ABSTRACT THE ADAPTATION AND MARKETING STRATEGIES OF THE JAPANESE MANUFACTURING FIRMS OPERATING IN THE UNITED STATES: AN ECOLOGICAL ANALYSIS AND AN INTRODUCTORY SURVEY by Hirofumi Matsusaki This study is concerned with the marketing practices of Japanese manufacturing firms as employed in Japan and America. The study involves personal interviews with executives responsible for the American operations. Those who were not reached in this manner were respondents to a mail questionnaire. In addition to the primary data thus generated, an extensive analysis was made of secondary in— formation available. Two hypotheses were tested: I. There are identifiable characteristics and patterns of adaptation in the behavior of the Japanese firms that operate in the United States. II. The successful adaptation on the part of the Japanese manufacturing firms is dependent on the selective use of marketing strategies. Both of these hypotheses were found to be tenable. Hirofumi Matsusaki The following were specific findings with regard to the structure of the Japanese business in the United States. I. The product mix being imported is changing. In- creased emphasis is on industrial goods and pro— ducts which require complex and sophisticated marketing. 2. Japanese firms have made entry via large major metropolitan trading areas, New York ranking first, followed by Los Angeles, San Francisco, and Chicago. The recent trend, however, is a relative decline in New York, with a corres- ponding increase of trade in Chicago and Los Angeles. 3. Organizationally, about half of the firms are structured as corporations under American law, with the remainder as representative or liaison offices. A. In aggregate there is a steady increase in U. S. imports from Japan. Three key characteristics of Japanese business life influence the needed adaptation for doing business in America: (1) traditional features, (2) the lifetime employment system, and (3) the group decision-making system. Hirofumi Matsusaki A four dimensional framework was used for inter- preting the adaptation of Japanese firms in America: (1) natural resources, (2) competitive and economic forces, (3) governmental, legal and international forces, and (A) ethical, social and cultural forces. Two counteracting concepts, the logic of industriali- zation and the family system, had major impact upon Japa- nese firms with respect to: (1) international competition, (2) structural changes in industrial organizations, (3) the lifetime employment system, (A) the decision-making system, (5) the traditional features of business, and (6) the social life in Japan. Differences in the marketing approach used by these firms in their home market and in America included breadth of product line offered, frequency of new product intro— duction, the advertising appeals used, organization and management of the sales force, pricing, length of distri- bution channels, and the post-transactional services of- fered. Generally speaking, when their product lines were exported to America, fewer new products were introduced: advertising focused on selective demand cultivation; and the key sales management problem involved finding, attract- ing, and hiring men (contrasted with the lifetime employ- ment system in Japan). Pricing was viewed as a much stronger competitive weapon for the American market than in the home market. Channels in America were longer and Hirofumi Matsusaki more post-transactional services were offered in America than in Japan. The respondents noted the following factors as of critical importance for marketing success in America: to promote its products as superior and better, to develop new products, to organize a sales force that will push their products, and to establish dealer—distributor net- works. Generally speaking, they viewed demand cultivation and distribution problems more important in America than in Japan. THE ADAPTATION AND MARKETING STRATEGIES OF THE JAPANESE MANUFACTURING FIRMS OPERATING IN THE UNITED STATES: AN ECOLOGICAL ANALYSIS AND AN INTRODUCTORY SURVEY By Hirofumi Matsusaki A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Marketing and Transportation Administration 1966 (5)Copyright by HIROFUMI MATSUSAKI 1967 PREFACE The underlying motivation for this work has arisen from my personal conviction that marketing, as a mature discipline, requires an extension toward international dimension, including its cross—cultural applications. However, the definite commitment to the content of this dissertation has come about from my educational and pro- fessional training in Japan, as well as my academic experiences at Michigan State University. In conducting this research, it has been difficult to extricate myself from certain emotional attachments to the subject of this study because of my relatively inti- mate knowledge of Japanese industry. But care has been exercised to keep the magnitude of this study within a positive, scientific frame. It is my personal conviction that the field of marketing can benefit substantially from the concepts and applications of ecology. Its contributions toward cross- cultural studies in international marketing seem quite significant. Acknowledgment This study reflects the contribution of many people, although the responsibility for its contents and appearance iii rests solely with the author. It would have been impossi- ble, for instance, to complete this task without the assistance of the Japanese executives who furnished the primary data. It is difficult to single out specific contributions from my professors in the Department of Marketing and Transportation Administration, but I would like to acknow- ledge my personal indebtedness and gratitude to Dr. w. J. E. Crissy, Associate Dean, Graduate School of Business Adminis- tration, Michigan State University. His academic guidance has spanned both my teaching and research interests. His contributions have ranged from the initial securing of the field investigation expenses to the critical review of the final manuscript. His assistance has immeasurably improved the style and readability of this dissertation. My thanks also go to Dr. Donald A. Taylor, the dis- sertation chairman. His insight about international re- search-—gleaned from his extensive professional experience in Brazil--has helped to limit the scope of this ambitious investigation. As the self-appointed devil's advocate, Dr. Leo G. Erickson shouldered the burden of critically reviewing every process of this investigation. I also thank Dr. Thomas A. Staudt, the department chairman, whose initial iv guidance contributed to my awareness of professionalism in an academic career. Finally, I would like to acknowledge the contri- bution of Misses Mary Jane Jacobs and Cheryl N. Nader, who patiently undertook the task of preparing parts of the initial manuscript. My acknowledgment also goes to the courteous assistance of Mrs. Catherine Laffin, who proofread most of the completed manuscript. TABLE OF CONTENTS PREFACE. LIST OF TABLES LIST OF APPENDICES Chapter I. THE PURPOSE AND SCOPE OF THIS STUDY . Introduction Initial Research Concept. . Conclusions from the Initial Research Objectives . . The Methods and Models Used. Major Hypotheses . Limitations to the Study. II. THE STRUCTURE OF JAPANESE BUSINESS IN THE UNITED STATES . . . Trade Relations. U. S. Imports from Japan by Commodity Type . . U. S. Imports from Japan by Major Customs Districts and Areas. Japanese Firms and Their Offices in America . Trade and Marketing Activities by the Japanese in the New York Area Summary and Conclusions III. CHARACTERISTICS OF BUSINESS ORGANIZATIONS AND PRACTICES IN JAPAN . . . Introduction. The Traditional Features of Japanese Business . The Lifetime Employment System. Group Decision-Making System vi Page iii viii xiv 5-4 NI—‘mmt’ml-J HFJ Chapter Page Conceptual Problems Involved in Such Descriptions . . . . . . . . . 55 IV. AN ECOLOGICAL VIEW OF JAPANESE BUSINESS . . 60 Why Use the Perspective of Cultural Ecology? . . . 60 The Ecological Setting of Japanese Business . . . . . . 65 Impact on Japanese Business . . . 87 Interpretation of the Three Character— istics of Japanese Business . . . 98 Summary of Japanese Business Practices and Customs from an Ecological Perspective . . . . . . . . . 118 V. THE ISSUES, PATTERNS, AND PROBLEMS OF ADAPTATION. . . . . . . . . . 12“ The Environmental Dimensions of American Setting to Japanese Business. . . . 12A The Major Issues and Organizational Forces Which Significantly Affect Japanese Business Operations in America. . . . 135 The Mode and Pattern of Adaptation. . . iuu Major Problems of Adaptation. . . . 170 The Selected Cases of Entrepreneurial Industrialists' Entry . . . . . . 179 VI. THE ADAPTIVE DIFFERENCES IN THE MARKETING STRATEGIES. . . . . . . . . . . 217 Introduction . . . . . . . . . 217 Customer- -Prospect Mix . . . . . . . 225 Product- Service Mix. . . 237 Interaction With the Customer— Prospect and Product— Service Mix . . . . 2AA Promotional or Marketing Mix. . . . . 257 Channel-Distribution Mix . . . . . . 266 Summary Review . . . . . . . . . 273 VII. CONCLUDING REMARKS . . . . . . . . . 279 Precis of Study . . . . . . . . 279 Limitations and Problems . . . . . . 281 BIBLIOGRAPHY . . . . . . . . . . . . . 285 APPENDICES . . . . . . . . . . . . . . 300 vii Table 2-1 2-2 2-3 2-A 2-5 2—6 2-7 2-8 2-9 LIST OF TABLES U. S. Trade with Japan by Quarter, 1963-196u (In Millions of Dollars) . The U. S. Share in Percentage of Japan's Trade (By Decades, 1873 to 1960) Comparison of Japan's Total Exports and Exports to the United States, Percentage Share, 195“ to 1964 (In Millions of Dollars) . . . . . U. S. Total Imports and Imports from Japan, 195A to 1964 (In Millions of Dollars). U. S. Imports from Japan, 1960-1964, by Commodity (Value in Thousands of Dollars, f.o.b.) . . . . U. S. Imports from Japan, 1963 and 196A, by Selected Commodity (Value in Thousands of Dollars, f.o.b.). . . . . . . Percentage Contribution by Top Five Commodity Groups to the U. S. Total Imports from Japan, 196U—195A Share of Heavy Industrial and Chemical Pro- ducts in U. S. Total Imports from Japan, 1959—1964 . . . . . . U. S. Imports and Percentage Distribution Total and from Japan by Regions, 1962, 1963, and 1964 . . . . . . . . U. S. Imports and Percentage Distribution, Total and from Japan and Value Change in U. S. Imports from Japan by Top Ten Selected Customs Districts 1962,1963, and 196A . . viii Page 15 l7 l7 18 2O 21 23 2A 26 27 Table 2-11 2-14 Page The Percentage Distribution and the Dis- crepancy in Percentage Between the U. S. Imports from Japan and the Number of Japanese Firms and Offices by Four Major Metropolitan Areas 1963 and 196A . . . 30 Japanese Firms and Offices in Four Selected Metropolitan Areas, Their Numbers and Type of Establishment. . . . . . . 31 Japanese Firms and Offices in Four Selected Metropolitan Areas, Their Numbers and Type of Establishment,Revised, 196A . . 33 Number and Type of Establishments and Employees and Amount of U. S.-Japan Trade Handled, Japanese Companies in the New York Area,1960-196A. . . . . 37 Number of Establishments, Japanese Com- panies in the New York Area by Type and Kind, 1963 and 196A . . . . . 38 Number of Japanese Employed by Various Establishments by Japanese Companies in the New York Area,l963 and 196A . . A0 Average Number of Japanese Staff Members Employed by Japanese Companies in the New York Area by Kind of Establishments, 1963 and 196A . . . . . . . Al The Amount of Paid-in Capital Held by the Top Ten Zaibatsu and Their Share in the Total Paid—in Capital of all Legal Corporations in Japan as of 1946 . . . 72 The Ecological Interaction of Organized Behavior Systems in Japan, Based on the Logic of Indistrialization and the Family System . . . . . . . . . 92 Yearly Rate of New Establishment Formu— lation by Form, 1952-1965 . . . . . 1&7 The Year in Which the Current U. S. Estab— lishments were Formed by Type (Industry Characteristics) and by Form, Sample 121 Establishments . . . . . . . 149 ix Table 5-3 5—U 5-5 5—6 5-7 5-8 5-9 5-10 5—11 5—12 5-13 5—14 Comparison of the Time When a Firm's Pro- ducts were First Sold and the Time of Formal Entry by Its Establishment for the 10-19 Years Group . . . . . The Year of Establishment Formulation by the Firms Categorized Under "Simultaneous" Product Entry, Sample 121 Establishments. The Number of Years Elapsed Between the Introduction of Products and the Establishment of Offices in America by Type and Form of Establishment . Scale of Operations as Measured by the Number of Employees. Rank Correlation Between the Year of Entry and the Year of Product Introduction for Establishments with 20 or More Employees . . . . . . . . . Rank Correlation Between the Year of Entry in Current Form and the Size of Estab- lishment Measured by the Number of Employees . . . . . . . . . . Size Distribution of the Establishments by Number of Employees by Type and Form (Combined Figures for Japanese and Local Employees). . . . . . . . Contents of the Future Organizational Changes Proposed by Kinds and Major Reasons Given. . . Firms Planning Incorporation in the Near Future by Industry Characteristics. The Relationship Between the Length of American Establishment and the Length of Operation of the Parent Company for a Japanese Firm in America, Sample 67 Firms . . . The Relationship Between the Size of Ameri- can Operations and the Duration of Operation in Japan . . . . . The Average Number of Years in Business Experiences of the Japanese Head Execu- tives Stationed in the New York Area X Page ISA 157 158 160 163 16A 166 168 169 178 180 Table 5-15 5-16 5-17 5-18 5-19 5-20 5—21 5—22 5-23 5-24 6-2 Page The Position and the Form of Establishment of the Respondents Surveyed . . . . . 193 Work Experience Outside of the Present Company, Type of Organization Previously Worked and the Number of Organizations Thus Associated . . . . . . . . . 196 The Level of Education and the Major Field of Study of 67 Respondents to the Interview . . . . . . . 198 The Average Length of Stay of the Japanese Staff Both Married and Single (In Number of Years). . . . . . 200 The Foreign Travel Experience of the Japanese Executives Outside of the U.S. and Japan . . . . . . . . . . . 201 The Preference and Felt Need for Special Training and Instructional Programs by Major Areas Chosen with Preference Ranking . . . . . . . . . . . 20“ The Degree of Control Perceived by the American Establishment of the Japanese Manufacturing Firms, Sample 67 Companies . . . . . . . . 211 Perceived Organizational Structure and the Relationship with the Parent Organ- ization in Japan. . . . . . . . . 213 The Current and Contemplated Use of a Consultant or Professional Firm in Key Decision Areas . . . . . . . . . 215 Comparative Use of a Consultant or Pro- fessional Firm to Other Companies in the Same Industry. . . . . . . . . . 216 Comparison of Firms' Marketing Approach in Japan and in America . . . . . 220 The Relative Competitiveness of American Market and the Degree of Progressiveness in Marketing Strategy Used in Japan and America. . . . . 222 xi Table 6-3 6-4 6-5 6—6 6—7 6—8 6-9 6-10 6-11 6—12 6-13 The Future Prospects for the Japanese Manu— facturing Firm's Main Products Both in Japan and America . . . . . The Relationship of the Type of Markets Served by the Firm in America and in Japan . . . . . . . . . . The Relationship Between the Firm's Future Prospects for its Main Products in America and the Type of Market the Firm Served in Japan . . . The Product Image of the Firm in America and in Japan. . . . . . . . . . The Summary Matrix of the Major Product Appeals Both in America and in Japan as Perceived by the Firm. . . The Market Segments Which the Firms Tried to Serve in America and Japan . Comparison of the Number of Different Models or Variations in the Major Pro- duct Line of the Firm, Both in America and in Japan. . . . . The Degree of Diversification as Measured by the Number of Basic Lines of Pro- ducts Offered, Both in America and in Japan . . . . . . . The Relationship Between the Number of Product Variations or Models and the Number of Basic Product Lines in America The Comparison of the Number of Different Products Offered in the Total Product Lines of the Firm in America and in Japan . . . . . . . . The Relationship Between the Choice of a Certain Market Segment and the Amount of Product Variation, the Number of Basic Line of Products, or the Number of Different Product Offerings xii Page 224 226 227 229 232 238 240 2&1 2A3 2A5 2A6 Table 6-14 6-15 6-16 6-17 6-18 6-19 6—20 6-21 6-22 6—23 6-24 6—25 The Comparison of the Frequency of New Product Introduction Into Market, Both in America and in Japan The Comparison of the Role of Product Design, the Degree of Adopting Recom~ mendations from Marketing in Designing, and the Evaluation of Engineering in Generating Marketable Designs Japan's Level of Productive Technology as Compared to the Western Industrialized Nations by Type of Products. . The Most Emphasized Advertising Appeals Used in America and in Japan . The Chief Problems with the Use of Sales Personnel, Sample 29 Firms . . The Most Important and the Second Most Important Factors in Determining New Product Prices The Basic Channel of Distribution Used Both in America and in Japan The Ideal Channel of Distribution a Firm Could Use in Both Markets . . The Extent of Customer Service, "After- Service," or Technical Services The Chief Problems Encountered in the Channel of Distribution . . The Most Important and the Second Most Important Ingredient for the Firm' 3 Success in the Marketplace, Both in America and in Japan . . . The Two Most Important "Musts" to Win Over Competition, as Perceived by the Firm, Both in America and in Japan xiii Page 249 251 254 259 262 265 268 271 272 274 276 277 LIST OF APPENDICES Appendix Page I. Basic Data Sheet . . . . . . . . 301 II. Mail Survey. . . . . . . . . . 305 III. Interview Guide (Main Questionnaire) . 312 xiv CHAPTER I THE PURPOSE AND SCOPE OF THIS STUDY Introduction Although relatively little known, the total trade between the United States and Japan has steadily increased over the last decade. In 1964, the volume of this two-way trade stood at a record $3.65 billion (U. S. eXports to Japan amounted to $1.76 billion), exceeding the previous peak volume of trade in 1963 by 15 per cent. Today, Japan is the largest overseas customer for U. S. goods, and America stands as the largest single overseas customer for Japan's export goods. As a result of such expansion of trade, the activities of Japanese manufacturing firms in America have become com- plex and diversified in recent years. Within the framework of a free enterprise system and democratic political insti- tuitions, Japan's industrial development has become an example to the rest of Asia and the entire world. This achievement has generated a myriad of economic relations based on the principle of free trade and reciprocity be- tween the United States and Japan. This study is concerned with the entry of Japanese business interests in America, and in particular, with the activities of manufacturers. In 1965, imports from Japan advanced from $1.8 billion to $2.4 billion, the largest percentage gain among the major suppliers to the U. 8.1 Japanese goods reach United States markets through a diversity of channels. However,the present study is re- stricted to U. S. based Japanese manufacturers. The American operations of these Japanese manufacturing firms are the main subject of this study. Initial Research Concept In spite of an accelerated research interest in the operations of American firms abroad, there has been less emphasis on the activities of foreign firms in the United States.2 In particular, very little has been published concerning the activities of Japanese manufacturing firms in the United States. This is partly due to the language problems involved in a definitive survey and analysis. Moreover, the time and expense involved in such studies invariably limit the scope of actual field research to the 1Council Report No. 14 (Washington: United States- Japan Trade Council, 1966), which was based on the U. S. Bureau of the Census, FT950-I. 2This point is introduced by Jean-Luc Rocour in "Management of European Corporate Subsidiaries in the United States" (unpublished Ph.D. dissertation, Cornell University, 1963). As can be inferred from the title, this study deals with the problems of general areas of management concern- ing subsidiaries of European corporations excluding sales offices. immediate problems or the specific subjects which seem to yield quick practical results. The initial exploratory work for this project con- sisted chiefly of personal interviews with Japanese business- men in the New York area. The purpose of these interviews was to identify (1) the marketing obstacles and problems which are unique to America and call for special adjust- ments on the part of Japanese business, (2) the background of the Japanese executives and their views of personnel practices and organizational problems associated with operating in the United States, and (3) the marketing strategies used in doing business in the United States. In order to supplement the above exploratory findings and to obtain an overview of Japanese business activities, extensive personal interviews were conducted at the same time with officials of the Japanese Chamber of Commerce, General Consulate of Japan, and Japan Trade Center, all of New York, and U. S.~Japan Trade Council in Washington,' D. C. The initial investigation was conducted in the New York area over a period of three weeks in the summer of 1964 followed by correspondence with the principals in these organizations. Out of this field inVestigation, which also re- vealed the sources for additional information needed for analysis, an overview of the marketing management activities of Japanese firms in the United States emerged. There were about 120 Japanese manufacturing firms with permanent staff members stationed in the New York City metropolitan area. Their mode of operations ranged from a representative or a liason office to a subsidiary American corporation having sales offices and assembly plants. A representative office was typically staffed by a couple of Japanese executives, while a subsidiary sales organization employed as many as 190 local people under the direction of Japanese marketing executives. In total, about 1,600 Japanese business execu- tives were stationed in the New York area, of which about 450 represented manufacturing firms and about 850 worked for Japanese trading firms. Conclusions from the Initial Research After analyzing the results of the initial research, some tentative conclusions were reached. First, any definitive study of operations, plans, and marketing activities of Japanese manufacturing firms operating in the United States must start from a compilation of de— scriptive case histories of selected firms. Although such case reports can be useful in providing foundation and direction for future research, their value is limited, because of the dynamic nature of company activities. The rate of change and transformation in their activities was judged large, as evidenced in the selected case his— tories of some industries and firms studied. Second, an analysis of the quantitative data to aid in understanding the industrial structure, problems and trends in Japanese business activities in America is neces— sary. There exist detailed quantitative data covering Japanese activities chiefly from the Customs Bureau, trade associations and industry surveys; however, there are serious limitations. The most serious limitation is the rapid change taking place in the industry structure itself. The increase in inter—industry competition and diversifi— cation in marketing activities make any case studies of selected industries operationally difficult and of limited value over time for comparative purposes. In addition, this approach inadequately reflects the role of entre- preneurship and the "people" factors involved in the problem. Third, any meaningful analysis must, in addition to industrial descriptions of the functions and problems of marketing management activities on the part of Japanese manufacturing firms, include studies of the group decision making practices, the lifetime employment system, and other unique, traditional features of Japanese business, as well as other cultural differences and influences which confront Japanese executives in marketing planning and decision making. This is necessary to give depth and meaning to the analysis. In conclusion, the most meaningful approach to studying the problem is a study of the adaptation of marketing strategies by Japanese manufacturing firms operating in the U. S. This is the most productive ap- proach for analysis because of the degree of universality involved in conceptualizing the problem itself. But this requires the formulation of proper objectives of study, and the creation of adequate methods of investigation. Objectives It is well recognized that there exists a marked cultural difference between Japan and the United States (East and West). The latent and broad objective of this study is to determine the relative interaction and impact of such diverse cultures in the business environment of the United States.3 Many writers have already explored the unique characteristics of Japanese managerial phi— losophy. Also, there are a number of comparative studies dealing with the Japanese managerial and marketing system. These all provide useful background material but do not necessarily deal with the interaction and impact of the different cultures. From patterns of adaptation to be observed among the establishments of the Japanese manu- facturing firms,many ecological analyses and tentative conclusions may be drawn. Pragmatically speaking, however, the marketing manager's main concern is the successful performance of 3A3 a descriptive concept, here culture denotes modes of historically derived modalities of behavior, explicit and implicit; as defined by Clyde Kluckholm (ed.) in Culture and Behavior (New York: The Free Press, 1962), p. 66. his duties and tasks. A Japanese marketing executive in the United States faces essentially the same problems that he faces in Japan,with one added complication. There is a difference in the way in which he achieves success in the United States. He must adjust the firm's efforts to the business environment in the United States. Adaptive behavior is necessary if he is to manage his firm in a way that it survives, grows and generates profits. Through such a process of adjustment the interaction and impact of the different cultures may be inferred. A useful approach to use is an ecological viewl4 re- flecting interaction between the firm and the environment. This approach is necessarily interdisciplinary in nature. Inferentially, analysis of marketing strategies indicates the kind of adaptations made. The planning of marketing strategy and the decisions involved identify the process by which adaptation is made to another culture. Although decisions on total marketing strategy are broad, the de- cisions on each mix ingredient are more specific. There- fore, by contrasting the differences in the strategies “As an approach, the application of ecology to cer— tain aspects of human social and cultural life can be seen in Julian Steward, Theory of Cultural Change (Urbana, 111.: University of Illinois Press, 1955), PP. 30-42. Also in a general way, the ecological approach was used to analyze the processes of social and agricultural change, as well as the interpretations of economic history of Indonesia, by Clifford Gertz in Agricultural Involution; The Process of Ecological Change in Indonesia (Berkley and Los Angeles: University of California Press, 1963). perceived and adOpted by the Japanese marketing managers in the United States and Japan, a summary of adaptive be— havior by Japanese marketing executives to the United States environment is obtained. Such an analysis points up problem areas of adaptation and thus provides a basis for predicting the consequences of marketing decisions made by Japanese executives in the United States. This is the key reason for the study. In conclusion, marketing strategies of Japanese firms operating in the United States will be analyzed with a dual perspective. First, an analysis will be made of the sys- tematic, ecological adaptation to the United States business environment. Second, analysis will be made of the reasons for making different marketing decisions other than those that would be made in Japan. The Methods and Models Used This study is based on primary data obtained through personal interviews and mail questionnaires from Japanese executives engaged in marketing activities in the United States. Some reliance is based on secondary sources, such as magazines and journal articles in both English and Japanese. This is a productive approach in that it can provide additional facts and proper perspectives for interpreting the primary data. The methods used are a combination of case analyses, behavioral analysis and industry studies. It is an eXplora— tory investigation of a relatively new subject matter. To add structure to the methods used, two models are employed as the basic frame of reference and analysis. First, the concept of organized behavior systems is used for analysis of the overall problems which Japanese manu- facturing firms face in America. This model as developed by Alderson, explains the evolution, dynamics and oper— ational adjustment of market organizations to their environ- 5 ment. In discussing and developing his functionalist ap- proach to marketing theory, Alderson not only covers the subject of the market organization's ecological adjustment to its environment, but also provides a systematic and generalized picture of the marketing environment from an interdisciplinary perspective. Alderson has stated: ". studying marketing in an ecological framework opens the way for considering a variety of interactions, includ- ing the prevailing combination of competition and cooper- ation."6 5Wroe Alderson, Marketing Behavior and Executive Action (Homewood, I11.: Richard D. Irwin, Inc., 1957). Also, see Chapter 13, "A Normative Theory of Marketing Systems," in Wroe Alderson, Dynamic Marketing Behavior (Homewood, I11.: Richard D. Irwin, Inc., 1965), pp. 301—321, for further elaboration of this approach. 