2. Dates: 1996 – 1998
Location: Taiwan
People involved:
OVERVIEW
Howard Wolff, CEO (American)
James Fukuda, Taiwanesesubsidiary CEO (Japanese
American)
C. Lo, ExecutiveDirector (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 FROMLO TO WOLFF
C. Lo iscomplaining about
the drasticmeasurestaken
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
Interculturaldifferences
Ethics
Management
Finance
Production and pricing
Sources of the problems in the company
STRENGTHS AND WEAKNESSES
11. Strengths Weaknesses
Easy communication
betweenTaiwaneseemployees 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 afterresignation of
twoemployees as well as the
lettertalking about theirproblemswith J.
Fukuda’s actions
No trust between all parties in Taiwan
COMMUNICATION
12. INTERCULTURALDIFFERENCES
Strengths Weaknesses
J.Fukudais a second
generationJapanese-American.
Basicknowledge of the culture
(Mianzivery important).
The
companyworkedwhileforeignersworked
in it (H. Wolff startedthissubsidiary.
Taiwan and Japan have
complicatedrelationshipsbecause of
Japanesecolonizationbefore and during
WWII.
The company has 8
foreignsubsidiariesand only 4 domestic
plants (they all have growing sales).
13. ETHICS
Strengths Weaknesses
J.Fukudadid not wait to come to
makesome changes – especiallylaying
out employees.
J.Fukudadoes not care about employees’
ideas and thoughts about hisstrategy.
14. MANAGEMENT
Strengths Weaknesses
The management ismainly local (only
exception is J. Fukuda).
Bad management of the
Taiwanesepresident. He does not
makehiscolleaguesatease and takes
important decisionstooquickly.
Easyaccess to the top management in
the US.
Taiwanese managers and
employeescomplain and resignveryfast.
American management actswhenasked
to.
15. FINANCE
Strengths Weaknesses
Theydon’tneed more money to finance
theiractivities (debts are
higherthancurrentassets).
Inventoryishigherthan the assets
High shareholder’sequity (able to
interestinvestors).
Receivables are as high as the current
cash.
16. PRODUCTION AND PRICE
Strengths Weaknesses
Diversifiedlines of products. Hugeinventorymeaningbaddemand
planning management –
toomanyproducts come out of the
factoryeveryyear.
Highdemand – the sinking sales are due
to harshcompetition.
Price higherthan the competition
Able to lowerprices if needed (in order to
compete more efficiently).
17. The company, after 2 ½ years of declining sales, must
reconnectwith an increase in turnover whilemanaging to
restore relationshipswithin the subsidiarycompany.
PROBLEMSTATEMENT
18. OPTION 1: DO NOTHING
Advantages Inconvenients
Thedecrease in sales isslowing (only -
1.8% in 1998 compared to 1997 with -
22%). Eventually the sales
mightgetbetter.
Bad relationshipsbetween J. Fukuda and
Taiwaneseemployees.
If theheating and cooling system
isstopped, itwill clean the inventory
(theywillselltheirremaining stocks).
Lost of an activity – even if
itisdecliningfasterthan the others,
itstillmeans a source of money.
Stoppingthisactivityalsomeansbeing able
to sellsomeassets.
Disponibilitiescanbeused to invest in
otheractivities.
19. OPTION 2: DISCUSSION WITH THE
TAIWANESE MANAGEMENT
Advantages Inconvenients
Having meetings and
generalassemblieswithemployeeswillma
kethemfeelheard and mightevenbe the
source of new ideas for the company.
Poor visibilitytowards the results of the
talks:willemployeesbesatisfied? Will J.
Fukuda change his point of view? Will
the Taiwaneseemployeesaccepthim as
their manager?
J. Fukudais not aware of the situation of
the market. It willbe a good opportunity
for him to learn the challenges of the
Taiwanesesubsidiary.
Itisverydifficult to know if a discussion
might change theirrelationships.
Sinceemployeesfelt not listenedat all,
the proposition might not
evenbeconsidered by employeeswholeft.
The companywillkeepexperienced and
talentedemployeesthatleft or mightleave
if the situation is to worsen.
20. OPTION 3: LOWER PRODUCTION
OUTFLOW AND KEEP THE MANAGEMENT
Advantages Inconvenients
Significantly drop in terms of inventory
(lessstoragespaceconsumed and cleaner
balance sheet).
Poor popularityamongworkers to
beexpected.
Loweroperationcosts due to lower
production. Profits
willraisesinceproductsalreadymanufactu
redwillbesold.
If the marketgets back to normal or
trends are betterthanexpected,
therewillbe a shortfall.
If production islowered over a
greatperiod of time, assetscanbesold in
order to invest on some R&D.
21. OPTION 4: PUT THE FATCORYWORKERS ON
ADMINISTRATIVE LEAVE AND SELL THE INVENTORY
Advantages Inconvenients
Better balance sheet (lessinventory). Employees moral willprobablydecrease
(knowingthey are
stillemployedwillavoidtoomanyconflicts
but itwillinduceharsh discussions).
Pricescanbeloweredat short terms to
competewith the Japanesefirms.
Proof of weakness (the business can not
runproperly).
Employeeswillstillbeemployed but
lesspaid (keepsrelationships ok and
provideslesscosts).
22. OPTION 5: LOWERPRICES TO DRIVE
COMPETITORS OUT OF BUSINESS
Advantages Inconvenients
Able to sellproductsat the sameprice or
cheaperthan the competition.
High incertitude of thisstrategy.
Keep the management and
employeesemployedat full time.
Profits unstable (mightsink for
anotheryear).
Better moral. Highlylikeablethatthisstrategywillneedan
other infusion of fundsfrom the
headquarters.
23. Which option do youfind the best?
Are cultural differences more important in a
companythanoperation profit when the
companyisencounteringsomedifficulties?
DEBATE
