Sony - a Japanese company going global

Inhaltsverzeichnis

Table of contents

1. Introduction

2. A deep look into Sony
2.1 Sony – History
2.2 Sony – Today

3 Japan–culture and traditions
3.1 Japan – History
3.2 Japan – Culture and tradition
3.3 Japan – Individualism

4 Japanese management
4.1 Collectivism
4.2 Hierarchy

5 Japanese globalization strategies
5.1 Going global – Japanese companies
5.2 Going global – The Sony corporation

6 Conclusion

Appendix

Sources

1 Introduction

“It’s a Sony!” – When looking around in your household you will probably see that this once used advertisement slogan in fact is true. No matter if television, radio, video recorder or Walkman – the name Sony is one of the most recognized brands on electronic entertainment devices.

No surprise that the Sony corporation is one global player in electronic business. It is a leading manufacturer of audio, video, communications, and information technology for consumer and professional markets world-wide.

The company, headquartered in Tokyo, in March 2002 employed 168,000 people all over the world. In 1946, when the two founders of Sony, the Japanese electrical engineers Masaru Ibuka and Akio Morita, decided to create their own company in Tokyo, they started with 20 employees.

In the past there were a lot of companies who conjured their subsidiaries out of nothing, and this is where often they very soon returned to. In contrast, the Sony corporation gave an impression on what is possible with the proper strategy. This impressive story of global success was only possible through a unique vision that was influenced a lot by Japanese habits and culture, by the way of operating and doing things “the Japanese way”.

What is so special about the Japanese way? How did the Sony corporation and especially Akio Morita, who could undoubtedly be seen as the uncrowned head of the company, successfully manage to transfer it to subsidiaries world-wide?

In my opinion, many aspects of the Sony strategy and philosophy could also be transferred to many Western companies today.

To investigate the topic I will focus on certain subjects: After a short look into the Sony corporation’s present and past in section 1, I deal with a little Japanese history and with Japanese culture, traditions and especially individualism aspects of social life in section 2. Some of them developed some thousand years ago and still nowadays make a big part in Japanese everyday and business life, so part 3 will examine Japanese management styles, with a special view on collectivism and hierarchy. I will compare them with European and U.S. habits and will try to draw parallels to the Sony phenomenon. In Section 4 I investigate the strategies Japanese companies use to integrate their Japanese culture, tradition and management styles into Western markets, with a special look at the Sony corporation. Were there difficulties or even problems when transferring Japanese management structures to U.S. or European countries? How did they manage to compensate and mix the different cultures? To what extend did they have to make compromises? In the final conclusion I will especially refer to the main peculiarities of Sony’s globalization process and draw a line to how their management styles could be used in Western companies today. The goal of this paper is not to conclude globalization strategies out of the Sony experience, because I think that globalization processes today could not be compared to those that were current more than forty years ago.

I chose this topic because though we as future managers learn a lot about how to deal with foreign markets, cultures and management styles at the University of Applied Sciences, to my mind we do not get properly instructed on how we could use them for own purposes. So I decided to look at it the other way round and to investigate how a Japanese company had to deal with foreign markets, cultures and management styles. I chose the Sony corporation because first of all it definitely is a very successful company. Besides I always liked the way Sony presented new ideas and revolutionary products. I wanted to learn more about the internal structures and innovation processes within the Sony corporation. Also, in general I am fascinated by the Japanese culture. I loved reading Michael Crichton’s novel “Rising Sun” and watching Ridley Scott’s picture “Black Rain”, both dealing being exciting crime thrillers, which also deal with cultural conflicts between Americans and Japanese.

2 A deep look into Sony

To understand the philosophy of the Sony corporation it is necessary to take a look at the historical process of the company which is very much linked with its founders Akio Morita, born January 26 in 1921, and Masaru Ibuka, born April 11, 1908. Without their ideas and courage the success probably would not have been possible. A look at the present through the annual report can only give a small impression of the dimension of the Sony corporation and its global network of subsidiaries.

2.1 Sony – History

The history of the Sony corporation starts in May 1946. At that time the two Japanese electrical engineers Masaru Ibuka and Akio Morita decide to create their own company in Tokyo. The company started as a workshop for electronic devices named “Tokyo Tsushin Kogyo Kabushiki”, which could be translated into “Tokyo Telecommunications Engineering Company”. The name in short was “Totsuko”, which will be used from now on. Totsuko then consisted of only 20 workers, which Ibuka brought from his research facility where they tested and produced new military equipment during the Second World War. In the beginning the only tasks they acquired were small repair jobs of radios. In the post war era, the Japanese people were poor and there was no demand for expensive technology.

