Free Business Essays - Trading Internationally
Introduction and History of Organisation
Throughout the 1980s Kodak an American based company trading internationally suffered serious competition from the Japanese firm Fuji Photo Film which aggressively expanded into both the American and European markets in which Kodak had relatively strong positions. In order to defend itself against these aggressive competitive moves Kodak decided to enter their major rival’s home market and its local operation has grown from a small beginnings to an operation now with over 4,500 employees reporting to the company’s headquarters in Rochester, New York and product developers located in Gifu Japan, (Harsany, 2004). It has been reported that this American electronics maker is beating the Japanese firm in the market due to rapid technological development and implementation of these developments which has given Kodak the competitive edge, (McWilliams, 2005). As a result of its successful operations in Japan Kodak’s label has achieved high levels of brand awareness and recognition among Japanese consumers and has further shown market growth rates of almost double its Japanese competitors. It is interesting to note that as a multinational company Kodak in Japan thinks and operates just like a Japanese company in terms of organisational structure, culture and human resource management as a particular adaptation to the Japanese environment. However at the corporate level McKinsey’s framework clarifies the significant relationship between the hardware of a organisation, namely its organisational structure and system and the software including such elements as those related to human resource management and interactions and inter-dependencies between these and local cultural influences, (Karlof, 1993). Thus it is essential to look at Kodak’s local subsidiary structure and HRM system and the relationships between these and local environmental conditions in gauging and analysing the determinants and outcomes of Kodak’s organisational strategies within Japan.
Analysis of Environmental Factors
It is considered that there is both a domestic and foreign environment which synthesise and contribute to the external influences on international companies in the pursuit of strategic and organisational goals. However in the case of Kodak’s operation in Japan it is useful to focus primarily on the foreign environment as this dimension affect significantly the local subsidiaries of the company’s operations in Japan significantly. Albaum, Strandskov and Duerr (1998) provide an environmental framework for analytical discussions of the variables that impact on an international company, which are defined as economic forces, cultural factors, political/legal environments and competition. Doole and Lowe (2001) suggest that the technological environment has become a major driving force in all aspects of the performance of international firms. To begin with it can be contended that a key economic force influencing all forms of organisations and especially international firms has been the forces of economic integration denoted under the broad term globalization.
In effect these global processes go beyond the economic activities pursued by individual organisations and involve cultural and political/legal process and changes as well the interactions between organisations and these processes. These elements are added to by the rapid development of technology which lessens the length of produce life cycles and is added to also by the changing demands of global consumers. These consumers require faster and more effective responses to their needs resulting in increasingly intense competition for the satisfactions of these needs. Specifically in relation to the discussion here Japan’s prominent position in consumer electronics development and consumption globally such as for example digital products can be attributed to a large extent to the country’s rapid and continual upgrading of human resources through corporate training and employee development programs emphasising continual improvements and developments in technological innovation, (Harzing, 2004). Kodak’s entrance into the Japanese market through direct investment sought to benefit from this innovation related advantage and in turn compete with rivals in their home market and consequently decrease their competitive resources in entering into competition with Kodak in its domestic US market. Additionally demand conditions within Japan have given Kodak advantages in competing in terms of the stagnation domestically of some its rivals.
However the rapid development of technology not only lessens the product life cycle of especially those high-tech electronics goods but also generates large pressures from more demanding and sophisticated consumers particularly in terms of product pricing and quality. It is therefore important to be aware of the strong nationally inspired cultural influences on the business strategies of Kodak particularly the way how the firm structured and operated within the local context of Japan. One of the most important elements in Japanese culture is an employee’s loyalty to the company and strong management in terms of leadership and decision making at senior level. Kodak’s subsidiary structure is designed totally the same as a Japanese company addressing hence the issue of recruiting and retaining qualified Japanese personnel within an organisational structure which is familiar to them. This can be seen as innovatory in terms of a multinational corporation adapting itself to the local culture and profiting from a local-global dichotomy for organisational operations. Secondly Japanese companies are highly regarded for their excellent cooperation between workers through team work practices (Odaka, Ono & Adachi, 1988).
