Carlos Ghosn led one of the most dramatic turnarounds in the history of the modern corporation. Dispatched to Tokyo in 1999, with orders from France’s Renault SA to rescue its floundering Japanese business partner, Nissan Motor, Ghosn moved boldly. He slashed costs, closed unprofitable factories, shrank the supplier network, sold unprofitable assets, and rewired Nissan’s insular culture. Skeptics pronounced his efforts doomed. But within a year, Ghosn had returned Japan’s second-largest auto manufacturer to profitability and was widely credited with saving it from collapse. Since then, Ghosn—who was named CEO of Nissan in 2001—has transformed Nissan into one of the world’s most profitable companies. Under his leadership, Nissan has pushed aggressively into emerging markets such as Brazil, China, India, Russia, and Southeast Asia and shifted production of many core models outside Japan. He has invested heavily to develop affordable zero-emission vehicles, including the Nissan LEAF, which was launched in 2010, and a full lineup of Renault electric vehicles.
1) What are the different management practices that are unique to Japanese organizations? Although Japan's economic development is primarily the product of private entrepreneurship, the government has directly contributed to the nation's prosperity. The culture of Japanese management and HR practices so famous in the West is in strong contrast to the practices followed in European or US organizations. A majority of the HR practices have strong historical influence emerged as a result of Japan’s defeat in World War II. Leadership stemmed from the government and authority in general, and business looked to government for guidance. The destruction caused by the war on Japan resulted in an economy, which included aggressive forms of government intervention. Such an economy favored a system where no company went bankrupt and no worker lost his job. One of the prominent features of Japanese management is the practice of permanent employment (shushin koyo). The core employees of the organization are assured of permanent (lifetime) employment to ensure that employees are loyal and hard working. In exchange for their loyalty, job security and benefits such as low-cost loans for housing and a new automobile; insurance, bonus and pensions are provided to the employees. Permanent employment practices also provide companies with a strong incentive to spend on training and development of the employees with no fear of employees leaving the company. Another unique aspect of Japanese management is the system of promotion and reward. An important criterion is seniority (nenko-joretsu). Seniority is determined by the year an employee's class enters the company. Career progression is highly predictable, regulated, and automatic. Another aspect of Japanese management is the enterprise union, which most regular company employees are obliged to join. The workers do not have separate skill identification outside of the company. Despite federations of unions at the national level, the union does not exist as an entity separate from, or with an adversarial relationship to, the company. The linking of the company with the worker puts severe limits on independent union action, and the worker does not wish to harm the economic wellbeing of the company. Strikes are rare and usually brief. Another important feature of Japanese management is keiretsu or interfirm network system. The system involves cross-ownership among different companies in each other’s equity, which creates linkages between companies, which work to serve each other and supply products and services to each other. The system is based on informal relationships among companies, who respond to each other’s needs and achieve results through collaboration. As a result, it eliminates the need for formal partnerships, which limit the scope of an alliance due to certain rigidities. Such practices have enabled the...
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