought or objection. A management culture can have a significant impact on the management style.” If a culture conveys a basic distrust of employees, managers are more likely to use an authoritative leadership style”(Robbins and Mukerjs,1990)
The inverse is true in Australia with equal rights generally awarded, irrespective of creed, social standing or gender. In Japan, when some thing goes wrong, the person in charge takes theblame.(Herbig and Jacobs,1998) In Australia, decision making is centralized and responsibility is diffused; in Japan, decision making is diffused and responsibility is concentrated. The government officials too do not carry the same authority in Australia compared to Japan. In the field of management Australia’s power distance is lesser compared to Japan’s.
The Australians are more individualistic in comparison to the Japanese. Kojin shugi, the Japanese word for individualism, has negative connotations and traditionally has been equated with selfishness (Herbig and Jacobs, 1998).Masculinity is also very dominant in Japan with regard to social standing, economic strength and opportunities. The same trend in Australia is valid to a lesser extent. As far as facing uncertainties is concerned the Australians are much more adventurous and risk taking with the Japanese followers of the tried and tested path.
In addition to these differences there are many other factors worth considering. The average Japanese worker is considered to be more productive and reliable due to the long hours (overtime) and lesser number of casual leaves. The Australian workers on the other hand prefer shorter working hours with more time for family and personal pursuits. Casual workers are also more common in Australia with Japan preferring full time employees.
Due to the conservative strategy of the Japanese firms, their corporate goals too are long term compared to short term (continuously revised) goals in Australia. “Japanese-style management may be characterized as ”company paternalism” rooted in the traditional values of Japanese pre-war society, “welfare corporatism”, or” the outcome of bitter post-war class struggles” (Kumar, 2007).
The following table sums up the preferences of both countries:FACTORSJAPANAUSTRALIACentralizationHighLowWork RelationshipsPersonalProfessionalControl MechanismSeniority basedFlexibleIndividualismLowHighGoalsCompany centeredSelf-centeredCommunicationIndirect/ RareDirect/ FrequentEffort/TimeHighComparatively lowerPoliciesLong TermShort termThus taking into consideration that the base employees are natives of Australia and the top managers are from the parent company in Japan, we can clearly see where the conflicts will develop.
The employees will want more say in the daily activities of the company like decision making and would demand individual duties and rights. The working of the company on the other hand would have been set on Japanese lines with not much scope for individual excellence or risk taking. This environment can thus take away the workers moral and decrease productivity. Thus cultural difference can bring cracks into the structure of the company.
Conclusion:As is clear from the data above, the merger between Mitsubishi and DiamlerChrysler was not very well thought and was based on too many assumptions. Mitsubishi’s has strong partners inside the mighty Mitsubishi keiretsu. Although Mitsubishi Motors was spun off as an independent company in 1970, Daimler execs figured the deep-pocketed group, which included Bank of Tokyo-Mitsubishi, would help supply needed talent and capital.
Instead, having such allies created a false sense of complacency. The culture that had developed in Mitsubishi was also an hindrance as the managers were reluctant to relay the bad news to higher-ups and thus complaints about defects very avoided for decades.
The company’s details are given as under: (Business Week, Time Magazine)PUBLIC IMAGE – Customer dissatisfactionEven the public image of the company deteriorated. A case in point is the television show Tokyo Friend Park 2, which offered a Mitsubushi Pajero as the prize every week for 10 years. The prize item was replaced after the producers decided that Mitsubishi was not worthy and audience may object.
IRRESPONCIBLE BEHAVIOUR – Problems with the GovernmentThe company has also been involved in a series of manufacturing defect rows. The executives at Mitsubishi admitted to government regulators that a defect in the wheel hubs of trucks may result in tires coming off completely. According to regulators this was the cause of about 73 accidents and 2 fatalities, including a case in 2002 when a disengaged tire killed a women. In total Mitsubishi has estimated that about 450000 trucks have defects which were known to the company but never made public. Moreover 155000 cars were recalled due to defects.
Police arrested former Mitsubishi Motors president Katsuhiko Kawasoe on charges of profession negligence for the above cases. (Business Week, Time Magazine)Financial Performance:Mitsubishi has lost $1.9 billion in its 2003 fiscal year, and the management is forecasting similarly dismal results for 2004 due to plummeting sales. Since April, its stock has fallen 50%.
The business strategy used by Mitsubishi was also suspect with the company launching an ultra generous financing campaign- no down payment or payment for the first year. This accounted for accumulated losses of half a billion in bad loans (Business Week).
