1. General presentation of the case study In this article the main character is Mike Flynn, president of the International Division of Information… [626558]

SUJI-INS
WILLIAM H. DAVIDSON
1. General presentation of the case study
In this article the main character is Mike Flynn, president of the International
Division of Information Network Services Corporation. He is in a need of developing
an agenda beacause he is going to Japan the next day, and it is very important for
him to make a good impression. He thinks the trip is vital for the Japanese joint
venture partner and he is aware of the fact that this will affect the long-term
relationship between his company and the Japanese partner in the management of
their joint venture. Prior to his promotion to the presidency of the International
Division, he had served as managing director of INS’s wholly owned subsidiary in
Canada.
The event came after after 2 years of demanding negotiations, and was
successful in establishing a joint venture in Japan with Suji Company (and INS was
particularly interested in the possibility of establishing a joint venture to provide VAN
services) a leading Japanese tele-communications equipment manufacturer. The
arrangement was formalized in the summer of 1987.
Suji’s management felt that VAN services, would be a major growth area. Suji’s
management, after some investigation, concluded that the quickest and most efficient
was to achieve entry into these markets was through either licensing or a joint
venture with a leading U.S. company. The negotiations concerning this joint venture
were difficult in part because it was the first experience of that kind for both
companies. INS has virtually no prior experience in Japan, and for Suji this was the
first joint venture with a foreign company, although it had engaged in licensing
agreements with several U.S. and European firms. The agreement also stipulated
that both companies would have equal representation on the board of directors, with
four people each, and that Suji would provide the entire personnel for the joint
venture from top management down to production workers. Representing the
Japanese company were the president and executive vice president of Suji, and two
senior executives of the joint venture, the president and vice president for finance.
The first president died suddenly about 3 months before the age of 68. He had been
a managing director of the parent company and had been the chief representative in
Suji’s negotiations with INS. About a month after his death, Suji, in accordance with
the agreement, Kenzo Satoh was nominated the new president. Flynn, when he
heard Satoh’s qualifications, concluded that he was not suitable for the presidency of
the joint venture. And this thing was strongly confirmed after he received a letter in
which was explained the Japanese way of working in companies. Not only did Flynn
feel that Satoh lacked the qualifications and experience for the presidency, but he
resented the fact that Suji was using the joint venture as a home to accommodate a

retired executive. In his response to Rose, Flynn suggests as president another
person, Takao Toray, marketing manager of the joint venture. Flynn was aware that
Toray was a little too young to be acceptable to Suji, but he felt that it was critical to
press for his appointment for two reasons.
Flynn was determined to get a first-hand view of the joint venture during his visit.
He had many questions, and he wondered whether he had inherited a problem. He
was scheduled to meet with Mr. Ohtomo, executive vice president of Suji
Corporation, on the day following his arrival. Ohtomo, who had been with Suji for
over 40 years, was the senior executive responsible for overseeing the joint venture.
While practicing with chopsticks, he returned to reading Theory Z, a popular book on
Japanese management, in the hope of gaining insight for the days ahead.
2. Identification of the problems, causes and negative effects:
Identification(statement) of the problem:
Problem 1: The first problem would be the fact the Japanese staff do not accept other
ways of thinking of doing things in business, they are very rigid and they just respect
the traditional ways of practices;
Problem 2: The seconds problem relies on the fact that the American people involved
in the board of the joint venture think that everything they do is right and they think
the Japanese staff is not suitable for this kind of business;
Problem 3: The Japanese and American people that are involved in the board of
directors of the joint venture cannot communicate effectively and establish something
clear, mainly due to the language barriers and the specific mentality of each
population.
Identification of the potential negative effects that will appear if the problems are not
going to be solved
If the problems are not going to be solved soon- if Japanese do not accept other
ways of thinking and the Americans coud learn Japanese and just accept the slow-
motion decision making process, this may lead to diverse quarrels between the two
parties involved and will eventually lead to the destruction of the joint venture and the
breaking of any relationships between these two.
Identification of the causes that led to the appearance of these problems
Problem1: The causes rely on the traditional way of doing business and the
extremely rigid thinking and acting of the most Japanese people. They also have very
specific rules/legislation regarding business activity that is very different from the
Western part.
Problem 2: Americans may think that they have a very good management style and
also do things very quickly may have roots in the fact that US is a leading nation and
the citizens might think they are doing everything correctly. They also have different
rules and tend to be outgoing, straight-forward and talkative, which is the opposite of
the Japanese people;

