Video #3 - Old & New Japan

Monday, January 09, 2006

sources | lesson plan

BACKGROUND INFORMATION

Japan is famous for "japanazing"-tailoring or adapting Western ways into its culture. The recent financial crisis seems to have accelerated this trend.

Peter McKillop writes: "For the past five years I have helped manage a small outpost of a multinational consulting firm. The last day before I left for a new position, packing my boxes, I began to think about how lucky I have been to work with Japan's newest and most promising generation ever. When I first joined the firm, it was a joint venture with a large Japanese corporation and was run in a lose-lose business matrix that had lots of older 40-plus Japanese men doing little but read newspapers while their Western counterparts spent most of their time at the Tokyo American Club. Below toiled dozens of cheerless consultants grinding out uninspired campaigns. Women served tea. Then something wonderful happened: Asia's financial markets melted down. My company felt the full force of "globalization." In a matter of months the hurricane winds of change had swept out the palsied management, the ancient phones and the old dusty ways of doing business. When the storm passed, we were a new organization with a new mandate: play by the new rules of global capitalism, or die. When we started instituting the new rules, many warned us that 'you can't do that in Japan,' or: 'the Japanese will never understand what you are talking about.' They were wrong on both counts."

Here, then, are my seven Golden Rules for managing a business in the "New Japan":

1. You can fire Japanese people just like anyone else.
2. If you are going to fire, you must reward. Younger Japanese workers embrace the Darwinian capitalist culture that says you are only loyal to yourself. They don't want lifetime employment or seniority-based pay raises. They want bonuses, options and new challenges. If they don't get them, they will walk.
3. Despite common assumptions, the Japanese can understand modern Western business strategies.
4. Technology is the backbone of success.
5. You have to have a great accountant/financial director.
6. Japanese banks are shortsighted.
7. Empower your Japanese staff.

Likewise, Yosiaki Murakami preaches a very American-sounding gospel of shareholders' rights and free management.

In early February, Murakami launched a hostile takeover bid against Shoei Co., a little-known electronics and real estate company. He offered $9.50 for each Shoei share, about 14% more than the previous trading day's closing price. It was a stunning move in a country where hostile takeovers are rare. But The country's sclerotic management class, Murakami charges, has ignored shareholders and wasted their funds. He hopes to spark a revolution.

Partly to ward off unwanted foreign suitors, Japanese companies have for decades wrapped themselves in a cocoon of share swaps with firms in their keiretsu, or conglomerate, making Western-style corporate assaults almost impossible. Raiders have generally been dismissed as cowboys trying to drive up stock prices and make a quick buck, rather than investors concerned with long term value.

Globalization is changing the way business is done in Japan. The old-style relationships are unraveling. Shareholders are demanding higher returns and once alien concepts like koporeto gabanansu (corporate governance) are entering the lexicon. M&A (merger and acquisition) deals soared to $150 billion last year, up from just $17.5 billion a year earlier, according to Thomson Financial Securities data. Murakami's move promises there's much more to come. "As a wake-up call to corporate Japan, it is an extraordinarily important event," says Gary Stead, head of M&A for Merrill Lynch in Asia.

Cheeseburger, fries - and 50,000 yen to go, please. That's a Happy Meal at the Bank of Yokohama! Scrambling to streamline operations and boost returns, the Japanese lender thought of shutting down an old branch near a train station in suburban Yokisuka. Instead, it gave the space to McDonald's and put its automatic teller machines inside the hamburger chain's new outlet. Result: lower costs and more satisfied customers. Not to mention another jolt to the Japanese banking system's staid, conservative ways.

"Such a new service style would have been absolutely unthinkable for a bank 10 years ago," says manager and ex-bank staffer Yokote Yasuaki. Now that deregulation and competition are rewriting the rules, old-fashioned banks are having to renew themselves to gain an edge on their rivals or keep up with them.

Business practices, new investment styles and entrepreneurship seem to be the hope for the "new Japan." Renewal and growth have been historically favorable forces in this island nation. History repeats itself.

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SOURCES:

MacIntyre, Donald, "Challenging Japan's Cozy Corporate Culture." Asia Now, February 7, 2000.

McKillop, Peter, "Letter from Japan: The 7 Rules for a Highly Effective Japan." Asia Now, February 4, 2000.

Sprague, Jonathan and Assif Shameen, "A New Breed Rising." Asia Now, September 10, 1999.

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LESSON PLAN

GRADE LEVEL/SUBJECT: 10-12/Economics, International Relations, World History, International Baccalaureate Programs(IB), Current Events.

PURPOSE: to present activities to be used at a variety of classroom situations in order to enhance student understanding of Japanese economy and its significance globally.

OBJECTIVES: Students will be able to:

1. Compare old Japanese business practices with new policies.
2. Trace the events which have led to a change in business practices in Japan.
3. Analyze the long range effects of the recent changes in Japanese business practices.

MATERIALS:

1. Background information provided.
2. Resources on entrepreneurship available at your school's Media Center and the Public Library System in your area.
3. Background information available through Internet "search engines".
4. Civic Entrepreneur's International Network. info@cein.org
5. Amagasaki Research Incubation Center.
6. Computing Japan, cjmag.co.org
7. Women Entrepreneurs International Exchange Program '00. cf.mbn.or.jp

ACTIVITIES: May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.

1. Create a Venn diagram comparing old Japanese business practices with new policies.
2. Create a time-line illustrating events which have caused changes in the way Japan does business.
3. Write an editorial describing the effects of changes in the workplace from the perspective of a female employee, a foreign investor, a senior executive of a bank, and/or an elderly "company man."
4. Role play a board meeting dramatizing the old and the new views on how to do business in Japan.

EVALUATION: Individual assignments should be graded by the teacher using established criteria. Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale:

Content 1= Superior (A) Creativity 2= Excellent (B) Clarity 3= Good (C) 4= Fair (D) 5= Poor (F)

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