Global Business Analysis: Japan - Research Paper Example

Global Business Cultural Analysis: Japan Earlier, plenty of countries, including communist China were reluctant in embracing globalization. Such countries thought that globalization is a concept put forward by capitalist countries to loot the resources of other countries. However, such concerns were quickly evaporated and at present China is the number one exploiter of globalization. One of the major advantages of globalization is the spreading of international or cross cultural business. Countries, irrespective of developed, developing or underdeveloped, have realized that foreign direct investment or FDI is vital in their countries economic progress. Doing international business is not easy as doing domestic business. An organization which tries to establish business units in another country should consider or learn the cultural, social, political, economical, legal and environmental frameworks in the target country to conduct business successfully. Japan is a country which has diverse culture and politics compared to that in America. This paper analyses the factors an American company should consider while establishing business units in Japan. Global Business Cultural Analysis: Japan Until the mid-80’s Japan’s economic progress was in the right direction. “In 1980, Japan’s financial system- and in particular its banking system – was the largest in the world. In terms of loan assets size, nine out of the world’ top ten banks were Japanese” (Suzuki, 2011, p.1). Japanese products were believed to be the best products in terms of quality at that time. Products from Japanese companies such as Sony, Toyota, Honda, Mitsubishi, Panasonic, etc have conquered the market all over the world. However, the scenario has changed a lot in recent times. However, from 1985 onwards, Japan has started to undergo a severe economic crisis. Growth started to decline in all sectors and collapsed and deflation started to embrace Japan from 1985 onwards. According to Hoshi and Kashyap (2004), Japan’s Financial Crisis and Economic Stagnation may cost the “taxpayers is at least 20 percent of Japan’s GDP (p.3). In any case, Japan has a unique business culture which is still relevant in the business world. Japan is still one of the prominent economies in Asia along with China, India and South Korea. In fact their economic growth was phenomenal even though Second World War caused huge damages to them. The hardworking Japanese people helped Japan to resurrect like a phoenix bird. In fact Japan set many examples or they taught many lessons to the world. It should be noted that along with manmade disasters, plenty of natural disasters like earthquake, tsunami and volcano eruptions strike Japan periodically. Yet Japanese people showed the frustrations or dejections. They kept on pressing the pedal of hard work and the outcome is evident from the present size of Japanese economy. International companies looking for business opportunities in Japan should learn cultural traits of Japan properly before the entry. Culture plays a vital role in the success and failures of business. It should be noted that international companies are currently keeping a diverse workforce as part of their business expansion strategies. Plenty of opportunities and challenges are brought by such diverse workforce in the organizational world. The services of locals are essential for an international company or American company while operating in Japan like countries. Major elements and dimensions of culture in Japan Communication Language, Environment, Social organization and structure, religion, Nonverbal means of communication, temporal conception, ethics, transparency, etc are some of the cultural dimensions of communication. Language Japanese is the national language of Japan. There are plenty of other languages in Japan, including English. However, the proficiency of Japanese people in English language is comparatively less. It is extremely difficult for an American or European to learn Japanese language. Honne (private) and Tatemae (public) are two terms associated with Japanese communication. “Tatemae is displayed when the words and the true intentions of somebody don’t really match completely. What is expressed in the words of the individual is the Tatemae and what he really thinks is the Honne” (Honne and Tatemae, 2010). Japanese people never use harsh words to criticize others. They have the habit of hiding their emotions whenever they get agitated by some comments. In other words, they keep absolute diplomacy while communicating with others, especially with foreigners. “Japanese are generally ambiguous, and often surprisingly vague when stating their opinion. This can be seen either as a sign of humility or a practical way to handle sometimes difficult topics” (Aimai - Ambiguity in Japanese Culture 