Furthermore it can be argued that learning effect through team work is essential for a company since each member within the team can complement the other with their respective strengths and this is a particularly strong organisational process in Japan, (Margerison, 2002). In addition to employee loyalty and team work another significant cultural factor which has affected Kodak is organisational contexts of employee development and training programs. It has been argued that the commitment of both workers and managers to their firm and the company’s investment in updating their skills and knowledge of cooperation methods has led to the success in industries in which cumulative learning effects are essential such as the electronics industry. Thus Kodak’s success in Japan result also stems from their faster and better learning capabilities in relation to their competitors. As Collis (1994) and Grant (1996) point out the ability of one organisation to learn more effectively than its competitors is indeed central to long-term strategic success.
Organisational Policy Analysis
Comparatively Kodak employs a multi-domestic strategy in the field of organisational HR management largely reflecting the critical influences of national culture specific to its local operations. According to Bartlett and Ghoshal (2000) the term multi-domestic addresses the significant role of national differences for a multinational firm in achieving its strategic objectives in a local environment. At this level global efficiency is realised mainly by the increasing return which comes from better structures integrated into local contexts and better responses to different consumers’ tastes and preferences. Therefore it is vital to consider how an organisation should be structured in order to provide the optimum framework of strategy and control mechanisms and in particular for those companies competing in highly competitive industries. Even more importantly is the fact that human resource is a key element operating within structural contexts which to a large extent determines the efficiency of corporate performance.
Our first point to consider then is the fact that the local Kodak subsidiary is entirely Japanese including a Japanese boss and Japanese management team. There are only 30 non-nationals among Kodak’s 4,500 people in Japan, (The Economist, 1990). There are significant advantages of setting up subsidiaries in this manner as business activities are conducted in a manner aware of local conditions. Therefore the greater independence of the organisation such as marketing opportunities associated with multinational flexibility allows a company to learn from differences and identify local needs as well as use local resources to satisfy these needs. Similarly this strategy demonstrates more sensitivity in dealing with foreign employee relationships and customers which subsequently are able to minimise the cultural differences which generate potential conflicts between people and organisational structure. In addition a major criticism in regards of other and previous HR strategies adopted by multinational companies is the ignorance displayed towards the significant effects of national culture as mentioned earlier. Mullins (2005) argues that the needs of any form or hierarchy used by the organization is shaped by the different national cultures and frequently gives those structures different meanings. Kodak’s organisational strategy has and will need to continue then to be aware and sensitive to these trends in the pursuit of success in the Japanese market.
For example Kodak hired a former Olympus executive for its new digicam operations, Yusuke Kojima, as a general manager and sought to benefit from his experience in helping build the leading position of Olympus in digital camera manufacturing, (Bandler, 2003). The combination of his conceptual ability on techniques and skills in managing people and a Japanese background was able to balance the conflict between creation and tradition for Kodak’s operations. However there are some disadvantages generated through the usage of a multi-domestic strategy. First of all a subsidiary may be seen as less important by head office managers and as a result this may generate conflicts between domestic and international strategic operations. For example the long-term strategic adjustments decided by head office might be performed ineffectively due to the strategic objectives defined by subsidiary management or the conflicts between two subsidiaries in different countries in short term strategic achievement of overall goals. The issue here then is one of effective co-ordination. Also it has been argued that this kind of human resource structure might delay the speed with which organisational innovation occurs because of the lack of fresh blood entering into the firm namely people come from different national backgrounds with different technical references and organisational experiences. This is arguably vital for the company due to the nature of the electronics industry and the increasingly intense competition within this industry. As a result an organisation’s experience in learning passed to employees is able to increase productivity in learning yet nevertheless might also decrease the creation of functional organisational structures. Linked to this also then is the view that revolutionary change in an organisation is identified as essential for an organisation’s growth, (Greiner, 1998). In this sense it can be said to result from the quality of human resource to some extent determined by the diversity of backgrounds and knowledge something hence of consideration for the company.