Subsequently, Ibuka's factory worked on an electric rice cooker. As the war plants had closed down, there was more electricity than was needed at the time. This surplus fed Ibuka's desire to produce items which were needed for everyday life. The electric rice cooker was a primitive product. The result depended heavily on the kind of rice used and the weight of the water. Tasty rice was a rarity, as the rice cooker produced mostly undercooked or overcooked rice. It was a memorable first failure for Ibuka and his staff, but it first showed the desire to produce tools that the consumers first did not recognize as useful but that in fact were. This still is one of the ideals the Sony corporation follows, so as Morita (p. 87, 1988) describes it in his own book:

“The public does not know what is possible, but we do. So instead of doing a lot of market research, we refine our thinking on a product and its use and try to create a market for it…”

This makes it clear why the small company soon had its first successful products placed on the Japanese market. The best-selling product at that time was an electrically heated cushion.

To expand its sales channels, Ibuko and Morita decided to start work on something more striking. The result was the first magnetic tape recorder in 1950, in fact a revolutionary invention. Unfortunately, things went different. As Morita points out:

‘We were in for a rude awakening. The tape recorder was so new to Japan that almost no one knew what a tape recorder was, and most of the people who did know could not see why they should buy one. It was not something people felt they needed. We could not sell it.’ (Morita, 1988, p. 64)

But with great marketing effort at least some units were being sold to some music schools and universities. And finally, they managed to sell a large number to the Japan Supreme Court, which was a turning point and brought a lot of Yen into the cash desk. For five years they held a monopoly on magnetic tape recorders, since they owned the AC Bias Recording patent, until the Matsushita Electric Industrial Co. entered the market. But this competitor even more increased sales of the Totsuko tape recorder, since markets are in fact stimulated by the presence of many competing companies. Soon, the tape recorder also penetrated into the consumer’s market.

A much bigger success came when in August 1953, Morita, who was to start out for a three-month tour of American and European businesses, was asked to sign an agreement with the US company Western Electric. It contained the right to use a license on the transistor, which was invented by Western Electric.

With this fruit from America they decided to develop a radio with the transistor technology. It was a risky process, because they had to afford a lot of money to built the factory plant that was necessary to produce the transistors.

After they successfully produced the first transistor radio they made the decision to enter both the Japanese and the US market. But to do the latter, they needed to think of a more significant label than Totsuku was. They were inspired by the expression “sonny”, which at that time particularly in the US stood for happiness and joy, but unluckily for Japanese meant “to lose money”. So they mixed it with “sonus”, the Latin word for “sound”, and out came “Sony”. Totsuko wanted to avoid that its products were “convicted” as “Made in Japan” by US customers, so they printed the obligatory line as small as possible – once too small for US customs, so they had to make it bigger again.

In August 1955 the transistor radio TR-55 went on sale. It had the honour of being Japan's first transistor radio and sold like hot cakes. Totsuko also used the reputation it achieved with transistors by selling them to other companies. Totsuko grew and grew – in 1956 they already counted 483 employees. To realize a corporate international identity, Totsuka changed its whole company name to Sony Corporation in 1958, and in 1960 the founding of the first international subsidiary could be announced: The Sony Corporation of America. Sony, being the first Japanese company to do so, entered the US stock exchange. It expanded more and more, established subsidiaries in Europe, Australia, finally all over the world. Their keen efforts on research and development always produced devices that were new to the world, such as in 1962 first portable mini TV-set, in 1965 the first home video system, in 1979 the Walkman, in 1982 the first CD player, in 1983 the first 3½’ Floppy disk, in 1985 the first 8mm-camera, and so on.

2.2 Sony – Today

Today the Sony corporation according to the annual report employs about 168,000 people world-wide in more than five lines of business:
- The electronics business consists of audio, video, televisions, information and communications devices, electronic components and other.
- Sony Computer Entertainment Inc. conducts the game console and software business.
- Sony Music Entertainment Inc. (SMEI) and Sony Music Entertainment (Japan) Inc. (SMEJ) take care of the music business.
- Motion picture and television business is conducted mainly through Sony Pictures Entertainment Inc. (SPE).
- Insurance business is handled mostly by Sony Life Insurance Co., Ltd. and Sony Assurance Inc.
- Other business includes leasing and credit card businesses, satellite distribution-related businesses in Japan, development and operation of location-based entertainment complexes.

The 1,080 subsidiaries in 70 countries made $57 billion of sales and operating revenue, which is the largest in the Sony history.

