International HRM. The purpose of this report was to analyze Japanese HRM functions and recommend to Wal-Mart suitable ways to approach it with the market.

University Degree Business and Administrative studies

Executive Summary

This report was commissioned to examine the organisational and national HRM functions of Japan through analysis to determine reasons as to why Wal-Mart had struggles in Japan and how it could avoid its mistakes in its new approach.

The research draws attention to the differences between the Japanese and Americans where the Japanese firmly value the principle of harmony, whereas Westerners consider their right to be free as a priority. Further investigations reveal some similarities between Japan’s human resource management functions and America’s exist in the manner they staff employees, with the tradition being to firmly select and then develop employees to their full ability, however differences lie in the Japanese’s main concern in group collectivism compared to America’s individualist doings, as well as equality and status. Moreover however, further key mistakes are identified in Wal-Marts strategy in Japan with problems in communication where Wal-Mart failed to recognize consumer’s quality perception and failing to communicate benefits to customers, which reflected on poor communication, all of which are evaluated for the examination of the new ‘Wal Mart 2.0’ project.

By identifying the function of managing the structure and control of Wal-Mart in Japan, the report evaluates this range and concludes by preparing a SWOT analysis. The analysis reveals that whilst there are some advantages in the Japanese market for Wal-Mart in its brand name and the strong Japanese economy it can partner with, as well as new opportunities in working with Japan’s technology, however it also faces challenges with the battle for intellectual property rights violation which is a damning issue in Asian countries.

It is recommended that Wal-Mart:

Establish common values through understanding of the Japanese consumer psychology and consumer buying patterns. Through establish common values with consumers, Wal-Mart can recognize customer wants.
Cross-cultural communication and training of its managers and employees to help avoid any conflicts with locals and also better understand the Japanese corporate culture.
Mixing of the management of localization strategy and employment of home country nationals which would not only make the transition for local nationals easier as they better understand their business strategies but also allow home country nationals to make their transition to an overseas market easier.

Contents

Introduction

1.1 Purpose

The purpose of this report was to analyze Japanese HRM functions and recommend to Wal-Mart suitable ways to approach it with the market.

1.2 Scope

While investigating the Japan’s national and organisational cultural functions, it was important to consider its realistic suitability for an company like Wal-Mart to operate in such a market.

1.3 Method

The information used in this report was collected by researching the history of other multi-national companies history in Japan and using the case study provided to determine what Wal-Mart needs to comprehend about Japan before ‘re-entering’.

1.4 Limitations

Some of the information researched related to East-Asia, and whilst Japan is situated in East-Asia, some of its factors are very different other East-Asia nations, such as being far more developed.
Additional information regarding Wal-Marts specific operations in Japan hard to locate.
Specific costs associated with recommendations are hard to determine as there is no history of prices with such factors.

1.5 Assumptions

It is being assumed that senior Wal-Mart executives have contacted the writer to construct a report that details what Wal-Mart must understand about Japan’s organisational and national culture and habits in order for them to launch their project.

The new project is an assumption that Wal-Mart is willing to completely reinvent itself in Japan and start somewhat fresh with a project called ‘Wal-Mart 2.0”.

1.6 Background

Wal-Mart is a retail organization founded in 1962 in the United States and has become the world’s largest public corporation by revenue. Since becoming the largest private employer and largest grocery retailer in the United States, Wal-Mart focused on its international expansion with it opening operations in 18 countries.

Wal-Mart however has had struggles with its expansion plan in Japan, by struggling to understand the Japanese market and making mistakes with steps needed to be taken to please the Japanese customers. ‘Wal-Mart 2.0’ was put together to help find solutions to these mistakes.

Culture

Japan has a homogenous culture with a very small portion of the workface being migrants, thus consequently, the cultural characteristics credited to the Japanese are collective to the vast majority of the people, characterizing the population with a dedicating feeling of unity and loyalty within the community. The loyalty within the national and organizational culture lies with the groups to which they fit into and are primed to forfeit their individual benefits, going as far as including the company they work for into their in group. ‘Japan has a relatively high power distance; and high uncertainty avoidance. It is relatively highly collectivist; although its communitarianism is limited to membership and reference groups (the Japanese do not see themselves as "members of the public")’ (Tang et.al, 2000). The Japanese exhibit powerfully balanced and practical characteristics.

