ANALYSIS OF TOYOTA AND GENERAL MOTORS

INDIVIDUAL PROJECT
SUBMITTED TO: SIR COL (R) MANZOOR IQBAL AWAN SUBMITTED BY: Ahsan Naeem Sethi BBA-7-B 01-111072-018

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Abstract:

The focus of this study will be on the management style in Japan (Toyota) compared to his competitor America (General Motors), how these forms definitely differ due to the different backgrounds from which they developed and how the two companies Toyota and General Motors differ in management style from their home country and in Host countries.

The most dominant features of the Japanese society on the management styles are the male dominant and collectivism. Japan is also a highly collectivistic country and constancy to your group is very important. These matters are also embedded in Japanese management where you find a tough hierarchical and collectivistic organization. The respect for tradition and long-term commitment also stands strong in the Japanese society.

The most important features of the American society on the management styles are the individualism and the gender equality. America is highly based on individual commitment. The value for belief and short term promises are also a strong factor in American society.

The most imperative thing in the opportunity for any organization is to be able to motivate, control and enable others to be successful in an organization. To include important values of the traditions that are visiting into your own ways of doing things is the key for successful cooperation across cultures.

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Introduction International business competition and globalization brings a lot of competition among the globalized companies. These factors can affect the business environment of the globalized companies. The major factors among globalized organizations are cultural differences. Organizations before going to global market are that they must understand the culture of the other country where they want to start their operations and become successful.

The basic idea of the study is to observe the difference between two companies one from Japan and other from America. Two companies are working on the concept of globalization and also investing in other companies. The two companies include Toyota and General Motors. Both the companies are from the auto mobile sector.

Toyota has reached a global market share of 10%, with a goal to be the worlds best auto manufacturer ahead of General Motors (GM), by achieving 15%. Cultural differences between America and Japan reveal some significant differences, most notably between the individualism in America and collectivism in Japan. A brief examination of Toyotas competitors and industry trends reveals that Toyotas recent growth has not been shared by its three American rivals GM, Ford and Chrysler, and that any trouble for the oil industry in turn spells trouble for the car industry. Toyota uses a geographic-area global structure, and is centralized and the GM is decentralized.

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Toyota

History:

Toyota Motor Corporation, commonly known simply as Toyota and abbreviated as TMC, is a multinational corporation headquartered in Japan. In 2009, Toyota Motor Corporation employed 71,116 people worldwide (total Toyota 320,808). TMC is the world's largest automobile manufacturer by sales and production. Toyota is the perfect example of the multinational company, because of its presence in every continent, with the employee from every culture and regions. Toyota has factories in most parts of the world, manufacturing or assembling vehicles for local markets. Toyota has manufacturing or assembly plants in Japan, Australia, India, Sri Lanka, Canada, Indonesia, Poland, South Africa, Turkey, Colombia, the United Kingdom, the United States, France, Brazil, Portugal, and more recently, Argentina, Czech Republic, Mexico, Malaysia, Pakistan, Egypt, China, Vietnam, Venezuela, the Philippines, and Russia. Thailand,

Japan and America:

This topic will include the management style of Toyota in Japan and America and how Geert Hofstedes model applies.

High context (Japan): Toyota is dealing in high context culture. High-context means that most of the information is either in the physical context or initialized in the person, while very little is in the coded, explicit, transmitted part of the message. (Hall, 1976, p 79). We can say that Toyota is operative in highcontext culture this means that people working in the organization give importance to every information around the message that has to be delivered. They listen to every single person suggestion and then make a best decision after listening to the suggestions of every one.

In high-context systems people expect from their interlocutor that he or she knows what the message

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of the communication was. This can be done without that it was specifically told Japanese, Chinese and French use a high-context communication. They place great importance on ambience, decorum, the relative status of the participants in a communication and the manner of massages delivery. Japanese people tend to be reserved which is considered as active behavior in collectivistic cultures. They first need to build up an interpersonal relationship a foundation where it is possible to find the right level of context.