Since the founders of Sony sadly already passed away – Akio Morita on October 3, 1999 and Masaru Ibuka on December 19, 1997 – the company is run by a board consisting of twelve directors, of which the most important representatives are:
- Norio Ohga, Chairman of the Board
- Nobuyuki Idei, Chief Executive Officer (CEO)
- Kunitake Ando, Chief Operating Officer (COO)
- Teruhisa Tokunaka, Chief Financial Officer (CFO)

3 Japan - culture and traditions

The Japanese culture has always been considered as a very special one. Many outsiders consider the Japanese as arrogant, introverted people, who regard others as inferiors. To see what really stands behind a Japanese soul it is necessary to focus on the Japanese history and culture.

3.1 Japan – History

The culture and traditions of Japan today to my mind have been shaped by four periods: The “time of the fighting states”, the Edo-period,the Meiji-period, and turning point in the Pacific War.

In the time between 1490 to 1600, the Japanese empire was reigned by chaos and permanent war. Although the emperor was still present, the country in fact was ruled by the Shogun, the military leader, and was divided into various regions, which were controlled by clans of autonomous princes, the Daimyo. Those made use of the power of several groups of Samurai warriors, members of an elite fighter class. During this era of feudalism many clans were fighting each other, so that it was called the “time of the fighting states” (sengoku jidai).

In 1600 the clan of the Tokugawa set up its headquarters in Edo (Tokyo), whilst the emperor and his court stayed at Kyoto – still without any power worth mentioning. To guarantee political stability, the Daimyo and Samurai had to do an official visit to Edo each second year. Their families practically were hostages of the government and were not allowed to leave Edo. Since 1635 Japan began to isolate from the rest of the world. Whoever left the country or traded with foreigners would be condemned to death. But through this isolation a lot of security and peace was assured so that all kinds of arts began to thrive, like for instance haiku-poetry and the bunraku-puppet show. In this so-called Edo-period the quality of textile, vessels, ceramics and lacquers improved.

This peaceful time lasted almost two hundred years, until in 1853 the US navy landed with a powerful fleet and forced the opening of Japan. The Tokugawa clan consequently lost its power, the Shogun was deposed, the Daimyo and Samurai removed. In 1868 the imperial power was re-established and Tokyo became capital of Japan. The country was separated into prefectures we know them today. Young emperor Mutsuhito called his time of power the „enlightened reign” (Meiji). Thus, the era today is known as Meiji-period. The economy experienced a fast westernization and industrialization. Western experts were being brought into the country and Japanese students sent abroad. By winning both the war against China in 1895 and Russia in 1905 the Japanese thought that they had caught up on the Western economic and military standards. In the First World War, Japan joined the Allied powers, but played only a minor role in fighting German colonial forces in East Asia. Thus they were able to concentrate on economic growth rather than meddling with the Germans. In 1928 Emperor Hirohito ascended to the throne. During the 1930s, the military established almost complete control over the government. Many political enemies were assassinated, and communists persecuted. Indoctrination and censorship in education and media were further intensified. Navy and army officers soon occupied most of the important offices, including the one of the prime minister. Nationalism spread the country and open hostility against China started to grow, which lead to the invasion of Manchuria and in 1937 in occupation of almost the whole coast of China. In 1940, Japan occupied French Indochina (Vietnam), and joined the Axis powers Germany and Italy. These actions intensified Japan's conflict with the United States and Great Britain. In December 1941, Japan attacked the Allied powers at Pearl Harbour and several other points throughout the Pacific. Japan was able to expand its control over a large territory.

The powerful era of Japan ended during the turning point in the Pacific War, the battle of Midway in June 1942. From then on, the Allied forces slowly won back the territories occupied by Japan. However, the military did not think of surrendering, and the Soviet Union entered the war against Japan. On August 6 and 9 in 1945, US military forces dropped two atomic bombs on Hiroshima and Nagasaki 1944, intensive air raids started over Japan. On August 14, however, the more moderate emperor Showa finally decided to surrender unconditionally. During 1945 – 52, the destructed Japan was occupied by US forces. Since the early 50s Japan experienced economic growth, which also lead to a rushing into world-wide sales markets, in which also the Sony corporation played a big role. The rise seemed unstoppable, until in 1999 the East Asian economy crisis struck many Japanese enterprises.

3.2 Japan – Culture and tradition

Due to historical circumstances each country developed and still develops its own cultures and sub-cultures. So did Japan. Certainly, influences from abroad also played a big role, as Morita (1988, pp. 251/252) states it:

“We often joke that most Japanese are born Shinto, live a Confucian life, get married Christian-style, and have a Buddhist funeral. We have our rites and customs and festivals steeped in centuries of religious tradition, but we are not bound by taboos and feel free to try everything and seek the best and most practical ways of doing things.”

