HRP Assignment Mabuchi Motor Case

Submitted by: Sudhanshu Varma H13113 Sumit Kumar Roy H13114 Abhilash SC H13064 Veer Vikram Singh H13124 Sankalp Saxena H13103 Vivek S Narayan H13122

1. Multinational enterprises use expatriates as a control mechanism, to transfer skills and to develop managers. Why the decline in the number of Japanese expatriates? The decline in the number of Japanese expatriates can be attributed to following points: i. ii. iii. The relatively huge cost of sending a Japanese manager overseas compared to its local peers. (Sometimes as high as 20 times the local salary.) The scarcity of supply for Japanese managers to send for expatriate missions due to the increased number of offshore Japanese subsidiaries. The need for developing and empowering local talents is also a key reason to achieve true globalization and efficiency. When local managers are well-educated on corporate strategies and culture, they should be more capable of running business as planned. Since Mabuchi started its international expansions as early as the 1996s, more numbers of local managers in most offshore locations should be ready to take charge. Even having Japanese expatriates did not leave them to autonomously plan and manager their locations. Accordingly, the high investment did not leverage their experience and capabilities, but assigned them to just execute strategies from the headquarters.

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2. What are the key elements of Mabuchis strategy and structure? What are its strengths/weaknesses? How might these factors be affected by NIHAO? Mabuchi Motors adopted primarily a concentric diversification strategy selling its products to different sectors that demand end product with similar technological knowhow to manufacture, ensuring that the market fluctuations even out over each cycle. Since it was a labour intensive industry Mabuchi reduced cost in terms of production efficiency by moving manufacturing off the Japanese borders to lower wages countries,. Operations strategy follows a mass production strategy with a high degree of standardization. Also by having multiple operation locations, it reduces the dependency on any one plant. The company successfully covered a wide range of product categories for different industries. However, this diversification strategy can put difficulties on the implementation of the NIHAO program by having the need to integrate local managers activities on both the regional and the product division dimensions which can be more challenging at the beginning of the implementation. Moving operations out of the Japanese border by foreign direct investment has helped the company to decrease cost of sales significantly and lead the global market. This can also help the implementation of NIHAO as the potential new local managers will be exposed to all aspects of operations with a freedom to experiment new methods and strategies. As for the adoption of strict quality standards; it can be a double edged weapon in the NIHAO implementation by exposing local managers to tough quality measures that forces them to either succeed in implementing, save huge costs which can help the companys globalization, or to fail which can lead to additional training investments and time. It is an example of a pure functional structure where a great respect to hierarchy and formal reporting lines. Mabuchis corporation global structure, we find it mostly a

functional structure with some elements of the product division and the international division organizational structures. The implementation of the NIHAO program assigned local Chinese managers to handle separate activities that dont overlap or interrelate assuming such strategy can minimize internal conflicts. The ethnocentric Japanese management is applied across all global locations with the minimal local adjustments to meet each local need. The functional structure is suitable for industrial organizations seeking a great degree of standardization and operational efficiency. The structure also helps having faster decision-making processes due to the centralization and the legitimate power of line managers. However, these strategies also hold many weaknesses such as; the difficulty to transfer and execute corporate level strategies to local operations due to a great power distance between both. The functional structure doesnt empower local managers to innovate with an entrepreneurial spirit in order to compete in developing their own business units and take creative approaches and decisions, as well as it can prevent them from integrating and sharing knowledge with their peers overseas. The increased level of expatriate managers especially in top positions can demotivate ambitious local individuals who are capable and holding a non-utilized valuable local market knowledge. Such structure and strategy can also create a natural resistance to the NIHAO program as it can be perceived as an outsiders agenda to be applied disregarding individual local location needs. Separating local managers activities in the NIHAO program isnt utilizing a valuable team spirit and sharing knowledge among local Chinese managers that is an integral part of their culture 3. What alternatives to NIHAO were available? Are these alternatives consistent with Mabuchis corporate strategy?

The alternative to NIHAO that existed were: 1. Do nothing and let the expatriate costs drain the revenues. Maintain central control as much as possible. This however is inconsistent with the strategy of minimizing the cost. 2. Implementation of the policy in china. This might help in reducing the cost but quality standards may be in question. There may be resistance on the part of people to accept added responsibility. 3. Implementation of NIHAO in other base country like Malaysia or Taiwan. This is consistent with the strategy of quality, diversification and cost.

4. In September 1995, what should Mabuchi do? In September 1995, Mabuchi should:

1. Stop the implementation of the NIHAO program. If possible the NIHAO program should have a pilot run to analyse the strength, weakness and effectiveness in a relatively amicable location. 2. The program should be redesigned towards more tolerance and understanding to local culture and needs. 3. Mabuchi 21 committee should add to its team local Chinese country managers. These local elements should be one of the primary inputs in the design of the NIHAO Chinese program. Similarly the program must incorporate the regional constraints and culture in other locations as well. 4. The management should communicate thoroughly the importance of this program to local staff in a form of clear and defined objectives that can directly relate to them. 5. The NIHAO program should be communicated and positioned internally as a way to raise the career aspiration and community overall in a positive way by providing training programs and career development plans. 6. Mabuchi should modify its organizational structure into a new global product division structure mixed with a regional and country management matrix to suite its current capabilities of having low local affiliates capabilities, high product standardization and product specialization 7. Knowledge exchange between International teams should be facilitated, global recognition programs, job rotations, corporate events and social activities should be held to help narrowing national differences into a one global corporate culture. The aim should be to make the geographical difference minimised and converted into the global corporate culture. 8. The compensation structure must also be revisited to adjust to the regional difference in culture and perception of rewards.