Problem 3: The Japanese language is a real problem for the American people, and it
seems that there are not so many Japanese persons that are having a good level of
English, so they cannot communicate very properly all the problems and thoughts
they have. Thus, the Americans also seem to have problems inside their staff, as
Flynn thinks that Rose is not suitable for his role as vice-president, and he also
doesn’t know yet how to approach the Japanese businessmen.
3. Identification of alternative solutions for each identified problem.
Solution 1: We strongly believe that the presindent of INS should insist on the
matter because, is a joint venture, the mechanism of decision-making should not rely
solely on” we have bigger slice of pie, our decisions matter more”. In fact, the Suji
managent must understand the implications of choosing Mr. Satoh as president on
the expansionary objective of the joint venture. Although the Japanese vs. American
practices are both subjected to nuances and interpretations, we can conclude that
the Japanese approach might be innefective on the long run. Choosing to reward a
retired parent company employee by offering a top position in a subsidiary is less
efective than taking the risk to hire a younger, yet more experienced employee.
Solution 2: In contrast to the Japanese faulty approach, Flynn’s perspective is
also very subjective. He should not rely on the idea that imposing the American
standards is mandatory in every situation as long as it is a joint venture. Sometimes,
objectiveness is requiered and an executive should be able to accept other opinions
as long as they are in the common interest of the company.
Solution 3: Visibly, the core problem of the whole situation consists of the
cultural differences between the two companies and their executives. It is stated that
none of the two parties have at least an impeccable command of the language of the
other, let alone an understanding of the cultural approaches. Therefore, a mediator is
required in dealing wih the problem. Unfortunately, Mr. Rose has proved as
unsuitable for the job because of his incapability to adapt and to develop a
relationship with the Japanese management. Hence, Mr. Flynn should find a
replacement for him a person more attached to the Japanes culture, a person that
has the ability to easily speak their language, thus offering the Japanese
management a sense of importance and respect. What the new vice president
should be able to do is to gain the confidence and respect of the Japanese
management. By achieving that, he might be able to convince the Suji management
of the importance of choosing the best suited president, therefore giving up their old
pactices in favor of common objective decisions.
Solution 1:
Advantages: The advantage of solution no.1 is that the Japanese part could
understand that choosing Mr. Satoh as president is not the ideal solution for
this partnership because of the lack of skills he has and maybe they would
agree on hiring someone else who may be younger but more suitable to the
position offered, which will lead to a better choice in the long run for the
company.