2009). In other words, Japanese people are reluctant in telling too many things at a time. They use language judiciously to communicate ideas. They do not like people who talk too much. In fact ambiguity or Aimai is considered as the symbol of maturity in Japanese culture. Environment Dailey et al. (2010) pointed out that in Japanese culture “anger and sadness expressions are more important than fearful expressions in day-to-day social communication and this may be even more so in a culture which is more status differentiating” (p.891). As mentioned earlier, Japan is a country which is vulnerable to many natural disasters. Volcano eruptions and earthquake are common in Japan. Such environmental characteristics made Japanese bold compared to people in other parts of the world. They will never show fear when natural disasters strike them. The world has already witnessed the courage of Japanese people when recent tsunami attacks caused huge problems in Japan. Live telecasts of recent tsunami attack showed the pictures of Japanese people facing the realities with courage. At the same time, it is interesting to compare these responses with the responses of Americans during 9/11 incident. Americans were frightened a lot and they became psychotic during the attacks on World Trade Centre. Social organization and social structure A four tire class system is prevailed in Japan until the 19 th century. The Samurai class, the farmers, the artisans and the merchants were the major classes of people in Japan at that time. Samurai class enjoyed many privileges in the society. It was customary for the other classes of people to bow the head while people from Samurai class pass them. A largely homogeneous society, Japan does not exhibit the deep ethnic, religious, and class divisions that characterize many countries. The gaps between rich and poor are not as glaring in Japan as they are in many countries, and a remarkable 90 percent or more of Japanese people consider themselves middle class. This contrasts with most of Japan’s previous recorded history, when profound social and economic distinctions were maintained between Japan’s aristocracy and its commoners. Two periods of social upheaval in the modern era did much to soften these class divisions. The first was the push for modernization under the Meiji government at the end of the 19th century; the second was the period of Allied occupation after World War II (People and Society, Social Structure, n. d.) Japanese people are enjoying many liberties at present even though their past was horrible. Empowerment of individuals took place in Japan along with the economic growth after the Second World War. In fact Japanese people took the reconstruction of Japan as a challenge and for that purpose; they were ready to sideline the class system and other evil forces of society. At present, family life is considered with immense value and respect in Japan. Staying together like modern life styles is not prevalent in Japan. However, Japanese youths are getting enough freedom to choose their partners. “In the Survey of Japanese National Character conducted by the Institute of Statistical Mathematics, which has been conducted every five years since 1953, 45 percent of respondents in 2003 said “family” was the most important thing in their lives”(Kei et al., n.d., p.7) Religion Religion is not much significant in Japan’s social life. In fact Japanese religious system is highly complex. Plenty of Japanese people believe in multi-religions instead of single religion. Even though Christianity, Islam, Hinduism and Sikhism are practiced in Japan, Shinto and Buddhism seem to be more prominent. Shinto is the indigenous spirituality of Japan. Japanese Buddhism is different from Buddhism in other parts of the world. Nonverbal behavior Japanese prefer to use eye contact, teeth sucking and head movements to avoid confrontation and disagreement with others. Listeners and speakers are expected to understand the real meaning of their movement and vague expressions to convey that it is not necessary to talk about it (Rudlin, 2008, p.49). It is often said that more than 60% of the ideas conveyed in a communication process is through nonverbal means. Japanese people are masters in using nonverbal channels to communicate their ideas. In fact they like to speak less and their body speaks more. Even though the knowledge of a common language is necessary when two people from different cultures communicate each other, such things are not necessary while nonverbal means of communication. In other words, nonverbal means such as body languages, eye contacts, hand and head movements, facial expressions, gestures etc can communicate many ideas. Different people use different nonverbal means of communication. For example, Indians bow hold their hands together to greet others whereas Americans shake hands to mark their