Especially after the Second World War, the Japanese emperor advocated to imitate European life-style. Also Morita experienced people attending ballroom dances, copying the European dressing order and food culture (Morita, 1988, p. 10).

Traditionally in Japan family always played a big role. The families were big. Often many generations – grandfather, father, sons and daughters - lived together in one house. So did Morita, although having the privilege of living at a high standard. He lived in a big mansion with tennis court, in a “rich man’s street”, as people called it (Morita, 1988, p.7). The reason for this was that the family owned a soy-sauce producing factory. By this Morita early learned to help his father in business affaires and could benefit a lot from it.

Especially within such big families, traditionally the oldest ones gain a lot of respect. Discipline within the family grants discipline for life, business life in particular. Many family owned businesses for instance relied on the eldest son being the successor as head of the company after his father. Morita therefore was quite doubtful whether it would be a good idea to found his own company in the electronics business and leave his father “alone” with his business. Luckily his father stood behind his son’s idea and even supported the company with occasional loans. In return, he got paid with stocks which turned out to be more than just a compensation. Also by the reaction of Morita’s father it is recognizable that the strict discipline within Japanese families seems to diminish (Blanpain/Hanami, pp. 27+29, 1993).

Besides discipline there exists a hard competition both in business and social life in Japan. This is why parents in Japan see to it that their descendants enjoy a high standard of training at school and business education.

This is transferred by the Japanese education system. Young Morita for example had to sit in unheated and during winter very cold classrooms. This step was being used to strengthen the awareness of the young one’s powers. This education Morita felt was continued during the navy service when he had to run very long distances – before breakfast.

Also Japanese universities maintain a high standard. Only the best students even get in and therefore have to pass very hard entrance exams, even harder than the following studies themselves. This also Morita criticises (1988, pp. 245+246) in respect to the United States’ and European education systems where the opposite seems to be the case.

Maybe also because of the competitive education system, poverty does not seem to exist in Japan. People early learn the importance of struggling for a comfortable life by achieving a good final examination that is the entrance to a secure job. The gap between the rich and the poor is seemingly small, so that the number of people who consider themselves as part of the middle class make more than 90% (Morita, 1988, pp. 149+150).

In connection with this goes the Japanese philosophy of avoiding to waste things. Morita (1988, p. 252) explains this with the Japanese expression “mottainai”, a key concept in social and business life, which “suggests that everything in the world is a gift from the Creator, and that we should be grateful for it and never waste anything” .

3.3 Japan - Individualism

Japan in my opinion is one of the few countries, where individualism and collectivism both have their own rate of importance in quite different segments of everyday life.

No matter if family, school, military training or business education: Each individual is formed to get aware of one’s strengths and weaknesses and this way become individually successful to gain respect and honour. The most honourable status one can achieve is ‘Namba Wan’, the ‘Number One’, no matter whether in class, sports, or business life. In Morita’s class for example the pupils were seated front to back in order of performance (Morita, 1988, p. 17), obviously to support competition.

Nothing is more honourable than both being the head of a happy family and a successful businessman or businesswoman.

Since the long lasting, chaotic era of the Daimyos and Samurai, who were involved in many wars against each other, many Japanese show a high concern of sympathy to those who step out of the ordinary by doing or achieving certain things and this way become some kind of heroes (Morita, 1988, p.30). Furthermore, the age of the Edo-period left its mark on the Japanese people, since the rules at that time forbade any individual excesses. This is for instance why many Japanese girls and young women today show a confusing variety of outfits. Young man join motorcycle gangs who openly and loudly attack the environment (Schneidewind, 1998, p. 9). Also during the running FIFA World Championship in South Korea and Japan one could experience a phenomenon that to my mind also could be linked to Japanese individualism: Even in matches without the Japanese team – like for instance Brazil against Costa Rica – many of the Japanese spectators try hard to overtrump even the fans of the partaking teams when it comes to dressing up and making one’s face up in the nation’s colours. The eminent desire for Karaoke (singing along to well-known songs watching their lyrics scrolling on TV-screens) among the Japanese folk in my opinion also shows how they strive for individuality. I think this is also the cause for the general enthusiasm for innovations. Especially Morita and Ibuka were characterized by it.