6Ibid., p. 370. 10 Second, the matrix model for marketing planning as developed by Crissy and Kaplan is used for analysis of marketing strategy.7 This model provides a comprehensive coverage of the ingredients which form the basis of market- ing strategy. The ingredients are divided into four major groups or mixes, each composed of sub-mixes. These four major mixes are: (l) customer-prospect, (2) product- service, (3) marketing-promotion, and (4) channel—distri- bution. This division helps to reduce the multivariate marketing planning process to a series of four sequential, interactive steps. These writers center the analysis around four basic questions to be answered in sequence: 1. Who are our customers? Whom do we wish to have as customers? 2. What needs and wants of theirs are we now satisfying? What needs and wants of theirs do we wish to satisfy? 3. What demand-creating forces are we now using? What demand-creating forces should we be using? 4. What methods or channels of distribution are we currently using? What methods or channels of distribution should we be using? 7William J. E. Crissy and R. M. Kaplan, "Matrix Models for Marketing Planning," Business Topics, XII (Summer, 1963), pp. 48-66. 8 Ibid., p. 48. 11 Major Hypotheses Two main hypotheses are used to limit the scope of the study and facilitate the analysis. They are primarily "identifying" type hypotheses derived a priori from the overall theoretical perspective upon which this study rests. I. There are identifiable characteristics and patterns of adaptation in the behavior of the Japanese manufacturing firms that operate in the United States. These premises underly Hypothesis I: (1) Human and organizational behavior is functional, although it may be subject to conflict or ambivalence. (2) Such behavior must be interpreted within context in which it occurs. (3) Such behavior tends toward a state of maximal inte- gration or internal consistency (homeostasis).9 II. The successful adaptation on the part of the Japanese manufacturing firms is dependent on the selective use of marketing strategies. The main concern in testing Hypothesis II is the extent of external adjustment as observed from identifiable pattern variation in the marketing strategies employed. Here we are mainly concerned with the specific modifi— cations in marketing strategies in the U. S. marked con- trasted with strategies employed in the Japanese market. 9Kluckholm, op. cit., p. 260. According to him, such theories are accepted by anthropology, psychiatry, psychology, and learning theory. 12 Limitations to the Study The limitations of this study are of two types. First, certain assumptions have been made in structuring the entire study. Second, there are methodological limitations as well. Some of the assumptions made follow: First, it is assumed that,if the Japanese execu- tives in the United States could shed their cultural back- ground,they would operate as their U. S. counterparts. Differences in behavior are inferentially caused by difference in cultural background. On the other hand, it may be argued that the differences in behavior are a result of size differences or stage of development in the U. S. business environment. Since most Japanese firms operating in the U. S. may be considered in the pioneering stage, it is impossible to determine the influence of stage of market life cycle. Likewise there is not a wide enough array of different size operations to test the size variable as a possible cause for behavior differences. Second, it is assumed possible to apply models developed in the United States to other cultural settings. Although care must be exercised in the selection of models to insure their universality in depicting business behavior, the two models selected for this study are broadly enough conceived to have universal application. Methodological limitations were present. First, the sample size for marketing strategy analysis (67 firms from 13 a total of approximately 150) was smaller than hoped for. There was such a variety of operational differences among the respondent firms that it was impossible to apply uni- form statistical analyses to the data. Similar limitations existed for the mail questionnaire with returns from about 121 establishments of the population of 220. Second, all personal interviews were with companies in the New York area. The Los Angeles area companies were contacted by mail questionnaire. Consequently, there was no way to insure comparability of the data. English language was used in the mail questionnaire and Japanese in the personal interviews. Third, the need to clarify marketing strategies made it necessary to draw up a highly structured and detailed questionnaire, which could also be used for personal inter— views. However, the actual modes of operations and market- ing activities differed so much from one firm to another firm that their operational characteristics could not be so neatly condensed in a pre-coded and highly structured questionnaire. To supplement this lack of data, additional interviews, journal and magazine articles, and company publi— cations, brochures and pamphlets were used as sources of information. CHAPTER II THE STRUCTURE OF JAPANESE BUSINESS IN THE UNITED STATES Trade Relations Between the United States and Japan, a vast network of economic ties has grown up through trading over the years. Since the days of Commodore Perry's "black ships" and the ending of Japan's isolation by the treaty of Kanagawa on March 31, 1854, the trade has traditionally played a key role in the history of U. S.-Japan relation- ships.1 In terms of merchandise flow, U. S. trade with Japan during 1964 reached a record—breaking amount.2 In 1964, U. S. exports to Japan amounted to $1,893 million and imports from Japan totaled $1,763 million. This amount of the total imports in 1964 of Japanese goods to this country actually represented as much as 28 per cent of 1For a detailed and comprehensive analysis of the U. S.-Japan trade, the best source is Warren S. Hunsberger, Japan and the United States in World Trade, Council on Foreign Relations (New York: Harper & Row, 1964). 2See Table 2-1 on page 15. 14 l5 Hmzccm on com poc awe Bum mew scan: .Hfiocsoo mompe .mcfiwcson ocm coflmfi>mh mo mmSMomo monswfim memo mazpcoe Ummfi>mn mo mESm map mum momsmfim zanmppwsan .moapmauppw meme» cwfimnow wdmcmo map mo sampsm .m .D co comma cmomh|.m .2 mo mpmoamm mfimmamc< tonne map Eogm ompom©mp on potwpdm cam manuou m>apmHsESo znmcfiefiamho mum mmpzmfim nomao .coameHMfimmmHo sumo msmcmo map on wcfiupooo a Heefie< .: meo.m 3:0.m woe.m mom.m mmm.m maefiecemz ecemacm cam mpcmoahnsq .mamsm Hammad: .m maw.:m msfi.o: mmo.m: so:.a: emm.:e mates eeccxm .caefieceH .mamfiececz cease .m mmm nos Ame Ame Hm: essence a mcmcec>mm .H mmm.mm sme.aw Hma.em emm.mm :ms.aw mfimefiee cefiq s poem .0 mead mead mead dean coma scams sefieceeco can nonssz cofipomm monumsozp ad msz>v maufiooesoo an «ammalomma .cmamb n.A.n.o.m .mpmHHoc no 809% mpLOQEH .m .Dll.mlm mqm¢e 21 TABLE 2—6.--U. S. imports from Japan, 1963 and 1964, by selected commodity (value in thousands of dollars, f.o.b.) _____ _ -4 __,_—.. _..-_—'_'__'T. .— _4_‘_.. Selected Commodity Type by Section Annual Annual Value Percent and Selected Commodity 1963 1964 Change Change 0. Food & Live Animals ’7,497 95 955 + 8,438 + Tuna, Fresh & Simply Preserved 17,717 25,624 + 7,911 + 44. Tuna, Canned 21,091 20,193 - 001 — Mandarin Oranges, Canned 9,287 10,798 + 1,511 + 16. 1. Beverages a Tobacco 717‘!1 929 + 225 + 32. 5. the"icals 33,'?4 35,141 + 3,493 + 16. Organic Chemicals 8,863 12,239 + 3,376 + 3? Inorganic Chemicals 12,350 14,201 + 1,851 + 1: Plastic Materials 2,696 7,058 + 4,362 +161 6. Manufactured Goods Classified . Chiefly By Materials 665,17‘ 755,128 +89,957 + 1 Wood and Cork Products _ (except furniture) 74,253 66,993 - 7,375 - Textile Goods (except apparel) 160,740 174,490 +13,750 + Non-Metallic Mineral , Manufactures 86,670 97,:’“ +11,?08 + 1 Iron and Steel 204,294 273,978 +69,694 + 32 Non-Ferrous Metals 15,990 23,?‘9 + 6,109 + 3 Metal Manufactures, n.e.s. 95,644 105,964 +10,150 + 1; 7. Machinery & Transp rt Equipment 260,050 357,075 +97,0.5 + 3 Machinery, Mon-Electrical 45,132 68,879 +23,747 + 5 Electrical Machinery, Apparatus 1 Appliances 175, 16 214,136 +39,020 + 22. Transport Equipment 39,"72 74,,tf +34,298 + 86 8. Miscellaneous Manufactured Articles 369,299 449,337 +80z043 + 21. Clothing (except fur) 106,971b 113,413 + 6,442 + Footwear 45,170 “0,365 + 2,195 + Scientific, Medical, Optical Measuring Instruments and Apparatus 44,485 5* 158 +13,673 + 30. Musical Instruments, Sound Recorders, and Reproducers 37,524 56,844 +19,320 + 5 Toys, Games, and Sporting _ b b Goods 63,143 66,710 + 3,562 + \I) \fl OsDkDr—J O\\O :fWkU 7" KO aSame source as Table 2—5. bRevised to reflect reclassification of "baseball gloves and mitts" from "toys, games, and sporting goods" (SITC Group 894) to "Clothing" (SITC Group 841) effective with 1964 data. 22 previous year. Automobiles registered $15 million in 1964, indicating an increase of 125 per cent over 1963. One way to explain this shift in product mix toward heavy industrial goods is to analyze the percentage contri- bution by the top five commodity groups to the total U. S. imports from Japan. By finding the share of the top five commodity groups and then studying which commodity groups are included in the list, an overall pattern of such a shift becomes manifest. In the most recent two-year period, 1962-1964, as much as 37 per cent of all U. S. imports from Japan was classified as steel mill products, an increase of 11.7 per cent over the previous two-year period figure of 24.3 per cent during 1960—1962. Next on the list was road motor vehicles with 10 per cent share, but this group did not even appear on the list in the previous period. Electrical machinery and apparatus was the top commodity with a 31.5 per cent share during 1960-1962 period, but declined to 8.4 per cent in the following two-year period. Wood, wool, or cotton manufacturers, which occupied important shares from 1954 to 1962, did not appear on the 1962-1964 period list. Instead, there appeared in the fifth place, with a share of 3.9 per cent, scientific, medical, optical, measuring and controlling equipment and apparatus. This is but one example of the shift in pro- duct mix. For details, see Table 2-7. .omH ea acaoacm .eeee mswcwo 0gp mo :mmnsm .n .5 co comma wH oncz .xpo» 30: .pmpcmo mpmcp cmdmw an :oHpmHHQEoo on» song OopamcHm Q09 go Haqunzm OOH shame ache meeoaeH .m .O HH< no Hence :mmHuOmmH m a maceHecmz meHzcm a cHHexce Amv a O mn0n3pomuscmz H003 H3O ~.m metaspommscms a menu OmHHH< a pmnnsm Amy m mH mp06300mu2cmz coo: Amy m OH mcceeosa HHHz Hecem HHS m.nm masono mnH60EEOO 0>Hm n09 mo Hauopnsm OOH cmnmw cosh mppanH .m .: HH< do Hapoe ommHlmmmH mgcpsuommscmz Hmmpm can COLH Amv muonsuompscmz H003 Hay mueseosa HHHz Hccem HMO ,spmnwodd a apochomz HacHnuomHm Hmv no x mm a menu O0HHH< a pmonsm AHV m.mm museum ASHOOEEOO 0>Hm Q09 mo Hmuounzm OOH cmsmw coca mSEOQEH .m .9 HH< m0 Hmuoa mmmHIOOOH 23 C—c C',‘ weascoan e eHecHesa .wsoe .mHHoo Hmv u m :c.m w mnszmm .Lmnummq HOV mpzuomuscmx ceppoo Amv Hosp La HHHE Hmopm Amv naumnmaSw « mscchomz HacfinuomHm HHV (H 0. t 1:2Lm mpHrncnmu 0>Hm doe ho Hauounsm OOH sedan Roam m3s0QEH .m .: HH< mo Hauoe OOOHINOOH m.m wapmrwudq a mpccssppmcH mcHHHontcon w uuHL: 0 an .Hnownms .0Hhfiucwflom H a m .Houme momma w mapmpmdq< >9 A m.m wnmomsandmm a mu . 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HH H.:e m.eam e.mm O.mmm.m memH sac» 3oz u meoHHHHz m a a mcoHHHHz a a mcoHHHHz » Ha\mv Amv A 02m cmdmn E069 0cm HOBO» xcoHuanapmHo 0wmpcmonoa paw mpLOQEH .m .DII.OHIN mam one cmpHHoaonpoz m.zmmH can mmmH.mmonm cwuHHOQonume LOOme 6509 an mmonmo can menHm 0m0cmdmw mo Lopez: 03p cam swath Bonn mpaoaeH .m .D on» coozpmp 0wmpcoonoa CH mocmaoaomHo on» cam GOHpanapmHO 0wmpcmonoa 0£BII.HHIN mHm¢B 31. .om00H00 .00000 00 H00000o 000H30coo coHuHs 0H pH .00 600500000 0o 00 0H 00H00HH0800 009 .mmmH .mme .m00nc00 0H .oomHocmpm 00m .0000O pmHH 000 so 00000 0H 0000 :00H 000 co 00000 0H 0000 MOmH .000E000Q .00L< :00» 30: CH 000HOOO :0 00000 0H 0000 :wOH 0000 xpow 302 .ammH .H 0000000 no 00 x00» .Azme .H >000000m 00 00V .momH .m mh0sc0w 00000 .000< 0w00H00 :H 000Hmmo 0:0 meaHm 00000000 m0 00HH H0H0H000 :0 :0 00000 0H 0000 :QOH om00H00 .0E0Hm 000:0mwO mo 000Hmmo ow00H00 .ow0oH00 .000000 0000b c0000 >0 00HH0500 00HH 000 :0 00000 0H 0000 mmmH 0w00H00 0000 00H00HH0E00 00H 000 .000000 0600 00» E000 0H 0000 ammH 00H .zmmH .m003000 no 00 00 H000C0o 000H00000 £000 00:H0000 00HH 00» co 00000 0H 0000 mme 000Hoc0nm s0m .mOmH .mH HHsaa co 00 use .chH0 0500 000 an .mpHcH0H> 000 00H0w0< 000 CH 000Humo 000 menHm 00000Q0O .00HH 000 .00Hmwc< 000 .0000O no H000000 000H30coo m0 00000H0L coH00E0000H 000 :0 00000 0H 0000 00H0wc¢ 000 30: CH 000H000 wcH>00 000H00NH00000 000 00Hc0asoo 00000000 HHO 0000H00H 00HH 0H09 .zomH 000Hzmcoo m0 00H00H5000 H0H0Hmmo 000 00 0:0 0E0Hm 000:000n .000» 30: .0000O no H00000o 000Hzmcoo m0 00H000HH000 HOHOHumo 00HHEH0 mmOOH .00050000 .000< x00» 30: CH 000Hpmo 0:0 wepHm 000:0Q0O .xpow 302 .0000O m0 H0L0C0o ”wcHsoHHou 000 6000 03000 0003 0H0H00p0s 00050m 00000 0H 0000 muOH 0000 snow 30: 0 .mcH0csom m0 0000000 H0000 000 00 a: 000 00: 00 00w0000000m .00HH x00» 30: 000 :H 00:0H000E 00>» 000 00 8000000 8000 00H 00 A0000000: n0>00003 00H0H000H000 0C0 0003H00H 0L0 000HH 000300 000 CH 00300 00» >0 0000 00 0000 Eopu mp0> 000HH 000 so wcH000H00 000 000000000 000 0030000 .0H0000QE00 >H000LH0 000 000 000080c 0090 000Hmmo 0:0 manm 000 00 HH0 .00>030$ .000000CO0 0000H30coo n- AN OH A0 0m A: 00H Am 00H somH .. A: 00 AH OH H: 00H Am OmH mmmH mmoaa H0 Om Am OH AOH OMH A0 0mm Am 00: smmH As ON AN OH 10 Om Am 000 is 03m mmmH 060000 0 00Hc000< eoHsmeaoaeH AOH v: Amm 00H AOH VmH Am 000 HHH vmm somH AOH Om HHN 00H AaH 00H HOH Sam HNH 000 mme mtoHsacm coHp0paoamcmaa Am Om AMH Va He Om Am 000 Am 03: qme As Om HmH 00 A0 Os Am 030 Am 00m mmmH moccasmeH 000 mchHaeocm .mxemm Amm 00H AmH 00H Ass 000 As: VOMH AH: VHHN sOmH Ham 00H H0 00 Am: Om: Am: VmHH Ham OemH momH macaspomusemz Amm VmH Am: 000 H00 0mm Ham vma Ham OmsH somH Ham 00H H0: 000 Ham 0mm Ham 00s Hom OmeH momH meaHm mchmae AOOHOO: HOQHOmm HOOHOANH AOOHOmmm AOQHOmHm somH AQOHOHM AQQHOme HOOHVmHH HOOHOmsm AOOHVNA: momH Hmpoe HAS emcee: ARV amass: H00 000032 A00 600522 H00 600552 000» uccsemHanemm co case ow00H00 000H0000m 00m 00H0wc< 004 xpow 30: H0 09 0 0000L< c00HH000000E A0 0000E02 00H000H000Ho 0w0uc0000m a000500HH00000 mo 00%» 000 0000500 0H000 .00 .300H 000 mmaH 000 c00HHoaoap0: 00000H00 0000 :H 000Humo 0:0 mepHu 0000000O||.mHum mHm¢e 32 was counted. Quite often such firms had their branch type operations in these areas under the direction of their New York headquarters. But this was not always the case. Many companies had their headquarters in Los Angeles or San Francisco and their branch operations in New York. By counting out duplicate appearance on the list, a clearer idea is gained of the absolute number of firms, as this procedure would eliminate many branch operations. Admittedly, this is a simplified procedure and no mention would be made of the firms whose headquarters were not in New York. However, comparing the percentage share of branch operations for each area for all the firms and for the manufacturers, there may appear some interest- ing patterns in the distribution of such firms. In all the areas, the ratio of duplicate offices was lower for the manufacturing firms. This might be due to the channels of distribution needed for such goods as compared with those engaged in marketing soft goods or in reselling. Table 2-13 provides details on the number and kind of firms having multiple locations. From the number and type of Japanese firms and offices in America, several conclusions may be drawn. First, there was a close relationship between the number of Japanese establishments in any area and the total amount of Japanese imports entering the United States through that area. Second, despite a decrease in the relative importance of New York in recent years as the 33 TABLE 2-13.--Japanese firms and offices in four selected metropolitan areas, their numbers and type of establishment,revised,1964. Type of Establishment Revised Numbers and Percentage Distribution by Metropolitan Areas Total New York Los Angeles San Francisco Chicago Number Number Number Number Number Percentage Percentage Percentage Percentage Percentage z % % Z z Total Offices 515(100) 295(100) 127(100) 53(100) 40(100) Duplicate 142( 28) -—-- 76( 60) 39( 74) 27( 68) Revised 373( 72) 295(100) 51( 40) 14( 26) l3( 32) Trading Firms Offices 149 79 33 22 15 Duplicate 49 —- 23 l4 12 Revised 100 79 10 8 3 Manufacturers Offices 211(100) 130(100) 56(100) 10(100) 15(100) Duplicate 38( 18) ---- 26( 46) 6( 60) 6( 40) Revised 173( 82) 130(100) 30( 54) 4( 40) 9( 60) Banks, Securities and Insurance Offices 44 25 9 7 3 Duplicate 16 -— 8 6 2 Revised 28 25 1 1 1 Transportation Services ‘ Offices 55 26 13 12 4 Duplicate 27 —- 12 11 4 Revised 28 2 l l 0 Information Agencies and Others Offices 40 23 13 l 3 Duplicate 9 -- 5 l 3 Revised 31 23 8 0 0 Press Offices 16 2 3 1 -- Duplicate 3 -- 2 1 -- Revised l3 l2 1 0 —- aSame source as Table 2—12. 34 center of Japanese business activities, it still enjoyed a dominant role in U. S.-Japan Trade relationship. Third, the relative importance of Los Angeles was increasing rapidly. Many automobile, motorcycle, and steel companies had headquarter offices in this area. The industriali- zation and the transportation advantage of the area seemed to be a decisive contributing factor for this pattern of development. Fourth, San Francisco's pattern reflected the region's uniqueness in that it was perhaps closest to the Japanese-American population concentration in the United States. Coupled with geographic advantages of the area, this explained the number of banks, financial organizations, as well as the existence of the offices of specialized manufacturing firms such as liquor, cosmetics, furniture and so on, which partly reflected the particular segments of Japanese-Americans in the area. Fifth, Chicago ap- parently was basically an extension of New York operations. Most manufacturing firms which had offices in New York had their branch operations in Chicago. The same applied to the trading firms. But the recent decline in branch type operations reflected the increasing trend for direct marketing activities by Japanese manufacturers. Some specialized steel companies and a few specialized manu— facturing firms located their offices in Chicago because of its proximity to the industrial markets in the Mid— west. 35 For purposes of the present study, a more detailed investigation of New York area offices is included on the assumption that this area is sufficiently representative of most Japanese business operations in America,as far as marketing strategies are concerned, despite the special characteristics mentioned above. Trade and Marketing Activities by the Japanese in the New York Area As of October 1, 1964, there were 290 Japanese companies that had establishments in the New York area. Of these 290, about half represented manufacturing firms. This was an increase of more than 20 per cent in the number of establishments as compared to 1963. The number of Japanese employed by these establishments was 4,218. These 290 firms in New York for 1964 included six establishments in New Jersey and one in Pennsylvania, but almost all were located in New York City. All estab- lishments which had been set up in the New York area as a part of the overseas operations of their parent companies in Japan were included in this list.7 Out of 263 companies listed for 1963, 20 companies were dropped from the 1964 list because of mergers and the new standard for listing adopted in 1964. Therefore,the total number of establishments for 1964 represented a net increase of 47 establishments, instead of 20, about a 20 7According to the criteria used for compilation by the General Consulate of Japan, New York. 36 per cent increase over the previous year figure. This increase was chiefly due to the opening by nine chemical firms, eight trading firms, and five transportation and service establishments. Of the 263 companies listed, about half (143) represented the Japanese manufacturing firms. About one- quarter (79) were trading firms, and the remaining one- quarter were transportation, service, banking, securities and insurance firms. By type of establishment, more than 60 per cent of manufacturers had representative offices, while almost 70 per cent of trading firms were incorporated under American law. This is because the trading firms en- gaged in actual sales activities, while many manufacturers used their representative offices to perform various functions related to marketing research, engineering re- search, negotiations for licensing, imports or exports deals, preparations for joint ventures, and liaison or in— formation services for their headquarters. However, many manufacturers, especially about half in machinery industry (electronics, electrical machinery, and optical equipment), did engage in actual marketing activities through their subsidiary American corporations. For details see Tables 2-14 and 2-15 which follow. There was a change in the number of employees from 1963 to 1964 as seen in Table 2-14. The number increased from 3,620 to 4,010, an increase of over 10 per cent. Of this number, trading firms employed almost half (1,819), 37 .mmmH .00sws< 0H 00000H00 .x0ow 302 .00Q0O 00 000H00coo H00000O .00H000m 0HEocoom >0 000030000 000>000 0000HH050030 I- 000.0 000.H 000.0 :00.H mpsoaeH 0o 000000 I- 000.H 00:.H 000.H 00H.H 0000000 0o 000000 in :00.m 000.m m0H.m 000.0 AmacHHoo 0o meoHHHHz 0H0 00H000m 00009 no 0czoe< 000.0 000.0 000.H 00m.H 0mm.H 0000000 0 0000H00000 000%0HQEm H000H 000.H 0H0.H 00m.H 0mm.H 0H0.H 00000 00000000 00H0000 0H0.: 000.m 000.0 000.0 000.0 mcmaoHaem 0o 000002 HmH HMH 00H 00 00 000000 0:0 000Hmmo 0>H0000000000m 0m 00 00 H0 0H mmoH000 000000 00H m0H m0 ms 00 eoHemaoaaoo :00H0000 0mm m0m 000 00H maH m0eceemHH000mm 0o 000502 :00H m00H m00H H00H 000H 0000 000% 0.:0OHIO0OH 0000 x00» 302 000 0H 00H00QEoo 00000000 .00H0000 00000 00000:.0 .0 00 000050 000 00000HQE0 0:0 0000800HH00000 00 0000 000 000E:zun.:Hum m0m<9 38 .zmmH .H 0090000 00 00 0:0 .mooH .om L09E0pa0w mo 00 000 m0psme 0gb .0000» 0>Hpo0am0p Lou .xpoy 302 .cmamw mo 000H50coo H0L0c0o .coHpo0m UHEOCOOm 050 an U0poswcoo mm0>psm ©0£mHHDSQCD0 HmH mmH om om 00H 00H onm mom H0009 0 0 m 0 I I 0H 0H 00000 m m I I I H m 0 HHmcoH00ELomch m0HQC0m< HH HH 0H HH 0 0 mm :m 00:00:0CH 0 00H0H0300m .mxcmm 0H HH 0 0 0H 0H 0m 00 m00H>L0m 0:0 COHp0ppoamc0LB 0 H I I I I a H 000:00 H I H H m m m m 0000 H H 0 H 0 H m m 00000 000000 m 0 I I 0 H 0 m mchHz 0 m I I H H 0 0 00HE0L00 w 0 I I I. I m, C mepm 0 HH I I I I 0 HH 00H0HH000H00 mH OH I I 0 m mm m 00Hpr0B 0H 0H H I 0 m 00 0H 0H00HE050 mm 00 0 m 00 00 H0 00 0000Hc00z mm 00 m 0 m: 0m m0H NHH 0000300003202 H0 00 0 0 00 m: 00 00 050H0 00H0000 000H m00H 000H m00H 000H m00H 000H m00H uaonmo mCOHu0poapoo 0>Hp0pc0m0pq0m m0coc00m cmoHp0E< 0 o 000chzm H 0 0 00 00H0 muC0EcmHHn0umm go 0&09 00:0ELmHH9000m go 0095:: 0.000H 0:0 m00H .00Hx 0:0 0000 an 00L0 xLow 30: 0:» CH m0Hc0QEoo 000C0Q06 .mpC0EzmHHnmpmm ho pmnESZII.mHIm mam<8 39 the manufacturing firms employed l,lu6,‘and banks, seCurities, and insurance companies employed 617. About half of the regular Japanese staff had their dependents and families brought over from Japan. The total number of Japanese regular staff and their families was 3,868 in 1963 and “,218 in 196“. Out of local em- ployees, there were about 350 Japanese,including Japanese- Americans,employed. This indicates that one out of six to seven local employees was a Japanese. The total Japanese employed by Japanese companies in the New York area, there- fore, was 4,218 for 196“. For details, see Table 2-16, which follows. Combining the data given in Tables 2-15 and 2-l6, it is clear that the average size of establishments in terms of the number of employees was around six in 1964. Breaking the figure further by kind of establishment, the average number of Japanese staff was the largest for trad- ing firms (around 10) and the smallest for the press agencies (around 2). The figure was larger than the average for the banks, insurance companies, and trans- portation and other agencies (around 8). For the Japanese manufacturing firms, it was considerably below the average, the figure being four. For details see Table 2-17. MO .JHIN mHDME .HOM Umfip mm ®EMm 039 mH mohzomm Aammv Ammev mam.: mam.m 0mm wem mom.m oom.m moa.m mmm.a woe.fi NH©.H Hmpoe Amav Amav am m: m N am on om mm am am mmmcm Ammv Ammv mHH NHH m ma oHH NQH ow mm 0: mm mmfiocmw< Ammfiv Azafiv mocmhsmcH a Ham :mm mm am wmm me: mam Hem cam now .mmapflbsomm .mxcmm Ammv Amov mmofi>pmm 0mm Nam m: mm emm :mm msa mma mm moa ecm coapmpcoamcmce Amflmv Aemfiv NOH.H saw me mm mmo.H mmm saw me: mmm was mecfim mcficspomoscmz ANNSV Aoemv 3:0.m mmm.H mma mmH mom.H eme.a smo.H Hmm New mmm msbfim wcfiemce zwmfi momfl :wmfi mood smmfl mwmfi somfi mwmfi nmmfi mama answermaflnmpmm AmcmoHLmE< Am + an UmmoHQEm mmmcmomh mo pmnE:2nl.mH|m mqmnmm a cofipmuAOchmpe : : mmm ma: mza FHA mEhHm wcHMSpommscmz OH Ad New mmm me me mebfim wefiombe amma mmma :mma mwma :mma mmma 902532 mwmmm>« Hmpoe mucmenmfiaompmm mumpm amaswmm mmmcmomh mo monasz mo pmoEsz m.:wma cam mmma .mpcmenmfianmpmm mo unfix monmmnm xgow 3oz map CH mmficmasoo mmmcmomh an ummOHQEm mpwnEoE madam mmmcmomh go bones: ommnm>Ibulation density per unit of productive land is one of t3r1€a highest in the world. Japan is also the fifth most DC>I>ulous country in the world, coming after China, India, titles U.S.S.R., and the United States. A population of 68 ten million makes Tokyo, the capital, the largest city in the world. Japanese people are industrious, energetic, and The level of education in terms of literacy Her history volatile. rate surpasses that of the United States. of universal compulsory free education dates back to 1872. (Phe people of Japan are homogeneous in their physical zappearance and way of thinking. Japan's culture is con- ssidered to be a derivative of Chinese culture, but her Ilistory as a centralized nation is one of the oldest in t he world . The Japanese language is the only official language, aJdd it is spoken throughout the country with only minor lxbcal variations in dialect. It is a complex, difficult ZLaJiguage to master even for a Japanese. However, English lusts been the accepted language of foreign trade and is Vvixiely used in commercial circles. Japan has a very limited underground natural resource Most of the raw materials used commonly in modern It has IDasse. irlciustries are known to be nonexistent in Japan. .a JTair amount of low—grade fuel coal, but virtually no C1er>osit of coking coal exists. Japan's domestic supply CDf‘ crude oil is very scarce. Even with the newest of ‘tllfia technology for utilizing low grade iron ore, Japan p0 Ssesses practically no iron ore deposits. The relative smallness of the country is a crucial ldilTLiting factor in discovering newer sources of untapped 69 natural resources, even with the advancement and innovation in their utilization. Assuming that various mineral and other underground resources are randomly buried and scattered over the globe, Japan's chances of having any are indeed small because of the smallness of her land areas. Competitive and Economic Forcesg The economy is basically one of free enterprise. IIn a sense, the prewar giants of Zaibatsu were originated lay the entrepreneurship of their founders who took ad- xrantage of the spirit of free competition in the tradition (pf the merchant class of Tokugawa Japan.10 In the course Cif their development, however, all Zaibatsu benefited Sllbstantially from official connections with the govern- National policy afforded them opportunities for bLlsiness expansion.ll The Zaibatsu leaders used professional "managers" to Incant. CEiIFFy out and administer operational aspects of their daily business. 9The best source material which introduces Japan's e<2<>nomy is G. C. Allen, Japan's Economic Expansion (London: R(Dyal Institute of International Affairs, Oxford University Press, 1965). 