respect towards others. On the other hand, Japanese people bow their head in front of others to greet others or to show their respect. According to Mandal et al. (2001), Japanese show a right hemifacial bias for positive and left hemifacial bias for negative emotions; Indians and North Americans show left hemifacial bias for all emotions” (Mandal et al., 2001, p.385). Negative emotions of the Japanese cannot be detected easily. They are smart enough to cover their negative emotions. Unlike people in other cultures, they never react aggressively when they face some unfavorable incidents. Sweeny et al., (1980) mentioned that “In terms of empathy, respect, and genuineness, Japanese show more nonverbal cues than verbal cues” (Sweeny et al., 1980, p.150). “The Japanese have assigned a special term to designate their ability to nonverbally discern another person’s intensions, meaning or thoughts- haragei or belly language’ (Edwin, 1993, p.4). Implicit communication or haragei is part of Japanese culture. It is considered as a quality rather than misbehavior in Japanese culture. Transparency Japanese people are believed to be extremely honest in their attitudes and behavior. They have no hesitation in respecting others or valuing the contributions of others. At the same time, they show reluctance in communicating frankly or openly with others. They have the habit of hiding their emotions and expressions when it is not needed in a communication. In other words, transparency is less in Japanese culture. They do not have belief in sharing their problems or ideas with others. In fact the bitter experiences in the past forced them to become introverts rather than extroverts. Ethics, Values and attitudes Values, beliefs, norms attitudes and behavioral patterns of different cultures are different. “Some cultures put more emphasis on universal commitments (like honesty) while others put more weight on loyalty to particular people and relationships” (Ghemawat and Reiche, 2011, p.2). Honesty and value of relationship are equally honored in Japanese culture. However, the entry of modern life styles and life philosophies are influencing Japanese people also. “In 2008, approximately 90 percent of Japanese women in their 20s responded “marriage not necessary” (Kei et al., n.d., p.8). Just like people in western countries, Japanese people are also getting more liberal in their life styles. Marriage is perceived as a burden rather than a compulsory social norm by many of the upcoming Japanese youths. Plenty of Japanese people believe that having children is another burden even if they are ready to marry. Kei et al. (n.d.) pointed out that “Seventy percent of young Japanese women have sex unrelated to marriage. The share of people who find the notion that couples should wait to have sex until they are married (“unacceptable”) has decreased since its peak of nearly 60 percent in 1973” (p.8-10). All these statistics clearly suggest the destruction of moral values and ethics in Japanese society. How are cultural elements and dimensions integrated by locals conducting business in Japan? In the Japanese world of business the exchanging of "meshi" (business cards) is extremely important and is an art form. The "meshi" is to be received and given with both hands and a deep bow. The depth of the bow depends on the persons position in the business and societal hierarchy vis a vis the other person or people they are meeting for the first time. The givers "meshi" must be looked at very carefully by each recipient to show respect and deference if the giver has a higher rank than the recipient(s). In traditional Japanese companies, if a subordinate wishes to make a business proposal they (he/she) must write a very formal "ringi-sho" (business proposal) paper and submit it to their immediate supervisor who will then stamp it with their business "hanko" (rubber stamp) and pass it on up to their superior(s) who will then approve it or disapprove it and send it back for revision by the originator of the business proposal paper (Morse, N.d.) Hierarchy is very much important in Japanese business context. They do all business activities just like a religious ritual. In other words, they consider business activities as sacred acts. No other cultures give such importance to business as Japanese people do. In fact business is a religion in Japan. The status of a Japanese person is determined by the reputation of the company he works for. Thus, all Japanese workers are keen in maintaining the good reputations of the company. While trade union strikes are common in most of the organizations in other parts of the world, such things are extremely rare in Japanese organizations. Japanese people increase production if they wanted to protest against something. On the other hand people in other parts of the world stop working when they wanted to protest against