Disadvantages: The disadvantage of solution no.1 could be that the Japanese
part will take this suggestion as an aggressive policy of telling them that they
are wrong and their way of doing things in business is not good, which will
lead to a conflict between the American part and them because they will think
that the Americans don’t respect them and their way of doing things.
Solution 2:
Advantages: The advantage of solution no.2 is that Mr. Flynn could realize
that the American way of doing things is not the only one good in doing
business and he could give credit to the Japanese side if it’s better for the
company in this way.
Disadvantages: The disadvantage of solution no.2 is that Mr. Flynn could be
right about the defective choice of Mr. Satoh as head of the joint venture and
in the long run that will damage the efficiency of the company.
Solution 3:
Advantages: The advantage of solution no.3 is that the idea of hiring a
mediator which speaks the both languages and who knows the culture and
traditions of Japan will lead to a better bond between the 2 parts creating a
more appropriate business relationship, thing which Mr. Rose failed to create,
being not suitable for the position of Vice President.
Disadvantages: The disadvantage of solution no.3 is that firing Mr. Rose and
hiring a new Vice President could lead to a step back in the relationship
between the 2 parts because the Japanese side already adapted to Mr. Rose
way of doing things and firing him by Mr. Flynn and replacing with a new
person could lead to a freeze in negotiations inside the company.
4. Selection of the optimal solution.
Taking into consideration all the solutions presented earlier we chose the
Solution 3 being the optimal one. To reach the consensus and some compromises,
it’s important to have the willingness to built and ongoing relationship on the long
term.
It’s clearly that both, Americans and Japanese, have to try to reach a common
point and they can be helped by a mediator. From a certain angle you tend to believe
the Japanese people, but on the other hand you also understand why Mr. Flynn is
unahppy with the decisions taken by the Japanese side. Chosing this Solution both
sides will win, they can be helped by a person who will explain them how to try to
mediate the problem, even if Mr. Rose failed to create a business relationshop.
So it won’t be wrong if they will decide to fire Mr. Rose because he feels like an
outsider, he has communication boundaries and his experience actually is not valued
by Japanese.

We didn’t chose the Solution 1 because Mr. Flynn has the right to believe that
Mr. Satoh doesn’t have the competences and experience to be a president, it’s
because of the way he was selected, the fear of losing control and the feeling that the
US-Japanese Joint Venture is turning into a Japanese subsidiary. This solution is not
ideal because it would lead to an imminent conflict between the Japanese and
Americans, since the Japanese may think that their capacity is questioned in regard
with their decision of choosing Mr. Satoh as president .
When it comes to the second solution, it is too risky to accept this solution
because it can generate a huge damage to the company in the long run. Even if they
will give credit to Mr. Satoh, the misunderstanding between the two culture would
continue to lead to conflict since the communication between the two parties would
remain the same. They should learn to communicate no matter who is in charge of
president, by learning the language of each other.
5 Implementation of the optimal solution.
We have to replace Mr. Rose and find someone more qualified for this job, with
better communication skills that are adapted to the japanese way of thinking. This
way, the relation between the two companies can be improved significantly and the
business can flourish. But there is, as said earlier, an issue. If we fire Mr.Rose, all the
progress he already made, the bonds that created, will be destroyed. And in the
business world, relations like these are very valuable and hard to build.
So how are we gonna do ?
A – Resources and actions
First we have to find somebody qualified. Somebody who speaks perfect
japanese, in order to have fluent discussions, and somebody who understand their
culture and will show it to them. This way, the japanese part of the joint venture will
be more encline to hear and adapt to what Americans are suggesting, and it will
create a trust bond.
In order to find the perfect mediator, we have to launch a recruit campain. The
human resources department of the american company will take care of that, by
looking for somebody dynamic, charismatic and fluent in Japanese. For example we
can look for students in high-end japanese universities in America ( as we previously
aked them to choose a younger director it would make sense ) or find somebody
competent already working for the company.
Then, regarding the replacement of Mr.Rose, maybe we don't have to totally
remove him from the joint venture. Chances are the best way to keep intact the
relations already established in the joint venture is to present the new mediator as a
partner of Mr.Rose; this way the Japanese part won't feel like having to start again
their bonds with INS, and the change won't be as brutal. Of course, Mr.Rose will
have to be briefed and convinced in order to make this strategy succeed.

If we put the right words in, this strategy is most likely very feasible. The only
difficulty will be to convince Mr.Rose of taking a step back in the management of the
joint venture.
B – Impact on disadvantages
The only disadvantage listed before this was that the relations between the two
parts of the joint venture would be deteriorated. But if we succeed to get an efficient
mediator, and to not fire Mr.Rose by presenting them as partners, the relations will be
kept clean and ready to improve. This will be the perfect environment to have fair and
clear negociations between the two parts of this joint venture.