10See, for instance, a survey by David Charles Sheldon, gltigiRise of Merchant Class in Tokugawa Japan (Locust Valley, IJEEVV York: J. J. Augustin Incorporated, 1958). 11This point is clarified in Thomas c. Smith, Political éétléagnge and Industrial Development in Japan: Government =533LEL§rprise, 1868 1880 (Stanford, California: Stanford r1lirversity Press, 1955). Also see William W. Lockwood (ed.), The State and €§Si§23gomic Enterprise in Japan (Princeton, New Jersey, r‘inceton University Press, 1965). 70 Personal relations within the business hierarchy were governed by the Japanese tradition which pre- scribed absolute loyalty to superiors; but the ex— tent to which the family members themselves exer- cised administrative authority varied from Zaibatsu to Zaibatsu. In Mitsubishi, for instance, the in- fluence of the Iwasaki family remained very strong. In Mitsui, on the other hand, control over policy even before the Restoration had passed mainly to banto, or managers. But even the greatest of these banto could expect to retain their positions only so long as they were successful in promoting the welfare of the house. According to Professor K. Noda, the Zaibatsu leaders Issually dictated the policy and major decisions for diversi- :fication, acquisition and mergers, but they left the opera- ‘tional decisions entirely to "hired" professional managers tvho were produced by the educational and training system of Japan.13 Because of Zaibatsu, the economic concentration in pxrewar Japan was quite significant. In addition to the cfild Zaibatsu like Mitsui, Mitsubishi and Sumitomo, new sst—War Japan), (Tokyo; Japan: Iwanami Shoten, 1963). 71 reflected in the degree of economic concentration in their hands. At the close of the war, the top ten Zaibatsu held as much as 35.2 per cent of the total paid-in capital of all the corporations in Japan. For more details, see Table A—1, page 72, and the comments Which follow. The top ten Zaibatsu held “9 per cent of the com- bined capital of all the firms in the heavy manufacturing industry, which included mining, machine tools, ship- building, and chemicals. Their control was also dominant in many growth industries where military demands played a crucial role. Within the economic framework of pre—war Japan, the relations between Zaibatsu leaders and the .government or military elites were close, intricate and <3omplex. Due to the international situation of the time, txhe personal relationship of this tight oligarchy group surpassed in importance the economic relations of Zaibatsu tnuith the actual external market demand. In this setting, 11C: modern marketing based on demand cultivation was re— cataired. The national needs were the primary concern of tzlue elite leadership. As for the organizational control, in many Zaibatsu the organization man type professional managers had t3£iken over the reigns of operations and had contributed to the fixation of bureaucratic business practices by the end C>1? the Meiji period. In terms of actual control, Mitsui ap- F>€3£1rs to have had the loosest control system, partly be- CLElllse of its sheer size and complexity, and partly because 72 .Csoaw mHCp omOQEOO mCsEoz pCm .mefinmxmz Amhsxoo .mzmxshzm aoCmm¢ .mzmxsm< .m>oom C509 COp mCu on Cofipfippm CHo .oosncs ops osoeaesm .fisnfiosnosz .asnoaz ”0&0 mmEMC .HfimCB n .ACOHCCHommao mpH UCm prmofimm mmmCmCmmv ampfimx 0Com 0% :mumnHmN CoCfiz CH meCHH Hpfiom CnmxfiCooz on mo powwoamp pump mCu Co pommn ma COHCS .mmzlmm: .QC n.pfinH Am%Hon Eonm popmmp¢m m.mm H.:HH m.:m :.mm Hapoe m.mH H.2H m.mH ~.HH mhmzuo m.oH s.s s.oa m.e msfissocsdssoz oswaq o.m: w.mw :.mm s.mm mCHanommssz z>mmm o.mm :.m b.@: o.m moCmCCmCH a wCfimem ApCmo Comv Ame Co ApCoo Comv Ame mo mCOAmeOQCoo mCOHHHHm CHV mCOHmeOCCoo mCOHHHHm CHV Hmwmq HH< Hmuoe Hmwmq HH< HapOE mhpmdch sH chasm one awesome sHuoHca sH chasm one .Hsoaoso anoaoa osmpmnfimw Cos Cos p Cmpmnfimw asom doe m.m:ma go we Cmdmh CH mCOHmeOCCoo Hmwma Ham mo Hmpfiamo Cancfima Hmpou one CH onCm CHme UCm prmCHmN Cop Con me an paw: Hmufidmo Cfiuwmmg mo pczoem m£&nn. 3 2E 73 of its emphasis on decentralized decision-making by Operating managers. Its control was typically indirect. And it pro- vided its member corporations much freedom of decision- making and opportunities for operational initiative. Only when the expected performance in the form of profits was not forthcoming, were measures taken to strengthen the operation by replacing the individuals in charge. Other Zaibatsu, smaller by comparison, appeared to have exerted tighter, centralized control. Regardless of the type of control, the Zaibatsu operations were largely managed by "professional" managers, .and the ruling families concerned themselves with policy and diversification decisions to determine the direction (pf future growth. Further, their main preoccupation seemed tn: lie in cooperation with the government and the military elites of the time. This organizational setup made the professional nieinager more of an acutely conservative, security-minded, and bureaucratized decision—maker chiefly concerned with Ircplxtine operational decisions, rather than an aggressive, :Lruzuovating, and entrepreneurial type- Thus Zaibatsu t>u=sinessmen tended to assume the posture of civil servants or government career bureaucrats.lu This explains partially ‘Vlllv' within the competitive, economic structure of Japan, :- 1”This conclusion is adapted from Professor Noda's r1 IHpmpComoaQomo .COHumsoCo mo Show Como pom oopsaaoo HmpOp on» Csz moHoCHoo poC use HmpOp on» nwCHpCCoa Co mmsmoom .mnmom CH Commoaaxm COHsoO oEHp one an mamoECC Hospom one wCHpH>Ho an poCHMunon .mpCoECmHHompmm HmH mHOEmm .HH xHoCoOQ¢ .>o>esm HHmzm mm mH m: HmH H H m m Hmpoe mH m mm on m m m mH mmmHnmmmH mm m OH H: e m m HH mmmHlmmmH 0H m m mm m H m m mmmanmmH H I: H m H I: H m mmmH m a: H m m I: H m mmmH .aoom CoCmnm monm o.aomm CoCmsm monm Hmpoe Hmpoe COHCmm Show Show oEHB msonECz Hmeo< nopwm mHnmow w.mmmHlmmmH «590% an COHumHSEhOh ucmsflmHHQMpmm 30c mo mums aHhmmMIl.Hlm mqmHumpComOCOomp .COHCoE< CHIIo>Oom ADV CH mm boomsoosooCH mHHmCmsIImCoOCmCUUmoC LHoCo do wCOHumCOOO CoCmCo one can COHCs .mOOHCCO Cocmsmo .mOHsoEC CH mon mumpm o>HpOoqmos COUCC pmumCOOCOoCH hHHmECom mpCoECmHHompmo OCp ohm COHCZ mCOHpmsOOCOo CMOHCoEssm Hszm 0 OH mm mH Hm: V on oOHmCo .Coom m m w m HQH V mH ConCm m m CH mm Ham V ms .otoo .aosa m mm :2 o: HooHV HmH Hmpoe UCmso I- I- m m lee V e ccsooo .toom I H H II AmH V m Cocmsm I m II 2 He: V e .Osoo .LoEC I z a e AOQHV mH mpooo HmHaumspCH sCm CoECmCoo Cpom m mH m Ame V mm ooHado .sdom I- I- m a As V a access I II N HH Hem V MH .Osoo .soEC m m mm Hm AQQHV mm mpooo HmHspmspCH m o 3 Com V mH oooHooo .tdom I a m m Amm V MH onocmsm m. w m Hm: V mm C.Osoo .awEC m HH NH mH AQQHV Hm moooo aoEsmCoo Amado» Amado» Antony Answer m u .02 I I I uCoECmHHOmpmm om mHV NH mV 5 :V CmCB mmqu no snow on» pcm mzmHImmmH 2mmHImmmH mmmHINQmH mmmHImmmH Hmpoonsm HmoHpmHsou IomsmCo zapmscCHV Hmsmow CH somamHm oEHB oCu pCmV poHsom oEHB came one pooocmHnoo one eron ocomHsstom nosceanHomonm no toossz one m.proECmHHompmo HmH OHOEMm Aesop mo UCm AmOHpmHsouomsmCo asumspCHV Oahu an ooEsou who: mucoECmHHomumo .m .D pcossso on» COsz CH Loo» oCBII.mIm mqm<8 150 products into the American market and the establishment of some form of representation in the major metropolitan areas of the United States. It might be hypothesized that the longer the time period, the more market knowledge and experience would be accumulated;and therefore the better would be the chances for creative, positive adaptation in the American market. Among firms sampled, there was a wide variation in terms of the number of years lapsed. ”Most establishments which had had some form of U. S. operations before the war fell in the category of twenty or more years. Pro- ducts of these firms included such consumer goods as ceramics, cultured pearls, fibres, and specialty foods or condiments. Also as long established were industrial goods manufacturers in metals and chemicals. The dinnerware and china manufacturers took ad— vantage of design and cost advantages to expand sales in prewar America. In the case of a specialty food firm, it originally catered exclusively to the Japanese-American segment of the population. This firm marketed,among other products,monosodium glutamate (abbreviated as MSG), a flavor enhancer, discovered and commercially developed by the Japanese. It first opened a representative office in America in 1917. The product, MSG, was entirely new to the American food market when introduced. According to the respondent, the firm started from door-to-door 151 sales by Japanese representatives, working out of an office Opened in 1917. The office was reopened in 1953, after the disruption of the war. Another firm in this category of prewar entry into the American market was a cultured pearl firm, which started marketing around 1927. It was a unique process developed by the Japanese. It displaced the Persian Gulf pearl business in the U. S. at the time Of introduction. It used its inventor-founder's Showmanship and propaganda to have its products accepted by traditional channels of the jewel trade. Its present-day channels still remain much the same as prewar days. Its U. S. Offices ceased operations in 19A1 and resumed activities in 1955. For these firms, apparently the disruption of Operations during wartime delayed the orderly develop- ments of their marketing activities. As far as the case histories of such firms go, theirs can be good examples to depict certain patterns of adaptation, pro- vided that recognition is given to the differences in the socio-economic and political climate governing the relationships of the two nations before and after World War II. In marketing, the ultimate user's needs and wants, tastes and preferences, and the course of action chosen to satisfy them become the predominant factors in determining the marketing success of a firm. In the process of matching the homogeneous supply and heterogeneous demand, a firm has to adopt a mode Of operation which is most 152 productive and efficient to expand and grow. Herein come the problems of socio-economic and political conditions in which the firm operates. Obviously those firms which had operated in America in pre-war days faced drastically different market and social conditions after the war. And these conditions are apparently still changing. In summary then, most of the pre war entry group firms were in the consumer goods field. They had unique products to sell-—most1y originated and develOped by the Japanese. They had to engage in considerable market cultivation efforts in order to overcome market resistance toward new, foreign products. Next comes the group of 26 firms falling in the 10- 19Hyear category. However, this categorization can be misleading. More than two-thirds of the firms (l8 estab- lishments) actually entered their products into the U. S. anywhere from 10 to 13 years before establishing their current offices. This means that only eight Of the firms waited 1A to 19 years after the first introduction of their products before establishing a form of business in America. Comparing the time lapse between the introduction of a firm's products and the establishment of its offices, the normal pattern was product introduction followed by the establishment of office. Pertinent to this, of the 121 firms in the sample, 15 establishments in the 153 industrial goods field allowed 10—19 years to elapse before finally opening their Offices in America. Many reasons could be pointed out for this phe- nomenon. Demands for industrial goods typically fluctu- ate widely. The transactions may be infrequent and sporadic. Many intermediaries may be present in the negotiations. The locations of the users are definitely known. Some of these factors would tend to mitigate the pressure of opening a representative or liaison Office in the United States. In the consumer goods field, where American cor- porations were the dominant form adopted by the Japanese manufacturers, many firms waited much less time than the industrial firms before establishing their offices. Thirteen of them waited from 3 to 5 years only. This presented a good contrast in the adaptive pattern. In all, the majority Of the firms sampled (73 establishments or 60 per cent) had sold their products for 3 to 19 years before they formally Opened their Offices staffed by their own corporate personnel. The predominant pattern was therefore the time lag of con- siderable years before these companies started maintain- ing their Offices here. Against this general pattern there were a few atypical cases Of the industrial goods manufacturers who opened their Offices even before any of their products were sold in America. This might be significant if one considers .HH xHOCOOO< Azo>ssm HHmzm 15A H mH H mm mamow OH I OH Hmpoe HHV HmV AmV HOV Hmsmow OH I HH HHmpooosmV II H II H OH II H II H NH H II m m OH II H II H mH II N II m :H AmV AOHV AmV AOHV Amsmow mH I OH HHmpopnsmV II N m m mH H m H e mH II H H m HH m m II H OH aspmspCH HCOmCOCH Ceom mooow mOOOO Hmpoe Amsmow mo Confisz CHV HmHapmspCH aoECwCOO Ooeaom osoz mpCoECmHHompmm 3oz HHpCD COHponospCH came an mpCoECmHHnmpmm mo nooazz .mposposm moCHm comamHm oEHB OCH m.osoaw memo» OHIOH one son pCmECmHHompmm mpH Ho HCpCo Hmenow mo oer on OCm pHom meHm cams mposoosa m.eCHm m CoCz mEHp on mo ComHsmOEOOII.mIm mqmssm HHOEO H OH HH O m OH H m mm ooHaoo .tdom O H II O II II II II OH CoCmCm m H s OH H m H II mH .dsoo .tosH OH Hm HO ON a HH m m HmH Hsooe H m H II II N II II O coHCCo .tch H H II II II II II II N £0CMHm H H m II H H II II H .otoo .acsa m H H II H H II II mH .soo a .osH room m OH O O m m H O OO ooHCCo .aocm II H II m II II II II : nonwhm m m m H II N II II mH .oaoo .Aoea H OH H OH O H H H mm moooo HsHaonsosH H H H m m m II II mH ooHuoo .aacm m H II m II H II II mH scream m H H O O O H II mm .onoo .tosa O H O OH O m H II Hm moooO Cossneoo memossz macs mHIOH mIO mIm NIH access» m mmoH Hcooe atom H case no ON IHCEHm CO H CO m OOmOOHm msmow mo Conesz pCoECmHHompmm mo Esom OCm maze OCH .pCoECmHHnmpmo mo Show OCO camp an OOHnoe< CH OOOHHHO mo pCmECmHHnmpmo OCH OCm muosposa Co COHpospoanH.OCp Coozpon OmmomHo whom» no CODECC OCBII.mIm mHOHB '159 The Size and Organizational Change For the establishments of the Japanese manufacturing firms in America, the number of employees is perhaps the best criterion for judging their scale of operation or size.‘ As it is relatively costly in time and expense to recruit qualified local office personnel and train them, there exist considerable rigidity and inflexibility in changing the size of their operations in terms Of numbers of employees. The lifetime employment system also makes such an adjustment slow because of the training needs and adjustments on the part of the parent Japanese organ- ization. Thus size,in terms of number of employees or staff personnel at each establishment,became the criterion for measuring the scale of operations. Here the number of employees was used to denote the combined figures of both Japanese and local employees. First of all, it became apparent that the scale of operations as measured by the number of employees was small. Of the sample 121 establishments, the majority had less than ten employees. Assuming that nine or less was small for American corporations and five or less for branch and representative offices, 79 establishments (65 per cent of the respondent firms) belonged to this "small" scale category. 160 Moreover, large ones employing more than 100 and less than 399 peOple numbered only seven, or 6 per cent of the sample. This left 35 establishments in the medium- size range, which was 29 per cent of the total. Analyzing further this medium-size range group of establishments, it was noted that there were 16 establish— ments whose size was less than 19 employees. Of the re- maining 19 American corporations belonging to this group, only six of them had more than 20 and less than 99 em- ployees——a truly medium-size range. TABLE 5-6.--Sca1e of Operations as measured by the number of employees.a Size and Scale of Number of Operations Establishments Percentage Small 79 65 9 or less for Amer. Corp. 23 5 or less for branch 1A 5 or less for repr. office 47 Medium 19 29 10 or more for Amer. Corp. 19 6 or more, but less than 19 for branch A 6 or more, but less than 19 for repr. office 12 Large 7 6 100 or more, but less than 399 for Amer. Corp. 6 Branch 1 Total 121 100% aMail Survey, Appendix II. 161 In terms of the age of establishments there seemed to be no relationship between duration and the size of establishment. One might tend to think that the larger the Operation, the more chance for growth for survival. However, as noted previously, this relationship was in- significant. For smaller operations, such relationships could not be established because of the very small size range—- 0-9 for the American corporations and 0-5 for branches and representative offices. Accordingly, establishments with more than twenty employees were used as the reference group for analysis. First, there was a clear, definite rank correlation between the year of establishment and the number of years products were sold for those establishments which had more than twenty employees and were established by 1962. This was significant because of the random distribution of the time lag after product introduction until the office establishment (p. 15A). From 1963 on, this pattern broke down. This was to be expected, because the recency Of entry left insufficient time for develop— ment to occur. All of the firms in this group were American corporations except for one branch. This is under- standable, since for growth and permanence the corporate firm is almost mandatory. 162 Second, using simple rank correlation, it was Ob- served that the length of operation or the number of years products had been sold had little to do with the' size of operations measured in terms of the total number of employees for the firms in this category of 20 or more. So it could be concluded that the time for adaptation was not related to the size. The number of employees was broken down into two groups--the Japanese staff and the local employees, and the rank correlation was checked for each. This test was necessary because the ratio of local employees varied widely among the firms sampled. Again no relationship existed between the number of such employees and the date of entry of establishments in the current form. From this analysis only one tentative conclusion may be drawn: that for those establishments having more than twenty employees, the size of establishments tended to have no definite bearing on the length of operation in the United States. Looking into the size of operations by type and form for the establishments with more than twenty employees, the top twelve companies in terms of length of operations all belonged to the consumer goods industry and all of them were incorporated. This was a definite pattern and the details will be seen in Tables 5—7 and 5-8 in the following pages. 163 .OCOOCOCH OOOOO HOHCOOCOCH u H OCO OCHOCOCH OOOOO CoECmCOO u 0 ”Com OCOpm poms mHOQEOm on» OCO mOHpmHCOOomsmCO HmHCpmsOCH mmOOCmO mazes .HH xHOCOOO< “Omsssm HHOZO OH H OH HOOH H HH O O OH HOOH H OH OH H HH OOOH O NH O O HH OOOH O HH NH O OH mOOH O OH HH H O HOOH O O s O O OOOH O O H O O OOOH O s H HH O OOOH O O O O O OOOH O O O H H OOOH O H O OH O HOOH O O O OH H NOOH O m H OH H NOOH O H mem msmow mo xCOm COOO OOOB sonECz toossz O soHOOOHOHOOOOH HOOHoosooosm COHpospospCH posooam ooCHm OHom Comm 8Com OCOCCCO CH OOOOOHOEM ON COCO o>mm mposposm msmow mo COOECZ one OHpCm mo Hmow OCH who: OOH; pCOeCmHHnmpmm O.OOOOOHOEO osoE so ON Csz mpCoECmHHnmpmo COO COHposp IOCOCH OOOOOCO Ho COOO on» OCO OCOCO mo new» OCH Comanmo COHOOHOCCOO xCOmII.OIO mqmae .Nlm mflflmB EOHM mewBo .OIO OHCOB CH muCoECmHHCOOmO Com OOOC mm COCECC OEOmC .OIm OHCOB CH mm Oossom OEOmO 16A O HH O A O OH OH HH OH ON O O HH OO OH OH HH O N NN HH OO HH NH O OOH OH O O OOH HH HH O OO O O OH OO OH OH N NON OH N N HON O O O OOH O OH O OOH O O H mom NH m H oom m O NH mm m ON 0 mH m m H ONH H ON H OHH O O O mm H HH m MHH H H m OOH MH N O mOH m m OH ON OH O OH HO H N OH ON O OH HH OO H H xCOm OOMMMMMEO xCOm Omwmwmmm xCOm HOOOB osaom OCOCCOO OCH CH CCOCEOz OCOCm mo COOH OCu COHOOOHOHOCOOH OCHCCOoCOO xCOm OCB HOOHOOCOOOOC OOOOOHOEm no COCECz CH OCOECOHHCOOmm mo ONHm OCH O.OOOOOHOEO mo COCECC OCC OC OOCCOOOE OCOECOHHCOCOO mo ONHO OCH OCO Esom OCOCCOO CH OCOCO mo COO» OCO COOZOOC COHpOHOCCOO xCOmII.OIm mHOHB 165 The size measured by the number of employees tended to be larger for sales offices and smaller for repre- sentative offices. The number of years of operation, measured either by the year of entry or product intro- duction, seemed to have little bearing on size. In terms of industrial characteristics, consumer goods industry tended to generate larger scale operations, as against the relatively smaller scale for industrial concerns. As a generalization, the following would apply to the size of establishment by type and form of operation. First, in consumer goods marketing, American corporations were the main form of operations and the size tended to be larger than ten. When the representative office form was used, however, the predominant size was between 3-5 employees. Second, in industrial marketing, the repre— sentative office was typically very sma11—-two or less employees. Only seldom did this form exceed more than six employees. The American corporation form was also used by the firms in industrial goods fields, but in this case the size tended to be larger—-often employing ten or more. Third, in the case of firms engaged in both in- dustrial and consumer goods marketing the size and form tended, as might be expected, to fall between the patterns found respectively for consumer goods and industrial goods firms. 166 TABLE 5-9.--Size distribution of the establishments by number of employees by type and forma (combined figures for Japanese and local employees). Size Group in Terms Number of Establishments Percentage of Number of Breakdown Type and Form Employees Number (Percentage)b For Each GroupC Consumer Goods 23 (19) 100 American Corp. A or less 3 (2) 13 5-9 3 (2) 13 10-99 11 (9) A8 100-399 6 (5) 26 Branch 13 (11) 100 2 or less 3 (2) ?3 3-5 6 (5) A6 6-19 3 (2) 23 20-199 1 (l) 7 Representative 1A (12) 100 2 or less 5 (A) 3 3-5 7 (6) A7 6-10 2 (2) 13 11-19 1 (1) 7 Industrial Goods 13 (11) 100 American Corp. A or less 5 (A) 38 5-9 3 (2) 23 10-99 5 (A) 38 Branch A (3) 100 2 or less (1) 25 3—5 3 (2) 75 Representative 38 (31) If? 2 or less 20 (17) " 3-3 12 (1O) 32 6—10 5 (A) 13 11—19 1 (1) 3 Both Consumer and Industrial Goods 7 (6) 10“ American Corp. A or less 1 (1) 1H 5- 3 (2) “3 10-99 3 (2) “3 Branch 2 (2) 100 3-5 1 (1) 50 6-19 (l) 50 Representative 6 (5) 100 2 or less 2 (2) 33 3-5 1 (l) 17 6-10 2 (2) 33 11-19 1 ( ) 17 Total 121 (100) American Corp. A3 (35) 100 A or less 9 (7) 21 5-9 9 (7) 21 10-99 19 (16) AA 100-399 6 (5) 1A Branch 19 (16) 100 2 or less A (3) 21 3-5 10 (8) 53 6-19 A (3) 21 20-199 l (l) 5 Representative 59 (A9) 100 2 or less 27 (22) A6 3-5 20 (17) 3“ 6—10 9 (7) 15 11-19 3 (2) 5 aMail Survey, Appendix II. bPercentages do not always add up to each group total because of rounding. cPercentages do not always add up to 100 because of rounding. 167 Organizational Change Forty-three (36 per cent) of the establishments re- ported various kinds of organizational changes planned for the very near future. And the majority of them reported plans for expanding their operation either by increase in personnel or by relocation of office due to the need for larger space for more efficient Operation. Of the A3 re- porting change, about one-third or 13 firms--more than one- tenth of the sample--reported incorporation as the major reason. This is significant in that it reflects,more than other changes might a likely shift in form of operation. This inference is strengthened inasmuch as incorporation was usually coupled with some quantitative changes,such as increase in personnel or relocation for larger space. For details, see Table 6-10. These firms included five in both consumer and industrial goods. This may have reflected the pressure for diversification and thus the preference for less restrictive forms of Operation. See Table 5-11 for details. From this result, it would be inferred that there was a definite trend toward incorporation among repre- sentative offices, toward the increase of personnel and toward the expansion of business by relocation. There were some cases of failure reported and apparently some representative offices were to be closed due to policy changes of the parent company, the discontinuance of operations, or mergers. 168 TABLE 5-10.--Contents of the future organizational changes proposed by kinds and major reasons given.8 The Year of Number of Kinds of Organizational Change Entry Establishments (or the Major Reasons Given Reporting Plans For the Change) Total For Proposed Number of Changes in Increase in Relocation Incor— Close or g Establishments Organization Personnel of Office poration Abolish O Sampled c d e Offices >: No. (53) (A) (a) (C) (2*)? 1965 9 8 89 3 2 3 -- 196A 18 8 AA 3 -- 5 -- 1963 19 5 26 2 1 2 _- 1962 12 l 8 —- -- -- 1 1961 11 A 36 1 l 2 -- 1960 13 3 23 1 1 -— 1 1959 8 2 25 1 1 -- -- 1958 A 3 75 2 l -- ~- 1957 6 3 50 3 -_ -- _- 1956 A 1 25 1 -- -- -- 1955 5 2 A0 —- 1 1 -— 195A A —_ __ —- __ —— -— 1953 A 2 5V 2 —- —_ -_ 1952 A 1 25 —- -- -- 1 Total Number 121 A3 36 19 8 13 2 Percentage (100) —— (AA) ’19) ’3‘) (“I aMail Survey, Appendix II. bBy the content analysis of the responses to an open-end, and free write-in type question. response—suggesting, cIncrease in personnel was usually explained as necessary in order to expand and facilitate Operations. Observed frequently among growth firms. d or due to plans to accommodate increased personnel. closer to the main market was also reported. Relocation of Office was usually due to growing out of their existing plant But relocation in order to be e Incorporation was the change in form from representative or liaison Offices to American Corporation (usually sales Office or sales branch). fClose or abolish office was reported by the firms which realigned its overseas activities and dropped their Offices over here. All of them were representative Offices. 169 TABLE 5-11.--Firms planning incorporation in the near future by industry characteristics.a Number of Establishments Type of Surveyed Reporting Incorporation Industry Sample Total Number Percentage Consumer Goods 51 3 6 Industrial Goods 55 5 9 Both Consumer & Industrial Goods 15 5 33 Total 121 13 11 aMail Survey, Appendix II. Industrial and Product Features AS seen from previous analyses, almost all of the larger establishments belonged to the consumer goods in- dustry, their size being more than 20 employees. On the other hand, most smaller ones represented industrial goods industry in the form of representative offices. There seemed to be many reasons for this. First of all, firms in industrial goods were relatively newer entrants into the American market. The most pOpular form in the past was the representative or liaison office, but this pattern has been Shifting and more and more establishments are incorporating formally under American law, especially the firms dealing in both consumer and industrial goods. Be— tween 1959 and 1962, only two incorporated industrial 170 firms appeared, whereas there were 19 representative offices (Table 6—2). However, between 1963 and 1965, 13 establishments were incorporated and only 8 representative offices were formed (Table 6—1). Moreover, many representative offices in industrial goods marketing were considering incorporation according to the survey. It should be repeated here that it was the companies in consumer goods which originally entered the American markets. The entry by industrial firms was fairly recent. Therefore, as far as experience in this overseas market went, the firms in consumer marketing definitely had many advantages in marketing know—how in America. This seemed to bear some relationship to the scale of operation in terms of number of employees, for consumer goods manu- facturers, for the most part, represented the largest size group. If Size could be construed as reflecting the de- gree of complexity of American operations, the most sophisticated ones were to be found among the large estab- lishments in the consumer goods field. Major Problems of Adaptation Tpe Entry Considerations: The Leaders and Their Entrepreneurship Introduction.