The five dimensions:

These are five dimensions from Geert Hofstedes

model. We will check each dimension

according to the management style of Toyota in Japan and America. Geert Hofstedes value dimensions for America and Japan are as follows:

There are great contrasts and the occasional similarity when analyzing the two nation cultures (Japan and America). Geert Hofstedes value dimensions show America is less accepting of power inequality than Japan. On the Power Difference Index (PDI) both Japan and America are below the world average (W.A). Japan is also below W.A for individualism, having a collective culture, preferring group work and group decision making; seeking the best group outcomes (Bond, 1986). Equally, America is ranked the highest in the world for individualism, having great emphasis on individual decision making and seeking positive outcomes for the individual or family.

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Geert Hofstede, 2003

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According to Hofstedes study Japan is considered to be a masculine society in comparison to Americans who have a relaxed lifestyle and show concern for others. Japan is a male dominated society with work taking priority over personal life or families; aiming for advancement, success and money.

Yet another significant contrast between Japan and America can be seen with Uncertainty Avoidance. Americans prefer to take risks, being less dependent on rules or regulations and happy to make their own decisions; in contrast to Japan who prefers rules or regulations and less informality. However, the main difference between Japanese and American culture is Long Term Orientation. Japan prefers to plan well ahead, setting long term goals for long term rewards; comparing to America who prefer short term planning, rewards and goals.

Using a select few of Trompenaarss Value Dimensions further show the differences between the American and Japanese cultures. Japan is a neutral culture, showing little emotion in business discussions; in comparison America has an affective culture, with body contact and emotional expression the norm. Furthermore, America is said to be a specific-orientated culture, prefer to separate their work and private life, whereas in Japan the two are linked, being a diffuse-orientated society. America is also known to be universalistic, as it applies one standard, placing more emphasis on contracts. In contrast Japan is a particularistic as they are based on relationships and interpersonal trust; friendship comes before the contract. Japan is also known as an ascription society where people are rewarded not on individual task, but on their background; compared with America where emphasis is placed on individual achievement.

Finally, the differences in negotiating culture between Japan and America showed in study some surprising results. Japan and America (55% and 54%) both consider the ultimate goal of negotiation to be a contract. Both have a high time sensitivity (91% and 85%), and believe in top-down agreement building (45%and 47%). Differences in the negotiating cultures include Japans indirect (high context) communication, as opposed to Americas direct (low context), Japans belief in win-win negotiation conflicts with Americas emphasis on win-lose, and

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Japans preference for formal negotiating styles rather than the informal approach preferred by their American counterparts2.

Power Distance: Japan is a High-context culture, they have great expansion in the economy and their standards are reflected totally in the organizations. In Toyota there is a tough chain of command and much power distance. In a culture like America Everyone is engaged in the decision making process, which leads to Minimum power distance and everyone feels equal importance in the organization.

Individual Index: Individualism is less; people are more tasks oriented which I stated to them from the higher authorities. People work in a group and the individual idea or thought is consider or valued less. But in America it is considered totally opposite in a culture like America individualism is high. Companies have belief on individual tasks and individual idea is considered much important.

Masculinity index: Masculinity factor is more important in Toyota. They consider those males are more loyal than females. However there are female also working in the organization is given equal rights. So there is a complexity for Toyota to adjust them in a culture like America where the belief is on gender equality.

Uncertainty Avoidance Index: Uncertainty avoidance in Toyota is high. Management doesnt apply to take much risk and they are careful to be more rules oriented. On the bases of this we can say that there is a centralized structure instead of being flat or decentralized.

Long-Term Orientation:

2
http://www.commerce.adelaide.edu.au/publications/assignments/toyota.pdf

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Toyota focuses more on the long-term relations and they want to get rewards from it. In America there is a culture that they have less focus on long term goals. This is the main complexity for the Toyota to adjust them in the culture like America.

Toyota America has issues and problems that were identified in the internal and external analysis based on structure, operations and international management problems in the organization. Toyota is a global operation, being one of the largest and most recognized automotive producers in the world, and will only benefit from realistic solutions and recommendations to the analysis of its issues and problems.

