Question A
Until early 1990s Japanese multinational corporations (MNCs) were globally successful. However, recently, there have been many changes that have presented various challenges to these multinationals, necessitating their adaptation to various management strategies including the International Human Resource Management practices. Though most of these firms still employ the same practices, to some extent, there has been some degree of adoption of strategies to respond to foreign subsidiaries’ needs. Recently, Japanese MNCs have been undergoing ‘internal internationalization’ as well as ‘external internationalization’ in their foreign operations (Kambayashi, 2014). Sustaining these global companies entail that Japanese executives need to adopt a new way of thinking in terms of the organization, marketing as well as strategy. Replicating domestic strategies in foreign operations initially worked successfully but not anymore. There have been various attempts by the Chinese government to adapt to changes. In the 1990s and early 2000s, there were efforts to open up Japanese firms to outside capital as well as takeovers but it failed ( Black & Morrison, 2010 ).
It is not yet clear whether the current initiatives indicate the willingness of Japanese MNCs to undertake the great step that is necessary to restore them to their previous competitiveness. Their management practices are homegrown and this makes it a challenge for them in responding to global competition (Kambayashi, 2014). For this hindrance, these multinationals have responded to various trends including the need to shift from production to buyer-driven global value chains, fostering strategic alliances as well as cooperative relationships, establishing global factory strategies and cross-border vertical specialization.
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These firms are attempting efforts to undertake organizational as well competitive transitions but the success of such initiatives largely depend on the willingness and capability of the parent MNCs in the cross-border transfer of management practices, the effect of risk on investment in the host country, strategies for ownership and entry, institutional differences, economic development variations between the home and host countries, knowledge boundaries as well as developments in insider networks which will overcome institutional and cultural differences within the company. Previously, Japanese firms put more importance on price efficiency disregarding the diversity of the different markets within which their subsidiaries were located ( Black & Morrison, 2010 ). This has had to change in order to regain global competitiveness.
Question B
Sinopec Group is a Chinese state-owned company that deals with petroleum energy as well as chemicals. Its headquarters are in Chaoyang District, Beijing. It operates in different areas of business including the exploration of oil and gas, refining, production as well as marketing of petrochemicals. Other ventures include the production of chemical fertilizers, chemical fibers as well as other chemical products. The company is also in the import and export business of the same line of products ( Black & Morrison, 2010 ).
Diversity is important for global success. Sinopec group is currently being ranked number 3 on the fortune global 500 list of companies. The company’s leadership is made of a president, six vice presidents and two members of the party committee. It consists of Chinese nationals. These are mainly engineers who have served in different capacities in other organizations in China apart from Zhao Dong who is an accountant. Dai Houliang is the president. The vice presidents include Li Yunpeng, Jiao Fangzheng, Ma Yongsheng, Ling Yiqun, Liu Zhongyun, and Li Yong. Jiang Liangping and Zhao Dong are the members of the party committee. The president has mainly gone through different ranks in the same company and was working for other two petroleum companies in China (Kambayashi, 2014).
The profile of other leaders mainly shows exemplary work experience having worked with other different organizations in different capacities with consistent rise in the corporate ladder. One common feature that comes out is that most of them have previously worked for Chinese companies. There is thus little foreign experience. The company is an MNC, thus operating in the global market, it operates in developing as well as developed nations, serving different types of customers in terms of social, economic, technological as well as environmental perspectives. Petroleum products are universally used all over the world as most countries rely on fossil fuel for energy source. This thus means that the product trades in the global market which is characterized by diversity. Serving a global market entails that one understands the different cultural backgrounds of different countries, which requires diversity in the organizational as well as marketing strategies that suit specific markets. In this era of globalization, it is close to impossible to serve a homogenous market (Kambayashi, 2014).
Question C
What made Japan succeed in the first place is the adoption of homegrown strategies in its operations in the foreign subsidiaries. However, it is for the same reason that the firms could not maintain this success. Focusing too much on their culture without regarding that globalization has transformed everything became its downfall. Their methods were effective in enhancing productivity for exports but when it came to serving the needs of the foreign markets, they could not adjust their strategies to suit the local market and instead thought they could adjust the market to suit their homegrown strategies. While these strategies worked at home, foreign markets have specific needs for which products and services needed to be tailored to serve. Facing less competition at home ill-prepared these firms to face such competition in the foreign markets, reducing their competitiveness (Kambayashi, 2014).
Having a workforce that is purely consisted of one nation offers a big problem since there is a general lack of experience with foreigners, and it becomes difficult to diagnose and meet the needs of foreign markets. A consideration of all the factors indicate that Japanese MNCs failed because they replicated their methods from home to foreign markets right from their processes to their workforces mainly employing their nationals from the top to low management levels (Kambayashi, 2014). The inability to adapt to changes and move by the current market needs lacked in their strategies. This provides a very important lesson for BRIC economies.
Currently, these economies drive the global economy but the question as for how long they will remain competitive is a matter of whether they are in a position to adapt to changes as they occur in their home ground as well as their foreign ventures. Adoption to such changes will be determined by various factors. These factors include technology, innovation, and policies to enable adoption to changes (Kambayashi, 2014). The ability of these countries to shift from fossil fuel energy to clean energy in response to depleting resources, adoption of new technology, undertaking development reforms, being innovative and responding to social and environmental needs of their markets will determine whether they remain relevant or become replaced by other emerging markets.
References
Black, J.S., & Morrison, A.J. (2010, September 1). A cautionary tale for emerging market giants. Harvard Business Review . Retrieved from http:// money.cnn.com/magazines/fortune/global500/2010/countries/japan.html.
Kambayashi, Norio. (2014). Japanese management in change: The impact of globalization and
market principles . Springer