—-The entrepreneurship of the Japanese business leaders has played a significant role in develop- ing Japanese business operations in America. As seen 171 through the patterns of adaptation, the earlier entrants were basically of the entrepreneurial type who brought new products developed back in Japan and succeeded in cultivating new markets in America, until the war broke all normal commercial relations. Therefore, by way of introduction, the origin of Japanese entrepreneurship will be briefly explored here. The purpose of this section is to clarify that American setting rewards innovators and entrepreneurs of Japanese business. The subject of Japanese business leaders is a fascinating subject to study. Behind Japan's rapid in- dustrialization was the strong leadership by her tradition of Tokugawa administration of almost three centuries.29 This tradition was combined with the rise of the merchant class and a new form of a merchant culture of the cities,30 298cc Thomas C. Smith, Political Change and Industrial Development in Japan: Government Enterprise,l868-l880 (Stanford, California: Stanford University Press, 1955). According to Smith, at the time Meiji government took over the vast machinery of Tokugawa administration, it not only inherited various practical applications of Western technology such as several iron foundries and numerous scattered furnaces for smelting the iron ore, a mechanized spinning mill, an important coal mine, scattered facilities for shipbuilding and repair, and a modest but substantive merchant marine, but also succeeded the individuals who had already acquired invaluable technical and managerial experience in starting these enterprises and upon whom it could draw help. Ibid., pp. 1-12. 30See David Charles Sheldon, The Rise of the Mer- chant Class in Tokugawa Jgpan (Locust Valley, New York: J. J. Augustin, Inc., 1958). 172 and later with a modern, centralized universal educational system of Meiji Japan, which generated succeeding elites for the nation. It is generally recognized that the Meiji elites' strategy of Japan's industrialization was based on the ut- most utilization of the old system. And the Zaibatsu leaders were a part of the elite class who actually shouldered the burden of economic development. Moreover, contrary to popular belief, they originally appeared as 31 entrepreneurs Western style. They were entrepreneurs who skillfully exploited the opportunities presented by the trend of the times. The emphasis on Zaibatsu family ties Should not obscure the origin of Meiji industrialists.32 31This and the following description and analysis of Zaibatsu leaders are based on Professor K. Noda's article in Komiya, op. cit., pp. 256-257. 32In Meiji era, many Zaibatsu grew by utilizing the entrepreneurial initiatives of their originators and founders. Until the economic power of Zaibatsu became dominant, still many more entrepreneurs could and did move into the arena of Japanese industry. Moreover, until the bureaucratization of Zaibatsu organizations became rather rigidly fixed, many able individuals did advance to the position of great influence to make entrepreneurial business decisions even without the proper family con- nections with the Zaibatsu. The details of Zaibatsu leaders' characteristics can best be found in autobiographical reports, personal sketches, and company histories written by the Japanese, although quite often they lack Objectivity and run to- wards exaggeration. There are English sources as well. Perhaps the most authoritative one would be: Johannes Hirschmeier, The Origins of Entrepreneurship in Meiji Japan, Harvard East Asian Series 117 (Cambridge, Mass.: Harvard Uni- versity Press, 196A). According to the cover summary of 173 Moreover, the Zaibatsu leaders depended heavily on professional managers to carry out and administer the- daily operational aspects of their business in the tradition 33 Of the merchant class in Tokugawa Japan. The Emergence of Entrepreneurial Industrialists3q‘f The end of the war meant the dissolution of Zaibatsu groups and the increasing use of professional managers. the book's content, this is a comprehensive analysis of the genesis and dynamic development of Japanese entre- preneurship, and it traces the dramatic struggle of a determined elite, using Japanese source materials almost exclusively. For a very interesting, lively account, see Robert Lubar, "The Japanese Giant That Wouldn't Stay Dead," Fortune, November, 196A, pp. lAl—1A9. This article is a case history and personal Observation of Mitsubishi, pro— bably the largest of Zaibatsu today, which originated in pre-Meiji period. 33Not only the samurai (warrior) class, but also the merchant class, which is supposedly at the bottom of social strata in feudalistic Tokugawa reign, seem to have been well educated. The number of temple schools (terakoya) for commoners in towns and cities increased from 9A at the beginning of Tokugawa period to 5,867 at the end. Merchant Confucianists gained a hearing from feudal lords and they aspired to become the intellectual leaders of the nation. Knowledge, culture, and power were spread over a larger area of pOpulation than ever before in Japanese history. Sheldon, Op. cit., p. 169. 3“The explanation of the type of entrepreneurs is based on Kazuo Noda, "Zaibatsu Kaitai To Sengo Keieisha No Toojo," (The Dissolution of Zaibatsu and the Emer- gence of Postwar Managers), The Bessatsu Chuo Korogy Keiei Tokushu, Fall, 1965, p. 368. Similar descriptions can also be found in Ryutaro Komiya, op. gig. 173 Moreover, the Zaibatsu leaders depended heavily on professional managers to carry out and administer the- daily Operational aspects of their business in the tradition 33 of the merchant class in Tokugawa Japan. The Emergence of Entrepreneurial Industrialists34 The end of the war meant the dissolution of Zaibatsu groups and the increasing use of professional managers. the book's content, this is a comprehensive analysis of the genesis and dynamic develOpment of Japanese entre- preneurship, and it traces the dramatic struggle of a determined elite, using Japanese source materials almost exclusively. For a very interesting, lively account, see Robert Lubar, "The Japanese Giant That Wouldn't Stay Dead," Fortune, November, 196“, pp. lUl-lUQ. This article is a case history and personal observation of Mitsubishi, pro- bably the largest of Zaibatsu today, which originated in pre-Meiji period. 33Not only the samurai (warrior) class, but also the merchant class, which is supposedly at the bottom of social strata in feudalistic Tokugawa reign, seem to have been well educated. The number of temple schools (terakoya) for commoners in towns and cities increased from 9“ at the beginning of Tokugawa period to 5,867 at the end. Merchant Confucianists gained a hearing from feudal lords and they aspired to become the intellectual leaders of the nation. Knowledge, culture, and power were spread over a larger area of population than ever before in Japanese history. Sheldon, Op. cit., p. 169. 3“The explanation of the type of entrepreneurs is based on Kazuo Noda, "Zaibatsu Kaitai To Sengo Keieisha NO Toojo," (The Dissolution of Zaibatsu and the Emer- gence of Postwar Managers), The Bessatsu Chuo Koron, Keiei Tokushu, Fall, 1965, p. 368. Similar descriptions can also be found in Ryutaro Komiya, Op. git. 174 Major enterprises experienced a period of confusion for about five years after the war. Most of them were pri- marily industrial goods manufacturers for the strong mili- tary demand and consequently could not switch back to peacetime production. Thus the dissolution of Zaibatsu generated many conditions which were conducive to creating entrepreneurs, as its economic impacts affected the structural and institutional arrangements of Japanese society. Many corporations in the consumer goods field did remarkably well during this post—war period as entrepreneurs. Generally speaking, there were two types of entrepreneurs among those who succeeded during this period, according to Professor Noda's analysis. One type was the business which started out during the war as the medium and small enter- 35 prise. Another type was composed of those who had al- ready Obtained a considerable degree of success as entre- preneurs in those areas where the Zaibatsu groups had not entered.36 Both of these two types had some common attributes and traits. They had abundant entrepreneurial spirit and demonstrated innovative managerial and marketing 3SMr. Ibuka of Sony Corporation is given as a typical example in Professor Noda's explanation. 36Mr. Matsushita of Matsushita Electric Company is given as a typical example of this type by Professor Noda. 175 strategies which paved the way for ensuing industrial practices. The impact of such entrepreneurial in- dustrialists has been tremendous in many sectors of Japanese business. Their impact has been especially great upon the fellow managers in the same industry who have more or less followed the "traditional" safe path. The entre— preneurial industrialists' aggressive marketing activi- ties stimulated the entire industry and eventually paved the way for the rapid expansion of Japan's industriali- zation in the ensuing years. From this introduction, it can be easily hypothesized that the firms headed by the industrial entrepreneurs tended to pioneer the marketing efforts in the postwar American market. As an ecological corollary of this hypothesis, it can be further postulated that any innovative, entre- preneurial venture does have a definite competitive ad- vantage in the American market according to Schumpeter's thesis.37 In order to test this reasoning, both a macro approach Of taking the entry adaptation pattern and the micro approach of using selected cases of entrepreneurial industrialists in their entry strategies could be used. 37Joseph A. Schumpeter, Capitalism, Socialism,pand Democracy (Third ed., New York: Harper & Brothers Pub— lishers, 1950), pp. 84-85, and 132-133. 176 Size and Length of Operations of the Entrepreneurs From a macro standpoint, the length of entrepre- neurial industrialists' operation in Japanese home market should be considerably shorter as compared to the opera- tional history of traditional Zaibatsu related corporations. Therefore, by comparing the duration of operations in the home market, it was assumed that the firms with relatively short history in Japan were more of the entrepreneurial type. The next step was to differentiate the period of their entry into America and the size of their Operations. There seem to be two crucial factors which determined time of entry for the firms surveyed. First, when con- sidering entry into the American market, the financial resources and the technical know-how of the well-established, traditional firms (the Zaibatsu related ones) would seem to provide a definite competitive advantage. However, if the aggressiveness in marketing operations, characteristic of the entrepreneurial industrials, is considered, one might expect their entry to occur earlier because of their ad- vantage in marketing strategies and product Offerings. In order to test which factor was dominant, the data concerning the time of entry into American market was cross-tabulated against the number of years the parent companies had Operated in Japan. The result in- dicated that about one-third of the firms had Operated in Japan 51 or more years,and they did emcompass a 177 prOportionately higher percentage of the total firms which had entered into America 7 or more years ago. The firms which operated in Japan 16-50 years for the most part entered the American market during a more recent period (6 years or less). It is difficult to ascertain the statistical significance of this result, but it can be safely concluded,at least,that the entrepreneurial industrialists did not enter the American market earlier than the traditional firms. For details, see Table 5-12. If a strong leadership and entrepreneurial spirit did have a definite bearing in determining the degree of success of American operations, it might be reasoned that the relatively successful firms would have a shorter history of Operations in Japan. Therefore the firms were grouped as: those firms which Operated back in Japan 6-15 years, those with 16-50 years operation, and those with 51 or more years' history in Japan. It was assumed that, of the three groups, the one with 51 or more years' operation was likely to contain more traditional, well- established firms than the group with l6-50 years' opera- tion which would contain more Of the entrepreneurial in- dustrialists. Measuring the degree of success in America by the size,in terms of the number of employees of the American establishment, the successful ones seemed to belong to the 16-50 year group. The distribution of firm size within this group was bimodal, with a relatively small 178 .HHH xfiwcmaa¢ .mzmfi>pOOCH Hmcompmmm Aooav no Aamv Hm Aamv a: Asv m Hmpoe Aooav AOOHV AOOHV Amv m AOHV m u- I- I- I- mummy omuma Ammv ma Ammv m Asmv Ha I- I- mummy maua Aqmv mm Asmv m Ammv ma Aosv m mamas mum Ammv ma Azmv m Ammv ma Aomv H whamw mua on : Amv H Amv H Aozv m mmmq no Emmy mac 3 Spa; 3: S :mmmwmm “WWW” we Hmpoe who: to am whats omumfi mammw maum pcossmfiapmpmm cmamh SH xomm coapmgmao m.mchEoo pcmmmm mo npmzmq one cmOfime< mo npmcmq one m.mEnHm so oaosmm amOfime¢ OH ELHM mmmcmamh w you achEOO pcmhma on» no coaumumao mo spmcmfi was gem pcmenmfifinmpmm amoncmee co cpmcmfl map cmmzpmn canchHpmHmp mzeuu.maum mqmae 179 number Of medium size firms (6-50 employeesL compared to the smaller or larger ones. For the firms with 51 or more years Of Operation, the size distribution appeared to be random. Therefore, it seems that, as far as entry and suc- ceeding growth is concerned, the entrepreneurial in- dustrialists successful in Japan tended to have larger Operations in America as well, compared to the tradi- tional firms. It will be recalled that the larger Opera- tions are in the consumer goods industry (Cf: Table 5—9). In addition, it was discovered that many entrepreneurial industrialists in the electrical and non-electrical machinery fields were included. A summary is found in Table 5-13. The Selected Cases of Entrepreneurial Industrialists' Entry there are many enterprises which successfully cultivated overseas market, in spite of Japan's relative isolation of the postwar recovery period, when many firms were primarily concerned with the domestic market. But it was not a mere coincidence that those successful firms in the foreign market were the newly emerged enterprises, instead of the traditional, well-established prewar firms. The successful ones in cultivating the overseas market-— Sony, Honda, Canon, Yamaha, for example--produced a new marketing strategy based on the different market preception from what the traditional firms followed. The pre-war firms stuck to the idea that there was a marked difference between the overseas and the domestic markets, and therefore that the success in the domestic one is no guarantee in the overseas marketing. But the newer firms did and would not subscribe to this traditional view of foreign market. 180 .HHH xHeemaaa ntOH>LOpCH Hmcompmmm Hmv H Asv m I: I: on : who: no HQH Hmv H AmHV m -u .. AQHV A OOHuHm HQHV m Hsv m u- I- AHV m omuHm HHHV m Hmv H I- I- Hov : omuHH AOHV m Hsv m u: I: Hsv m OHuo HQHV m HmHV m Homv H HmHV a mum AmHV : Home m Homv H HmHV MH mnH quv m Homv m Hozv m Hmmv mH mcoz Ami H HHV m Homv H Hsv m mpcmecoammm-coz AHOOHV AHOQHV HHQOHV HHOOHV Hm H: m we Hmpoe HHHmV HHHQV . HHHV AHOOHV HHV cmnesz ARV cmpssz ARV tongsz AHV Hammmszz HmmmHOHQEm 80: .3 a 3-2 as 2:; .3 -EngMmmsHmoswmgms Hmnszz :OHpmNHcmeO mo ONHm cwth CH xomm Ompwgmdo mm: EpHm m 50ch mammw mo Lonesz m.:mqwh 2H COHpmpmaO mo coHpmpso on» cam mcoHpmmeO COOHLOE< no ONHm on» cmmzpmn QHszOHpmHOL chll.mHIm mHmhOch Hmcomnmm “monsomm 3.:H :.m m. OH mm Hmuoe mH m I: m H msomcmHHmomHz NH 2 I- H H poem mm m I: :m H mOHEmmmo mm m.H II a H mHOOHEOno mH : I- m m Hmmpm m H I: z m OHHuxmB NH 2 :. Hm m AHmOHnuomHmv mnmchomz m.HH m m.H NH w AHMO -HcpomHmucozv mumcHnomz AHOQESZV handsoo mOHpOE¢ mchmQEOo UOHOHOEm Ommmpnsm pammmpm pH pH spam pmnpo eH mHchHpmz mapHm cOHBmpoao OO>Hmm mpmmw mo mammw mocmHHmme mmwcmomh mo mo maze no 8: .mm>Hp:omxm comm one HMpom mo AEHHm nmmv 903632 mmmnm>< m.mmpm xnow 302 on» CH OchHpmpw mm>HpsOmxm Upon Ommcmamh on» mo mmocmfipqum wmmchsn CH mnmw» MO 90985: mmmhm>m mnBII.:HIm MHmpmp:H Hmcompmmm co m: w m: o mwmpcmopmm on mm mm m mm : Honesz Hmuoe 4 m I: m I: I: mmmpm HmOchomB I m H H m I: mmmum ucmEmwmcmz rm mH NH :1 H 1: O>Hpmpcmmondmm H H I: In H :1 pmmmcmz penumHmm< mH 0H s H H H powwcmz r m m I: m I: memcmz Hmnmcmw em mH I: H :H m pampHmmpm OQH> “H s I: II 5 II ucmOHmmpm e o: OOHm o OOHMOQ zmH COOHLOE< Hope: cOmeH no HLOOEH no OonmpoonoocH zpmHOHmnsm m>Hpm cm mnomm mOHmm .zocwgm .manOHmnsm mmHmm wszzpommzcmz COHpHmom acmeanHOmHmm no Enom mucmvgoqmog mnn no pcmELmHHnmpmm do Snow mcp Ocm COHpHmOQ Ocell.mHIm mqmHOHCH Hmcomnmmm 196 AROSV NN.............HMPOB AROSV Hm.............OHMUOB AROOHV NO..............HMUOB ANMV N oooooooooooono< oz Hmzv m .....mmoz no uanm AHHV H ..c0HpmHoomm< mpmne ARHV H ......co>mm no me HRHV m .........pcOEcnm>Oo ARHV H ......O>Hm no msom Aumv m ......mEHHm mcHOmLB HHOV : ......mmcge no 039 HmmHV m ........mchmQEOO CMOHCH$E¢ ANHV H o....o....o.ofl.o< oz ANSNV mfioo........o....®co ANQHV MH........mmHCNQEOU mwmngMW #0390 ARO£V NN................W0W flammv QMOOooooooooooooooooz Omxnoz szSOH>OHm ocmxpoz szSOH>mnm mamasoo pcmmmpm no mCOHpmNHQmwno HO 909852 mCOHpmNHcmmno mo maze mpHmuso mocmHHmaxm x903 m>mm m.OOpmHoommm wzsp mQOHpmNHcmeo mo amass: mnp cam Omxpoz szSOH>OpQ :OHumNHcmwpo mo camp .AOOQEOO Hammond mnp mo mnHmuso mocmHanxm xpozll.mH|m mHm¢B 197 indicated that the top business leaders in Japan generally have been chosen on the merits based on their higher level of education, rather than the family lineage or the amount Of inherited wealth.55 Therefore, it could be reasoned that if the lifetime employment system was accepted by Japanese business in America, the educational background Of the executives sur- veyed would tend to indicate a high degree of educational level. Accordingly5the educational background of the ex- ecutives was investigated and it was found that almost all the respondents had college or university education, as indicated in Table 5-17. Since the location of the highest education received was Japan, 55 (82 per cent), U. S., 10 (15 per cent), and others, 2 (3 per cent), it could be reasoned that almost all of them had school training in Japan. The respondents' country of citizenship was Japan, 62 (93 per cent), U. S., 3 (A per cent), and others, 2 (3 per cent). Inquiry re— vealed that the education received placed heavy emphasis on economics, business and law as the fields Of study. See Table 5—18 for details. 55This point seems to be widely accepted by many contemporary Japanese managerial scholars who conducted various empirical investigations. Most of such research results are published in summary form in the recent issues of The Bessatsu Chukoron, Keieimondai Series on Management. For personal portrayal of the top business leaders of Japan, see Yonosuke Miki, Zaikai Shunobu (The Top Leaders of Japanese Business), (Tokyo: BungeishunJu Shinsha, 1962). 198 OOH so H0909 OOH um H0909 H H H3xmm39o H0m3zxv m m A90303¢ O2V Hoo9om 9wH9 090990 29mncoo0m 80902m OHO H H m99< Hm9eeHH H H Hooeem emHm s m Hm90990H H mpaav e m A0909 Hmmsexv mxn3m 0w0HHoo 80902m OHo 9 m HeecmHemv prm H m eweHHoo w m wcH9003Hmcm n m Hoonom 0903Om9o OH 8 HzmHv 3m9H902 OH HH 29Hm90>HcD mH m 0003Hm3m mm OH 29Hm90>HQD 80902m 302 m: mm AmOHEOCOOmV H0NH02 mm :m 29Hm90>H33 80902m OHo 0&09300909 909832 mo39m no OH0Hm 0&09300902 909832 H0>0H H030H9mo3om .30H>9099H 099 O9 0930OCOQm09 no 90 2O39m 90 OH0H9 9OO08 099 O80 OOH9003O0 HO H0>0H 099||.9H1m MHm¢B 199 From the results in Table 5-17, it may be concluded that the lifetime employment system and seniority and academic level rule appear to be practiced by most Japanese firms Operating in America. Considering the disruption of war and the economic reorganization in postwar Japan, the degree of individual mobility revealed in this survey was to be interpreted as rather small. This trend apparently continues without maJor modification. Some Organizational Issues: Rotation and Training.-- As far as the staffing of the establishments was concerned, there was a pattern in rotating their assignments. Because of the lifetime employment system, the individual execu- tive's assignment to an American Operation would be re- garded as the extension of his career in the parent company. And this seemed to be the main reason,causing a clear pat- tern Of rotating the personnel in American establishments, despite the relatively short history of most Japanese business Operations. Of the 67 respondents surveyed, #0 firms (60 per cent) indicated that their unmarried employees would stay in the U. S. on the average less than three years and the married personnel a little longer. Some firms inter- viewed indicated that their companies had a definite policy on the rotation of personnel. There were some firms with no definite patterns in rotation (12-13 per cent). See Table 5—18 for details. 200 .m3H033O9 00 0030009 H0909 039 09 03 000 903 O0 00w093009000 .30H90030 0H39 903030 903 0H0 090309039 030 3909900 H03OH90909 230 30HH90900 902 903 0H0 2039 9039 0083000 003 9H 030 09002 9H0 3039 000H 00H908< 3H 00909000 003 8039 no 9002 .3OH90030 0H0H0000 0H39 O9 00300009l3020 .0903 2H000 =09002 m: 90 3908 08H9 039 93090 A9V 3H 00 09308800 90HH8Hm0 .90>03O3 .29090000H900 00900H0300 003 093000090 0H39 .20>930 0H39 30 0000930 039 900 .HH03 00 29000900 9203 039 29 009030 00H0 0H 3908 08H9 :09002 m: 00 .09002 00 909833 039 3H 2090 00 39030H 039 003H000 2H0000H 3OH900H0H000H0 03H30HH03 039 030 0H3B9 .HHH 2H03000¢ «089Hm 20 0H080m «030H>9093H H03O09000 OOH no OOH 20 0020>93m 089H0 00 909832 H0902 NH O m 0 032 .z mH 0 NH w 3909900 09H3H000 02 H H II II 09002 0902 90 0 0: Hm 0H HH 00.989 0 S. H mm 2H O0 on 909002 m 09 H H H m m 9002 H 3032 0009 00w09300900 089Hm 0w09300900 089H0 00 909832 30 909832 .m .D 3H 209m 00 09002 00 00H9902 0Hw3Hm 909832 0w090>< 03B 0909802 02090 00030000 20 039090 H09H902 A09002 no 909833 3HV 00Hw3H0 030 00H9908 3909 20090 00030000 039 00 2090 20 39m30H 0m090>0 03B||.mHnm mqm9093H H03H0H9O 039 3H 00900000 00 30>HO9 .HHH 9H03000< .3080003H03m 20 .030H>9093H H03O09000 AHOoHu30V 9mm 0: m: 0: mm 00 H0909 H H u- n- H I- u- 80H0000.....9039O AOHO 0: mm 0 m 3 0 0 30900000 03H90090z 300 90 mm 0 9 HH HH 0 03H90x90z 300 0H mH 0 0 H m I- 03H0H990>00 390 00 0H 9 0 m I- m 9303000302 300 0: mm m 0 OH 0 0 00H00 300 00 0H 0 H m m m 03H9000H030 3:0 0H 0H m H 0 m I- 030H9H0300 0H303oem 20A IOHoom 030 00H9HH00 .0939H3O 300H908< Amy O0 O0 0 2 0 mH m 0809030 030 0903302 .000H90090 0003H03m 300H9083 Amv m: om m H 9 0 0H HgmHH0emv 00000800 HHV 0 .oz 03H030m 39: 09m 030 90H 9:039H3 00900H0m 09002930 90 00090 H0909 00Hxs0m 00Hoge 9 0.03H3309 0030900090 39H3 300030 00090 90208 29 08090090 H030H9039903H 030 03H3H099 HOH0000 900 0003 9H02 030 0030900090 032:1.Omnm mqm<5 205 Then the choices indicated were 21 first, 27 second, 28 third, 15 fourth, and 15 no ranking, of the total 67 businessmen surveyed. The emphasis on marketing and marketing research which was indicated might reflect many factors. First, the respondent businessmen were mainly engaged in market- ing or research activities, so naturally they wanted more training in the area to increase their productivity in performance. Second, this was one area which had been under—developed in Japan and the American technology could be useful in their present J00 as well as for their careers in Japan upon their return. Fourth, because Of the pio- neering nature Of their work, their training in Japan might have been inadequate. The need for additional training and the necessity to include the rotational pattern in staffing the American Operations of Japanese business created a compromise con— flict between the two elements of on-the-Job training and Operational performance. By the time the career business— men could handle the Operational aspects with adequate training and experience, the pressure mounted for him to go back to Japan if he wanted to stay in the normal career path. In some organizations, the period of stay for the key executives of American operations seemed to be getting considerably longer--apparent1y an attempt to solve part of the difficulty. Some Operational heads were per- manently located in the United States. In others, the 206 head executive in charge of American Operations did spend more than half Of his time abroad, chiefly in America, dividing his time between the American Operations and headquarters, although theoretically he might belong to the head Office. If the lifetime employment system was directly used in America, together with the attending rules of seniority and academic level, it usually created conflicting pro- blems in the structure of organization. This was so not only with the Japanese businessmen stationed in America but also with the use of the local employees. Apparently there was a search for a workable pattern in organizational arrangement. Mostly the modification was made, however, on a trial and error basis. The tendency seemed to be to have the key, top operational executive in charge of American operations stationed permanently in the United States,but with rotation for additional training and development in the headquarters in Japan. On this score, the entrepreneurial industrialists' growth firms had more flexibility than the traditional larger firms. The reason for this organizational flexi- bility would be apparent from the previous analysis. First Of all, there was less rigidity built into the organization because of less bureaucratic controls. Less adherence to the lifetime employment system enabled them to recruit and utilize the necessary talents without being bound by the seniority and academic level principle. More important, 207 perhaps, was the fact that many Of the successful firms seemed to have competent operational leadership supplied by the right individual whose career pattern was outside of the normal path which a typical Japanese businessman would follow. Operational Controls and Decision- Makinngspects Of Adaptation Ringisei and Its Implications.—-There are different interpretations of ringiseido (group decision-making system) and its implications to Japanese business practices. Gener- ally speaking, however, it is regarded as typically repre— sentative of Japanese managerial practices, although its uses and practices vary widely from company to company. Professor Akira Yamashiro of Hitotsubashi University main- tains that the ringiseido, or the managerial philosophy based on it, symbolizes the strongest obstacle to moderni- zing Japanese business against the impending international competition and the structural change of the Japanese 56 economy. The tradition of family manufacturing is still strong in Japan. There are numerous medium and small size enter- prises down to the tiny "family firms," which support the 57 larger, modern business organizations in Japan. 56Akira Yamashiro, "Nihonno Keiei Kindaika to 'Nihonteki Keiei'" (Japan's Modernization of Management and 'Management Japanese'), The Bessatsu Chuokoron, Keieimondai Tokushu, Winter, 1965, pp. 352-367. 57 An excellent description of such family manufacturing 208 Theoretically, all modern Japanese corporations are the outgrowth Of such family manufacturing systems, and in making this transition within the past 60 years or so, ringiseido was devised and has been refined to meet the 58 challenge of the times. On the surface, ringiseido is but a procedure and a method of office management, but the real implication goes much deeper than that. Yamashiro comments on this point: This system is well devised and refined,in that incompetent managers could assume leadership under it. First, those subordinates who know actual operations would "raise plan" of a proJect. Then before the top leader would make a "decision to ap- prove" with "a blind seal," the plan will go through a round of related sections, divisions, departments, or bureaus for "round discussion" and the seal of "approval" by each separately. As long as all the organizational sub—units Judge the plan "sound," the risk involved in the top management's "blind" approval would be very small. If something goes wrong, the blame belongs to everybody. This is the essense of ringiseido's philOSOphy and the typical procedure used. therefore, Just changing this system's procedure would not change the traditional way of management, in which the leadership could be pre- served without knowing the real contents of actual Operations. Also related to this is the traditional use of somubu (general affairs division) as the adJutant or special assistant. Moreover, Job de- scriptions are generally undecided and no clear delegation of authority exists--thus the managing Operation in today's Japan is an article by Nicholas Wood based on primary source data in Tokyo, 1951, "The 'Family Firm'--Base of Japan's Growing Economy," The American Journal of Economics and Sociology, XXIII, NO. 3 (July, 196A), pp. 315-32A. It gives five case histories and the background of the system. 58Yamashiro, op. cit. 209 business in Japan has to be done by "conference type group management." All these can be called ringiteki keiei (management by group decision making).59 It is not the purpose of this section to discuss the relative merits and different interpretations of the pipgi system. The point raised here is that this system of "management from below" is a very salient character- istic of the peculiar atmosphere in which Japanese busi- ness decisions are made. Also, it should be noted that the degree of professionalism among the Japanese manage— ment leaders is partially under attack in the given quo- tation, in view of their modern outlook. If such a managerial climate is introduced into their American Operations, what functional problems would it raise in connection with the Operational adaptation and adJustment to a different environment? Geographical com- munication barriers exist between the headquarters and the foreign operations. The daily Operational pressures demand prompt but accurate decisions on the part of Operating executives. So the control Of the headquarters will be discussed first. The Degree of Headquarters Control.