Employee Performance:The employee productivity was badly hurt due to low morale. There was a drop in employee satisfaction and thus the productivity of the company was hurt. The decision by Diamler to leave the management of Mitsubishi intact proved to be wrong with the management showing a total lack of vision or commitment. A key facet in successful partnering is the need for executives to understand the impact of culture on the relationships they create and the networks they form.
(Fletcher R & Fang T, 2005).
Supplier support:The support of the suppliers is important for a manufacturing company and can be hampered by late payments or lack of trust. Thus the supply chain has to be taken care of to keep quality and production up to the mark.
As is common in the merger of companies there is always some clash between the different working styles of the merging entities. In the case of DiamlerChryslar and Mitsubishi too there was a conflict between the Japanese management style and the Australian work culture. This needed to be minimized and the problems taken care of.
Recommendations :Taking into consideration the fact that Mitsubishi has been unable to develop despite having the support of DiamlerChryslar; urgent measurers have to be undertaken to bring it back to profitability.
•Dumping inefficient suppliers and looking at global suppliers to cut costs.
•Introduction of new quality model to erase the memory of older defective ones.
•Marketing campaign to salvage the companies image both at home and abroad.
•More emphasis on weekly and monthly targets for effective decision making and high flexibility.
•Salary consolidation for some senior managers.
•Shifting production to offshore locations to minimize losses.
•More funding for Research and Development
•Hiring established designers to revive the ageing model lineup.
•Formation of an Business Ethics Committee to repel further conflicts with the government.
•Role of Expatriate to be looked at thoroughly on a case to case basis (a local appointed as the head may bring more value to the table).
•Building trust in customers by recalling all defective vehicles and fixing them.(money spent will bring back goodwill)Taking into consideration Nissan which was under the same kind of problems, we can see that hard decisions combined with good management can create magic. Toyata can also be used as an example as it also started with nearly the same resources and is now one of the largest motor exporters in Australia. The total capital increased to (AU) $1.87 billion with 4200 employees of which 3500 were Victoria based.
Thus the working environment can be improved by having equal opportunities for all. Suggestions and proposals from juniors should be looked at with respect. Each employee should have a well specified role. Toyota, receives more than 700,000 improvement suggestions every year. Over 99% of suggestions are implemented (Kotelnikov, 2007).
Thus we can conclude that diverse cultures can also coexist if the niggles are sorted out. All that’s needed is understanding and intent. Cultural integration can thus be used for maximizing the company’s advantages and minimizing the disadvantages.
REFERENCESBrian Bremner, Emily Thornton, and Irene M. Kunii (1999)”Mitsubishi: Fall of a Keiretsu”, , BusinessWeek, March 15, 1999Hodgetts, M. Richard., Luthans, Fred. &Doh, P. Jonathan. (2006), “International Management: Culture, Strategy, and Behavior”,6th edn, McGraw-Hill/Irwn,BostonJohn Schmid (2003) “Daimler Gets Closer To Mitsubishi Deal”,International Herald Tribune, March 23, 2000Karen Lowry Miller & Joann Muller (1998) “Jurgen Schrempp:
The Auto Baron”, BusinessWeek, November 5, 1998Kotelnikov, Vadim. (2007), ” Case Study: Toyota”,view 17 Aug. 2007Paul Herbig and Lawrence Jacobs(1998) “Culture As an Explanatory Variable for the Japanese Innovative Processes”, Volume 5 Number 3 1998Rose, Che Raduan. & Kumar, Naresh. (2007),”The Transfer of Japanese-Style HRM to Subsidiaries Abroad”, Cross Cultural Management, Vol. 14, No. 1, pp. 54-67.
Robins,S & Mukherjs,D (1990) “Managing Organisations,Prentice Halls of AustraliaRodrigue Fontaine and Stanley Richardson (2003) “Cross-cultural Research in Malaysia” Volume 10 Number 2 2003 75Fletcher, R and Fang, T, (2005) “Assessing the impact of culture on relationship creation and network formation in emerging Asian markets”European Journal of Marketing, Vol. 40 No. 3/4, 2006, pp. 430-446Internet References:Businessweek http://www.businessweek.com/magazine/content/04_19/b3882044.htmTime Magazinehttp://www.time.com/time/magazine/article/0,9171,501040705-658372,00.html?cnn=yesAsian Timeshttp://www.atimes.com/atimes/Japan/FE11Dh02.html