In addition sharing information is now considered widely as essential in contemporary organisations due to new characteristics of the organisation which depend largely on effective information systems to create organisational innovation. The idea of organisational learning has been present in management studies literature for decades but researchers have not as of yet identified templates or ideal forms for organisations, (Easterby-Smith & Araujo, 1999). This is because factors in the foreign environment either directly or indirectly influence the organisation’s human resource structure. Therefore it is useful to examine Kodak’s practices in attempting to develop an effective information system contributing to the good performance of its subsidiary. It is argued that for most multinational companies one of the main problems at the human resource level is communication and in particular as this bears upon multi-lingual operations, (Lincoln & Kalleberg, 1990). Thus Kodak decided to exploit the technique offered by the tool WebEx in order to build up a more effective information sharing system to contribute to the learning process among all the levels of employees within its organisation. WebEx consists of meeting centres, support centres and event centres deployed utilising video-conferencing technologies which allow unlimited number of employees to attend corporate meetings virtually. In doing this free and relatively unrestricted information flows are generated and with these tools Kodak makes company wide announcements and updates employees on changes in benefits and other labour matters.
While human resource departments use this system internally other employees use WebEx to educate retailers in relationships with the company about imaging products, (Harsany, 2004). Additionally it is believed that the use of WebEx contributes positively to teamwork performance among not only different departments but also between the head-office and local Japanese subsidiary management team. This is because communication among different departments is enhanced as well as the involvement of the employees in decision making processes. In short the development of technology has equipped the organisation with advanced information exchange channels as well as allowing for obvious saving in costs related to HRM such as travelling costs for meeting. Timing which is critical in response to customer’s needs also benefits from the more effective and direct information channel. However it is necessary to mention that the critical disadvantage of the use of WebEx is the absence of body language and lack of personal touch in communication. This is can be seen from most of the sophisticated tools used by organisations compared with traditional communicating forms. In this vein then Cummings and Worley (2005) state that the quality of communication rather than the quantity matters most in managing organisational development and change.
In addition leadership as a cultural factor in a personal sense is an important ingredient in a Japanese context with its strong managerial leadership traditions. Traditionally then Japanese companies have been highly centralized with several hierarchical levels interacting and dependent on one another compared with a much more flatter form in US companies. There are therefore potential risks associated with generating problems during the use of information systems which may go against the grain of traditional Japanese managerial styles. From the employee’s perspective they expect to be supervised closely and believe the power holders within the organisation are entitled to special privileges in contrast to more egalitarian philosophies within American organisations. It is not clear presently whether the traditional Japanese management style and culture will adapt to the development of advanced information systems or whether it will create obstacles for the efficient operation of the organisation.
Conclusions and Recommendations
In considering the development of Kodak’s Japanese subsidiary it is useful to be aware of the differences between the terms and concepts of organisational learning and the learning organisation. According to Tsang’s (1997) framework organisational learning is the process involved in individual and collective learning inside organisations while learning organisation refers to an action orientation for an organisation. Additionally of consideration is the fact that due to the pace of globalization and technological development learning has become a determinant factor in the survival and success of an organisation and in particular of those organisations that are multi-national. Effective learning generates innovatory creation which is closely related to the R & D departmental functions of a business and this is especially for a company like Kodak competing in a high-tech industry. It can be argued then that human resource policies should encourage staff to be more open-minded and recruitment should accept people from different backgrounds who might not agree or reflect the organisation’s cultural specificities but bring to the company a diversity which could allow for innovation to occur through shared learning processes within the organisation. Linked to this innovatory aspect is the realisation also that revolutionary change comes from most the double-loop learning process that is possibly linked to a varied replacement of personnel with diverse backgrounds and knowledge along with the wholesale revision of systems and structures within an organisation. Thus while creating a local subsidiary faithful to Japanese concerns is a good point on the one hand for Kodak it may be the case that to innovate in the future may be difficult for the subsidiary. Also then therefore in order to achieve organisational growth it is vital and necessary to balance cultural influences and innovation within the organisation. A global perspective should be widely employed for a multinational company in choosing the organisational structure and management approach in operating domestically but the challenge is the mix between local and global which is used. This a challenge for organisational policy not only within Japan for Kodak but also arguably throughout its regional operations in different parts of the world.
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