Strategy

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Strategy

As the world moves towards a ‘global business village’, there is a greater need to know how managers in various parts of the world cope with issues and handle problems relating to human resource. It is not enough, in the present setting that managers know only about only their home country and its various aspects. They should have sufficient knowledge about how human resource is managed and the strategies implemented by other countries. This is particularly true in a country like Japan. In Japan, religious beliefs and social values play an important role in the workforce's perception of work, learning, and human relation. For Wal-Mart to have successful achievement of their objectives, it is essential that they have a clear understanding about the culture and attitude of the Japanese. Cultural awareness and skill can be helpful in influencing organisational culture. Management philosophies of every country are deeply rooted in culture. Therefore adopting management practices of one culture to another may not always prove to be positive (Linehan, 2005)..

Communication

The influence and power of language is meaningful to cultural and ethnic group members. Each speech community has its norms, forms and codes for communication. The interactions of a group of people vary in many respects: in frequency and value of speaking, interpretation of speaking performances. For instance if Westerners pronounce incorrectly the Japanese’s dialect, they see it as a form of disrespect and can cause harm within Wal-Mart’s operations.

English is somewhat used in business, politics and education. This would be an advantage for English speaking workers because they would not have to learn an additional language in order to help Wal-Mart succeed, especially being located in Japan where a large population there speak English. There is always a risk factor involved when one has to do business abroad because it is not easy to adjust to alien surroundings it can be extremely daunting (J.Perkins, 1997)..

Staffing and training

Managers in Japan more than most countries ardently consider that workers the integral component of a company, where in an undersized country amid a small number of possessions other than the talent and vigor of their employees, this appears an ordinary belief. The requirement of a job changes and as a result a Wal-Mart needs to respond to economic, social and technological pressures so it is vital for it to implement the right staff. Wal-Mart must expect economic changes as well they must anticipate potential tactics from its competitors or any other influences from its external environment so they can make certain that the workers who are staffed have exceptional ability, expertise and experience that can fulfill its strategic objectives and aims (Ahmad & Schroeder, 2002). In Japan company’s looks for workers who are capable of working as a team as well has bringing new ideas and thoughts to improve the organization, they search for workers who have the capability to continue learning and improving, looks for workers who want to learn and help the organization improve (Harzing & Ruysseveldt, 2004). Commonly, in Japanese companies it is very widespread for the company to also offer internal promotion for jobs that are available in their organization.

A significant difference between the way Wal-Mart would operate in the Untied States and how it would operate with its staffing in Japan is their outlook regarding lifetime employment, where both nations look to recruit employees who are young and then coach and develop them and ultimately retain them (Ahmad & Schroeder, 2002). However, Wal-Mart in the US would anticipate a turnover of employees and in the process look to recruit mid-career workers who bring with them experience, this differs slightly to Japan. In Japan it is thought that by staffing employees who have experience signifies that the business doesn’t require spending so much in training or developing the employees and can expect instantaneous input from the employees who can also aid other workers. Realistically life employment indicates that fast outcomes don’t have to be as significant as the extended tenure of developing employees, managers in Japan hold the thought that there is enough time to train workers can bring aboard their knowledge and expertise later on ’(Tang et.al, 2000)..

Workforce Diversity

Women’s values differ greately in Japan compared to a country like the United States or Australia, this directly refers to Hofstede’s dimension involving degree of masculinity or feminity in social values within an organizational culture. Unlike most Western companies where women play a crucial role in the decision making process, it is improbable that you will come across female decision makers. The standard is that the head of the organization is a man and that the organization he works for forms both his family’s social prospects, whereas in Western nations the norm is working couples with many senior exectuive roles taken up by women (Tang et.al, 2000). When it comes to the Japanese workforce, it is very common for women to be married between the ages of 25 to 30 which then results in them leaving their post at their firm and also leave their careers permanently to stay at home and raise their children.