There are drawbacks due to cultural differences when comparing America to Japan .Japan (being the parent company) needs to have some sort of training in their country for American executives, so they can understand the collective culture of Japan comparison to Americas individualistic approach according to Hofstedes study (Bond, 1986). America also needs to train the Japanese management to be aware of its culture and the differences between the two countries. Time devoted to educating and training managers on cultural differences will be well spot3.

General Motors America and United Kingdom

General Motors (GM) is not only the world's leading manufacturer of cars and trucks, including brand names Pontiac, Saturn, Buick, Cadillac, GMC, Chevrolet, and Oldsmobile. With 400,000 employees worldwide, it is also the largest industrial enterprise in the world. Founder William Durant was a pioneer of the automotive conglomerate, realizing that individually produced automobile brands had a much better chance of surviving a slow year if grouped together. Between 1908 and 1910, Durant bought 17 companies and concentrated them in Flint, Michigan. In 1923, President Alfred Sloan implemented a decentralized management system that is still in place at GM, and has been emulated by countless other corporations. GM has focused on aggressive global expansion, including hiring former Toyota consultants to

guide them into the Japanese market. (The company also has significant stakes in both Suzuki and
3
http://www.commerce.adelaide.edu.au/publications/assignments/toyota.pdf

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Isuzu; in 1999, GM upped its stake in Isuzu to 49 percent and bought 10 percent of Suzuki in 1999.) In late 1998, a joint venture with SAIC produced the first Buicks for the Chinese market. And by moving into low-cost vehicle markets in Brazil and Russia, GM is broadening its penetration of foreign consumer markets, amassing a client base and establishing brand strength long before its competitors arrive on the scene. The world's largest corporation keeps its workforce satisfied by offering "challenging assignments" and by being "responsive to the career goals of younger employees." The game plan of the GM board is to "demand action" to grow GM's market share and to "focus on customer satisfaction." GM is a "huge company with tremendous resources and talents," but its enormous size "makes it very hard to stand out and be noticed." Insiders bemoan that "much of how you are perceived is based on the way you conduct yourself rather than what you actually accomplish." Of course, at GM "corporate culture is a variable" much likes other corporations, but when you have over 100,000 salaried employees, the chaos factor tends to increase. Culture team came up with four ways it felt it could embed the new culture in the companys day-today operations: The company would replace its performance management system; it would create an education series to explain what the new culture is and what is expected of leaders; it would use internal and external communications to communicate the companys new values; and finally, it would launch Building the Movement.

Perhaps more than anything else, Building the Movement reflects GMs new approach toward helping the salaried workforce live the companys new values of customer/product focus, speed, risk-taking and accountability.

The company has set out to identify employees who already exhibit the new values and turn them into models for others to emulate. The change reflects the companys move away from hierarchical decision-making, Oster says. The movement appears to be an attempt to implement the new cultural values by teaching workers at any level that they can make decisions in their areas of expertise, rather than go up the chain of command as they did in the past. Doing so would clearly allow the company to move quickly to respond to the needs of customers and products. With individuals making decisions, the company would also have an easier time identifying who is accountable.

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But all of this requires a certain amount of risk-taking, and as Oster says, Risk-taking is probably going to be one of the toughest of the cultural priorities4.

General Motors' first UK presence was in 1925, beginning with the takeover of Vauxhall. GM now manages a number of brands in the UK and Ireland, namely Corvette, Cadillac, Saab, HUMMER, Vauxhall, Opel and Chevrolet.5

GM's UK headquarters are in Luton, Bedfordshire. There are two UK General Motors Manufacturing (GMM) sites, which are located in Luton and Ellesmere Port, producing the Vivaro van and Astra 5-door respectively6. General Motors in Britain is already in talks with potential fleet customers for its Vauxhall Ampera extended-range electric vehicle ahead of the U.K. market launch in 2012. GM-U.K. spokesman Denis Chick told just-auto that the company is already talking to potential fleet buyers for the car and that there is plenty of interest from the British government and the public sector. "We'll start off with fleet demonstrators," he said. "But we are already picking up plenty of interest from potential fleet customers. The fact that the right-hand drive car goes on sale in the UK in 2012 the year of the next London Olympics - is also highly significant in terms of visibility for some fleets." Chic added that there had been "huge interest" in the car from London's Metropolitan Police Force with an announcement possible later this year. This topic will include the management style of General motors in America and United Kingdom and how Hofsteds model applies.

