Mabuchi Motor, Study Case

International Human Resources Enterprise Background Mabuchi Motor Company is the world’s number one manufacturer of small electric motors.

The company holds 70% of the market for motors used with automotive, toys, computer, industry. All started in 1946 when Kenichi Mabuchi (now the company’s honorary chairman) founded “Kansai Rika Kenkyusho,” a scientific research institute. He created the world’s first high performance horseshoe-shaped magnetic motor in 1947. On January 18, 1954, Kansai Rika Kenkyusho established Tokyo Science Industrial Co. , Ltd. for the production of small electric motors for toys and scientific apparatus.

We Will Write a Custom Case Study Specifically
For You For Only $13.90/page!

order now

By the dawn of the 1970s, Mabuchi became one of the world’s leading producers of original equipment motors for consumer electronics, toys and model aircraft. In the early 1980s Mabuchi entered both the VCR and battery-operated power tool market. The development of a heavy-duty printer motor in 1985 led to Mabuchi’s entry into the office equipment market. The Mabuchi Technology Center was created in 1992 for in-depth research and development of small electric motors. Operations in Europe and China began in 1993.

1. Multinational enterprises use expatriates as a control mechanism, to transfer skills and to develop managers.

Why the decline in the numbers of Japanese expatriates? The decline of Japanese expatriates became due to several reasons: a) To maximize its competitiveness by minimizing its cost the production was shift outside of Japan. The production capability had been shifted outside of Japan to take advantage of the low cost labor, like in Hong Kong in 1964, because the labor rates were low. Furthermore the cost to maintain a Japanese expatriate (salary, accommodation ..

. ) was 10 to 20 times that of local manager. Interfering with the strategies of cost minimization and continued aggressive expansion. ) Several numbers of Japanese subsidiaries, to continue its strategy of production expansion, Mabuchi established new factory in Taiwan, in China and employed local workers. c)

The Performance advantages associated with using local managers, were that they share the same language and the same culture that the employee.

Therefore it was easier for local managers to run a team whose understand the problems. d) The Local government had preferences for local managers; the regulations of work were facilitating the employ of local managers. Even if the skills of the local worker were inferior to the Japanese employees. ) Mabuchi decided to increase supply of qualified local managers to develop corporate training programs for foreign personnel: NIHAO (New Integrated Headquarters and Overseas Operation) to improve the management competence of local managers. f) It was easier to manage from a distance.

In beginning in the 1990s, to shift many of the responsibilities back to the individual subsidiaries. And encourage subsidiary managers to communicate directly with their counterpart in other subsidiaries. With the goal to reduce duplication of effort and efficiency management control.

Also thanks to the Establishment of the COMPASS program, a computer based management information system to improve and reduce the time of transfer of the information between department and subsidiaries. To conduce the decrease of need of Japanese managers in the foreign subsidiaries. 2.

What are the key elements of Mabuchi’s strategy and structure? What are its. Management philosophy, Respect of the hierarchy Mabuchi had the assumption that all the people are the same in what they need and want. They have a common longing for security, peace, ease of living and freedom.

And that the work than they can get in Mabuchi Company can contribute of these desires. As well is in the culture of the Japan Company to encourage employees to take on the organization’s goal as their own.

Also like all the Japan Company Mabuchi had the respect of the hierarchy and the lines of authority. Rewards were given through bonuses to personnel having satisfactory development. It was the ideology of the company, the cultural awareness. + Strong culture of enterprise encourages the employees to be more competitive. – But not adapted to the Chinese culture, where all the employees of the company are considered like equal.

And share the bonus between the members of the team. In my opinion is in reason of the communist culture. Centralized management In 1971 a new politic of reorganization for administration of marketing and production to concentrate responsibility for these functions in the head office was implemented. + It has complete power over decision-making. – Management decisions are slow and they do not always fit the reality on the ground High quality and production cost minimization In 1988 it was decided to produce 40% of its total output small motors in China, then 70% in 1993.

Even if the consumer thought that Asia producer outside Japan was an inferior quality of production, they took this path with the goal to maximize competitiveness by minimizing its cost of production and labor. To the quality was from the beginning one of the main goals. All the things were made for guarantee an identical level of high quality product no matter where the product came from. It’s for that, that the operations of quality control were made only by the head office technical center, following this behavior, in 1992, Mabuchi announced the formulation of the “New Mabuchi 21 Steering Committee”.

The Committed was charged to examine and making recommendations one product quality, delivery lead time, costs of production.

This led to the establishment of ISO 9000 standards, to guarantee the quality. And the sales systems COMPASS for improve the transfer of information between departments and subsidiaries. Moreover the committee took the decision to reduce the number of Japanese’s managers posted to the foreign subsidiary. + Mabuchi has the reputation of supplying high quality products on a timely basis and low costs of production.

Is for this reason that is the leader in small motors, due to competitive prices ;amp; the quality of the products.

Good decision to reduce the number of Japanese’s managers in the overseas, because the salary of the Japanese’s mangers is 10 ;amp; 20 times higher. – But only if they have even the same skills and knowledge, to contribute to the successful organization of the company. Diversification of products and market segment In the beginning Mabuchi produced small electric motor for the toy industry (like racing car, model airplanes) but after also for audio and visual equipment (CD player, camcorders,).

Later on the integration of the Mabuchi products’ became very strong, for different market: Home market, like blenders, shavers. They also were into professional industrial market with circular saws, drills. With industrial equipment like automotive industry with the application of the engine, electric windows and computer market, with drive lector, etc.

+ This diversity of markets, consumers thus ensures that will not depend of one market. Then even if one of these markets had to disappear, the company will be able to survive.