-—The first im- portant consideration is the scale of American operations, which is relatively small. Therefore, there should arise no significantly complex control problems in this parent- subsidiary or the headquarters-American Office relationship. 591010. 210 It is safe to assume that most control problems should be simple,because the typical size of operation is small. First, the degree of perceived control from the standpoint of the American establishment was obtained by asking the respondents to choose appropriate statement(s) best illustrative of the degree of such control. Out of the surveyed 67 firms, a significant portion Of the se- lected statements (25 per cent) was chosen in connection with another statement. Such multiple choices occurred in the combination of items (1) and (2), or (2) and (3): (1) Tightly controlled in all matters, (2) Controlled in all policy matters, and (3) Operate autonomously, and our recommendations usually get adopted. Therefore, the illustrations given in the question were not really mutually exclusive. At any rate, modal responses were items (2) and (3) as given above. These statements im- plied a greater degree of operational freedom as against a tight central control. See Table 5-21 for details. In order to test the significance of the results further, the responses were cross-tabulated with the answers to the question on organizational structure, namely, whether they perceived the firm as centralized or decentralized. It was found that, although the ma- Jority of the firms believed that their organizational structure was highly or fairly centralized, there existed a considerable degree of Operational freedom as far as the parent-subsidiary relationship was concerned. For 211 TABLE 5-2l.--The degree of control perceived by the American establishment of the Japanese manufacturing firms, sample 67 companies.a Type Of Statement Given Number of Firms Which Chose the Percentage Statement (1) Tightly controlled in all matters. l3 l9 (2) Controlled in all policy matters. 26 39 (3) Operate autonomously, and our recommendations usually get adopted. 2A 36 (A) Operate autonomously, but our recommendations sometimes are not adopted. 11 16 (5) Can make all Operating decisions without interference. 8 12 NO Answer 2 3 Cumulative Total (Multiple Answers Counted) 8A 125% Total Number of Firms Surveyed 67 100 aPersonal Interviews, Appendix III. 212 the relationship of the perceived organization structure and the degree of control, see Table 5-22 for details. With regard to operational decision, making bases used for decision-making were thought to be a key factor. What outside agencies or services did they use for this purpose and to what extent? Most respondents felt that they used far less of such consultation services as com- pared to American competitors in the same industry. Some respondents, however, felt that they were using more of these services than their Japanese competitors in America. First, as far as the frequency of using such ser- vices in the four key decision areas of legal matters, sales, advertising, and marketing research, there was an interesting pattern of their use. For legal matters, al- most all the firms made frequent use of the professional counsel. Advertising was second on the list, followed by marketing research and sales. This was to be expected, because some of the firms did not yet have a full—fledged marketing Operation in America. The degree of contemplated use of consultant or professional firms—-how much they wished they could use them--indicated that there was a wide gap or discrepancy in the marketing research area. This was where the re- spondents wished they could use more of them. There was another reference point for their use of the professional firms: a comparison with other Japanese firms and American firms in the same industry. From the 213 .00930H0 00 309 3000 00 830 039 O9 H0300 903 090 0909833 H0909 039 .30H90030 039 O9 09300300009 039 29 29930 0H0H9H38 039 00 003000m0 .0030000913029 .009300090 2H00H99 2H3o 090 2039 .00000 no 300H 900 .Hmum 0H90B 3H 30>Hw 0930809090 039 09 0300009900 0H303OH90H09 039 03H9030H000 0909833 0320 00H m 0H 0H mm mm 0H 0009900900 :0 m . 0 HH :0 00 mH 0039H9 9o OOH 20 909832 H0902 mH m u- H H m m m 9.0 .2 H H H u- I- u- I- .: 000HH0999000O 290> m 0 n- H m m m I- e00HH09990000 909900 0: 00 H m 0 9H 3 0 000HH099900 2H9H00 mm mm I- m m 0 0H m 000HH099900 2H90H0 0 .oz 209 200 3:0 Hmv 200 HHV 90.90 .000 .0900 0.090 000. 0H09OB H03OH90NH30090 03OH90NH30w9o 930900 039 39H3 0H303OH90H02 .30000 3H 3OH900H30w90 930900 039 39H3 0H3030H90H09 039 030 093903990 H03OH90NH3009O 00>H00900|I.mmlm mqm9093H H03009000 20 20 20 20 20 20 20 20 H0902 ON mH mm OH mm om :H m 9.3 .2 I: 0 II m I: m H m 290000003 90903032 I: H II In H m H H 008H90800 II In H H H In H 0 0H000 903H090m 0 mm NH 0H mm 2m 0 0 90902 0 0 H H m 0 OH 0 2HH0399< HH 0 m 0 a m 0 0 2H9099030 0H 0 9H 0H 9 0 00 mm 2H39coz 0 m m m H 0 m 0 2Hx003 H H I- u- u- H I- I- 2HH00 9003H< 002 002 000 00D 000 002 000 000 0090H0 9309930 0090H0 9309930 0090H0 9309930 0090H0 9309930 1809800 I809800 I809800 I809300 0022 030 203030090 30900002 03H0H990>0< 00H0m 0909902 H0003 03H903902 00090 3OH0H000 202 .00090 3OH0H000 20x 3H 089H2 H03OH0000090 9O 9309H30300 0 00 003 0090H0809300 030 9309930 0321:.mmnm 03032 216 903030 039 3033 903 0H0 2H900303 9300303009 039 9039 0083000 003 9H .30H90030 039 09 .00303009I3023 .HHH xH030333 .030H>9093H H0300903 .089H3 20 0H380m0 20 20 20 20 H090933m 0m mm mm mH 9.3.2 2m 0m mm om 0003 m m N. :H mEmm H m m a 0902 00H303800 300H9083 90390 09 00903800 S S S S H3303. mm am 2m Hm 3.3.2 mH. 0H 0H OH 0003 mm om 2H mm 080m a m N. m 0.902 00H303800 00030300 90390 09 00903800 30900002 m3H0H990>03 00H0m 0909902 H0003 w3H903902 . 00093 30H0H003 202 300H903800 90 0H00m 0.2990303H 0800 039 3H 00H303800 90390 09 89H9 H030H0009093 90 9309H30300 0 90 003 0>H90903800|I.=m|m m3m32 CHAPTER VI THE ADAPTIVE DIFFERENCES IN THE MARKETING STRATEGIES Introduction The Difference in Overall Strategy The basic stance which a majority of the Japanese manufacturing firms took in America with regard to their marketing strategy was more conservative than their pos- ture in the home market. Many of the firms with a very progressive approach in Japan tended to have, relatively, a much less progressive approach to marketing in America. A progressive approach to marketing in Japan was the over- whelming characteristic of a majority of the firms sur- veyed (56 firms or 8“ per cent). It was in comparison with this that the overall strategy of the firms in America was considered less progressive or conservative. Of the firms with a progressive approach in Japan, 15 firms or 22 per cent of the total characterized their American ap- proach as conservative. Of the 38 firms with a very pro- gressive marketing approach, 10 firms (15 per cent of the total firms surveyed) rated their American marketing strategy as rather progressive instead of very pro- gressive. 217 218 On the other hand, only four firms, or 6 per cent of the total, indicated that their marketing effort in America was more progressive than their effort in Japan. Two firms with a rather progressive approach in Japan took a very progressive approach in America, and the re- maining two firms characterized their marketing in America as "rather progressive" in contrast with "conservative" in Japan. Thirty-five firms or 52 per cent took the same stance toward marketing in America as they did in Japan. If a firm was progressive in Japan, so it was in America. If a firm was conservative, so it was in America. The reasons for the observed difference in marketing strategies from the overall perspective could be traced to many factors. It might be expected that the firms with a progressive approach to marketing in Japan would be en- ticed to become active in the American market as they grew and diversified. But there would be a limit on the firms' command of corporate resources because of the geographical, national and cultural barrier, which would tend to in- crease the risk and uncertainty involved in their American ventures. This would tend to make their strategy more con- servative,compared to the home market where the amount of risk and uncertainty would look considerably smaller. Moreover, many firms would have less familiarity with American markets and face the lack of a reliable supply of market intelligence information. Where a similar 219 marketing stance was adopted, the firms would still have to adjust it operationally for use in America. The re- quired adjustments would tend to push the firms toward a more conservative marketing approach, because such changes invariably would take time in implementation. See Table 6-1 for a detailed comparison of the re- spondent firms' marketing approaches in Japan and in America. Related to differences in the marketing approach, each firm was asked about the relative competitiveness of Japanese and American markets. About a third (25 firms or 37 per cent) felt that the American market was very much more competitive than in Japan. A quarter (16 firms or 24 per cent) felt that the American market was more competitive than in Japan. Another quarter (18 firms or 27 per cent) replied that the competitiveness was "just about the same" in both markets. All the answers were from the standpoint of the individual firms and reflected the perception of the situation by the responding ex- ecutives. Although there were a few (7 firms or 11 per cent) who believed that the American market was less competi- tive than in Japan, in general the competitiveness which a firm faced in America was taken to be much stiffer than in Japan. The exceptions were in the photographic and in some machinery industries,in which the domestic competition had been especially fierce. 220 .0000H3032 930H0H33303H 30 0030003 2H9008 .00303002I3020 .30H90>033H 9030 1093 009H8HH 39H3 .0>H90>900300 290> 23V .30900009 03H90x908 90 003 039 030 3oH90>o33H 9030093 0800 0H 09039 933 .0>H90>900300 903902 Amy .30900009 03H90x908 o9 30H930990 0H30900H0300 39H: .0>H0009wo93 903902 Amv .30H90>o33H 9030093 030 30H9o8o93 0>H0009wm0 39H: .0>H0009wo93 290> AHV ”00H3w 30H>9093H 039 3H 0003 00 30009330 00903833 3000 903 30H9030H3x0 0>H909903HHH 39H3 30H03 00900H03H 0H 30009330 m3H90x908 30 0329 0323 .HHH 3H030333 .089H2 20 0H380m n030H>9093H H03009030 OOH m z a 2m 2m 0009000900 00H 20 m m 0 0H mm 089H2 30 903832 H0902 m m H H In In In 0.3 .2 Amv NH 0 I: m I: m m 0>H90>9003o0 290> any mH mH II II a 3 m 0>H0009mo93 903902 Amv Hm Hm u: I: m m 0H 0>H0009mo93 903902 Amv mm mm H u- u- m 00 0>H0009mo90 290> AHV Amv 3:0 Amv 300 3H0 290> 903902 903902 290> 0w09300 089H2 20 .3.2 I902 903832 0>H90>900300 0>H0009wo92 300H9083 3H H0902 30009333 w3H903902 330300 3H 30009333 03H90x902 0.00H9083 3H 030 30300 3H 30009330 m3H903908 .089H3 30 300H903800II.HI0 23232 221 It should be noted that this perceived difference in the degree of competitiveness in both markets was not affected by the stated difference in marketing approaches. It was discovered that the degree of competitiveness in America was more or less objectively assessed as generally stronger, regardless of the degree of progressiveness of the firm in its overall marketing approach,both in Japan and in America. The cross-tabulation indicated that the perception of the degree of competitiveness was not re- lated to the firm's stance or approach to marketing. For details, see Table 6-2. The Future Prospects For the majority of the firms surveyed, they viewed their main products as having good future prospects in America. The future prospects looked very fine, with ample opportunities available, for the main products of 23 firms (3A per cent) in Japan. Eighteen (27 per cent) of the firms reported very fine future prospects for» their main products in America. Apparently more companies believed that the future prospects for their main products were better in Japan than in America. This result could be expected in the light of the previous findings that more firms took a progressive approach to marketing in Japan,and that the market competitiveness was perceived as stronger in America. 222 TABLE 6-2.—-The relative competitiveness of American market and the degree of progressive— ness in marketing strategy used in Japan and America.a The Degree of Competitiveness in American Market Compared Marketing Approach in America to Japan Total (Degree of Progressiveness in ‘ Number Per- Marketing Strategy) Very Much Just About of Firms centage More More the Same Less (1) Very Progressive 7 5 6 3 21 31 (2) Rather Progressive 7 8 A 2 21 31 (3) Rather Conservative 6 2 5 —- 13 19 (A) Very Conservative A 1 2 1 9 12 Total Number of Firmsb 2a 16 17 6 63 9a Percentage 36 2A 25 9 9A Marketing Approach in Japan (1) Very Progressive 15 9 11 3 38 57 (2) Rather Progressive 6 6 3 2 17 25 (3) Rather Conservative 3 1 2 -- 6 9 (A) Very Conservative 1 —- 1 1 3 A Total Number of Firmsb 25 l6 1? 6 63 06 Percentage 37 2A 25 9 96 aPersonal Interviews, 67 Firms, Appendix III. bNon—respondents omitted. The percentages do not add up to tota1s because of rounding. 223 Twenty-seven firms (A0 per cent) reported fairly good prospects which should prove to be profitable fku' their main products sold in Japan and 28 firms (A2 per cent) for the main products sold in America. Thus those firms reporting the optimistic outlook for their main products totaled 50 firms (75 per cent) for the main pro- ducts in Japan and A6 firms (69 per cent) for the main products sold in America, if the figures were combined with those with very fine prospects. The firms which reported the Optimistic outlook for their main products both in Japan and America simultaneously, moreover, totaled 40 firms (60 per cent of those surveyed). Therefore, the dominant outlook for the future prospects of the Japanese manufacturing firms' main products was quite optimistic. Only 12 firms (18 per cent) felt that the prospects in America were "not bad bUt could not expect too much." It should be noted that this pessimistic out- look was basically unrelated to their outlook for their main products in Japan. This was evidence pointing to the fact that success in the domestic market in Japan was no guarantee of similar success in America. See Table 6—3. Market Coverage and Industrial Characteristics In the pattern of adaptation previously discussed, it was pointed out that the industry characteristics were a determining factor in influencing the size of operation and the form of establishment. Therefore, an attempt was 2214 .0030300213020 .90HH080 03H9900 0H 903908 930 .9003 903902 Amv .3038 009 900300 903300 909 .009 902 300 .0009 009 09 2090 09 9H00H99H0 909 .0H909H9092 Amv .0H009H9090 09 09 0>o93 03030 .0000 2H9H02 Amv .0H30HH0>0 00H9H3399o33o 0H380 .03H2 290> AHV ”3000 909 30H9030H3x0 0>H909903HHH 39H3 30H03 00900H03H 0H 090030093 093933 20 009000 0323 .HHH xH030333 .089H2.20 .0300990932 H03009020 00H m H 0H 0H 0: 0m 0009900902 00H 20 m H 9 2 20 mm 03932 90 903832 H0902 H H H u- I- I- n: In 0.0 .2 3 M II II H N II II 200m 2059mm 0H NH I: u- 0 m 0 m 00m 902 2 m I: I- I- H m m 0H909H9099 00 mm H u- H m 0H m 0000 2H9909 2m 0H .. H H I- m . HH 0092 290> 0.3.2 9002 000 0H90 0000 00H2 0009300 089H2 20 903902 902 I9H2o92 2H9H02 290> 300H9083 I902 903832 3H 090030092 H0902 330300 3H 090030092 0.00H9083 030 30300 30 3903 09030093 3H08 0.89H9 03H9390033308 00030300 039 902 090030093 093932 032l|.m|0 23232 225 made to compare the type of markets-—either consumer or industrial--which a firm served both in Japan and in America. The result indicated that a significant dis- crepancy did not exist between the type of markets the firm served in both nations. The only significant finding was the existence of the firms which catered only to the consumer market in America but covered both industrial and consumer markets in Japan (8 firms or 12 per cent). Outside of this difference in market coverage, there did not exist any significant deviation as to the type of markets served. See Table 6-A for details. At this point, it could be asked whether the type of market a firm was in--either consumer or industrial markets--had any significant impact on the firm's future prospects for the main products as reported previously. The test of this relationship was conducted. The result indicated that it was unlikely that the type of markets served influenced the future prospects in either country. Although no standard statistical test of significance was applied, the data in Table 6-5 would attest to this con- clusion. Customer-Prospect Mix The main problem facing those engaged in international marketing operations is that the marketing strategies and techniques used in domestic markets are not necessarily effective in foreign markets. The marketing mix must be individualized on a country—to-country basis. The marketing man must be sensitive to the 226 90830300 90 H0H990303H 903900110903908 20 0329 039 09 0303009900 0903833 032 .0000H3033 930H0H22303H 20 0030003 0030300213020 :.00H9083 3H 00>90m 903902 20 0322: 90033 003H0H3x0 00110903908 3 .HHH 3H030333 .089H2 20 .030H>9093H H03009020 OOH mH MH 03 mm 00H 20 OH mm 2H 3 NH 0H Hm Hm Hm 3H Hm 3H 3H 0009300902 089H2 20 903832 H0902 0903902 H0H990303H 3032 90830300 0902 Amv 0903902 90830300 3032 H099903009 090: 390 0903902 90830300 0 H0H990303H 3902 Amv 2H90 0903902 90830300 200 2H00 0903 1902 H0H990303H AHV 0009300 1902 089H2 20 903832 H0909 0.3 .2 300 3 300 30300 3H 00>90m 903902 90 0322 Amv Amv AHV 00H9083 3H 00>90m 903902 20 0322 030 00H9083 3H 89H2 0.30300 3H 039 23 00>900 0903908 20 0329 039 90 3H3030090H09 03211.:10 23232 227 .0030300213020 .0903908 H0H990303H 3039 90830300 0902 Amv .0903908 90830300 3039 H09990303H 0902 Any .0903908 90830300 030 H099903039 3902 Amv .2H3o 0903908 90830300 200 .2H3o 0903908 H09990303H AHV "090 0903833 039 23 0090309000 0903908 20 0329 0323 .HHH 3H030333 .08992 20 .030H>9093H H03009020 009 0H 9 mH 0: mm 0009000900 00H 20 0H m 0 00 29 00990 90 903832 H0902 H H 1 1 1 H 1 0.0 .2 3 m 1 1 1 m 1 9002 903902 09 NH m 1 m H m 000 902 2 m 1 H 1 m 0 0990999090 09 00 9 H 0 MH 0 0000 299900 20 09 m H H 0 m 0090 2902 08992 20 Amv A30 Amv Amv 9H0 0099083 3H 0009300902 903832 330300 39 003900 090030092 032 H0909 0990 009 00903 0903903 90 0029 009 0.30300 39 00>900 8993 039 903908 20 0329 039 030 0099083 39 09030093 3908 099 909 090030093 093939 0.8999 039 3003903 393030990H09 03211.m10 23232 228 cultural pecularities of each country so that com- munication with the foreign buyer may occur within the framework of his life and customs. The Product Image For those Japanese manufacturing firms operating in America, their product image was radically different from that enjoyed in the home market. For instance, there was only one firm which had the image of unknown brand but a good buy in the home market, but in America 17 firms believed that this characterized their product image. By the same token, 8 firms had a low cost, high quality image for their products in Japan, but 26 firms felt this characterized their image in America. Similarly, the leading brand, trustworthy image was shared by 38 firms in Japan, but by 12 firms in America. The well- known, reliable image was shared by 39 firms in Japan, but by 21 firms in America. Apparently, the difference was due to the weak market penetration on the part of the firms surveyed, combined with the traditional consumer resist- ance to new, unknown brands. To illustrate this point, the image of major brand, many attractive features was enjoyed by 25 firms in Japan, but by 12 firms in America. The commonly shared images both in Japan and in America were the following: best value for the price, by 17 firms in each, careful workmanship by 9 firms in lGerald Zaltman, Marketing: Contributions from the Behavioral Sciences (New York: Harcourt] Brace & World, Inc., 1965), p. 8. 229 Japan and 10 firms in America, superior engineering and technology by 20 firms in Japan and by 1“ firms in the United States. For details, see Table 6-6. TABLE 6-6.-—The product image of the firm in America and in Japan.a Number of Firms Product Image of the Firm America Japan No. % No. % Low cost, high quality 26 39 8 l2 Well-known, reliable 21 31 39 58 Best value for the price 17 25 17 25 Unknown brand, but a good buy I? 25 l 1 Superior engineering and technology I“ 21 3O 30 Leading brand, trustworthy 12 18 38 57 Major brand, many attractive features 12 18 25 37 Careful workmanship 10 15 9 13 Total Number of Firms Surveyed 67 100 67 100 aPersonal interviews, Appendix III. The product image could be influenced by a wider range of factors than those affecting the product appeals. The product image, for instance, would be affected by the relative market position of the firm, by the product know- ledge of the consumer, or by the general consumer 230 resistance to Japanese goods. The product appeals, on the other hand, would depend more on specific product attributes and the firm's promotional efforts. Therefore, inquiry about the product appeals was made to find out how the firms perceived their major pro- duct appeals in America. The results indicated that there was no significant difference in the product appeals in Japan and America in terms of their relative frequency of occurrence in the aggregate. Except for the appeals represented by low price and good brand image, other aspects of product appeals had a similar frequency of occurrence between Japan and the United States. The exceptional cases of the product appeals regarding low price and good brand image closely corresponded to the findings discussed under the product image. Twenty-three per cent more firms chose low price and twenty per cent fewer firms chose good brand image as applying to America. It is interesting to note that such product appeals as high or good value, high quality, good styling and design, careful after-service, and newness in product features were mentioned by the firms surveyed almost an identical number of times in the aggregate in Japan and America. However, from a micro—standpoint, only about half of the firms surveyed believed that the same product appeals did apply to both countries, if the less 231 discriminating appeal of high quality was omitted from the above list. The Japanese manufacturing firms, therefore, did perceive a difference in markets as represented by the product appeals, assuming that their major products were the same in both. This tendency was especially noticeable for such product appeals as newness in product features (55 per cent agreement), good styling and design (62 per cent agreement), and high or good value (62 per cent agreement). Part of such differences was of course due to the levels of national economy of both countries, as was the case with high or good value. But it could not be denied that non-economic, behavioral appeals did cause the difference in both nations such as newness in product features and good styling and design. All in all, there were no differences in the relative frequency of the product appeals which were mentioned in the aggregate. But there seemed to be a considerable discrepancy between a firm's product appeals in Japan and those in America. For details, see the summary matrix of the major product appeals in Japan and America given in Table 6-7. Degree of Market Segmentation Who are the customers of the Japanese manufacturing firms' products? And whom do they wish to have as 232 90H3099903 039 09 0390303009 08992 20 903833 093H0030 039 009009032 .0090HH H00330 0H00330 20 29930 0H399H38 039 90 0030003 .0093002 309 H030H>H039 20 H0909 039 9020 .0030 30099083 039 90033 30>H0 0H00330 9030093 0800 039 09009039 0903833 032 3 .222 30030333 .08902 20 .0309990932 H03009020 .09300303009 23 m: 0H mm Hm 02 mm mH 0009000900 om mH mm Hm om 2H 2 008902 90 903832 H0902 mm 2H 09 m 2 2 m9 9 m 00009 03092 0000 A20 0H HH 0 0 2 2 0 0 m 00939002 9030 1092 39 0003302 200 20 0H m m 0H 0H 0H 2 m 009>90m 190993 H390900 Amv H0 H0 9H 2 HH mH 2H 0H 9 009000 000 009H290 0000 2:0 S2 90 mm 0H 2H 2H m: HH 0 299H000 009m AmV 3H mH 2 m 2 0 2 0 H 03H0> 0000 90 3092 200 mm :m 0H m m 0 2H 0 0 00992 303 AHV 000990 90 920 200 900 990 2m0 900 9H0 0009300902 903832 0099083 3H 0H00333 H0902 30300 39 0H00333 9030092 90002 032 9030092 90002 032 3 0.8993 039 23 003900903 00 30300 30 030 0099083 39 3903 0H00330 9030093 90008 039 90 399908 2908830 03211.210 23232 233 customers? Theoretically, each firm should have its own market segments based on the communality of those needs and wants of the customers and prospects which each firm wants to satisfy in a unique fashion. Although it was not attempted to measure the degree of market segmentation each firm attempted, a general question was asked of the respondent firms in order to find out if any difference existed in the typical market segments which they served in Japan and America. The question was: "What main seg- ments of the market do you try to serve with your com- pany's major products?" The answers were indicative of a priori thinking on the degree of market segmentation used in America. First, in industrial goods the market targets were specific and definite because of the location and the needs and wants of the buyers. Products were produced to universal techni- cal specifications and not much change in the type of buyers was conceived of in America. And this was indeed the case with the firms dealing with American industrial buyers in the O.E.M. market, e.g., manufacturing concerns like auto makers. For these firms, the target market segments were the same for both countries (11 firms or 16 per cent of the total). On the other hand, for consumer goods, the setting of specific market targets or segments in America would involve more complicated planning and more sophisticated programs than in Japan. Because of the difference in 23“ culture, the behavioral patterns--the needs and wants of the consumer—-might conceivably be different. This would make exact specifications of American market segments a hazardous and difficult affair, causing the marketing plans to be less geared to well-defined narrower targets and mak- ing them more all-inclusive of many market segments. From the aggregate data on the respective market target segments in both countries, it could be tentatively indicated that there was a tendency to have less defined, wider market segments in America than in Japan for the firms surveyed. First of all, the aggregate data indi- cated that the two most frequently mentioned segments were all income group and anyone who tries to buy the product. The all income group category was chosen by 39 per cent of the firms as applying to the Japanese market and by US per cent of the firms as applying to the American market. The anyone who tries to buy the pro- duct category was selected by 2n per cent of the firms for the Japanese market and by 31 per cent of the firms for the American market. These two all—inclusive segments were the only ones with significant difference (6—7 per cent) between the two countries. All other segments were chosen for both nations with similar frequency. Why, then, was such all-inclusive segment desig- " nation widely used in Japan in the first place? The homo- geneous nature of Japanese society was conducive to the 235 use of saturation marketing in many instances, as evi- denced by the merchandising of photographic goods, which represented the first Japanese quality consumer durable goods accepted in both domestic and world markets by discriminating buyers.2 And apparently such saturation marketing on the part of other manufacturing firms did not require detailed segmentation of the home market either. It could be inferred, therefore, from the aggregate data that a similar posture of saturation marketing was implicitly brought over in many manufacturing firms' ap- proach to market segments in America. Additional evidence to illustrate this point was the highest degree of agree- ment between the Japanese segments of "all income group" and "anyone who tries to buy the product" and the corre- sponding American ones. A surprisingly high proportion of firms chose both responses as descriptive of their intended market. There was an agreement of 92 per cent (24 firms) in the case of "all income group" and that of 94 per cent (15 firms) for choosing "anyone who tries to buy the product." In general, the degree of coincidence or agreement of the same market segments chosen in America and in Japan was fairly high for most of the segments listed on the interview guide. (See Table 6—8 for details and seg- ment designations.) The exceptions were found for the 2Bernstein, op. cit., pp. 112—113. 