One of the most guarded treasures in Japan is the honour of the individual. The fear of losing one’s face is so great that it influences a lot of social behaviour and way of thinking. Almost as awful as losing one’s own face is bringing someone into a situation where he might dishonour himself. This is why Japanese dialogues does not seem to contain any possibilities to pick a quarrel. Instead of fighting, Japanese use their language to analyse what went wrong instead of directly confronting the opposite. Being loud or rough is not listed on the agenda. In Japan the one who overreacts and loses his temper is the one who loses his face. Morita (1988, pp. 116+117) writes about it: “One day in New York my friend … Issey Miyake told me that he was upset that Yoshiko and Diana Vreeland … had ‘a terrible fight’ (…). There was no fight, just a difference of opinion that is natural among Westerners, but which most Japanese try to avoid.”

4 Japanese management

The Japanese management styles that formed during the time of industrialization was on the one hand influenced by Japanese culture and history, on the other hand by the westernization that took place after the end of the Tokugawa age.

Moreover certainly the time of the economic wonder during the 50s, a time where also Sony managed to grow and to expand to foreign markets, very much affected Japanese management strategies.

4.1 Collectivism

In contrary to predominant individualism in private life, working life is very much shaped by collectivism.

It seems to me that a Japanese has three families: his real family, the company he works for and the country he was born in.

The Japanese pride for their nation “Nippon” is extra-ordinary. Japanese revel in statistics that show their country ahead of others. Authors writing books titled “Japan as Number One” regularly can be found on peak positions of the Japanese best-selling lists. Since becoming “Namba Wan” is the core aim of a Japanese individual and there are not so many Namba Wan positions in Japan, everyone can reach this goal as member of the “Japan corporation” (Sachwald, pp. 17+18). And since all Japanese companies are part of the Japan corporation, for a Japanese employee the company he works for is not just his employer. He sees himself belonging to a whole community and he is one part of it that can make it successful. Because of this dedication Japanese, when introducing themselves to others, first name their company before they tell who they are (Blanpain/Hanami,1993, p. 27). In comparison to Germany for example, the willingness to sacrifice for one’s employer in Japan is very much higher. Germans as a rule work as long as they have to according to their employment contract which is very often based on collective agreements. For a German the working time therefore always ends “as soon as the bell rings” – as long as there is no overtime premium. For a Japanese, “working time is the time that is needed to do the job” (Blanpain/Hanami, 1993, p.28).

In Japan the relationship between employee and employer can be regarded as an interrelationship, not only because the employee earns money to care for his family.

As a countermove to their loyalty, Japanese employees have the benefit of not being regarded as tool by their managers, but as somebody who helps to realize the company’s visions and ideas. Morita (1988, p. 158) explains it as follows:

“Management must consider a good return for the investor, but he also has to consider his employees…, who must help him to keep the company alive and he must reward their work. The worker’s mission is to contribute to the company’s welfare, and his own, every day all of his working life. He is really needed.”

Therefore, he thinks that “the performance of a manager is measured by how well that manager can organize a large number of people and how effectively he or she can get the highest performance form each of the individuals…” (1988, p. 171).

To underline that philosophy, Japanese companies keep up the institution of life-time employment. Even in times of crisis they do not switch to the “hire and fire”-mentality of for instance US enterprises. Instead, they try to form a motivated and flexible workforce. This is done by consequent team-work, internal training seminars to create broad job classifications, by promotions and extraordinary awards and through extensive sharing of information (Blanpain/Hanami, 1993, p.28). This way it is possible at all to use the full brain power of a company or department. A fact, that Morita had preached even more extensively, because he thought that the more different the employees ideas in a company, the smaller the risk of making mistakes (1988, p.163). To develop a motivated labour force, Sony even established a non-profit bar called “Sony Club”, where employees could meet after work. Although, as Morita admits, it also existed to prevent the workers hanging around in unknown bars, drinking too much and telling secrets of the company (1988, p. 235).

In terms of making mistakes, Japanese companies in general are more tolerant. Instead of trying to find out who made the fault, the cause for it is being analysed. Individual responsibility is rather undefined, so that young employees are encouraged to experiment and due to this have more chances to discover something new (Morita, 1988, pp. 165+166).

But also in Japanese companies avoiding mistakes is much more important than analysing those that have been made. Therefore meetings in Japanese business are often very long and intense – much longer and more intense that for instance in the US or Europe (Morita, 1988, p. 221). Businessmen from those countries frequently feel uneasy when negotiating with Japanese ones. The reason for this could be that, as said in chapter 3, the Japanese avoid struggles in conversations and tend to paraphrase what they originally would like to say. A fact, that over and over again lead to misunderstandings and could cause vicious circles.

