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An Application of Japanese-Style Management to Latin American Countries

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  1. An Application of Japanese-Style Management to Latin American Countries “Globalization and Customer Satisfaction” The 15th Anniversary Congress of the Masters in Quality Engineering Iberoamericana University October 1 and 2, 2008 Nobuo KAWABE (Waseda University)

  2. An Application of Japanese-Style Management to Latin American Countries 1. Characteristics of Japanese-Style Management 2. How and Why Did Japanese-Style Management Develop after WWII? 3. Competitiveness of Japanese Enterprises and the Toyota Production System 4. CS in Japan 5. Changes of Japanese Style Management 6. The Possibility of Japanese-Style Management in Latin American Countries

  3. 1. Characteristics of Japanese-Style Management (1) Three Pillars of Japanese-Style Management ・Life-Time Employment (Life-Time Commitment) ・Seniority System (Single Wage and Salary Track) ・In-House Trade Union (Company Union) (2) Collectivism and High Context ・Participation in Decision-making Process ・Rotation and Information Sharing ・Economic Democratization (Equality of Employers and Employees) ・The Reform of the Education System

  4. Comparative Business Systems Asia UK Generalists Specialists Operatives Japan USA

  5. Market Structures in Japan and United States United States Japan

  6. 2. How and Why did Japanese-Style Management Develop after WWII? 1. Rice Growing Culture 2. Latecomer Effect 3. Democratization by the Occupation Army 4. High Economic Growth 5. Demographic Structure

  7. Demographic Structure of Japanese Male Workforce Age Age Age 65- 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 -24 65- 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 -24 65- 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 -24 35-39 1955 1985 2005

  8. 3. Competitive Advantage of Japanese Companies and the Toyota Production System • The 2nd Industrial Revolution to the 3rd Industrial Revolution • Importance of the World Market (Individual Market) • 3. Increasing Productivity and Improving Quality • 4. Cooperative Society • 5. The Toyota Production System

  9. The 2nd Industrial Revolution to the 3rd Industrial Revolution

  10. The Economic Principle of the 2nd Industrial Revolution Unit Cost Cost vs. Variety (Service) Volume

  11. The 2nd Industrial Revolution to the 3rd Industrial Revolution 1. The Development of ME/IT  ・Introduction of Industrial Robots and Machine Tools 2. Family Market to Personal Market  ・Flexible Production System ・Small Lot and Frequent Delivery 3. Integration with Networking  ・External Relations of Japanese Business (Keiretsu and Outsourcing)

  12. Importance of the Global Market 1.The Development of the Personal Market   ・Changing concept of existing products (Family use to personal use) 2.The Development of the Global Market   ・Responding to a variety of markets   ・Scale of economy based upon mass production   ・Importance of Emerging Market (BRICs)

  13. Employment and Training(Internal Labor Market) 1. Employment of New Graduates ・Emphasizing character and personality more than profession 2. OJT 3. The Meaning of the Internal Labor Market (1) Accumulation of Company-Specific Skills (2) Fixed Cost

  14. 1.Cooperation between Business and Government   ・Japan Inc. 2.Corporate Governance   ・Cooperation between Employers and Employees (In-house unions)   ・Less pressure from stock holders 3.Relationships among Companies (coexistence and co-prosperity)   ・Business Group (Stock Sharing and Interlocking Directorship)   ・Keiretsu Cooperative Social Systems

  15. Increasing Productivity and Improving Quality • Introduction and Adaptation ofAmericanManagement Technologies to the Japanese Situation • 1955 Establishment of the Japan Productivity Center • QC, IE, ZD, OR, MBO etc. • 2. Development of the Quality Management Movement • 1949Establishment of the Japan Union of Scientists and Engineers (JUSE) • 1950A Series of Lectures by Dr. Deming • Statistical Quality Management by Dr. Deming

  16. The Toyota Production System 1.What is the Toyota Production System (TPS)   ・“Complete Elimination of Waste”   ・Just-in-Time: Kanban   ・Automation controlled by human-beings:Multi-processes and stopping line by line worker’s judgment (Employee participation and management by employees)   ・Simultaneous attainment of quality, cost and delivery (Business system for the 3rd Industrial Revolution) 2. Cooperation among workers (linkage among processes) 3. Technological rationality and organizational rationality(Workers’ Operational Objectives) 4. Expansion of TPS into Sales and Services (TQC)