something. Japanese people know very well that the problems facing by their company may affect them in one way or another in future. To a great extent a Japanese man and his family are socially ranked by the reputation of the company he works for and the position and prospects he has there. In the US and Europe, the success of entrepreneurial economies has to an extent supplanted social casting by employment, but in Japan, entrepreneurs are not accepted so readily and are often seen as eccentrics or misfits (The Japanese company in Japans culture, n. d.). Comparison of US culture and business with that in Japan The attitudes of Americans in doing business may not be the same as that of the Japanese. Even though both Japan and America are highly developed countries in terms of technology, business philosophies in these two countries are entirely different. Japanese companies always keen in producing high quality products. It is often said that there will not be any compromise on quality if the product is produced in Japan. However, the scenario has changed a lot in the recent past. For example, Toyota and Honda like automobile manufacturers forced to recall millions of vehicles from America and Europe recently because of technical problems. In short, Japanese business philosophy is also changing drastically because of the huge competitions in the global market. “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster" (Hofstede, N.d.). Geert Hofstede has conducted comprehensive researches to identify the influence of culture on international business. His findings are extremely important for companies doing international business. According to Hofstede, “Culture is the collective programming of the mind distinguishing the members of one group or category of people from others” (Hofstede, N.d.). It should be noted that a person behaves and believes in a particular way because of the actions of his mind. The activities of mind depend on heredity and the environment in which the person is brought up. Since Americans and Japanese have different heredity and environment, their cultures and thinking patterns would be entirely different. Hofstede has formulated five dimensions for national culture: Power Distance (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS), Uncertainty Avoidance (UAI) and Long Term Orientation (LTI) (Hofstede, N.d.). (See Appendix for country wise break up of dimensions of national culture). PDI refers to the extent of inequalities existing in the power or authority of people. PDI of Japan is 54 whereas that of America is 40 (See Appendix). In other words the gap between the least powerful and most powerful people in Japan is more than that in America. In business, autocratic and participatory management styles are prevailing. Higher values of PDI represent autocratic management styles whereas lower values represent participatory management styles. In other words, American management styles are comparatively more democratic than the Japanese management styles. In organizations Individualism and Collectivism represent individual work and team work. In some cultures, people like to work individually whereas in other cultures, they like to work collectively. IDV of Japan and America are 46 and 91 respectively (see appendix). In other words, Japan and America are extremely different countries in terms of IDV. American society is more individualistic than Japanese society. As a result of that team work is encouraged more in most of the Japanese companies whereas many of the American companies have more faith in individual work. For example, Apple is a company which encourages individual work more than teamwork. Masculinity versus Femininity (MAS) refers to the distribution of roles between genders whereas UAI refers to the ability of people to avoid uncertain situations. 95 and 92 are the MAS and UAI values of Japan whereas 62 and 46 are that in America. From the above statistics it is evident that male and female equality in America is more than that in Japan. Japanese society is comparatively more male dominant. Competitiveness, assertiveness, ambition and power are some of the masculine parameters whereas relationships and quality of life are some of the feminine parameters. Both America and Japan have huge differences in terms of these parameters. UAI value of Japan is extremely high compared to that in America. That is why Japanese people show more courage when they face disasters. On the other hand, Americans have less idea in dealing with uncertain situations which is evident from the mass hysteria generated in America after 9/11. In short, cultures with high value of UAI will approach issues emotionally and they will try to avoid uncertainty as much as possible. Implications for US businesses that wish to conduct business in Japan Language It is impossible for an American company to