Developing and Managing global employees and managers

As expatriates face several fresh tasks at work as well as their new environment, Wal-Mart’s selection of expatriates is largely more complex than the selection employees and managers in home country, or even in a English speaking country. Being a manager in Japan requires a measure of cultural hardiness. Wal-Mart should inspect several personality traits and attributes in evaluating if the candidates character is adequately flexible. Ways to assist comprise of cross cultural training to make the transformation to the Japanese culture and language as simple as possible, where the candidate would improve their knowledge and understanding of the Japanese national and organization culture (Harzing & Ruysseveldt, 2004)..

Training is the process of changing employee behavior and attitudes in a way that raises the probability of goal achievement. Wal-Mart’s training process is critically crucial in arranging for those who are employed in Japan, because most expatriates are new with the traditions, cultures, and customs of the Japanese. Consequently, this leads to errors in work and problems with locals.

For Wal-Mart’s criteria, the most straight-forward training, in terms of proper adequate groundwork, is to consign a cultural integrator in Japan. The integrator will be in charge of making sure that Wal-Mart’s procedures are in harmony with that of the Japanese national and organisatonal culture. This individual/s counsel, direct, and advocate proceedings required in guaranteeing this harmonisation. The type of training that is necessary of expatriates is influenced by Wal-Mart’s overall attitude of international management (Ahmad & Schroeder, 2002)..

Cross-Cultural decision making

In Japan, the interests of a group are placed over those of an individual. The concept of group focus and cooperativeness in Japanese-style management is manifest. An example is that employees are expected to contribute ideas for improvement of the decision-making processes in management- widespread and slow consultation, diffusion or blurring of responsibility, but prompt execution of agreed decisions. Japanese companies see the sharing of experiences and expertise as a vital competitive advantage. They circulate information systematically to everyone to whom it might be useful, not only within the company, but also to their subcontractors and suppliers.

The Japanese decision-making process is often understood to as the bottom-up consensus decision-making process. This method engages the passing of documents to concerned personnel of Wal-Mart to get their support before it advances and executes a plan. It means that not only managers or senior staff do not get the only say, with all workers probable to get the chance to share their analysis and have it listened to and to have some weight. Wal-Mart in Japan’s make-up may rightly be seen as that of system of “reverential enquiry about superior’s intentions, a confirmation-authorization process. Japanese style decision-making does not mean that all decisions are made at mid-management levels”. It is a misleading notion to deem that the power to give final authorization to decisions is delegated to lower levels by those top Wal-Mart executives. (Stedham & Yamamura, 2004.

Managing structure and control

Under Wal-Mart’s current circumstances, it is necessary to consider developing new ideas. This section analyses the company in terms of the Japanese market by adopting a SWOT approach.

Strengths –

Strong brand name and image of Wal-Mart allow brand recognition and consumer retention. Therefore, the expanding of stores to Japan is easier and proficient.
Japan has a very strong economy environment. Japan’s GDP and income level is the second one in the world. So, in this market, there will have a strong purchasing power. Japan is also a member of WTO, so when there needs to be trade with the US, there will be no strong tariff wall (Stedham & Yamamura, 2004.
Wal-Mart brings the technology to use in the stores in order to attract more customers. For instance, there are high-speed internet, website and prepaid Wal-Mart cards. It might be increase traffic in the stores particularly in new generation group.

Weaknesses

There is an culture gap between Japan and US. First, the language becomes a big problem, if need to export products to the Japanese Wal-Mart, as well as needing to develop the translator system. That will increase cost. Fast expansion is difficult due to lack of experience in Japanese market and also rapid international growth could weaken control.

The local brands are very strong in Japan. Japanese consumers are also very nationalist regarding the products they wish to purchase, especially for American companies (Stedham & Yamamura, 2004.

Opportunities

Technology is developing quickly in Japan, with the Japanese also using developments that United States makes and bettering it. This circumstance demonstrates very clearly in the television industry. Japan sets up technology and employs their outstanding machining methods to get a larger market share in global business (Tang et.al, 2000)..
The quicker Japan’s economy continues to grow, the better living standards get, which allows accessing a larger range of products as a result of less expensive imports which are valuable to open countries. This ultimately decreases poverty levels due to Japan having more products that are easier to attain on a daily basis as living standards will be improved if quicker growth in economies halts the import of specific products. This gives countries a wider range of options in economical imports and allows them to export products to Japan for a sounder price.