  17. The TPS and Customer Satisfaction (CS) 1. Market Orientation ・Product out to market in 2. Importance of After Service ・Integration service with sales 3. Providing Customers with More than They want 4. Early Introduction of CSI ・J.D. Power’s CSI and Japanese Automobile Companies in the 1980s 5. Establishment of the CS Committee ・Chairman was Mr. Shoichiro Toyoda (CEO) ・Mental revolution of the company as whole

  18. 4. CS in Japan 1. Competition of Products Quality to Service Quality 2. Changes of Social Conditions ・ Economic activities and corporate management to emphasize : ・consumers and customers ・Increasing importance of consumers and customers than producers ・CS management to satisfy customers are more than marketing 3. Measuring Customer Satisfaction as well as Expectation 4. Corporate Level of Revolution to Improve Quality of Products and Services by Changing Consciousness of Bottom to Top

  19. The Development of CSI in Service Industries 1. CS Orientation of Japanese Companies ・“Consumer is God” ・Honda’s three joys (buying, selling and creating) 2. Background ・ Increasing importance of service industries (more than 70% of Japanese GDP) ・Improving Productivity of Service Industries Is A Key for sustainable growth 3. Problems of CS in the Japanese Service Industry ・High quality and low productivity ・Late introduction of IT in the service industries ・Small-scale business units in the service industries ・Services are traditionally free of charge

  20. Annual Growth Rate of Labor Productivities (%) (1995 to 2003) Japan U.S. UK Germany Service 0.8 2.3 1.3 0.9 Manufacturing 4.1 3.3 2.0 1.7 Source: OECD

  21. CS in the Service Industries 1. April 2007 Ministry of Economy and Industry ・Report by Working Group on Innovations and Productivities in Service Industries ・Application of IT (improvement of operations), ・Development of CSI and introduction of scientific methods ・Establishment of ADR organization ・Improving quality of service by understanding the degree of CS 2. May 2007 Establishment of the Council of Service Industry ・Improvement of productivity ・Prizes for quality service companies ・Development of CSI and certification ・Development of human resource 3. December 2007 The First Selection of High-Service Companies ・6 criteria: global development, application of know-how from manufacturing, scientific and engineering approaches, high value added, contribution to regional community, and HRD

  22. CS Portfolio by convenience store good Evaluation of satisfaction factors Attractiveness of merchandises Easy finding and clearness Variety of merchandises Price lines of merchandises Manners and attitudes of store managers bad big small Impacts on total customer satisfaction Source: Hiromi Hidaka, “Strengthening of CS Management,” JEJ (Oct.5, 1991)

  23. 5. Changes of Japanese Style Management 1. Coming of the Third Industrial Revolution (1) Coming of the information society (2) Globalization 2. Indigenous Problems (1) Coming of the aging society (2) After effect of the collapse of the “bubble economy” (3) Changing values of people

  24. New Business Strategy 1. Advanced Technology Development and New Business (1) Security of Production Property (2) Establishment of Sales Channel (3) Risk Hedging (product category and regions) (4) Intellectual Property Management 2. Global Strategy (1) Development of World Strategy (R&D, Production and Sales) (2) Brand Strategy (3) Production/Logistics Strategy (4) Localization Strategy (5) Entry Strategy (green fields, alliance and M&A)

  25. Lifetime Employment and Performance Based HRM 1. Employees are Human Resources: importance of individual persons 2. Social Responsibility of Enterprise is “Employment” 3. Cooperation and Loyalty to Company: big products need 10 to 20 years for development 4. Introduction of Performance (team) based HRM: Abolition of Seniority System

  26. 6. An Application of Japanese-Style Management to Latin American Countries 1. Japanese-Style Management Developed in the Catch-Up Process 2. Development of Cooperative Society 3. Imitation and Incremental Innovation 4. Use of Knowledge and Experience of Shop-Floor Workers (organizational learning) 5. Business Systems for the 3rd Industrial Revolution Simultaneous Achievement of Quality, Cost and Delivery (Services)