4.2 Hierarchy

Certainly, there exists a lot of respect among the subordinates in regard to their superiors. Through the ages this respect for age and seniority, experience and hierarchy has been developed and still exists. But in relation to collectivism, Japanese managers also see themselves as a part of the family. Morita (1988, p. 155) underlines that: “Management is not dictatorship. Top management of a company has to have the ability to manage people by leading them.” As a result, to maintain a good relationship between management and labour, managers meet with their subordinates regularly, also after working hours (Morita, 1988, p. 160). To abolish the gap between management and labour, management offices in Japan do not look like their counterparts in Europe or in the US. Regularly, they neither are ten times bigger than those of their inferiors, nor do they have leather outfits or other toys like cocktail bars and television sets. This way Japanese also avoid clients and investors to become too suspicious on what the profits are being spent (Morita, 1988, p. 202).

Managers in Japan take a high responsibility according to the condition the company is in. In case of low profits or even losses, they are the ones who get their salary shortened instead of employees being fired (Blanpain/Hanami, 1993, p.29). This also shows a great difference between the US and Europe: Working as a freelancer I obtained an announcement of the DJV (Deutscher Journalisten Verbund, an institution to protect the rights of journalists and freelancers in Germany). It stated that the Axel Springer Verlag AG in 2001 was in the red for the first time since the firm came into existence and that it would cut back 10% of staff - whereas the top manager still would earn as much as about 15 million Euros. This would not be possible in Japan. It contradicts to the idea of life-time employment and the solidarity that is present between management and labour force.

5 Japanese globalization strategies

When a Japanese company readies itself for deeply entering international business by setting up subsidiaries in other countries, it has to transfer and somehow adapt its management styles to those of the foreign country. Problems due to cultural differences have to be realized, analysed and solved. Different values concerning hierarchy and collectivism need to be fixed up with the work force and management. Sony had to do the same, although in the early ‘60s they did not have to deal with the same conditions that we have today.

5.1 Going global – Japanese companies

In the time after the Second World War, Japan was shaken by destruction of both infrastructure and economy. Before it could think about foreign investment it had to build up its economy once more and had to restore its relationships to the world.

As mentioned in chapter 3, in the ‘50s the economy experienced a big boom that could be compared to the German economic wonder. But exports in Japan would not rise as fast as that. According to the FDI report of UNCTAD's Division on Investment, Technology and Enterprise Development (http://stats.unctad.org/fdi, 06/18/02), foreign direct investment going outwards of Japan in 1970 was only 350 million dollars - in comparison to the United States 7,590 million dollars in that year. Twenty years later the scene looked different: Japan’s FDI had risen to 50,497 million dollars compared to 30,982 million dollars from the US. It seems as if by the ‘70s Japan had realised that it had to catch up concerning foreign direct investment – and this catch up effect was immense. With a view on Europe, according to Blanpain and Hanami (1993, p. 38) “until the end of the ‘60s, relations between the European countries and Japan were rather limited. Both were rather far apart from each other. Trade relations would, however, grow rapidly in the ‘70s.” Alone between 1987 and 1991 the number of Japanese manufacturing subsidiaries in Europe rose from 157 to 676 (Blanpain/Hanami, 1993,p. 33).

When investigating the special management systems of the Japanese subsidiaries in Europe and North America, according to Blanpain and Hanami several unique characteristics attract the attention (1993,pp. 55-60):

First of all, it is obvious and understandable that many expatriates from the Japanese headquarters are working in the subsidiaries. To assure a smooth integration into the whole group of affiliated companies, especially in early periods, high- and middle-ranking positions are filled with them. But in contrast to other multinational companies, even after some time there are still a lot of expatriates, also in leading positions, in relation to local staff. Especially when Japanese companies more and more became successful abroad, this led to the reproach of discrimination. The explanation for enduring these complaints could be that Japanese headquarters have a much higher trust in expatriates. They live and understand their own culture and language and therefore could better guarantee the perfect transmission of Japanese business and management tactics.

Another characteristic is the conversion of hierarchy into collectivism. To many European and American employees it would be strange to see their superiors sitting next to them in the same office, and during lunch break or after work sharing the diner table or bar with them. In many Japanese subsidiaries such relaxed relationship between management and labour could be perceived.

This collectivism in Japanese subsidiaries is also recognizable through the way information is being shared. In many meetings, committees and other occasions each individual opinion and inspiration is being discussed by all to find a sufficient solution on a certain problem or to find innovative ideas (Blanpain/Hanami, 1993, p. 74).