236 segments of "low income group" with a 50 per cent agree- ment and of "lower social class" with a 33 per cent agree- ment in both markets. Apparently, a much higher standard of living in America made the direct adoption and transfer of a similar segment difficult for a Japanese product. However, it should be noted that in the middle and high income group and in middle and upper social class, the degree of agreement between the corresponding segments comparable to both nations was much higher. This might suggest some behavioral similarity in these segments, as far as the Japanese products were concerned. These conclusions were merely tentative for the discussion of the market segments. Aside from the vertical segmentation used in the analysis, the horizOntal or geo- graphical base, as well as more specific behavioral ones based on the communality of needs and wants, must be used.3 Also, a more elaborate measurement tool of the degree of market segmentation must be used than the approximation used for the analysis here. However tentative the con- clusion might be, it would seem that a lack of appreciation of the heterogeneous nature of American society, as 0p- posed to the homogeneous Japanese culture, did characterize the posture of Japanese manufacturing firms operating in America, The heterogeneity would invariably dictate 3See William H. Reynolds, "More Sense About Market Segmentation," Harvard Business Review, XLIII, 5 (September, October, 1965), 107—113. This article indicates common pitfalls in understanding the tOpic and gives a neat summary of arguments involved. 237 detailed specification of the target market segments in America. But the prevailing attitude was to widen it in- stead. Also there was a tendency to specify the same market segments as in Japan and use them as the base of marketing efforts. For details, see Table 6-8, which follows. Product-Service Mix There are few elements of a company's market- ing operations which, when subjected to critical, objective, and systematic appraisal, afford a greater opportunity for improving over-all product lines. . The challenge to marketing today is to find ways of dealing more effectively with current pro- ducts under current conditions. Product Diversification By examining the amount of product offerings of the major product line, it was found that the number of differ- ent models or variations offered in America tended to be smaller than in Japan. For instance, of the MO firms (60 per cent of the total) reporting having more than 21 vari- ations or models in the major product line in Japan, 3 firms offered only 1 to 3 product models, 9 firms 4 through 10, and 6 firms 11 to 20 models in America. Also, more than 11 product models or variations were offered in the major line by 51 firms (76 per cent) in Japan, but by 36 uD'Orsey Hurst, "Criteria for Evaluating Existing Products and Product Lines," reprinted in Thomas L. Berg and Abe Shuman (ed.), Product Strategy and Management (New York: Holt, Rinehart and Winston, 1963), p. 163. 238 .999 39030333 008992 20 .0309>90939 903009020 009 9 9 9 9903 3033 9.300 03 929V mm 9 m m 00090 909000 90303 A99V m2 0 m 0 093003 030900300 039090 909V 00 m 0 m 00090 909000 90333 Amv om m 0 2 33090 080039 309 Amv 00 0 99 0 090000 00900000 920 mm m 0 2 00090 909000 090092 900 02 2 09 09 00090 000009 0090 900 009 99 99 99 9009390023308 90390 “0903080930 .0..2.2.0V 090232 9099903039 900 90 M9 29 29 33090 080039 090092 Amv 00 09 09 90 9000090 009 233 09 00999 033 030233 92V mm 00 00 om 00090 000009 990 990 08992 20 08992 20 08992 20 0009300902 903832 903832 903832 09308000 903902 900909 908992 20 903832 90909 9099082 039 20 00093009020 30300 0099083 20 930800903 20 009002 039 0009902 0900 09 09308002 903902 039 .2 .30300 030 0099083 39 0>900 09 00999 08999 039 30933 09308000 903908 0391:.010 29239 239 firms (53 per cent) in America. Thus the width of the major product line was much narrower in America. Against this general pattern, it should be noted that there were four firms which offered more product models or variations in the major line in America than in Japan. Apparently the width of the major product line was an important factor in marketing success. And this might indicate the relative emphasis of the American market over the domestic one for these firms. If the number of product variations or models in the major line did indicate the degree of corporate efforts to match the product offerings to the heterogeneous market require- ments, the existence of these four firms did suggest cor- responding adjustment in marketing and product strategy of the Japanese manufacturing firms. Also this might be indicative of the need for less product variations in Japan because of "saturation marketing" mentioned earlier. See Table 6—9 for the comparison of the number of models in the major line. If the measure of diversification was extended to cover the entire lines of products, the Japanese manu— facturing firms in general indicated a high degree of diversified Operations. But their American operations had a much smaller degree of diversification in product lines. Table 6-10 indicates this relationship. In America, 14 firms (21 per cent) had only one basic line of products, whereas there were 7 firms in 240 .999 39000003 .08992 .00303009I302 3 20 .0309>90939 903009020 009 m 00 09 m9 2 0009300902 009 22 m o: 99 09 0 08992 20 903832 90909 9 9 9 u- I- u- u- 0.3 .z 300 0m mm .. 00 u- 9 n- 0900 90 90 900 m9 m9 II 0 0 9 In omu99 Amv 9m 9m 9 m m z m 09:: Amv m9 0 u- m I- 0 m mu9 290 0099083 39 0399 9030 :09 9090 0 0E992 2O Amv sz Amv Amv 99V 2 . 2 39 0009300902 903832 39 030990990> 90909 .3 .2 0902 02:99 09:: m|9 90 090002 9o 92 930902292 mMQMMImM 20 903832 039 0.30300 39 030 0099083 39 3903 .8992 039 20 0399 9030093 90908 039 39 030990990> 90 090008 930902290 20 903833 039 20 3009903800ll.m|m 29239 .00303009I3023 .999 39030333 008992 22 .0309>90939 903009020 009 0 22 2 09 09 0009300902 009 20 m m: 0 0 2 00990 90 903832 90909 0 m m 9 u- u- u- 0.0 .0 900 1 0m 00 9 mm 9 u- u- 9000 900 .M 09 09 I- 0 0 I- 9 00909 990 90 09 u- 2 . I- 0 9 009 900 90 09 I- 0 9 0 m 000 A90 0099083 39 08992 2o Amv Anv Amv Amy 99V 0090220 00399 0009300902 903832 .3 .2 0902 00939 039 030 9030092 09002 90909 3 90 9302 039 20 903332 039 30200 39 0.30300 030 0099083 39 3903 00090220 09030093 20 00399 09003 20 903833 039 23 00930008 00 309900929090>90 20 009000 0391:.09I2 29239 242 Japan with but one basic product line. Similarly, there were 1A firms (21 per cent) with two basic lines in America, but in Japan there were 8 firms (12 per cent) with two lines. Thus the number of firms handling one or two basic lines of products in America was twice as large as those in Japan. Although there were three firms which handled more product lines in America, they were exceptions. In general, the overall aggregate pattern of the width of product lines looked quite similar to that of product model or variation in the major line. Probably similar underlying reasons discussed earlier under product models and variations would apply to the difference between the width of the basic product lines in America and in Japan. However, there was no apparent relationship between the degree of product diversification measured by the number of basic lines of products and the model variations within the major product line. The result of this test is presented in Table 6-11. Finally,in order to find out the overall degree of product diversification, a question was asked: "How many different products (items or models) are there in your total product lines?" The answers to this question showed that there were 1“ firms (21 per cent) with more than 3,000 products offered in Japan. In contrast, there were only 2 firms (3 per cent) in America with more than 3,000 product offerings. 2A3 .00303009I3023 .999 39030333 008992 22 .0309>90939 903009020 009 0 0m 09 9m 90 0009000900 009 22 m am 29 09 09 08992 20 903832 90909 9 9 II 9 In In In 3 3 .2 0m mm It 09 2 m m 0902 90 92 29 M9 m m m m In omu99 9m 9m 9 09 9 m 2 09:: m9 0 -- i 9 0 0 0-9 0009300 08992 20 .3 .2 900mmw 00939 039 030 0399 1902 903832 2 9030092 90202 90909 039 39 090002 00399 9030092 09002 20 903832 90 030990990> 9030092 20 903832 0.0099083 39 00399 9030093 09003 20 903833 039 UCQ mHmmuOE .90 mQOHpmfihdxw DUSUOLQ .HO .HmQESQ mflp Q®®39®Q QHSmCOHPMHmh mQBII.HHIm Mdmafifi 2AA There were 5 firms (7 per cent) with 10 or less pro- ducts in their entire offerings in Japan. But the similar firms with 10 or less products in America increased to 20 firms (30 per cent). Thus it was clear that in America most firms tended to limit their product offerings sharply, as against the case in Japan. For details see Table 6-12. Interaction With the Customer-Prospect and Product-Service Mix Regarding the width of the product, it could be argued that the more diversified a firm, the more likely it was for the firm to use refined market segmentation. In this respect, those firms which replied that they sold to "any- one who tries to buy the product" as the main segment of the customers in America could very well be the ones with- out systematic planning on market segments to cultivate (Table 6-8 on page 238). Based on such an assumption and reasoning, the ratio of the firms which replied in the affirmative to the above question of the segment was examined with regard to the number of product variations or models in the major line, the number of the basic product lines, and the total num— ber of the different products or items of the firm. The result was indicative, though not conclusive, of the assertion that there might be a significant relationship between the way the firm defines its market segments and the amount of product diversification. See Table 6-13 for details. 245 .003990220 9000093 30099083 902 30>90 00 0800 039 090 0903833 039 .00303009I3020 3 .999 39030333 .08992 22 .0309>90939 903009020 009 2 90 0 09 09 00 09 2 0009000900 009 22 0 09 m 2 2 09 99 m 00990 90 903832 90909 9 0 m I I I I I I I 0.0 .2 900 m m I 0 I I I I I I 0900 90 900.m A20 9 9 I I 9 I I I I I 000.mI900.9 A00 0 0 9 m I 0 I I I I 000.9I90m 900 09 2 I m I 0 m I I I 00mI909 900 00 09 I 0 I 0 m 0 I 0 009I9m Amv 09 09 I 9 0 9 I 9 m I omI99 300 cm 00 9 m I I 0 0 0 m 0009 90 09 290 0009000 00990 90 900 A20 90V 200 300 Amv 900 990 0099003 09 I902 903832 330300 39 0090220 0090220 08099 90 90909 08099 90 09030092 20 903832 09030092 20 903332 0.30300 39 030 0099083 39 8992 039 20 00399 9030093 90909 039 39 0090220 09030093 930902290 20 903833 039 20 3009903800 039:1.m9l2 29239 2463 TABLE 6-13.--The relationship between the choice of a certain market segment and the amount of product variation, the number of basic line of products, or the number of different product offerings.8 The Market Segment Selected Product Variations or , "Anyone Who Tries to Buy the Product" Categoryb Number of Product Models in the Major Line in In America In Japan America Number HorizontalC Number Horizontaln of Firms (%) Percentage of Firms (%) Percentage” (l) l-3 u (19) AU 3 (19) 33 (2) u-lo 8 (38) 38 5 (31) 2A (3) 11-20 3 (1“) 23 3 (19) 23 (U) 21 or More 6 (29) 26 5 (31) 22 Total 21 (100) 31 16 (100) 24 Basic Line of Products in America (1) One 7 (33) 50 6 (38) b3 (2) Two A (19) 29 3 (19) 21 (3) Three 3 (1“) 25 3 (19) 25 (A) Four or More 5 (2A) 21 A (25) 17 (5) N. A.d 2 (10) 67 —- -- -— Total 21 (100) 31 16 (100) 2A Number of Products Offered in America (1) 10 or less 9 (“3) “5 6 (38) 30 (2) 11—30 2 (10) 2O 2 (13) 2O (3) 31-100 5 (2A) 26 5 (31) 26 (a) 101-300 1 ( 5) la 1 ( 6) 1A (5) 301-1,000 2 (10) 33 l ( 6) l7 (6) 1,001-3,ooo -- -- -- -- -- -— (7) 3,001 or more 1 ( 5) 50 1 ( 6) 50 (8) N. A.d 1 ( 5) 50 —— —— -— Total 21 (100) 31 16 (100) 2n b aPersonal Interviews, 67 Firms, Appendix III. See Table 6-8. cOf the firms belonging to each row designations, which covered other segments as well. dNon-response. 2A7 For instance, the market segment of "anyone who tries to buy the product" was chosen by a relatively high proportion of the firms with narrow product lines and limited product offerings. And the same market segment was chosen as an intended target of marketing efforts by a relatively small percentage of the firms with many pro- duct variations and basic product lines. As far as the choice of this particular segment of "anyone who tries to buy the product" was concerned, there was not a wide dis- crepancy in its general pattern either in America or in Japan. However, in the aggregate, 5 more firms (7 per cent) chose the segment in America as over in Japan, indi- cating that more firms tended to use less defined, all- inclusive delineation of the market in America. Product Innovation Fairly aggressive product development and new pro- duct introduction were observed among the firms surveyed. The result of the survey indicated that 16 firms (24 per cent of those surveyed) introduced more than 21 new pro- ducts per year in the home market of Japan. As might be expected from the previous findings, the number of firms which introduced more than 21 new products a year in America was smaller. And yet, it should be noted that 6 firms (9 per cent) introduced more than 21 new products per year in America. 2A8 As for the firms which introduced less than 2 new products a year, there were 1“ firms (21 per cent) with such a conservative stance in Japan, while there were as many as 33 firms (49 per cent) with less than 2 new pro- ducts introduced within the past year in America. Again this result conformed to the generally conservative stance in marketing strategy and the existence of many limiting factors for market segmentation in marketing efforst in America. As to the role of product design in the total market- ing effort, it should be noted that 7 firms indicated that design was not very important in their marketing effort in either country. Most of them were industrial goods firms and this was understandable. To them universal technical specifications of the components or materials should be more important than design considerations. However, the overwhelming majority of the firms, 50 or 75 per cent in America and A9 or 73 per cent in Japan, indicated that the product design played an im- portant role in the firm's marketing effort. A design specialist was used by two firms in Japan and by three firms in America—-this fact was significant in that the information was voluntarily supplied by additional write— ins. A proportionately higher percentage of the firms reported that "recommendations of marketing people 2A9 .0030300913020 .09909 039 20 309903w9000 309 039 ..0.9 «903908 30099083 39 9009 903 3099030 I09939 9030093 303 20 909833 039 20 30990092900090 0800 039 090309000 0909833 0390 =.300 309 29 .0900» 039 9003 039 20 0m090>0 039 0309 9903908 039 39 09030093 303 0003009939 309 0>03 9993030092 303: "0003 30990033 90390990 0399 .999 99030333 .08993 20 .0309>90939 903009030 009 9 90 m 90 20 09 9 0009000909 009 20 m 09 m 99 09 99 m 00999 20 900832 90909 0 0 0 I I I I I I 0.3.2 920 m m H m l I l I. I @908 .90 am va 0 m I m I I I I I 00I99 900 m 0 I 9 9 m 9 I I 09I0 990 mm 29 I 0 9 m 2 I I mIm 990 mm 29 I 9 I m 2 0 I 0:9 909 90 09 I I I m m m m 9 0009 0009 990 0090093 0WMWM00 0mmwmzmo 920 900 900 990 Amy 900 990 09009 900 0003009909 90909 030300 39 09030093 302 20 909832 0.30300 39 030 0099083 39 3909 “903908 0939 30990890239 9030093 303 20 903033092 039 20 3009903800 039:1.3910 mqm39 250 usually get adopted in designing" in Japan than in America by a margin of 8 per cent. Similarly the response, ' was chosen "engineers usually come up with good designs,‘ by 25 per cent of the firms in Japan and by 18 per cent of the firms in America--a margin of 7 per cent. These were the only significant differences between America and Japan. A negative comment of the engineers not quite responding to the market needs was given by 3 per cent of the firms for Japan and by 6 per cent of the firms for America. It seemed that the majority of the firms believed that product design played a significantly more important role in the total marketing effort in America than in Japan. Also they felt that the recommendations of market- ing people tended to have less voice in product design in America. And finally they perceived that the design prob- lems were more complex and difficult for the American market. See Table 6-15. Product Technology From the technological perspective, the Japanese products seem to be quite competitive in the international market. It seems that there no longer exists a signifi— cant technological gap between the industrialized nations of the West (America and European countries) and Japan. Therefore, for the products offered by the Japanese manufacturing firms in America, it could be said that there is no fundamental disadvantage from the general pro- duct technology level. 251 TABLE 6-15.-—The comparison of the role of product design, the degree of adopting recom- mendations from marketing in designing, and the evaluation of engineering in generating marketable designs.a In America In Japan 9 Product Design Diffiience Number Per- Number Per- Percenta~e of Firms centage of Firms centage 5 The Role of Product Design in Marketing Effort (1) Not very important 10 15 8 l2 3 (2) An important marketing tool 20 30 18 27 3 (3) Very important to marketing success 30 A5 31 b6 1 The Recommendations of Marketing People (A) Usually get adopted in designing l3 19 18 27 8 (5) Are not reflected on designing A 6 5 7 l The Performance of Engineers (6) Our engineers usually come up with good designs 12 18 17 25 7 (7) Our engineers do not necessarily respond to what market desires U 6 2 3 3 (8) Design specialist used 3 A 2 3 l aPersonal Interviews, 67 Firms, Appendix III. 252 Needless to say, the first requirement for the successful cultivation of an overseas market for manu— factured goods is the product's technological soundness. In this respect, the Japanese level of product technology, its application, and the amount of product innovation is not inferior to that of the West,though in the post-war period there were allegations of inferiority of Japanese goods. In some areas, the Japanese technology enjoys a clear superiority. It is more a matter of product types or kinds of goods than the general level of technology which determines the actual technological level as a determining factor in international marketing. It will be unnecessary to quote the classical laws of comparative advantage and cite the facts of international "hori- zontal division and specialization" in manufacturing. From the general standpoint of the level of product technology, the Japanese products which are superior by Western standards are: (l) the labor intensive type goods such as ceramics, light machinery, toys and tex- tiles, and (2) the historically government supported in- dustries and goods such as pig iron, shipbuilding, railway equipment, communication and optical equipment, ferti- lizer and cement.5 5Noboru Makino, "RiJun o Sasaeru Mittsuno GiJutsu Senryaku" (The Three Technological Strategies to Supp0rt Profit), The Bessatsu Chuokoron, Keiei Mondai, Summer, 1966, pp. 102-10“. 253 On the other hand, the Japanese products with in- ferior technology are (l) the automobile and auto-related industries and (2) the products related to the special demand of space eXploration and modern national defense.6 In between these two poles of superiority and inferiority, there are numerous products with similar levels of tech— nology. They could be characterized as (1) products based on imported technology and (2) the general consumer goods.7 A summary view of Japan's level of productive technology as compared to the Western standards is given in Table 6-15. From the above discussion of the technological level of Japanese business, it would be apparent that there really does not exist any fundamental handicap or dis- advantage for most Japanese manufacturing firms in extend- ing their marketing activities to the United States, as far as their overall technological level of products is concerned. It does not affect the overall pattern of adaptation to America as a decisive factor, although it is a most important one. The variation in the pattern of adaptation may, therefore, come from the management, marketing, or planning factors rather than technology. To illustrate this point, examples indicating the level of Japanese technology will be given in the remainder of this section. Ibid. 7Ibid. 2511 TABLE 6-16.--Japan's level of productive technology as compared to the Western industrialized nations by type of products.a The Comparative Level of Productive Technology ._. .- .-9 3 Materials Machinery Chemicals At Superior Level (l) The Labor Intensive (2) The Government Sup- ported Industries At Similar Level (1) Based on the Imported Technology (2) General Consumer Goods At Inferior Level (1) Automobile Related Ceramics Pig iron Aluminum Ordinary steel Coated steel plates Copper Zinc Wire Construction materials Insulating materials Casting and forging metals Special steel Diecast Radios, Cameras Sewing machines Textile machinery Watches Mechanical toys Shipbuilding Railway equipment Communication equipment Optical machinery Electrical motors Electron tubes Applied electrical apparatus Office machines Machine tools Agricultural machinery Home use electrical machinery Friction bearings Automobiles Manufacturing tools Specialized tool- ing machines Chemical fibres (Rayon, etc.) Fertilizers Cement Plastics Synthetic fibres Petra-chemicals Paint Dyes Inorganic chemicals Synthetic rubber Glass Presses Metal tooling machines (2) The Special Demand Heat-shielding Aircrafts, Related materials rocketry Rare metals Nuclear reactors Electronic com- puter Control apparatus aSource: Noboru Makino, Ibid., p. 103, which was based on an extensive survey conducted by the Ministry of International Trade and Industry of Japan. dustrialized Western in- nations include major EurOpean nations, Canada and the United States. 255 By 1963, for instance, the Japanese shipbuilders had adopted several methods to cut their production costs. It was not the low pay scales and somewhat lower steel costs alone that had helped build the foundation for the rapid expansion of its business. They were saving on labor, material and construction time by employing a modified prefabricated technique called welded-block construction--a genuine innovation in the production process.8 The Japanese shipmakers were also making their own marine diesel engines and steam turbines at the yard while the vessels were under construction, and they had also developed a new pudgier tanker with a short, wide hull and a deeper draft that required less steel to build-- again a true innovation,in that it defied the traditional thinking of the hull design based on well-established principles of aqua dynamics.9 Japan kept building bigger and more s0phisticated tankers. The 150,000-deadweight-ton Tokyo Maru was com- pleted by the end of 1965, and the Japanese transportation ministry was pushing development of techniques for build- 10 ing 250,000-ton tankers. Ishikawajima-Harima Heavy 8"Japanese Assembly-Line Methods Speed Ships Down Ways, Cut Costs, Lure Orders," The Wall Street Journal, Thursday, August 22, 1963, p. A. 9Ibid. 10"What U. S. Companies Are Doing Abroad," U. S. News & World Report, October 18, 1965, p. 137. 256 Industries, Ltd. of Tokyo completed and delivered a tanker which could carry four different kinds of oil at one time because of the unique design and special pipings devised.ll Similar examples of technological innovation could be observed for the other types of goods listed in Table 6-16 as enjoying a superior level of technology compared to the Western nations. The examples are numeroug starting with the New Tokaido Railway; but discussion of them is obviously outside the scope of this analysis. It will only be necessary, therefore, to point out the fact that in industries where the level of technology is inferior according to Table 6-16,there is evidence to indicate that Japanese know-how is rapidly catching up with the West. Through their affiliations with U. S. prime contractors, two Japanese firms eye active partici— pation in the programs of the Communications Satellite Corporation (COMSAT). For Nippon Electric, a COMSAT contract to provide nearly half a million dollars' worth of multiplex relaying equipment at Paumalu, Hawaii, and Brewster Flats, Wash., is considered a di- rect result of its association with Hughes Air- Craft Company. Similarly, a tie-up with TRW, Inc., is yielding benefits for Mitsubishi Electric as Sub- contractor on two large space-related orders. Mitsubishi is to turn out power control units and transformers for six COMSAT satellites for which TRW is prime contractor.12 11The Japan Economic Journal, Tuesday, June 8, 1965, p. 7. l2"What U. 8. Companies Are Doing Abroad," U. 3. News & World Report, July A, 1966, p. 73. (The article copyrighted by U. S. News & World Report, 1966.) 257 And again: Discard those old notions about Japan as a nation of industrial copycats. Japanese scientists and engineers are experi- menting, innovating, coming up with new industrial products and processes. Convincing testimony: U.S. firms are buying Japanese ideas. While the main flow of new techniques and technology still is from West to East, several companies are finding it pro- fitable to reverse the flow, import Japanese know— how. * Ayerst Laboratories has signed a lO-year contract with Toyo Brewing. It involves the pro- duction in the U. S. of a new Toyo-developed anti- biotic, for U. S. and Canadian sale. * Goodyear Tire & Rubber is buying technology from Japan's Bridgestone Tire. It covers production of a synthetic rubber with superior resistance to abrasion, overload. * Esso Research & Engineering has acquired production and sales rights on a special plastic tubular film developed by Kokoku & Rayon Pulp for packing such items as food and textiles. Rights cover U. 8., EurOpe, except Britain. * Bethlehem Steel is interested in a new centrifugal casting process perfected by Kubota Iron & Machinery for the manufacture of rolls for steel rolling mills. The kubota process is said to deliver a stronger, higher quality casting, in quantity, at less cost.1 Promotional or Marketinngix Like many concepts, the marketing mix concept seems relatively simple, once it has been expressed. I know that before the ideas involved were ever tagged with the nomenclature of "concept," the ideas were widely understood among marketers as a result of the growing knowledge about marketing and market- ing procedures that came during the preceding half century. But I have found for myself that once the ideas were reduced to a formal statement with an accompanying visual presentation, the concept of the mix has proved for me a helpful device in teach- ing, in business problem solving, and generally as an aid to thinking about marketing.1 13U. S. News & World Report, December 6, 1965, p. 106. 1”Neil H. Borden, "The Concept of the Marketing Mix," in Science in Marketing by George Schwartz (ed.) (New York: John Wiley & Sons, 1965), p. 395. 258 Advertising The most important and fundamental ingredient of any market communication effort is the purpose of the message 15 to be conveyed. And of course, culture plays a crucial role, as it can also be viewed as communication.16 Therefore, the advertising appeals used by the firms were expected to be rather significantly different from those used in Japan. Instead of rather technical comparison of media, theme and advertising allocation by individual firms, a macro investigation of the fundamental appeals used for the firm was attempted. From this perspective, a question was asked: "When advertising your company's products, which appeals do you emphasize most?" The answers to this question did indicate a rather significant difference in the emphasis of basic advertising appeals used in America and in Japan. See Table 6—17 for details. In both nations, the quality of the product was the first and the top advertising appeal emphasized with equal frequency (61-63 per cent). The factual information about the product was the least frequently selected as the advertising appeal emphasized most (by 22 per cent of the firms in America and by 27 per cent in Japan). l5Communication net theory and other theories of communication. See Thomas Staudt and Donald Taylor, A Managerial Introduction to Marketing (Englewood Cliffs, N. J.: Prentice Hall, Inc., 1965), pp. 353-370. 16This viewpoint is given in Edward T. Hall, Th3 Silent Language (New York: Fawcett World Library [Pre— mier Books], 1961). 