Case Study Five

7/27/2019 Case Study Five

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Case Study Five: Culture Clash at Oyamada Industries

Oyamada Industries is a Japanese multinational corporation that develops and produces a range

of consumer electrical products including televisions, MP3 players and computer games

consoles. It has recently moved into the personal computer market producing a range of

notebooks, PDAs and peripherals. It has 46 subsidiary operations worldwide (the majority of

which are in South-East Asia) with approximately 8000 employees. In 2000, Oyamada opened a

greenfield plant producing LCD and plasma televisions for the European market in Bremen,

Germany. After an extensive decision-making process, Oyamada had chosen to site the plan in

Bremen to benefit from the available skills in the local and national labour markets and because it

felt that, within a European context, Germany would represent a good cultural fit with the

Oyamada approach to labour relations and production. This was based on an assumption of

similar degrees of collectivism which contrasted with its principle alternative option to build a plant

in England.

When the plant first opened Oyamada Bremen it had a workforce of 250 employees. All

production workers at the plant were German and recruited primarily from the local labour market.

Many workers had previously been employed at as recently-closed German producer of electrical

equipment for the automobile industry. Production at the plant is organised in a typically

Japanese manner with self-managed and cross-functional teams given responsible for particular

aspects of production. While some line manager roles have been filled by German workers with

previous supervisory experience, the majority of these were filled by Japanese workers brought in

from other Oyamada subsidiaries. Originally, all the senior managers at the plant were Japanese

and had previously worked at other subsidiaries or Oyamada headquarters in Kyoto. All research

and development activity continues to be done at the company headquarters.

Over the 1990s Oyamada saw significant growth in global market share in its core areas of

operation. In particular, it saw its presence grow considerably in key markets in the USA and

Western Europe. During much of this decade, the majority of its products were produced in its

largest subsidiaries in other parts of South East Asia, particularly in China. At the time of its

opening, Bremen represented one its largest investments outside of Asia. In all of its

subsidiaries, Oyamada has sought to impose its core approach to HRM albeit tailored to fit with

local legal requirements. Senior managers take the perspective that organisational culture can

override national cultural differences and, therefore, it has largely not responded to differences in

cultural norms in its management style, approach to employee relations and the organisation of

work. The reason for this is that senior management feel that the high levels of productivity which

Oyamada achieves, particularly in comparison with its Western competitors, is partly a question

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of culture which reflects the inculcation of traditional Japanese values in its workers. For this

reason, an exportive approach to HRM has been adopted consistent with Oyamadas global

business strategy and tight HQ control over subsidiary decision-making and target-setting. Initial

worker training was done by Japanese trainers from other subsidiaries or HQ who stayed on site

for three months until the plant was up and running. Production supervisors go to Japan every

six months to learn new techniques, to discuss developments and to disseminate these in the

German plant. Some workers on highly-specialised machinery spend some considerable time in

Japan learning associated techniques and this practice continues. There are, however, some

areas of moderate local adaptation in labour management. In Japan Oyamada would typically

select school leavers to work as operators, whilst in Germany most were older workers with some

experience, along with a handful of apprentices. School leavers in Germany were regarded as

being unreliable and not team players which could contribute to problems of absenteeism and

lacking work ethic.

Despite some reservations about the manner in which the dominant approach to HRM at

Oyamada and the German principles of co-determination and works councils might work

together, senior managers were initially surprised by the degree of cooperation in worker

consultation (for example, over substantive issues of work design). After six months, however,

the company was forced to recall a number of the televisions produced at Bremen because of a

safety fault. Upon investigation, the production manager attributed the problem to having

emanated from a single operator on a highly-specialised piece of machinery having informally

trained a colleague to operate the machine, unbeknownst to management. Both workers were

reprimanded but complained that workers should be trained across machinery rather than rigidly

sticking to single areas of operation. Quality initiatives such as total quality management and

quality circles were also blamed for the quality problems. These have been implemented

wholesale in the German plant but are deemed to have been unsuccessful, not least because

workers feel that they conflict with the role of the works council. Moreover, quality circles often

take place outside of normal working hours and involvement is unpaid. Meetings are, therefore,

poorly attended.

A subsequent decline in the demand for Oyamada televisions produced in Bremen also saw the

need for the plant to cut costs in order to maintain the levels of efficiency demanded by

headquarters. Senior managers decided that the only way to achieve this was to make a number

of workers redundant. The quality problems also saw the escalation of a number of employee

relations problems at the plant. The operation of the works council became more conflictual with

managers and union representatives failing to come to an agreement over a range of issues. The

HR director felt that the union was simply being obstructive and argumentative and wanted to

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punish management for the mistakes of workers. Markus Acher, the local union representative,

responded by claiming that whilst Oyamada was happy to adhere to the fundamental principles of

Japanese employment when it suited them, it rejected them where it acted to benefit workers (for

example, a strong commitment to long-term employment security). He also claimed that the

company failed to understand the basic principles of German employment relations and simply

wanted the union to be passive and for the works council to simply rubber-stamp managerial

decisions.

Questions

1. Drawing on the typologies of cultural difference discussed in Chapter five, discuss why

Oyamada has experienced HR difficulties at its Bremen plant. Why might managers have

assumed Germany to have been a good fit for the company?

2. Drawing on an understanding of Japanese and German employment relations, how might

we account for both the differences in opinion over the operation of the works council?

How might the changed attitude of the Japanese senior managers towards the works

council be explained?

3. Why might the profile of the operator workforce in Germany represent a problem for the

Japanese approach to HRM, compared to that which is found in many of Oyamadas

plants in Japan and South East Asia?

4. How might Oyamada have avoided the problems detailed in the case study? How might

the company now address these problems?

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Case Study Five