Threats (or challenges)

A factor to consider in Japan is counterfeit goods. Asia has been recognized and acknowledged as the market most notorious for fake goods and heavily exploiting the intellectual property rights of Western company’s products and ideas. Most of these fake items are supplied through manufacturers, where the net difference between sales income and expenses is their profits. Although there is great danger of potential loss and being found out by authorities, investor will move in when the produced counterfeit items profits reach is on equal points with average income from the common market. In Japanese market culture, their existence causes great trouble, and their focus is on more quantity than quality (Tang et.al, 2000)..
A challenge in Japan is actually reproducing intellectual properties rights. The world production department is in Asia. Nonetheless counterfeited goods are growing fast each day, and negatively impact on their status of Asian markets (and Japan). Japanese leading executives don’t comprehend the intricacy of intellectual goods, but at the same time form several protests about intellectual property violations. Senior executives do not understand their own organizations are likely responsible for these errors in making mistakes (Tayeb, 2005)..

Conclusion

Wal-Mart’s struggles in Japan are due to the lack of knowledge of the culture and government laws associated with them. Wal-Mart’s strategy when it entered Japan was almost identical to its domestic operations in the United States without many significant alterations. Before re-entering the Japanese market with its ‘Wal-Mart Japan 2.0’ scheme, Wal-Mart must research the Japanese market through analysis of it’s national and organisational culture to understand their employees ,customers, Japan’s government policies , laws and rules for the retail industry and how steady the economy is. Wal-Mart needs to see the likes and dislikes of different people so that required changes can be made for that particular segment of the market.

Recommendations

Establish common values

Westerners have different national and organisational values to that of Japan, which causes problems for its HRM department. Particularly with the quickening of global integration, cross-cultural management has become a difficulty for Japanese companies.

As a result, to find the peak of integration of Japan’s culture to that of Western nations, understand the core of both cultures, to play their nature and uniqueness of the benefits of each other, to take heavy actions to construct step by step with Wal-Mart characteristics, but also to become accustomed to new environment organisational culture, and steadily institute familiar values. The troubles of management caused by cultural differences can be decreased.

Implementation: Would require research of the Japanese market to understand its organisational and national culture to help establish common values. Discussion with Japanese management in home country could reduce cost as well as evaluate opportunities and challenges and crucial in order to gain common ground in attempt to reduce future misunderstandings.

Cross-cultural communication and training

In order to eradicate the ensuing management difficulties that have been caused by the difference in cultures, Wal-Mart should utilize techniques to reinforce communication with the Japan’s culture and cross-cultural training. One of the most effective manners to diminish conflict amongst different cultures and realize valuable cross cultural management is through the use of cross cultural training.

Implementation: Cross-cultural communication & working with interpreters would prepare management and workers to enter the Japanese culture with some understanding of at least its basic values and habits. Classes would allow for engaging with the Japanese to recognize their way of life and practices to avoid any potential conflicts.

Management of localization strategy and Home Country Nationals

Localization of human resource management would mean the managers or senior employees of Wal-Mart in Japan who are responsible for roles such as staffing and appointment are from the United States. ‘Wal-Mart 2.0’ in Japan can executive a universal view of processes, maintain their activities abroad, closely watch political or cultural shifts and exercise the use of local nationals. However, unlike the previous strategy in Japan for Wal-Mart, this would focus more on finding people from the United States who have an understanding of Japanese and/or East-Asian culture, which are home-country nationals.

Wal-Mart would take most of their own ideas and aspects of its organisational culture to Japan, but allow the accountability of citizens in Japan. The idea is to mix cultures, and not just force its organisational culture to be entrenched in Japanese culture. Wal-Mart should vigorously encourage the preparation and staffing of home-country nationals, who have been working in the United States; which would then reduce the linguistic confusion and rapidly open the market and improve the competitiveness of Wal-Mart in Japan.

Implementation: Would require some in-depth research and require the human resource department to search out capable host country nationals who are working in the United States who are willing to make the move back. The mixing of home country nationals understanding and the localization strategy is a risk and could prove to be costly, but in the long term it could bring sustainability as it would reduce many communication and cultural problems.

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