http://www1.excite.com/home/careers/company_profile/0,15623,579,00.html

5
http://www.epolitix.com/members/member-page/sites/gm/

6
http://blogs.edmunds.com/greencaradvisor/2010/03/general-motors-in-uk-in-talks-with-potential-fleet-customers-for-vauxhall-

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Low-context culture America is an example of low-context culture. So we can say that America is operative in a lowcontext culture this means that people working in the organization do not give importance to inappropriate information about the point that has to be conveyed. Individuals go directly to the point and things are done efficiently.

In this way individuals lean to be focused on the message and not on the person even though the affiliations and detailed information about one another can develop during a process. This is still not a focus and just a by-product of the condition and in any case not necessary for doing work together as it is in a high-context society.

America is one of the richest economies in the world. The United States of America has been a leader in scientific research and technological innovation since the late 19th century. In the early 20th century, the automobile companies of Old sand Henry Ford promoted the assembly line. According to Geert Hofstede's cultural dimensions analysis, the United States has the highest individualism score of any country studied. While the mainstream culture holds that the United States is a classless society, (Gutfield, Amon (2002). American Exceptionalism) scholars identify significant differences between the country's social classes, affecting socialization, language, and values. The American middle and professional class has initiated many contemporary social trends such as modern feminism, environmentalism, and multiculturalism. Americans' self-images, social viewpoints, and cultural expectations are associated with their occupations to an unusually close degree. While Americans tend greatly to value socioeconomic achievement, being ordinary or average is generally seen as a positive attribute.

The five dimensions:

These are five dimensions from Geert Hofstede's model. We will check each dimension according to the management style of General Motors in America.

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*

There are only seven (7) countries in the Geert Hofstede research that have Individualism (IDV) as their highest Dimension: USA (91), Australia (90), United Kingdom (89), Netherlands and Canada (80), and Italy (76). Individualism: The high Individualism ranking for the United States indicates a General Motors with a more individualistic attitude and relatively loose bonds with others. The management is more selfreliant and looks out for themselves and their close family members. UK is relatively having the same culture as united state. So there is a same culture dimensions and its easy for GM to adopt that culture.

Masculinity: Masculinity (MAS) with a ranking of 62, compared with a world average of 50. This indicates the
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http://geert-hofstede.com/hofstede_united_states.shtml http://geert-hofstede.com/hofstede_united_kingdom.shtml

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companies experience a higher degree of gender differentiation of roles. The male dominates a significant portion of the society and power structure. This situation generates a female population that becomes more assertive and competitive, with women shifting toward the male role model and away from their female role. United Kingdom also belief on equal gender distribution as USA, so there is a same masculinity dimension.

Long Term Orientation The LTO is the lowest Dimension for the US at 29, compared to the world average of 45. This low LTO ranking is indicative of the companies belief in meeting its obligations and tends to reflect an appreciation for cultural traditions. In UK culture and USA companies are tend to make a plan for short term goals and to achieve that goals in a specific time period..

Power Distance: Power distance at 40, compared to the world Average of 55. This is indicative of a greater equality between societal levels, including government, organizations, and even within families. In GM (America), there is a less power distance everyone is engaged in decision making process. Everyone has right to speak or give suggestions. UK and USA culture both believe on equality and they both are from low context culture.0

Uncertainty Avoidance: Uncertainty Avoidance, with a ranking of 46. A low ranking in the Uncertainty Avoidance Dimension is indicative of a General Motors that has fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts, and beliefs. U.K is few points behind than USA in uncertainty avoidance. GM employees feel anxiety in unknown and uncertain situations.

GM, America is a low-context and rule-based culture which favors equality, participation and democracy. So if we talk about the management of General Motors we see a democratic structure.

