Topic 6: East Asia

Summary



The Japanese management style is characterized by:

• Not all the companies are alike.

• They are based on a market share-growth strategy.

• They have an aggressive price strategy in order to achieve economies of scale which lead them to a price war to reach more consumers.

• They are value maximization tended.

• Their relationship with the suppliers are seen as an inter-organizational perspective, where suppliers are seen as part of the organization in order to adapt better and easier to the changes because of a good coordination.



The best example of a successful Japanese management style is Zaibatsu, which began as diversified family enterprises that rose to prominence in the Meiji Era; they gained a privileged position in the Japanese economy by receiving subsidies from the State and favorable tax policies, additionally the government granted them a privileged position in the economic development of Japan. An example of their influence was that on the decade of the 30’s they controlled one third of the bank accounts and one third of the foreign trade of the country and, since they had their own banks, they had autonomy on who they would finance and safe financial taxes.



The Korean management style is characterized by:

• Being a Japanese colony from 1910 to 1945, so their managerial practices are influenced by Japan.

• In the 70’s and 80’s they still sought Japan as an economic development model.

• They had government intervention in aspects such as credits, foreign exchange rationing and benefits for exports growth.

• As a result the favored firms grew at a faster rate and diversified their economies better, but the gap between big and small firms widened.



A successful Korean management model is the Chaebol, which is a large conglomerate of family-controlled firms characterized by having strong ties with the government and is modeled on the Zaibatsu model. However, there are some differences of the Chaebol regarding the Zaibatsu: on Korea there is prohibited to own banks, since they are nationalized, they had special privileges from the government which lead them in some cases to grow because they borrowed vast funds instead of production growth.



The convergence occurs when as countries develop, management styles will converge to a model found in developed countries. Differentiation is a wider set of cultural norms in each society that acts as a powerful force that differentiates the culture and practices across borders.



On the convergence model there are two main pressures that determine if a management style tends to be homogeneous or not:

• Domestic pressure to retain culturally determined forms of management.

• International pressure to confront to conventional norms in the international marketplace.

Explain the phenomenon of convergence in terms of management styles. What are the forces or factors pushing for convergence?

Convergence in terms of management style refers to acquiring similarities in order to emulate a management practice from another country. Additionally, as countries develop, management styles will converge to a model fund in developed countries in order to copy the trends that are considered as the best managerial practices in order to reach a homogeneous practice. The forces or factors that push for convergence are mainly the international pressure to reach some standards that are established by the market in order to survive in a competitive environment (or isomorphism).

Explain the phenomenon of differentiation in terms of management styles. What are the forces of factors pushing for differentiation?

Differentiation in terms of management style is a set of forces which try to avoid homogeneity in the managerial practices of a certain country or culture in order to be differentiated and have identity and a proper style. The forces that push for differentiation are mainly the national culture and the national identity that try to keep an identity from a dominant culture.