259 .999 99030333 008993 20 .0309>90939 903009030 009 20 009 20 0020>93m 08993 20 900832 90909 20 09 00 09 9030090 039 93090 30990890239 9039003 90V 90 30 cm 00 09030090 8092 00>9900 09920309 9090300 AmV mm 3m 3m mm 09030093 2303800 039 20 0003033932 939 mm mm 3: mm 00000990 0803 2303800 90 03090 Amv 0: 2m 0: 9m 09030090 039 20 0390> 039 20 09003383 ANV 90 90 m0 0: 09030090 009 90 2999030 990 08993 20 08993 20 0009300903 909832 0009300903 909832 0002 0900333 03909990903 20 0329 30300 39 0099083 39 .0 .30300 39 030 0099083 39 0003 0900330 03909990>00 0009003380 9008 03911.2910 09039 260 Comparing the use of major advertising appeals, there was a rather significant difference between the two. In America, the value of the product was the second most frequently used appeal by H6 per cent of the firms, followed by the brand or company name being stressed (A2 per cent), the uniqueness of the company products (3A per cent), and the general benefits derived from the products (30 per cent). In Japan, this pattern was almost reversed. The second on the list was the brand or company name with 5M per cent of the firms, followed by the general benefits (43 per cent), the emphasis of the value of the products (40 per cent) and the uniqueness (36 per cent). Judging from this pattern, it seemed that the relative strength of the firm in both markets affected the selection of the appeals more than the cultural differences involved. The brand names were stressed more often in Japan, probably to cultivate selective demand. In America weak corporate or brand position of the firm made this appeal less tenable. However, the emphasis on the value of the products was much more frequently used in America. This could be construed as indicating the purchase behavior of the American people -—perceived to be more rational and scientific instead of being emotional and general as in Japan. Personal Selling Out of 67 firms surveyed, 29 firms (A3 per cent) indicated that they used personal selling or the sales 261 force in America. Thirty-two firms (A8 per cent) replied in the negative and there were 6 firms (9 per cent) without definite responses. The chief problems related to the use of sales personnel were asked of the 29 firms using the sales force in America. See Table 6—18 for the results. Recruitment, selection and hiring headed the list of the chief problem areas (A8 per cent of the firms using personal selling effort). This was followed by competence and quality of sales personnel (also A8 per cent), and training and developing (31 per cent). In Japan, the problem areas were considerably different. It was train- ing and developing which headed the list with A8 per cent of the firms using the sales force, followed by competence and quality of sales personnel (31 per cent) and recruit- ment, selection and hiring (17 per cent). This difference apparently was indicative of the Japanese practice of the sales force development based on the lifetime employment system, in which career junior executives occupy key line positions. Quite often Ameri— Acan firms would use independent, professional salesmen under similar circumstances. The fact that training and developing was mentioned third on the list by 31 per cent of the firms using the sales force might indicate a sys- tematic effort to transplant and modify Japanese-style organizational arrangement, covering the sales force in America. As a matter of fact, many firms did use their own Japanese staff members in line sales positions. 262 009 mm 009 mm 0020>93m 08993 90909 m39 m3 309 33 003099302 203033093 90909 II II m 9 09003 3090098800 30 090 2039 0030003 0309908 I9o239 903908 303030 03993 9.303 93V 09 m II II 0090 00900 39 08093093 90908 02 90v 2 m 09 m 2303800 09 2990203 92V m 9 II II 9.090 9039992 .30990309009 09 0300 90>03939 900 9m 3 m: 39 903300903 00900 20 2999033 030 0030903800 Amv 39 3 39 3 039900990 030 03909>9033m 9:0 39 3 39 3 03990>9908 030 039900303800 Amv 00 :9 9m 0 0090090>00 000 00909099 900 29 m 03 39 039993 030 .309900900 .93089939003 A90 08993 20 . 08993 20 0009300903 903832 0009300903 903832 00900900 00093 8093093 20930 039 30300 39 0099083 39 .08992 mm 093800 0903300903 00900 20 003 009 0993 00090090 90900 009II.09I0 09039 263 Pricing With vigorous new product development activities on the part of the Japanese manufacturing firms, pricing of new products in America assumed a crucial role in the over— all marketing strategy. Of the many factors that influenced the pricing decisions of new products, an attempt was made to determine the relative importance of the five maJor factors: economic, financial, competitive, psychological and sociological. This attempt was based on the historical assumption in which the firm traditionally employed marginal as against average pricing in America. The main reason for this, of course, was the incremental nature of additional product lines to the parent firm's overall cost structure and the concept of the overhead costs in Japan, which at times included the direct labor because of the lifetime employment system. From the investigation of the relative importance of the five major factors, it was evident that the firms used basically the same rationale and reasoning in new product pricing in America, with only a minor modification. The modification was chiefly in the relative emphasis on the financial soundness and the competitive strength as af— fecting the determination of new product prices. In Amer- ica, the financial consideration was not as frequently the prime reason, but the competitive strength was by far of prime importance. 26“ Thus, although the competitive strength was the most frequently mentioned factor for pricing in both markets, there was much more emphasis on the basis of competition as the major factor in new product pricing in America. The firms utilizing psychological impact for pricing seemed to recognize the importance of marketing considerations in pricing decisions. For details, see Table 6-19. Other Demand Creating Forces Of widely used sales promotion methods, the most popular one in America seemed to be participation in trade shows and exhibits, which was the choice of 60 per cent of the firms, surpassing its use in Japan by 51 per cent of the firms. The next widely used methods were dealers sales contest, and customers sales contest or the invitation of prospects to special events. They were used in both markets to about the same degree. And no significant difference was observed between them except for the dealers sales content, which was less widely used in America. As a demand creating force, the extent of research and development activities could not be ignored. About one—third of the firms believed that their R & D activities were about the same as other Japanese firms in both mar— kets (33 per cent in America and 30 per cent in Japan). But “8 per cent of the firms did much more R & D than .0903 00990309 0903 039 309 039 3930 .Amv 09 A90 8093 0030990389 99039 30 90090 39 8039 039 265 I3309 .0>93 0>030 039 8093 0909003 00939 903030 09 00300 0903 09300303009 03B .999 99030333 008993 30 093800 .0309>90939 903009030 II II II 930990389 9002 903830 039090 0 00 393908 .900330 900900909000 m m 0 3 930990389 9008 030000 0 3 m 0 930990389 9002 00390> 9030093 3093 03993039 903 000993 00990093 3993 0900389 9009009030903 90 39 09 09 930990389 9008 030000 0 0 09 0 900900009 9000 030800 030 393330 30 309 039 039309903 .0300009 09803000 0m 00 99 mm 900990009 9000 000000 99 0 9 0 900900009 9000 999093 900909 90 0393909 30 0909 900909 03993000 .000303300 909030393 09 0 m 0 930990389 9008 030000 03 9m 3m 0m 900900009 9000 09099903800 039 30 9903 039 30 0390993 9099890 09 030 039030990 0>999903800 08993 30 08993 30 0009300903 903832 0009300903 903832 000993 9030093 302 03939890903 903 0300003 90 0909003 039 30300 39 0099083 39 0.000993 9030093 303 03939890900 39 0909003 930990389 9008 030000 039 030 930990389 9008 03BII.m9I0 09039 266 other Japanese competitors in Japan, reflecting the generally progressive stance in marketing strategy of the firms sur— veyed. However, those firms which had much more R & D than other competitors in America dropped to 25 per cent. In both markets, the firms planning to place increasing emphasis on R & D activities were about one—third of those surveyed. Apparently many firms started realizing the importance of research and development activities and their implications for marketing success. Channel-Distribution Mix Basic Channels of Distribution The main difference in the basic channels of distri- bution used in America as compared to Japan was the fewer number of firms selling direct to customers and prospects (11 firms or 16 per cent in America versus 20 firms or 30 per cent in Japan). As a corollary to this use of less direct channels in America, there were 11 firms (16 per cent) which used one or two levels of middlemen in America, compared to 4 firms (6 per cent) in Japan that used one or two levels of middlemen. Other than this manifestation of such a use of longer channels in America, there was no significant differ- ence in the overall pattern of the basic channels used. The fact that the channel was shorter in Japan might sound contradictory to the common notion that the long channels 267 of distribution were the overriding characteristics of the Japanese distribution system. For instance, it is reported that the use of long channels is the common practice for both industrial and consumer goods in Japan.17 How could this seeming puzzle be resolved then? The most reasonable but tentative answer to the above question would be that most of the firms operating in America tended to have their own sales outlets, financed and staffed by the corporate personnel in the Japanese home market. This was made possible because of the dominant position of the firm or of the unique financial advantage to the customer resulting in intensive coverage of the home market, which, in turn, could sustain such a branch or warehouse supported corporate distribution system. An additional reason for the longer channel in America was perhaps due to the weak market position of those firms, whose control often ended at the wholesale level and who could not use the direct channel, which was relatively expensive and required a degree of saturation marketing backed up by volume or mass in motion. Table 6-20 gives the basic channels in both markets. 17George A. Elgass and Laurence P. Dowd, "Whole- saling in Japan," in Robert Bartels, (ed.) Comparative Marketing: Wholesaling_in Fifteen Countries (Homewood, Illinois: Richard D. Irwin, Inc., 1963), p. 16“. 268 .999 39030333 008993 90 093800 .0309>90939 903009030 II II m 0 .2.0.0 09 900990 9900 900 3 m 9 9 308090098 30 090>09 0908 90 00939 300 m m 3 m 308090098 30 090>09 039 900 m 0 m9 0 308090098 30 90>09 03o Amv 0m om 09 99 090030093 90 090809030 09 900990 9900 930 99 .00 9m 90 000990900 990 0m 0m 3m 0m 090933999090 90 09090009033 900 03 mm mm 00 00090 0090009 990 08993 30 08993 30 0009300903 903832 0009300903 903832 90003 393902 0309900930090 03900990 30300 39 0099083 39 0000 9033030 30 033B 039 .0 .CQOh CH. USN MOfifimcfiQ CH. £0.09 mefi COfipSDHmeHU .HO HmCQGEO Oflmmfl mQBII.ON|© MAMdJH. 269 Actually, the American marketing channels of the Japanese firms were quite complex and dynamic. And not all of the presently used ones were ideal for the firm using them, either. The ideal channel of distribution for the firm differed somewhat in America for the Japanese firms surveyed. In America many firms preferred to sell direct either through franchised dealers or through various re- tail outlets (u3 firms or 6“ per cent); but in Japan a smaller prOportion of the firms believed this to be the ideal channel (32 firms or “8 per cent). It was easy to see that behind this there was a desire to establish managerial control over the channel to compensate for other weaknesses in marketing efforts in America on the part of the Japanese firms. Also there were 8 firms which considered selling through mass-merchandising outlets (supermarkets, discount stores, chains, etc.) to be ideal; but in Japan only one firm regarded this an ideal channel. The relatively underdevelOped state of mass-merchandising outlets in Japan was no doubt part of the reason why this was not selected for use in Japan. As to the choice of the indirect channel, the firms considered this to be equally ideal in both (10 firms in America and 11 firms in Japan). Fourteen firms con- sidered selling direct and indirect at the same time to be ideal both in America and in Japan. 270 A considerably larger number of firms regarded selling direct to customers as ideal in Japan (18 firms or 27 per centF-compared to America (10 firms or 15 per cent). The results corresponded closely with the actual use of this channel discussed earlier (Table 6-20). For details, see Table 6-21. Customer Service and Other Channel Problems The Japanese firms tended to emphasize the importance of the customer service, or "after-service" as they called it, including technical services considerably more in America. This emphasis on "after—service" was the only significant difference in the extent of the general customer service of these firms in both markets. Therefore, it could be reasoned that as far as the investigation went, there was a stronger emphasis on the importance of the customer ser- vice in the total mix of marketing effort in America. In spite of the cost involved, a significantly higher proportion of the firms maintained a warehousing system for the necessary parts in America than they did in Japan. This might be a reflection of the geographical reality of the United States; but the relative emphasis on customer service no doubt was a factor giving rise to the warehousing system. See Table 6-22. Were there any differences in the major problems related to the channels of distribution used in America and in Japan? The major difference in the chief problem .09300303009 0800 30 9903 039 30 39930 09399938 30 0030003 90909 039 000030 0099930 383900 90309>90393 .999 39030333 008993 90 093800 00309>90939 903009030 271 009 30 009 90 008993 30 903832 90909 9 9 9 9 99033030 I09399938 30 0030 9033030 9300093 930 9 9 m9 0 9009090 93300090 .0903908903300 0909930 0390903030908I0008 3030939 0399900 900 90 39 90 39 0899 0800 039 90 90009009 000 900090 0900 0099900 900 09 99 m9 09 090933999090 030 09090009033 3030939 90099039 930 09 9 m9 09 0909930 990909 030990> 3030939 900993 9m0 9m , mm 03 mm 0009000 0009000000 0000009 900090 900 90 09 m9 09 090809030 09 900993 990 900>9o> 0009300903 0WMMW3M0 0009300903 Wmem23o I39 0309900930090 039903902 030 039903902 030 0399900 30 000020 00000 09 0090000 09 90009 09 00903 9000000 00 0039 009 0.0903908 3903 39 003 09300 8999 0 309933999090 30 9033030 90009 03BII.9mI© 09039 272 000030 000303009 0009300903 033 .0099930 09399938 90 0030003 9300 903 009 .999 39030333 .08993 90 00309>90939 903009030 o m m 9303800 009>900 09090300 0 0>03 03 90V 09 mm 9m 300 03 9003 039 90>09033 00 030 0030990389 99039 039003380 03 Amv m 90 om 09903 990000003 039 909 809090 03903030903 0 0>03 03 93V 0 0m 3m 009090 90 0909000 :009>900: 0039099 999090030 90 3903903 0 0>03 03 Amv 9 mm 0: 8039 090303 090039030 330 933 900 39 9 9m 8039 909 0003 03 0>03 03 A90 08993 90 08993 90 0009300903 0009300903 0009300903 009>900 90809030 90 930930 039 30 30993990003 0030909393 30300 39 0099083 39 .000 >900 0m H 900933009 90 :.009>900I90930= .009>900 90809030 90 930930 0391:.mmu0 03339 273 areas seemed to be the environmental one of legal regu- lations and restrictions. Legal matters, resale price maintenance, and cooperative advertising in America were mentioned as the chief problem areas in 36 cases, as compared to 14 cases in Japan. Aside from the above area, other problems were chosen with similar frequency by approximately the same number of firms as applying both in America and Japan. Of these, price-cutting was mentioned most frequently. See Table 6-23 for details. Summary Review As the base of making decisions affecting marketing strategy, the Japanese firms used more outside sources, such as marketing research agencies in America, than they did in Japan. Such use was reported by 30 firms out of the total 67, but in Japan the use was limited to 22 firms. Instead the existence and use of their own marketing re- search staff were limited to 23 firms in America, while in Japan 35 firms used their own marketing research staff. Since there are numerous other sources of marketing in- formation, the relative emphasis on marketing research apparently indicated the generally progressive approach in marketing strategy mentioned earlier. In a general way, two questions were asked of the respondent firms to indicate the relative merits and emphasis of the four mix ingredients. The purpose was to 274 .999 39030333 .08993 90 .0309>90939 903009030 o 9 9 309933999090 30 0393039030990 909V 9 99 09 3099009338800 903902 99V 0 99 m 0900:90809030 909 3 09 09 08093093 009>900I90933 99V m 9m 09 9030093 039 3033 09 309908093 90V 0 m 99 03909990>00 0>990903ooo Amv 9 mm mm 0399930I00993 3o 309930>093 909 m 09 3 9099300 900990 30 00303093902 Amy 09 0 om 00303093908 00993 090003 Amv 3 9 m 0909908 90003 99v 908993 30 908993 30 0030903393 90383zv 90383zv 08093093 30930 033 30300 0099083 .m .309933999090 30 9033030 039 39 00909330030 08093093 30930 0391:.mmlm 0333B 275 find out the overall pattern differences in emphasizing certain mix components in America and in Japan. In order for the firm to succeed in the market place, the surveyed firms believed that "to promote its products as superior and better" was of first importance in America. And many firms selected the item "to organize sales force and push their products" to be third in importance, which was fairly close to the second choice item "to develop new products." On the other hand, "to develop new products" was considered of first importance in Japan, which was followed by the items on "to promote products" and "to organize sales force." Thus it could be said that there was more emphasis on new product development for a firm's success— ful survival in Japanese market-—more so than in America. Also to be noted was the fact that "to establish a dealer or distributor network" was considered a key to succeed in America by many firms. The difference for the need of dealer network was remarkably clear-—in Japan a few firms considered it of vital importance. From this overall pattern difference, it could be argued that in America most firms considered the organ- ization of marketing efforts in the promotional and distri- bution mix much more important for the marketing success than in the case of Japanese market. The second question used to verify this point seemed to endorse this con- clusion. See Tables 6-2A and 6-25. .999 39030333 .08993 90 .0309>90939 903009030 276 m9 99 00 00 99300 903 009 u 900 0009300903 90903 09 99 9930990389 9008 030000 030 9 m9 9930990389 9008 030 3903903 00900909090 00 009000 0 009900900 09 900 3 m9 9930990389 9008 030000 030 9 9 9930990389 9008 030 03903 990309 903 3903903 009>900 33 900 09 900 mm 09 9930990389 9008 030000 03V 9m am 9930990389 9008 03v 09030093 303 3090>00 09 Amv N9 90 9930990389 9008 030000 03V 09 m9 9930990389 9008 039 09030093 930 3033 09 00903 00900 00930090 OB 900 m9 m9 9930990389 9008 030000 03v mm mm 9930990389 9008 030 909903 030 90990330 00 09030093 930 0908093 09 99V 08993 30 08993 30 0009300903 0009300903 00900900 09309009039 039 30300 39 0099083 39 9. Is. 0.30303 39 030 0099083 39 3903 .00093903908 039 39 0000030 0.8993 039 903 9309009039 930990389 9008 030000 039 030 930990389 9008 03311.00I0 3303B 277 .999 39030333 .99300 903 009 "V 08993 90 .0309>90939 903009030 9m am 09 3: m9 m9 9m mm m9 m9 m9 0: 9930990389 9008 03000mv 9930990389 90029 0009>900 990309 909903 9930990389 9008 0300000 9930990389 90020 00903 00900 039 030 30800900 0930 0902 9930990389 9008 0300000 9930990389 9002V 00900 030 03909990>00 909903 9930990389 9008 0300000 9930990389 9002V 0990909 90 .0909000 0090933999090 0000 30 30990903000 9930990389 9008 0300000 9930990389 9002V 0390993 0>999903800 030 90303 9930990389 9008 030000v 9930990389 9002v 9900 09 9030093 909903 3 GV Amv 2: Amy 900 A90 08993 30 0009300903 08993 30 0009300903 30300 39 0099083 39 0.30309 39 030 0099083 39 3903 .8993 039 93 00>900903 00 .30999903800 90>o 393 09 =09038: 930990389 9008 039 0331:.mmlm 0333B 278 In summary, then, it could be said that in both markets a better product as a result of new product development was a "must" of primary importance to win over competition, as perceived by the respondent firms. In this respect there was no difference between America and Japan. Next important on the list of "musts" in America were lower, competitive pricing and cooperation of good distributors, dealers, or retailers--both being mentioned with similar frequency. The emphasis on these two points was significantly stronger than in Japan, underscoring the earlier findings. Advertising and sales promotion were also slightly more emphasized as a competi- tive weapon in America. See Table 6—25. CHAPTER VII CONCLUDING REMARKS Precis of Study This is an investigation of the marketing adjust- ments, adaptations, and strategies of Japanese manufactur- ing firms doing business in the United States. Infor- mation has been derived from secondary sources as well as personal interviews and a mail questionnaire. The per- spective taken has been ecological and consequently at- tention has been directed to contrasts in the business environment between Japan and the United States. The first step in the investigation was to determine the magnitude and structure of Japanese business in the United States. The findings are set forth in Chapter II and may be highlighted as: (1) about 210 establishments maintained by the Japanese manufacturing firms in four major metropolitan areas, (2) a steady and continuing in- crease in the American imports from Japan, and (3) a shift in the product mix toward heavy and chemical industrial goods and the goods requiring complicated marketing efforts. Chapter III introduces the basic characteristics of Japanese business. In summary, these are: (l) the tradi— tional features of Japanese business, (2) the way businesses 279 280 are organized (the lifetime employment system), and (3) some salient operational characteristics as seen in group decision—making practices. Chapter IV states the value of using the ecological view in this study, contrasts the imports of ecological and environmental forces which affect business organizations, and attempts a systematic description of their interactive consequences upon business behavior as evidenced in the ad- justment paradox of the family system and the logic of in- dustrialization. Turning to the empirical data, of necessity, only those variables were selected for analysis which were judged to be crucial in influencing marketing behavior of the firm. Selection was accomplished by a search of the existing literature, and, in particular, by an implicit review of relevant ecological forces and factors presented in the previous chapter about Japanese business practices. Thus, in summary, the variables dealt with are dimensions of the environment, organizational characteristics, and marketing practices and are: (l) the year and form of entry into the United States, (2) the amount of operational acquaintance with the U. S. market, (3) the size and organ- izational changes, and (A) the industry characteristics. Derived from the above analysis were the major ad- justive issues and problems faced by respondent Japanese manufacturing firms as they engaged in business in America. By relating the empirical data to the theoretical 281 postulation found in the literature, it was possible to infer the probable reasons for the adaptive behavior examined and the degree of success in adjusting to American environment. These were: (I) the entry considerations with regard to the leaders and their entrepreneurship, (2) the organizational implication of adaptation, and (3) oper- ational controls and decision—making aspects of adjustment. The final phase of the empirical part of the study concerned the marketing strategies used by the respondent firms, again contrasting those used in America with those used in Japan. The objective was to pinpoint still further the specific causes of adaptation in each firm's marketing approach, which could be inferred from the findings. In summary, the comparative description was made of the overall difference in the marketing strategies used in both markets in Chapter VI. Also a more detailed compari- son of specific mix components was made in aggregate terms. A significant difference was observed in the firm's market- ing approach in America, which emphasized the promotional and distributional aspects of its marketing efforts. Limitations and Problems In view of the paucity of research literature and the exploratory nature of the study, definitive policy or operational recommendations cannot be justified. The study did, however, serve to point up research voids that need to be filled by other investigators. 282 The shortcomings of this study stemmed from two major limiting factors. 1. The basic theoretical issue of formulating a conceptual frame of reference for ecological adjustment of business is yet to be resolved. Comparative studies of cross-cultural phenomena need such a central framework. The ecological view used in this study may eventually give rise to a model, which is powerful enough to handle the problem. But there are too many limitations for this view to suggest that a theoretical model has been established. 2. It is necessary to develop more powerful tools of investigation of cross-cultural phenomena. The analytical tools used were eclectic by design. Mostly they were ap- plied to the data in aggregate terms. But the data used had many limitations in collection methods, sample size, and quality. The usual time and cost considerations pre- vented a more comprehensive and refined investigation. In addition, there was a significant lack of sub- stantial secondary data about the subject matter. Also there was no theoretical model operationally available for this study. For these reasons, there was no need to further refine the measurement tools of empirical investi- gation used for this survey. It was primarily descriptive, with many exploratory elements. Therefore, an experimental design might be effectively used for future investigations. 283 Tentative Generalizations In spite of the exploratory and descriptive nature of this investigation, tentative generalizations are presented below. In interpreting and applying them, care must be exercised in view of the theoretical and methodological limitations of the entire study. 1. Entrepreneurship plays an extremely important role for successful adaptation. The role of entrepreneurship and dynamic leadership cannot be over-emphasized for success in the American market. This would imply that a workable organ- izational arrangement must be devised in order to translate and harness such entrepreneurial spirit into operational results. 2. There is a need for developing talents to fill the American posts on behalf of the parent corporations in Japan. Aside from the more effective use of local office and sales personnel in America, it seems that there is a need for industry-wide training, crossing enterprise barri— ers. This might be accomplished through seminars, confer- ences or specialized training programs centered on and around the theme, "How to Do Business in America." A talent pool or reserve could conceivably be build up--out- side of the traditional lifetime employment system. The human side of adaptation is very important. 3. A clearer statement of the gpals and objectives of the American operations seems in order. For this, the first consideration could be of course the balance between the long and short-run business objectives. Then there exists a need for setting an order of priority among the specific goals of business. These goals will include the amount of on-the—job training desired, the degree of talent development, the results either in growth rate or profits, and the relative emphasis on home and American operations. In many instances, ambiguity on the seemingly conflicting goals of business increased the discrepancy of policy inter— pretation and market preception, resulting in poor coordi- nation between the headquarters and American establishments. A. For better performance, more decentralized oper- ations seem to be desired. However, this is predicated upon the full understanding and managerial backup of the Japanese headquarters, both in the financial and personnel needs. Thus the implementation of realistic, systematic marketing planning becomes a necessity both for internal organization needs and for external strategic adjustments. For many Japanese businesses operating in America, the Crissy-Kaplan model might prove to be a useful tool for marketing planning. 284 Topics for Future Research Out of the study there have arisen many topics re- quiring further research. Aside from the methodological problems discussed before, the following specific subjects may be pointed out in order of their priority. 1. The implication of the Japanese lifetime employ- ment system in America. What are the "pinch-points" and the areas of greatest friction? 2. Investigation to pinpoint specific issues of organ— izational patterns of adaptation. An initial approach would be to compile selected cases of successful and unsuccessful firms to derive manifest organizational differences. 3. Building of a theoretical model for adaptation problems. Such a model could be empirically validated and applied to normative evaluation of marketing strategies used. A. As a corollary to the above, development of effec- tive tools for empirical investigation. New techniques could be tested, and an experimental design could be used. Of lesser importance, but having a great practical benefit, would be the following industry—wide investigations. 1. Investigation of the best methods to conduct marketing research for Japanese companies. Many problems concerning marketing intelligence activities could be clari- fied to present appropriate recommendations. 