In GM America and United Kingdom, the entire employee has equal rights. There is no favoritism in term of work force, because there are many people who are from abroad and working there in

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America. It has been seen in the organization that employees are given goals which they have to achieve in a specific period of time but they arent uttered that they have to do it otherwise they will not be awarded.

General Motors Business Culture:

1. Goal and achievement oriented: General Motors reflect a focus on task completion and understanding, learning, mastery, solving problems, and developing new skills.9 2. Highly organized: General Motors are highly organized. They have decentralized culture. Everyone has right to speak, employees are involved in decision making. 3. Freedom-loving and self-sufficient: The employees of General Motors are freedom loving and self sufficient. They work according to their assigned tasks. 4. Work oriented and efficient: Employees of General Motors are work oriented and efficient. They are master of their field and they done their work on time. 5. Friendly and informal: General Motors worker are friendly. They help each other in any way.10

http://www.iapsych.com/acmcewok/Achievementgoalorientation.html

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General Motors Negotiation Strategies: y The negotiators of General Motors are selected based on their record of success. The company selected few expertises for the negotiating. y Gender, age, and social class are not criteria for selection. They believe on skills not other factors. If the employee is good in negotiating they utilize their skills on his field. y Individual characteristics are criteria for selection11

Business environment of General Motors: They Listen to each other carefully and show interest for all. They accept and struggle for change. They believe on constant improvement is obligatory. They always think about their customers and ask them what they want. General Motors empower their employees and support them support for the betterment of organization. They provide them ways to achieve goals of the organization. GM also trained their employees about new technology and gives them information about their goals.12

Analysis of Toyota and General Motors

An analysis of the cultural differences between America and Japan reveals some significant differences, most notably between the individualism in America and collectivism in Japan. Toyota uses a geographic-area global structure, and is decentralized. By focusing on market share instead of profits, the emphasis has shifted towards product quality and customer satisfaction. Its key

10

http://www.slideshare.net/zadsol/american-business-culture-workshop

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http://www.slideshare.net/zadsol/american-business-culture-workshop

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http://www.slideshare.net/zadsol/american-business-culture-workshop

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strengths include product quality, efficiency of production, R&D, and sales satisfaction. Toyota is also taking advantage of a close relationship with Honda and leading the way in hybrid technology.

Toyotas competitors GM and Ford have reduced their employee compensation benefits severely, as it reduces their production costs. In difference, Toyota maintains a good employee relationship by sharing concerned for their total welfare and uses this to motivating employees. Toyota is providing benefits to their employees low interest rate loans, housing subsidies, access to leisure facilities and retirement allowances to motivate them at work place.

The national culture of American is highly individualist, compared with the Japanese collective culture. The business culture in General Motors insists on equality.

General Motors creates excellent relationships with its dealers, which provide great local distribution channels for their vehicles. This representing an outstanding strength in sales for General Motors, whose profit margins have been increasing every year since 1997, becoming the largest auto manufacturer worldwide.

The first priority of these companies is to introduce the same level of customer service which they are providing in the home country. The people of world are very much influenced by Americas culture. So they will easily accept their culture & attracted towards their brands.
A high emphasis on customer satisfaction is one of General Motors strengths, as it continually surveys its product users to target new ideas or recognize problems. General Motors therefore determines customer satisfaction with its products and makes improvement based on these suggestions.

GM has a decentralized global geographical structure providing diverse opportunities for the United Kingdom subsidiary.

Toyota operates in foreign markets bringing it many opportunities for industrial expansion into certain products or services, as well as increased efficiency of information flow between countries (Weihrich, 1999; Hartel & Lloyd, 2004). Organizations competing on a global scale (in foreign markets) are miles above the rest. Toyotas contributing factors would be pure global dominance

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General Motors sets the standard in efficiency, productivity and quality in the auto manufacturing industry; and is the envy of rivals such as Toyota.

Toyotas latest future plans are to expand worldwide and to engage in manufacturing overseas; enhancing growth and opportunities. This could be done by forming operations in third-world countries with manufacturing done there, as it substantially reduces costs through labor.13

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http://www.commerce.adelaide.edu.au/publications/assignments/toyota.pdf

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