Furthermore, a specialty and therefore unfamiliar to Western industries is the ability to job flexibility that is being emphasised and that employees in Japanese subsidiaries ought to have. The usual career of a Western worker – special training and after that specialisation on and responsibility for certain kinds of tasks – is being abolished. Within the collective, “much weight is given to the personality of the individual concerned. Character is an essential variable in selection. The company typically tooks [sic!] for a specific type of individual. Of course, professional qualities are required but other qualities are also sought. Adaptability dynamism, the capacity to listen, an interest in Japan, a willingness to handle responsibilities or to remain within the company, a co-operative spirit, a concern not simply for one’s own interests, open mindedness, and a well-balanced personality have all been quoted, with a premium on adaptability.” (Blanpain/Hanami, 1993, p. 72). The individual abilities mentioned above are the requirements for on the job-training, frequent job rotations and multi-job cross-training.

Especially since the recent lay-offs in connection with the crisis in the new economy the idea of job security gets more and more important in Europe and Northern America. As said in chapter 4, life-time employment has always been a Japanese virtue and many Japanese subsidiaries try to attract local staff with it.

While some of the characteristics mentioned above (e.g. job security) are positive for the work force, others like the less defined task responsibilities stand in conflict to the strict rules of unions that exist particularly in European countries. Therefore, Japanese companies try to find non-union environments or, if this was not possible, to trade advantageous working conditions against disadvantageous ones.

5.1 Going global – The Sony corporation

When international success came and half of the Sony products were already sold abroad, Morita discovered that “the future of [his] company would depend a lot on the United States and on other international business” and that it “had to become a citizen of the world, and a good citizen in each country”. So they “had to know more than the market statistics and sales data” (Morita, 1988, p 102).

Morita already travelled to the US in 1953 and recognized that this country was so big that he could not even think of selling their inventions there – let alone establishing a subsidiary (Morita, 1988, p. 72). So, to analyze the country and its markets, Morita already then had ears and eyes open wide. Morita intended to be independent and would not use the help of other Japanese who already knew the specialties of the US. The reason was that “despite a couple of years living in a foreign country, these Japanese businessmen were still strangers; following their advice was like the blind leading the blind.” (Morita, 1988, p. 99). So he build friendly relationships to American businessmen, all on his own. He become conscious of the power that lawyers have in America, and also got in touch with some of them (Morita, 1988, p.98). Thus, when the Sony Corporation of America became the first Sony subsidiary world-wide in 1960, it was build on a lot of relationships and vast knowledge of the country.

Without doubt, it was not only done by attending the opening day ceremonies. Still, he learned a lot about American business. For instance Sony for the first time was forced to consolidate its figures – something that was usually not done in Japanese companies at all. Another problem occurred when it came to financial security aspects: When dealing with local investors they wanted to see guarantees from the bank. Japanese banks only used to offer short-term loans and therefore did not need to see any securities. Like business in many other Western countries American business is used on long-term loans. So Morita also for the first time had to present securities. (Morita, 1988, p. 105).

To avoid heavy and constant travelling from Tokyo to New York and back, in 1963 Morita decided to move with his wife and his two children to the United States. This action was a big step, but also it helped Morita and Sony to become more and more aware of the American way of life and business. Through his children, who both attended American schools, Morita learned how Americans show pride and joy for their motherland by rising the flag every morning – an incident that was gladly adopted to Sony subsidiaries world-wide: All show the Japanese flag on top of the flagpole (Morita, 1988, p. 114). Not only Morita saw the importance of integrating his family into the American culture and life-style when attending meetings in country clubs with a lot of his colleagues and their families (1988, p. 108). Also his wife soon experienced that when organising private cocktail and diner parties for American friends. She even became a specialist and when they moved back to Tokyo two years later she wrote a book about how to make diner parties, and it became a bestseller (Morita, 1988, p. 115).

This integration philosophy Morita transferred to the staff of the Sony subsidiaries, which especially in the beginning consisted mainly of Japanese employees. A good example is the way the location of the German subsidiary was chosen:

“… since I didn’t want our company and its employees to be involved in the Japanese community, which was concentrated in Düsseldorf, we set up our company, Sony GmbH., in Cologne, within easy reach of the autobahn, but far enough away that the staff would be spending most of its time with Germans, not expatriate Japanese. I have always stressed that our people should concentrate their time and effort on the people of the host country.” (Morita, 1988, p. 141).