completely avoid the services of Japanese people while doing business in Japan. Proper verbal communication between Americans and Japanese are necessary for the American company to conduct business successfully in Japan. It is extremely difficult for the Americans to learn Japanese language. However, it is possible for the Japanese to learn English since English is accepted as an international language in Japan also. The HR managers in the American company should provide more training to the Japanese employees in English language so that language may not become a big constraint in communication between American and Japanese employees. Environment Japanese people have huge temperament compared to the Americans. The bitter life experiences taught them to stay patient whenever they face some complex problems. The patience and courage of Japanese people while severe problems may become a blessing to the American company trying to establish business in Japan. Moreover, Japanese people know the local market and business conditions very well. It should be noted that the legal frameworks prevailing in Japan for doing business could be entirely different from that in America. For example, Japanese government is keen in protecting the environment and encouraging the sustainable business practices. There are plenty of laws exist in Japan with respect to the waste handling and recycling. American company definitely gets help from Japanese people in understanding these laws. Social organizations and structure Social organizations and structure in America and Japan are entirely different. America is believed to be the most civilized and liberal country in the world. Americans have freedom and liberties in spreading their religious beliefs. Same way, Japanese society is also liberal up to certain extent. Even though the influence of monarch is still visible, democratic values are prominent in in Japanese politics. All these factors are encouraging signs for an American company to invest in Japan. Unlike, China, issues such as human right violation or censoring of information may not prevent American companies from investing in Japan. Religion American society is much more liberal than Japanese society. The gap between rich and poor in America is less compared to that in Japan. Moreover, religion is an important entity in American social life even though it is not so in Japanese society. It should be noted that Christianity dominates American culture whereas Buddhism and Shinto dominate Japanese religious system. Even though, Christianity, Shinto and Buddhism have some common elements, they have many differences also in terms of rituals, beliefs and customs. When an American company tries to establish business units in Japan, it should consider the beliefs, values and structure prevailing in Japanese society. Nonverbal communication Unlike Japanese culture Aimai may not be considered as a good quality in American culture. In fact Americans companies are looking for people who have better verbal communication skills. They do not like people who speak less and use body languages to express their ideas. Americans always like to know the ideas of others directly. Indirect language uses are not so pleasant to the Americans. Japanese on the other hand believe in using nonverbal means more than verbal means in a communication process. Davies & Ikeno (2002) pointed out that “Silence or Chinmoku viewed as a communication skill in Japan, not just a form of emptiness between spoken words” (p.51). Ekman & Freisen (1987) pointed out that Japanese are capable of masking negative emotions with smiles better than the Americans (p.713). In other words, even while a Japanese person smiles, nobody can judge what emotions he is going through. Americans are good at reading the minds of people. However, in the case of Japanese people, Americans may struggle to identify the emotions. Pain and gain are handled equally by the Japanese people. It should be noted that 9/11 caused a mass hysteria in America whereas the two atom bomb explosions or the frequent natural disasters do not affect the Japanese people mentally. In short, mental power of Japanese people is extremely higher than that of the Americans. Ethics, Values and attitudes Japan and America have almost similar culture in terms of life styles, ethics, values and attitudes. The influence of western culture is evident in Japanese social life. Therefore, American companies may not face much problem with these cultural elements in Japan. Conclusions Japanese culture is entirely different from that of America. Japanese people give more importance to nonverbal communication whereas Americans give more importance to verbal communication. Japanese people have the ability to hide their emotions even when facing tough situations whereas Americans express their emotions even when they face simple