2. Dates: 1996 – 1998
Location: Taiwan
People involved:
OVERVIEW
Howard Wolff, CEO (American)
James Fukuda, Taiwanese subsidiary CEO (Japanese
American)
C. Lo, Executive Director (Finance) (Taiwanese)
T. Hu, Vice-President of Operations (Taiwanese)
H. Lee, Superintendent of Manufacturing (Taiwanese)
3. Participants
Howard Wolff, President
James Fukuda, President Taiwan
Discussion about James Fukuda’s management in Taiwan and
the discontentment of the employees.
DIALOGUE
4. EXHIBIT 1: LETTER FROM LO TO WOLFF
C. Lo is complaining about
the drastic measures taken
by Fukuda:
- Interruption heating and
cooling system
manufacturing, resulting in
the layoff of 18 workers.
- Introduction of a radically
new management
organization.
- A new reorganization plan.
10. 6 categories:
Communication
Intercultural differences
Ethics
Management
Finance
Production and pricing
Sources of the problems in the company
STRENGTHS AND WEAKNESSES
11. Strengths Weaknesses
Easy communication between Taiwanese
employees and the American top
management.
No communication between J. Fukuda
and the Taiwanese
managers/employees.
Good communication between James
Fukuda and Howard Wolff
No communication after resignation of
two employees as well as the letter
talking about their problems with J.
Fukuda’s actions
No trust between all parties in Taiwan
COMMUNICATION
12. INTERCULTURAL DIFFERENCES
Strengths Weaknesses
J. Fukuda is a second generation
Japanese-American.
Basic knowledge of the culture (Mianzi
very important).
The company worked while foreigners
worked in it (H. Wolff started this
subsidiary.
Taiwan and Japan have complicated
relationships because of Japanese
colonization before and during WWII.
The company has 8 foreign subsidiaries
and only 4 domestic plants (they all have
growing sales).
13. ETHICS
Strengths Weaknesses
J. Fukuda did not wait to come to make
some changes – especially laying out
employees.
J. Fukuda does not care about
employees’ ideas and thoughts about his
strategy.
14. MANAGEMENT
Strengths Weaknesses
The management is mainly local (only
exception is J. Fukuda).
Bad management of the Taiwanese
president. He does not make his
colleagues at ease and takes important
decisions too quickly.
Easy access to the top management in
the US.
Taiwanese managers and employees
complain and resign very fast.
American management acts when
asked to.
15. FINANCE
Strengths Weaknesses
They don’t need more money to finance
their activities (debts are higher than
current assets).
Inventory is higher than the assets
High shareholder’s equity (able to
interest investors).
Receivables are as high as the current
cash.
16. PRODUCTION AND PRICE
Strengths Weaknesses
Diversified lines of products. Huge inventory meaning bad demand
planning management – too many
products come out of the factory every
year.
High demand – the sinking sales are due
to harsh competition.
Price higher than the competition
Able to lower prices if needed (in order to
compete more efficiently).
17. The company, after 2 ½ years of declining sales, must
reconnect with an increase in turnover while managing to
restore relationships within the subsidiary company.
PROBLEM STATEMENT
18. OPTION 1: DO NOTHING
Advantages Inconvenients
The decrease in sales is slowing (only -
1.8% in 1998 compared to 1997 with -
22%). Eventually the sales might get
better.
Bad relationships between J. Fukuda and
Taiwanese employees.
If the heating and cooling system is
stopped, it will clean the inventory (they
will sell their remaining stocks).
Lost of an activity – even if it is declining
faster than the others, it still means a
source of money.
Stopping this activity also means being
able to sell some assets. Disponibilities
can be used to invest in other activities.
19. OPTION 2: DISCUSSION WITH THE
TAIWANESE MANAGEMENT
Advantages Inconvenients
Having meetings and general
assemblies with employees will make
them feel heard and might even be the
source of new ideas for the company.
Poor visibility towards the results of the
talks: will employees be satisfied? Will J.
Fukuda change his point of view? Will
the Taiwanese employees accept him as
their manager?
J. Fukuda is not aware of the situation of
the market. It will be a good opportunity
for him to learn the challenges of the
Taiwanese subsidiary.
It is very difficult to know if a discussion
might change their relationships. Since
employees felt not listened at all, the
proposition might not even be
considered by employees who left.
The company will keep experienced and
talented employees that left or might
leave if the situation is to worsen.
20. OPTION 3: LOWER PRODUCTION
OUTFLOW AND KEEP THE MANAGEMENT
Advantages Inconvenients
Significantly drop in terms of inventory
(less storage space consumed and
cleaner balance sheet).
Poor popularity among workers to be
expected.
Lower operation costs due to lower
production. Profits will raise since
products already manufactured will be
sold.
If the market gets back to normal or
trends are better than expected, there
will be a shortfall.
If production is lowered over a great
period of time, assets can be sold in
order to invest on some R&D.
21. OPTION 4: PUT THE FATCORY WORKERS ON
ADMINISTRATIVE LEAVE AND SELL THE INVENTORY
Advantages Inconvenients
Better balance sheet (less inventory). Employees moral will probably decrease
(knowing they are still employed will
avoid too many conflicts but it will induce
harsh discussions).
Prices can be lowered at short terms to
compete with the Japanese firms.
Proof of weakness (the business can not
run properly).
Employees will still be employed but less
paid (keeps relationships ok and
provides less costs).
22. OPTION 5: LOWER PRICES TO DRIVE
COMPETITORS OUT OF BUSINESS
Advantages Inconvenients
Able to sell products at the same price or
cheaper than the competition.
High incertitude of this strategy.
Keep the management and employees
employed at full time.
Profits unstable (might sink for another
year).
Better moral. Highly likeable that this strategy will
need another infusion of funds from the
headquarters.
23. Which option do you find the best?
Are cultural differences more important in a company than
operation profit when the company is encountering some
difficulties?
DEBATE