Diversification of place production ;amp; Expansion of the market (Quick response) Mabuchi started to implant offshore production in Hong-Kong in 1964 and Taiwan in 1969. And in 1980 it’s continued to focus in China by implantation of some factory in southern China (Dongguang) also Malaysia. And the strategy of the corporation included an aggressive plan in the reason of the low technology of the motor, meaning that it could be reproduced easily.

It was decided to occupy the maximum of competitive space and market opportunity. And established sales offices in Germany ;amp; and USA to manage its developing markets. The company will not depend of only one product or country, diminishing the risk of the emergence of new competitors. – Limited scope for continued expansion with existing managerial capacity.

Relative difficulty in transferring Japanese management style across cultures Implications for subsidiaries Mabuchi operated a change in its strategy, to reorganize its production.

In 1990 the firm began to shift many of these responsibilities back to the individual subsidiaries and to encourage the subsidiary managers to communicate directly with their counterpart, to increase the administrative effectiveness and operational efficiency. Enhances the responsiveness of the firm on the local market. – Reduces the power of the house mother. Standardization ;amp; low variety of product The standardization of products and thus allows low Variety economy of scale. But also the same product and same quality doesn’t matter where was the product from. 3.

What alternatives to NIHAO were available? Are these alternatives consistent with Mabuchi’s corporate strategy? Mabuchi had as main strategies in first place the Diversification of productions bases and markets, also to keep high quality standards and these two along with the minimization of production costs.

The control and decisions of all the company were guided for long time always in the head office of Mabuchi, but at the beginning of the 90’s it was decided to give more autonomy to each Mabuchi subsidiary and thus motivate to mutual cooperation among all subsidiaries and head office with ideas and methods to achieve company’s goals. As part of this new effort a Committee including several subsidiaries managers was created. At the time, Mabuchi held a lot of Japanese managers within the overseas subsidiaries with the aim to assure that the standards of production efficiency and quality were well accomplished.

It was accorded by the Committee, that in order to accomplish Mabuchi’s strategy of reducing production costs, the number of Japanese managers in foreign countries had to be reduced.

The cost of maintaining a Japanese manager abroad could reach 20 times what they had to pay to a local manager, but despite the optimistic scenario, there was still another problem to solve, get the capable and qualified personnel that could take the post. This situation was not reachable at that moment because of the ack of skills and preparation so Mabuchi decided to implement a training program to have competent local managers. The training program was named NIHAO, New Integrated Headquarters and Overseas Operations. The program was designed and implemented in one city in China.

Afterwards, the just trained managers took their new responsibilities. From the information provided it can be said that the goal of replacing Japanese managers with local people was done but the results were not totally accomplished.

) Increase recruitment of Japanese managers. This measure would help to keep product quality and production standards and diversification but on the other hand would make production more expensive, going against the aim to minimize costs. At the same time, involving more Japanese to manage foreign subsidiaries interfere with the cultural awareness of local workers, thus, the commitment that they have and the interest to accomplish company’s goals is diminished. b) Reduce recruitment for expatriate managers.

Saving production costs will be achieved, although if the capability of local workers is not enough to guarantee the quality.

This would become later a problem to the company, since the quality they offer is part of the reputation and success of the brand. c) Create a formation center within the countries for employees. In order to get enough prepared workers with the necessary knowledge and skills linking the culture and ideology of the enterprise to maintain the level of quality and the respect of rules, and maybe get to need less so much leading from the managers.

Depending on the way of operation, it could be so expensive that would be worthless and the need to minimize cost would not be achieved. d) Decrease quality of product.

It could be thought as an alternative measure that having less control on the production and ignoring in some way the standardized quality expected would be a way to minimize costs but would represent big losses for the future of the company, if it lost the customers trust and satisfaction. e) Change the production method to have less human intervention.

With this implementation the quality could be standardized and the production could maybe become more dynamic and effective, getting to meet diversification strategy goal. Despite this, the cost of implementing and maintaining such a system like this would raise the costs, even more than keeping the Japanese directors. Effects of NIHAO | YES| NO| Reduce dependence on HQ but disperse HQ management style| X| | Reduce cost of senior managers in offshore subsidiaries| X| | Use sufficient level’s local managers| | X|

Solve the difficult multilingual management problem | | X| Enhance communication between superiors and subordinates in local subsidiaries| | X| The management is now centralized| X| | strong head office/subsidiaries relations| X| | Multiple locations| X| | Focus on single product| | X| Minimize costs| | X| Maintain high quality output| ? | ? | Expand production base| | X| Diversify into new markets| | X| 4.

In September 1995, what should Mabuchi do? The market for small motors continued to expand rapidly. Decision: Mabuchi implements NIHAO 1 plant at a time, by 1998 managements of all plants introduce to the program.

Disappointments with NIHAO program: Many local managers are still not very efficient and effective As local managers took on greater roles in inter-subsidiary communication, language became more of an issue local manager commitment to the goals of the head office. Recommendations| Net Result| Stop the project Nihao | Same difficulty, high coast (Japanese managers) ;amp; Quality management. | Slow the process of implementing the program: Introduce Nihao, in a single test subsidiary. | Integration of the Program will be Control|

Allocate more financial and human resources to the establishment of Nihao : -Created a headquarter position has qualified, full-time for ensuring the implementation of Nihao.

– Denominational a permanent training facility for the employees. – Use a tutorial system, with senior managers| The results will be fast, and will increase the number of junior managers and their knowledge quickly. | Implement Nihao at all Subsidiaries Immediately. | This could lead to total disruption of the company that would be detrimental to these customers in terms of quality and delivery times. And so bad for the reputation of Mabuchi|