Reference no: EM131164357

Part A - Expatriation or Discrimination?

One issue faced by companies with international operations is determining the right time to bring expatriate managers home, or 'repatriate' them. Promoting host-country personnel into key managerial positions can boost morale and provide a sense of equal opportunity. Also, local managers often have keen insights into local business conditions and. therefore, a potential advantage when it comes to decision making. Moreover, by bringing expatriate managers home, firms can often save considerable amounts of money. In China, for example, compensation for an expatriate can cost between $200,000 and $300,000 per year; the total package includes both cost-of-living and hardship allowances of 15 to 20 percent each. By comparison, total compensation for a top-notch Chinese manager would be only about $50,000 per year.

Despite the benefits to be gained from turning over control to local managers, some industry experts warn that localizing' too quickly can be a mistake. For example, as one expatriate manager in China pul it, "Doing business the Chinese way is much less well- documented and can be dangerous. There is a serious risk when you give up financial control.' Another problem is the fact that many expatriate managers are evaluated according to operating results rather than according to their efforts to train local managers.

The issue of expatriate assignments is not limited to emerging markets such as China. In developed countries, laying off employees or replacing local managers with persons from the home country can be controversial moves. For example, Japanese-owned Ricoh Corporation (www.ricoh corn) replaced a U.S. manager with a Japanese manager in charge of optical computer disc sales at its California File Products Division (FPD). After being laid off as a result of the move, Chet Mackentire sued his former employer for discrimination under Title VII of the Civil Rights Act of 1964. But Ricoh argued that Mackentire was laid off for business reasons, not because he was a Caucasian-American.

Mackentire lost his case. The court said that it found 'no evidence to support Mackentire's theory that the layoff was discriminatory' and ruled that there was 'substantial evidence that it was due to business necessity: Mackentire appealed the ruling but lost again. The appellate court wrote that Ricoh 'offered affidavits stating that FPD was losing money. running into the millions of dollars annually. It also offered evidence that it reorganized the division to de-emphasize the Product for which Mackentire was most responsible."

Thinking Globally-

1. In addition to those mentioned in the case, what are some other advantages associated with the hiring of local managers in emerging markets?

2. What steps should a company take to ensure that, if taken to court, it can demonstrate that staffing cuts have not been discriminatory?

Source "Staffing Globalization: The Economist (www.economist.com), June 24, 2006. pp. 77-80; James Harding, "when Expats Should Pack Their Bags" Financial Times, September 1, 1998, p. 10; C. K. Prahalad and Kenneth Lieberthal. The End of Corporate Imperialism." Harvard Business Review. July-August 1998, pp. 68-79.

Part B- Toyota's Strategy for Production Efficiency

Toyota Motor Corporation (www.toyota-global.com) commonly appears in most rankings of the world's most respected companies. One reason for Toyota's strong showing in such rankings is that the company always seems to maintain profitability in the face of economic downturns and slack demand. Another reason is that leaders in a wide range of industries have high regard for Toyota's management and production practices.

Toyota first began producing cars in 1937. In the micPT950s a machinist named Taiichi Ohno began developing a new concept of automobile production. Today, the approach known as the Toyota Production System (TPS) has been intensely studied and widely copied throughout the automobile industry, Ohno, who is addressed by fellow employees as sensei ("teacher and master"), followed the lead of the family that founded Toyota (spelled Toyoda) by exhibiting high regard for company employees. Ohno also believed that mass production of automobiles was obsolete and that a flexible production system that produced cars according lo specific customer requests would be superior.

It was at Toyota that the well-known just-in-time approach to inventory management was developed and perfected. Implementing just-in-time required kanban, a simple system of colored paper cards that accompanied the parts as they progressed down the assembly line. Kanban eliminates inventory buildup by quickly telling the production personnel which parts are being used and which are not. The third pillar of the TPS was quality circles, groups of workers who discussed ways to improve the work process and make better cars. Finally, the entire system was based on jidoka, which literally means "automation." As used at Toyota, however, the word expresses management's faith in the worker as a human being and a thinker.

A simple example illustrates the benefits of Toyota's system. Toyota dealerships found that customers kept returning their vehicles with leaking radiator hoses. When a team of workers at the U.S. plant where the vehicle was made was asked to help find a solution, they found the problem was the clamp on the radiator hose. In assembly, the clamp is put over the hose, a pin on the side is pulled out, and the hose is secured. But sometimes the operator would forget to pull out the pin. The hose would remain loose and would leak. So the team installed a device next to the line that contains a funnel and electric eye. If a pin is not tossed into the funnel (passing the electric eye) every 60 seconds, the device senses that the operator must have forgotten to pull the pin and slops the line. As a result, a warranty problem at the dealerships was eliminated, customer dissatisfaction was reduced, and productivity was increased.

Nearly 50 years after the groundwork for the IPS was first laid, the results speak for themselves. Toyota's superior approach lo manufacturing has been estimated to yield a cost advantage of $600 to $700 per car due to more efficient production, plus another 5300 savings per car because fewer defects mean less warranty repair work. Ohno's belief in flexible production can also be seen in the fact that Toyota's Sienna minivan is produced on the same assembly line in Georgetown, Kentucky, as the company's Camry models. The Sienna and Canny share the same basic chassis and 50 percent of their parts. Out of 300 different stations on the assembly line, Sienna models require different parts at only 26 stations. Toyota expects to build one Sienna for every three Camrys that come off the assembly line.

Thinking Globally

1. Chrysler engineers helped Toyota develop its Sienna minivan. In return, Toyota provided input on automobile production techniques to Chrysler. Why do you think Chrysler was willing to share its minivan know-how with a key competitor?

2. What other benefits do you think Toyota obtains from its production system? Think in broader terms than just production, and consider financial, marketing, and human resource management issues.

Source: Hirolaka Takeuchi, Emi Osono, and Norihiko Shimizu. "The Contradictions That Drive Toyota's Success,' Harvard Business Review, June 2008. pp. 96-104; David Welch, "What Could Dull Toyota's Edge.' Bloomberg Businessweek, April 28. 2008, p. 38; '08A: Pushing Carmakers to Rev Up Factories.' Bloomberg Businessweek (www.businessweek.com). February 17. 2002.