In terms of filling management positions in their companies abroad Sony relied to a great extent on expatriates from the Japanese headquarters. Morita did not like the American way of management where a lot of outsiders make decisions concerning the future of the enterprise (Morita, 1988, p. 198). The dislike of outsiders to my mind was influenced a lot by the experience Morita had when his family-owned soy-sauce business temporarily was run by hired managers, almost went bankrupt and only was saved when his father took over command (Morita, 1988, p. 6). Morita also criticises that Americans pay too much attention on making profits instead of caring for continued employment and complacency of the staff members (Morita, 1988, p. 199). He got involved directly in the American “hire and fire”-mentality when it turned out that the hiring-fever in the start-up phase of Sony’s American corporation not only brought talented workers out into the open. One man in particular did not fulfil the requirements to fulfil his tasks. But instead of trying to find a task that would fit him, the American managers suggested to fire him. That was new to Morita and he was shocked (Morita, 1988, p. 167). But he also learned that many American employees took over the understanding that a job generally was just considered as a job and not an alliance for a life-time: A sales manager came to him and said he would quit because a competitor had offered more money. Morita’s faith in this man was so disturbed that when he met him again he could not believe that that guy even greeted him cheerfully (Morita, 1988, p. 168).

So, to make sure that Sony’s “we are family”-philosophy - which obviously to a big part is a Japanese one - also could be experienced in the Sony subsidiaries, Morita developed a training system for foreign managers. They would be flown to the headquarters in Tokyo and trained the Sony management style. This contained no private office, no special dining rooms and regular meetings and talks with the office people to discover their feelings and by this maybe get rid of problems before they occur (Morita, 1988, p.159).

Morita’s intention always was to keep alive the spirit that he experienced right from the beginning – all over the world, in the whole Sony family.

6 Conclusion

The reason for Sony’s success story to a great amount can be found in the person of Akio Morita. To form a world-wide network of subsidiaries under one company name and make it seem a whole family is not possible if you do not carry that certain spirit within you. He was the one who managed to motivate his people to use Japanese management strategies and to transfer them to places all over the world.

These Japanese management styles that are very much based on unity and togetherness, to my mind are very fascinating. I think that nowadays many companies lack this kind of feeling, or at least they are not able to keep the spirit alive in bad times. When I worked for ricardo.de AG, a German company which runs an online auction channel in the internet, I could experience this by myself. The day I started to work there business was booming. Every day new people where hired and had to learn for themselves how to deal with business without any training. Ricardo.de then was the highest ranked stock on the Nemax, the German stock index for the new economy. Almost each month anything was celebrated, we were about 120 happy, the spirit was alive, we knew our chiefs by forename – though we had nothing to do with them, because the management section was placed one step above us. Soon, almost from one day to the other, everything broke down: People were fired, business to a great extent taken over by another company, and the chiefs were placed in high positions elsewhere. In my opinion the problem was the distance between management and labour. Everybody knew about the problems of one’s own department and area of responsibility, but not about those of others – let alone management affairs. Though ricardo.de still exists with about 20 employees, I think a big chance has been wasted. If it had been done the Japanese way, it would not have happened. For instance a mere meeting each morning to discuss tasks and difficulties could have been a key to success.

Japan in the early ‘70s had to catch up with the Western countries in terms of globalization. It performed more than well. In my opinion, now it is our task to catch up in terms of management strategies. A joke by Akio Morita, which can be found on page 310 of his wonderful book and which I changed a little, reflects the impression I got when I worked on this paper: “A Western guy and a Japanese were walking through the jungle together when they saw a hungry lion running toward them. The Japanese immediately sat down and began putting on his running shoes. ‘If you think you can outrun a hungry lion’, scoffed the Western guy, ‘you are a fool.’ ‘I don’t have to outrun that hungry lion,’ said the Japanese. ‘I only have to outrun you!’”

Appendix

Sources

Morita, Akio; Reingold, Edwin M.; Shimomura, Mitsuko:Made in Japan – Akio Morita and Sony, New York (Penguin Books), 1988

Blanpain, Roger; Hanami, Tadashi:Industrial Relations and Human Ressource Management in Japanese Enterprises in Europe, Baden Baden (Nomos Verlagsgesellschaft), 1993

Sachwald, Frédérique:Japanese Firms in Europe, Luxemburg (Harwood Academic Publishers), 1995

Schneidewind, Dieter:Markt und Marketing in Japan, München (C.H. Beck), 1998

Kikuchi, Makoro:Japanese electronics,Tokyo, (The Simul Press), 1982

Microsoft,Microsoft Encarta Enzyklopädie 2001,(Microsoft), 2000

http://stats.unctad.org/fdi/,FDI report,(UNCTAD's Division on Investment, Technology and Enterprise Development), 2002