problems. Team work is encouraged in Japan whereas in America individual work is encouraged more. The influence of American culture is evident in Japanese culture present. Liberal life styles are more popular in Japan at present. Japanese religious structure is extremely complex. Many Japanese people have belief in multiple religions. Business philosophies in America and Japan are different. Business is just like a religion in Japan. The status of a Japanese person depends on the reputation of the company he is working for. On the other hand, Americans do not give that much importance to business or profession. Individualism is encouraged more in American companies whereas collectivism is encouraged more in Japanese companies. In short, there are plenty of similarities and differences in doing business in America and Japan because of the cultural differences between these two developed countries. An American organization looking for opportunities in Japan should formulate business strategies suitable to Japanese culture to excel in Japan. References Aimai - Ambiguity in Japanese Culture (2009). Retrieved from http://www.hanamiweb.com/aimai_ambiguity_in_japanese.html Dailey, M.N., Joyce, C., Lyons, M.J., Kamachi, M., Ishi, H. & Gyoba, J. (2010). Evidence and a Computational Explanation of Cultural Differences in Facial Expression Recognition. Emotion American Psychological Association 2010, Vol. 10, No. 6, 874–893 DOI: 10.1037/a0020019 Davies, R.J. & Ikeno, O. (2002). The Japanese Mind: Understanding Contemporary Japanese Culture Tuttle Publishing, 15-Mar-2002 Ghemawat, P. & Reiche, S. (2011). National Cultural Differences and Multinational Business. Globalization Note Series. Retrieved from http://www.aacsb.edu/resources/globalization/globecourse/contents/readings/national- cultural-differences-and-multinational-business.pdf Hoshi, T and Kashyap A K. (2004). Japan’s Financial Crisis and Economic Stagnation. Journal of Economic Perspectives—Volume 18, Number 1—Winter 2004. Hofstede G. (N.d) Cultural Dimensions, Retrieved from http://geert-hofstede.com/ Honne and Tatemae (2010). Retrieved from http://www.kirainet.com/english/honne-and- tatemae/ Kei K. Koichi T & Miwako H. (n.d.). The Survey of Japanese Value Orientations: Analysis of Trends over Thirty-Five Years Retrieved from http://www.nhk.or.jp/bunken/english/reports/pdf/10_no8_04.pdf Making Sense of Cross Cultural Communication, (2012). Retrieved from http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/masculinity/ Morse DS. (n.d.). Five Factors that Strongly Influence Japanese Business Practices, Retrieved from http://www.bestthinking.com/articles/business_and_finance/international_business/asian_ and_pacific_rim_business/five-factors-that-strongly-influence-japanese-business- practices People and Society, Social Structure (N.d.). Retrieved from http://countriesquest.com/asia/japan/people_and_society/social_structure.htm Rudlin, P. (2008). Indirect communication: I see what you mean. MultiLingual, Jun2008, Vol. 19 Issue 4, p49-51, Suzuki, Y. (2011). Japans Financial Slump: Collapse of the Monitoring System under Institutional and Transition Failures. Hound mills, Basingstoke, Hampshire: Palgrave Macmillan, 2011. The Japanese company in Japans culture, (n.d.). Retrieved from http://www.venturejapan.com/japan-business-culture-company.htm Appendix Country PDI IDV MAS UAI LTO Japan 54 46 95 92 80 Hungary 46 55 88 82 Austria 11 55 79 70 Venezuela 81 12 73 76 Italy 50 76 70 75 Switzerland 34 68 70 58 Mexico 81 30 69 82 Ireland 28 70 68 35 Jamaica 45 39 68 13 China 80 20 66 40 118 Germany 35 67 66 65 31 United Kingdom 35 89 66 35 25 Colombia 67 13 64 80 Philippines 94 32 64 44 19 Poland 68 60 64 93 Ecuador 78 8 63 67 South Africa 49 65 63 49 United States 40 91 62 46 29 Australia 36 90 61 51 31 New Zealand 22 79 58 49 30 Czech Republic 57 58 57 74 Greece 60 35 57 112 Hong Kong 68 25 57 29 96 Argentina 49 46 56 86 India 77 48 56 40 61 Belgium 65 75 54 94 Egypt 80 38 52 68 Iraq 80 38 52 68 Kuwait 80 38 52 68 Lebanon 80 38 52 68 Libya 80 38 52 68 Saudi Arabia 80 38 52 68 United Arab Emirates 80 38 52 68 Malaysia 104 26 50 36 Pakistan 55 14 50 70 Brazil 69 38 49 76 65 Singapore 74 20 48 8 48 Israel 13 54 47 81 Ghana 77 20 46 54 16 Indonesia 78 14 46 48 Nigeria 77 20 46 54 16 Sierra Leone 77 20 46 54 16 Taiwan 58 17 45 69 87 Turkey 66 37 45 85 Panama 95 11 44 86 France 68 71 43 86 Iran 58 41 43 59 Peru 64 16 42 87 Spain 57 51 42 86 Ethiopia 64 27 41 52 25 Kenya 64 27 41 52 25 Tanzania 64 27 41 52 25 Zambia 64 27 41 52 25 El Salvador 66 19 40 94 South Korea 60 18 39 85 75 Uruguay 61 36 38 100 Guatemala 95 6 37 101 Thailand 64 20 34 64 56 Portugal 63 27 31 104 Chile 63 23 28 86 Finland 33 63 26 59 Costa Rica 35 15 21 86 Denmark 18 74 16 23 Netherlands 38 80 14 53 44 Norway 31 69 8 50 20 Sweden 31 71 5 29 33 (Making Sense of Cross Cultural Communication, 2012) Read More