2. Determination of training needs for the Japanese executives stationed in America. This could lead to the evaluation of the training methods or techniques. 3. Comparison of the basic problems and issues involved in using an American sales force. The organizational controls and the performance evaluation could be investigated for their validity. A. The identification of the major problems in the use of the channels of distribution in America. This could lead to the conceptual planning of the logistics system and the physical distribution of the Japanese products. BIBLIOGRAPHY 285 BIBLIOGRAPHY English Language Sources Books Abegglen, James G. The Japanese Factory, Glencoe, Illi- nois: The Free Press, 1958. Alderson, Wroe. Dynamic Marketing Behavior. Homewood, Illinois: Richard D. Irwin, Inc., 1965. . Marketing Behavior and Executive Action. Home- wood, Illinois: Richard D. Irwin, Inc., 1957. Allen, G. C. Japan's Economic Expansion. London: Oxford University Press, 1965. . Japan's Economic Recovery. London: Oxford University Press, 1958. . A Short Economic History of Modern Japan. London: George Allen & Unwin, Ltd., 19A6. Barnard, Chester I. The Functions of the Executive. Cambridge, Mass.: Harvard University, 1938. Bartels, Robert. Comparative Marketing: Wholesaling in Fifteen Countries. Homewood, Illinois: Richard D. 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J.: Princeton University Press, 1965. Japan Trade Guide 1966. Tokyo: The Jiji Press, Ltd., 1965. Kluckholm, Clyde (ed.). Culture and Behavior. New York: The Free Press, 1962. 288 Lazer, William and Kelley, Eugene J. (ed.). Managerial Marketing: Perspectives and VieWpoints. Revised edition. Homewood, Illinois: Richard D. Irwin, Inc., 1962. Levine, Solomon B. Industrial Relations in Postwar Japan. Urbana, Illinois: University of Illinois Press, 1958. Lockwood, William W. The Economic Development of Japan; Growth and Structural Change 1868—1938. Princeton, N. J.: Princeton University Press, 1954. . (ed.). The State and Economic Enterprise in Ja an. Princeton: Princeton University Press, 1925 McClelland, David C. The Achieving Society. Princeton, N. J.: D. Van Nostrand Company, Inc., 1961. Ohkawa, Kazushi. The Growth Rate of the Japanese Economy Since 1878. Tokyo: Kinokuniya Bookstore Co., Ltd., 1957. Okochi, Kazuo. Labor in Modern Japan. Tokyo: The Science Council of Japan: Division of Economics, Commerce and Business Administration. Economic Series No. 18, 1958. Oxenfeldt, Alfred R. Executive Action in Marketing. Belmont, Calif.: Wadsworth Publishing Company, Inc., 1966. Parsons, Talcott and Shils, Edward A. The General Theory of Action. Cambridge: Harvard University Press, 1951. Reischauer, Edwin 0. Japan; Past and Present. Second edition, revised and enlarged. New York: Alfred A. Knopf, 1961. Riesman, David in collaboration with Glazer, Nathan and Denney Reuel. The Lonely Crowd: A Study of the Changing American Character. New Haven, Conn.: Yale University Press, 1950. . Faces in the Crowd: Individual Studies in Character and Politics. New Haven: Yale Univer- sity Press, l952. Rostow, W. W. The Stages of Economic Growth. New York: Cambridge University Press, 1960. 289 Schumpeter, Joseph A. Capitalism, Socialism, and De— mocracy. Third edition. New York: Harper & Brothers Publishers, 1950. Schwartz, George. Science in Marketing. New York: John Wiley & Sons, 1965. Sheldon, David Charles. The Rise of the Merchant Class in Tokugawa Japan. Locust Valley, New York: J. J. Augustin Incorporated, 1958. Silberman, Bernard S. (ed.). Japanese Character and Culture; Selected Readings. Tucson, Arizona: The University of Arizona Press, 1962. Simon, Herbert A. Administrative Behavior: A Study of Decision-Making Processes in Administrative Organ- ization. 2d ed., with new introd. New York: Macmillan, 1957. Smith, Thomas C. Political Change and Industrial Develop— ment in Japan; Government Enterprise, l868-1880. Stanford, Calif.: Stanford University Press, 1955. Staudt, Thomas A. and Taylor, Donald A. A Managerial Introduction to Marketing. Englewood Cliffs, N. J.: Prentice Hall, Inc., 1965. Steward, Julian. Theory of Cultural Change. Urbana, Illinois: University of Illinois Press, 1955. Vogel, Ezra F. Japan's New Middle Class; The Salary Man and His Family in a Tokyo Suburb. Berkeley and Los Angeles: University of California Press, 1963. Warner, W. Lloyd and Abegglen, James C. Occupational Mobility in American Business and Industry. Minneapolis: University of Minnesota Press, 1955. Weigand, Robert E. (ed.). DoingaBusiness in Japan. Proceedings of an Executive Conference Held at DePaul University. Chicago: DePaul University, 1963. Whitehill, Arthur M., Jr. and Takezawa, Shin-Ichi. Cultural Values in Managament-Worker Relations, Japan; Gimu in Transition. Chapel Hill, North Carolina: University of North Carolina, 1961. Zaltman, Gerald. Marketing: Contributions from the Behavioral Sciencea. New York: Harcourt, Brace & World, Inc., 1965. 290 Zimmermann, Erich W. World Resources and Industries. New York: Harper & Brothers, 1951. Articles and Periodicala Alderson, Wroe. "Planning in Japan," Growth and Profit Planner, I, 4 (November, 1963), l-A. Buck, Barbara F. "The Teaching of English in Japan," Overseas, III, 2 (November, 1963), l4-l7. "Business Around the World," U. S. News & World Report, LIX, 32 (December 6, 1955), 110. "Consider Japan--I," The Economist, September l, 1962, 787—819. "Consider Japan——II," The Economist, September 8, l962, 912-933- Crissy, W. J. E. and Kaplan, R. M. "Matrix Models for Marketing Planning," Business Topics, XII, 3 (Summer, 1963), 49-66. Fischer, John. "The Japanese Intellectuals: Cliques, Soft Edges, and the Dread of Power," Harper's, CCXXIX, 1372 (September, 1964), luff. "Following Henry Ford: Matsushita Electric Co.," Time, LXXIX, February 23, 1962, 93-97. "The Fortune Directory: The 500 Largest U. S. Industrial Corporations," Fortune, LXXIV, 2 (July, 1966). Froomkin, Joseph N. "Management in Perspective: Mange- ment and Organization in Japanese Industry," The Academy of Management Journal, VII, 1 (March, 1964), 72ff. Gonzalez, Richard F. and McMillan, Claude, Jr. "The Universality of American Management Philosophy," Journal of the Academy of Management, IV, l (April, 1961), 33-h1. Hirata, Junji, et a1. "Marketing Research Practices and Problems in Japan," Journal of Marketing, XXV, A (April, 1961), 3u-37. Hodgson, Francis X. "The Selection of Overseas Manage— ment," Business Topics, XI, 2 (Spring, 1963), 49-54. 291 Hollerman, Leon. "Japan' 5 Place in the Scale of Economic Development, " Economic Development and Cultural Change, XII, 2_(January, 196A), 139- 157. "Honda: Making Motorcycles an "in" Product," Printers' Ink, CCXCI, 2 (July 23, 1965), 23-2A. "How Big Brother Trades on Its Own; Brother Industries, and Brother International Corporation," Business Week, January 8, 1966, 78. "How Good is Japanese Equipment?" U. S. Camera, XXIIX (June, 1965), 56-59. "How the 'Thunder Herd' Boss Brought a Honda Boom to U. S." Newsweek, July 6, 1964. "How to Succeed in Business in Japan," Newsweek, May 17, 1965, 80 Inkeles, Alex. "Industrial Man: The Relation of Status to Experience, Perception, and Value," The American Journal of Sociology, LXVI, 1 (July, 1960), l-3l. The Japan Economic Journal. 1965. "Japanese Assembly Line Methods Speed Ships Down Ways, Cut Costs, Lure Orders," The Wall Street Journal, Thursday, August 22, 1963, A. "Japan' 5 Giant Web of World Traders," Business Week, January 8,1966,76-78. "Japan, The Never- Easy Structure Toward the Top," Chemicai & Engineering News, XLI, 26 (July, 1963), 63- _82. "Japan, Pa. Sekisui Chemical Co. Plans for Polystyrene Paper Plant in Eastern Pennsylvania," Newsweek, LX, (November 5, I962), 85— 86. "Japan's Prime Natural Resource is People," Fortune, LXVIII, (July, 1963), 142—149. "“—’_“ Lee, James A. "Cultural Analysis in Overseas Operations," Harvard Business Review, XLIV, 2 (March-April, 1966), 106—11A. Lifton, Robert Jay. "Who Is More Dry?--The Casual Cowboy is the Hero of Young Japanese," The New Republic, August 13, 1962, l2-lU. Lubar, Robert. "The Japanese Giant That Wouldn't Stay Dead," Fortune, LXX, (November, l96A), lAl-lu9. 292 Marino, John A. "Japan's Trading Companies: The Two- Way Bridges of International Trade," Boston Univer— sity Business Review, II, 3 (Spring, 1965), 3—23. "Motorcycle Boomlet Spurred by Smaller, Less Costly Vehicles," The Wall Street Journal, LXIX, 89 (Monday, November A, 1963). "Motorcycles: Honda's Hang-Up," Newsweek, July 11, 1966, 66. Miller, Dudley L. "The Honorable Picnic: Doing Business in Japan," Harvard Business Review, XXXIX, 6 (November-December, 1961), 79-86. Miller, Stanley S. "Management by Omikoshi: Traditional Features of Modern Business in Japan," Management International, III, 1 (January, 1963), 59-69. Nakane, Chie. "An Analysis of Japanese Social Structure," Council for International Progress in Management (USA), Inc. (A paper presented at the International Management Association of Japan Program for Foreign Executives in Japan, lst Session, 196%, July 30- August 1, 1964, at Motel Hakone.) n.d., 8 pages. Nicosia, F. M. "Marketing and Alderson's Functionalism," The Journal of Business of the University of Chicago, XXXV, A (October, 1962), 403—413. Noda, Nobuo. "Characteristics of Japanese Management," Council for International Progress in Management (USA), Inc. (Prepared for IPCCIOS [Indo-Pacific Council of CIOSJ) n.d., 9 pages. Oberg, Winston. "Cross-Cultural Perspectives on Manage- ment Principles," Journal of the Academy of Manage- ment, VI, 2 (June, 1963), 129-143. Packard, Vance. "This is the New Japan," The Saturday Evening Post, April 20, 1963, 28-36. "Profiles of a Tokyo Businessman," Business Week, April 18, 1959, lOSff. Reynolds, William H. "More Sense About Market Seg- mentation," Harvard Business Review, XLII, 5 (September—October, 1965), 107-ll“. Rocour, Jean-Luc. "Management of European Subsidiaries in the United States," Management International, 1966, 1 (January, 1966), l3-27. 293 Shapiro, Stanley J. "Comparative Marketing and Economic Development," in George Schwarts, Science in Market— ing (New York: John Wiley & Sons, 1965), 398-“29. Silberman, "Criteria for Recruitment and Success in the Japanese Bureaucracy, 1868-1900: 'Traditional' and 'Modern' Criteria in Bureaucratic Development," Economic Development and Cultural Change, XIV, 2 (January, 1966), 158-173. "Sony: How to Grow Big by Thinking Small," Newsweek, June 13, 1966, 88. "Special Report on Japan," Business Week, April 18, 1959, 109ff. Takemata, Takatoshi. "Characteristics of Japanese Busi- ness Executives," Council for International Pro- gress in Management (USA), Inc. (A paper presented at the International Management Association of Japan Program for Foreign Executives in Japan.) n.d., 5 pages. Watanabe, Tsunehiko. "Economic Aspects of Dualism in the Industrial Development of Japan," Economic Develep- ment and Cultural Change, XIII, 3 (April, 1965), 293-312. "What U. S. Companies Are Doing Abroad," U. S. News & World Report, July A, 1966, 73. "What U. S. Companies Are Doing Abroad," U. S. News & World Report, October 18, 1965, 137. "Where Expense-Account Living is Really Worthwhile," U. S. News & World Report, February 28, 1966, 111- 113. "World Looks for Better Managers," Business Week, September 16, 1961, 111-7. Miscellaneous Published Material Committee for Economic Development. Japan in the Free World Economy. New York: The Research and Policy Committee of CED, 1963. A unique review of Japan's economic growth, its trade relations, and seven recommendations to strengthen economic ties among Japan, the U. S. and other free nations. Japanese views on the same issues are dealt with in a special supplement by Keizai Doyukai (the Japan Committee for Economic Development), 120 pages. 29H Dentsu Advertising, Limited. MarketingiActivities in Dun & Japan; 1962. Tokyo: Dentsu Advertising, Ltd.; n.d. A succinct summary of the trend of the Japanese economy, the current marketing activities in Japan, and the advertising media, with ample illustrations and statistical tables. The part dealing with current marketing activities in Japan includes: development of new products, channels of distribution, advertising and sales promotion, marketing research, protection and education of consumers, and activities of associations and organizations related to marketing. Dentsu is the largest advertising agency in Japan. 92 pages. Bradstreet, Inc. International Trade Review; Made in Japan, Part II, October, 1963. Published by International Division of Dun & Bradstreet, Inc., New York. The entire issue of this monthly publication is devoted to presenting a wealth of information and opinions on Japan, her domestic economy and overseas trade, reflecting increasing attention paid to Japan by international business- men. l30 pages. The Japan Times. Japanese Industries in Review 1965. Japan Tokyo: The Japan Times, April, 1965. Published as supplement to The Japan Times, this is a de- tailed review of Japanese industries represented by major product items, from the standpoint of their export activities. 56 pages. Trade Center. How Japan Trade Center Serves Yew. New York: Japan Trade Center. n.d. A pamphlet explaining the services offered through Japan Trade Centers in selected metropolitan areas of America. 13 pages. Quality Control in Japaw. New York: The Japan Trade Center. n.d. Introduces the quality control standards, practices, and agencies involved in improving the quality of Japanese products sold overseas. 15 pages. United States—Japan Trade Council. Council Reports. 1965. Washington, D. C.: United States—Japan Trade Council. Japan's Trade Liberalization and American Exports. Washington, D. C.: n.d. Analyzes sharp increases in U. S. exports of certain commodities to Japan after liberalization, which started in June, 1960, until April, l963. 10 pages. 295 United States—Japan Trade Council. Non-Tariff Trade Barriers of the United States. Washington, D. C.: Prepared by Noel Hemmendinger, Counsel, United States-Japan Trade Council. February, 1964. A comprehensive discussion of the five most important governmental trade barriers: quantitative re- strictions, Buy-American policies, marketing re— quirements, anti-dumping legislation, and customs practices. 24 pages. U. S.—Japan Trade Roundups. 1965. Washington, D. C.: United States—Japan Trade CounCil. United States Trade with Japan: 1960-6A. Washington, D. C.: n.d. A five year commodity survey, covering the U. S. exports to Japan and the U. S. imports from Japan. Includes a detailed analysis of the composition of U. S. trade with Japan based on the data published by the United States Bureau of the Census, and the official Japanese government publications. 29 pages. U. S. Congress, Subcommittee on Foreign Economic Policy of the Joint Economic Committee. Japan in United States Foreign Economic Poliey. 87th Cong., lst Sess., 1961. A study paper by Dr. Warren S. Huns- berger, providing valuable information through a comprehensive examination of U. S. foreign economic policy toward Japan. 27 pages. U. S. Department of Commerce. Survey of Current Business. Washington, D. C.: Office of Business Economics. Volume U5, Number 8, August, 1965. Unpublished Material Bernstein, Herbert Martin. "The Significance of the Postwar Growth of the Japanese Photographic In- dustry." Unpublished Ph.D. dissertation, Western Reserve University, 1965. McCann, Eugene Carroll. "Appropriateness of United States Management Philosophy in a Latin American Setting." Unpublished Ph.D. dissertation, Department of Management and Marketing, Louisiana State Univer— sity, l963. Rocour, Jean-Luc. "Management of European Corporate Subsidiaries in the United States." Unpublished Ph.D. dissertation, the Graduate School of Business and Public Administration, Cornel University, 1963. 296 Yoshino, Michael Yootaro. "Managing Selected Marketing Functions in International Operations." Unpublished Ph.D. dissertation, The Graduate School of Business, Stanford University, 1962. Other Sources Workshop on Problems in U. S.-Japan Trade. Sponsored by United States-Japan Trade Council, held at Waldorf- Astoria Hotel, New York City, February 1, 1966. Personal participation in the workshop, as well as informal personal interviews with some of the participants. Japanese Language Sources Books Furuhata, Takehiko. Kabushiki Kaisha Keieiron (Theory of Managing Corporations). Kyoto, Japan: Moriyama Shoten, 1962. Hayashi, Hisakichi, et al. (ed.). Maaketingu Handobukku (Marketing Handbook). Tokyo: Dobunsha Shuppan, 1961. Hayashi, ShuJi. Ryutsu Kakumei; Seihin, Keiro Oyobi Shohisha (Distribution Revolution; Products, Channels and Consumers). Tokyo: Chuokoron Sha (Chukoshinsho A), 1962. Ryutsu Kakumei Shinron (New Theory on Distri- bution Revolution). Tokyo: Chuokoron Sha (Chukoshinsho M2), 1964. Iwao, H. (ed.). Nippon no Biggu Bizinesu (Big Business in Japan). Tokyo: Nipponhyoron Shinsha, 1961. Keizai Kikakucho. Keizai Hakusho 1963, l96u,l965 (Economic White Paper, 1963-1965). Tokyo: Keizai Kikakucho. Komiya, Ryutaro (ed.). Sengo Nihon no Keizai Seicho (Post-War Japan's Economic Growth). Tokyo: Iwanami Shoten, l963. Mannari, Hiroshi. Bizinesu Eriito (The Business Elite; Backgrounds of Business Managers in Japan). Tokyo: Chuokoron Sha (Chukoshinsho 71), 1965. 297 Miki, Yonosuke. Zaikai Shunobu (Top Industrial Leaders). Tokyo: Bungeishunju Shinsha, 1960. Miyazaki, Yoshikazu. Biggu Bizinesu (Big Business). Tokyo: Kawadeshobo Shinsha, 1965. Morikawa, Hidemasa (ed.). Nippon no Daikaisha (Big Enterprises in Japan). Tokyo: Sanichi Shobo, l963. Nihon Boeki Shinko Kai. Kaigai ShiJo Hakusho 1965 (The 1965 White Paper on Overseas Markets). Tokyo: Nihon Boeki Shinko Kai (Japan External Trade Ex- pansion Organization), 1965. Nihon Keizai Shinbun Sha (ed.). Sangyo Saihensei no Doko (The Direction of Industrial Reorganization). Tokyo: Nihon Keizai Shinbun Sha, l963. Noda, Kazuo. Nihon no Jyuyaku (Japanese Executives). Tokyo: Daiyamondo Sha, 1960. Okano, Kaneki. Nihon Sangyono Seicho to Keiei Kakushin (Japan's Industrial Growth and Managerial Revolu- tion). Tokyo: Hakuto Shobo, 1962. Ooe, Shinobu. Senryaku Keieisha Retsuden (Biographical Notes on Strategic Managers). Tokyo: Sanichi Shobo, l963. Oono, Yoshihiko. Sengo Nihon Shihonshugi Ron (On Postwar Japan's Capitalism). Tokyo: Aoki Shoten, l963. Sakamoto, FuJiyoshi. Nihonno Keiei Kakushin (Japan's Managerial Revolution). Tokyo: The Mainichi Press, 1961. . Rijuneno Chosen (Challenge to Profits). Tokyo: Chuokoron Shinsha (Chukoshinsho 63), 1965. Toyonaga, Keiya. Yushutsu Senryaku (Export Strategy). Tokyo: Chuokoron Shinsha (Chukoshinsho 3A), 1964. Articles and Periodicals Bupgei ShynJu (Literature Shunju Monthly, Tokyo), 1961, 1962, 1963, 196A, 1965. Bessatsu Chuokoron Keieimondai Tokushu (Management Problem Special Quarterly Issues of The Chuokoron, Tokyo), 1963, 1964, 1965. 298 The Chuokoron (The Central Public Opinion Monthly, Tokyo), 1961, 1962, 1963, 196A, 1965. Hayashi, ShuJi. "Ryutsu Keizai Seisaku no Kyumu," (Pending Task for Distribution Economy Policy), The Chuokoron, June, 1963, 34-45. Ito, Mitsuharu. "Ryutsu Kiko," (Distribution Structure), Sekai, November, 1963, 249-26“. Kamakura, Noboru. "Nippon Keizaini okeru Yushutsuno Kadai," (The Task of Exports in Japan's Economy), The Chuokoron, May, 1963, A3-55. Makino, Noboru. "Rijuno Sasaeru Mittsuno Gijutsu Senryaku," (The Three Technological Strategies to Support Profit), Bessatsu Chuokoron Keieimondai Tokushu, Summer, 1966, Miller, Dudley L. "Amerikade Bizinesuni Seikosuru Ho," (How to Succeed in Business in America), Translated by Tetsuo ShinJo, The Chuokoron, April, 1963, 17n— 183. Morita, Akio. "Wagashano Jinzae Kaihatsu," (The Talent Development in My Company), The Chuokoron, May, 1966, 193-198. Noda, Kazuo and Kamakura, Noboru. "Kigyo Seichono Mittsuno Joken," (Three Conditions for Corporate Growth), The Chuokoron, May, 1966, 213-216. Noda, Kazuo. "Zaibatsu Kaitaito Sengo Keieishano Toojo," (The Dissolution of Zaibatsu and Emergence of Post- war Managers), Bessatsu Chuokoron Keieimondai Tokushu, Fall, 1965, 363-370. Sumiya, Mikio. "Gijyutsu Kakushinto Keiei Kazokushugi," (Technological Innovation and Managerial Paternal- ism), The Chuokoron, May, 1961, 90-99. Uchida, Tadao et al. "Ryutsu Kakumeiwa do Shinkosuruka," (How does Distribution Revolution Progress?), The Chuokoron, April, 1963, 162-173. Yamashiro, Akira. "Nihon Keiei Kindaikato 'Nihonteki Keiei,'" (Japan's Modernization of Management and 'Management Japanese'), Bessatsu Chuokoron Keieimondai Tokushu, Winter, 1965, 352-367. 299 Other Sources Consulate of Japan, New York. Personal interviews with the Vice-Consul in charge of economic affairs. August, 196“; August, 1965. The Fuji Bank, Ltd., New York Agency. Personal inter- views with the deputy agents and the bank officials. August, 1964. Japanese Manufacturing Firms in Chicago area. Personal interviews with eight selected firms and their officials while pretesting the main questionnaire. May, 1965. Japan Light Machinery Information Center. Personal inter— view with the director of the Camera Division (formerly called Japan Camera Information Service Center). August, 1964. Japan Trade Center, New York. Personal interviews with the Market Research Director and the Director of Public Affairs. August, 1964; August, 1965. Mitsubishi International Corporation, New York. Personal interviews With two Japanese executives in Coordi- nation & Credit Department. August, 1964. Mitsui & Co., Ltd., New York. Personal interview with Director of General Affairs Division. August, 1964. The Sumitomo Bank, Ltd., New York. Personal interview with Director and Chief Manager. August, 196“. U. S.-Japan Trade Council, Washington, D. C. Personal interview with the Marketing Research Director. August, 1964. 300 301 APPENDIX I BASIC DATA SHEET Purpose At this stage of the investigation, very little was known about the extent of the Japanese business activities in America. Thus the form was devised in order to collect the fundamental morphological description of the Japanese business firms Operating in the New York area. Personal interviews were considered as the best method to collect the necessary data. The Basic Data Sheet, therefore, was used as an interview guide. Technical Considerations The Basic Data Sheet consisted of four basic parts: (a) general information on the company, (b) scope of marketing activities, (c) some specific operational fea- tures in conducting business in America, and (d) the back- grounds of marketing executives in charge. The entries to each part were designed to be broad enough to cover a range of heterogeneous marketing opera- tions without omitting key considerations in marketing. The primary use of the Sheet was as a structured inter- view guide, and effectively used as a proper introduction for further informal discussions. 302 Limitations and Shortcomings The Basic Data Sheet served as an excellent call card to introduce the researcher. But the actual modes of operations differed so much from one firm to another that the adherence to it proved to be impractical. The unstructured personal interview seemed to work out best for the purpose of the investigation. However, data on the background of Japanese execu- tives was useful in providing quantitative guides and proved to be reliable in view of succeeding research. All in all, the Basic Data Sheet was satisfactory for the purpose of this phase of investigation: an exploratory research. 303 GRADUATE SCHOOL OF BUSINESS ADMINISTRATION MICHIGAN STATE UNIVERSITY East Lansing, Michigan Hirofumi Matsusaki Confidential 30A Eppley Center For research purposes Michigan State University only East Lansing, Michigan August 10, I96“ BASIC DATA SHEET GENERAL INFORMATION Name of Company Parent Company Name Person in Charge Title Respondent's Name No. of Number of Employees Functional Duties Employees Japanese Nationals Americans Others Have been in the U. S. market for years. Brief history of the company MARKETING CONDITIONS Name of products Main products 301d Percent of sales Channels of distribution Promotional methods Any changes? Advertising? 10. ll. 12. 13. l“. 15. 30M OPERATIONAL FEATURES Marketing Objectives Marketing Policy Subsidiary Parent Marketing Obstacles and Problems MARKETING EXECUTIVES Person to be contacted for the main questionnaire in November Personal background of the executive in charge Length of stay in U. S. Years University (high school) attended Year of graduation Number of years in the present company Years Titles held before Number of companies worked before What type of survey or research do you want to have university academicians do? Other comments. 305 APPENDIX II MAIL SURVEY Purpose This mail survey was designed to identify the over— all patterns of adaptation of the Japanese manufacturing firms operating in America. The emphasis was placed on finding out their modes of operations since the entry into the U. S. market. Thus special attention was focused on their relationship to other American market organizations and on the problems involved in their channel structure over a period of time since entry. Technical Considerations The coverage and the high rate of response were re- garded as of prime importance. This was reflected in the design of the mail survey; and the entire questionnaire was short, concise, and constructed with the respondent's view- point with ease in answering in mind. In order to correlate the factual part of this in- vestigation with the representative data obtained from the preliminary investigation and personal interviews, certain facts about the establishments, products, and channels were again asked. This duplication indeed was unnecessary for some establishments; but the overall response pattern proved to substantiate the reliability of the data. 306 The basic form adopted in the mail survey was of Open-end question, free-response seeking type. And the responses were analyzed by standard procedures of content analysis. Limitations Two follow-up requests were needed to obtain a target rate of response. It was discovered that the mail question- naire could not adequately cover the establishments which ceased operation, or which did not engage in any direct marketing activities. Therefore, it was impossible to determine whether the non-respondents did have any signifi- cant marketing operations or not. The quality of response was not consistent from one firm to another, and a rela- tively large number of responses had to be omitted from the final analysis. UNIVERSITY OF MROFNE IN PORTLAND 96 FALMOUTH STREET PORTLAND, MAINE 04103 Confidential .A SURVEY ABOUT THE PROBLEMS OF ENTRY AND ADAPTATION OF JAPANESE MANUFACTURING FIRMS OPERATING IN AMERICA November 29, 1965 Dear Sir: I am conducting a survey of all the establishments maintained by the Japanese manufacturing firms operating in America. Using the attached questionnaire, I am attempting to gather basic data about some of the common problems which the Japanese manufacturing firms may have in coming to America to sell their products. Regardless of the ferm of your establishment, the location of your office, or the length of Operation in America, your answers to this questionnaire will be of great value to the fellow Japanese manufacturing firms and the international business world. Even if your establishment is just a branch representative office, please answer this questionnaire. Of course your answers will be considered confidential and will be combined with those of other respondents in the final report to protect your identity. In answering this questionnaire, your use of Japanese language is quite welcome. So please use Japanese if you prefer. Mest questions ask you to write in some basic infermation as indicated by illustrations. The entire questionnaire is only four pages long, and can be easily filled out in less than twenty minutes or so. Since this survey is only of academic interest and is my own personal research project, I would highly appreciate your filling and returning this questionnaire at your earliest convenience. I have also enclosed a self-addressed and stamped return enveIOpe. The results of this survey will be published together with a report of another marketing survey. If you are interested in obtaining a general view of Japanese manufacturing firms' Operations in America, as well as the results of this survey, please indicate so in the space provided fer that purpose at the end of the questionnaire. I will be pleased to mail you a copy as soon as the report becomes available. Sincerely yours, \\\ , ,>— FILM/If)? foo Hirofumi Matsusaki Assistant Professor of Business and Economics 308 What is the form of your establishment? (Check answer and explain.) (a) A main office, or the headquarters for American operations. (b) A branch office. (The head office in America is in ) ) A representative office, or a liaison office. (x (y) A sales office, or a sales subsidairy. (z) Other How many people do you employ at your own establishment? (Write in the number) (a) The Japanese Staff (Seishain) (b) Local Employees (c) Others (A) Do you expect to have any changes in your present organizational arrangement in the future? (Check answer.) (Such as changes in the form of establishment, increases or decreases in the number of personnel, relocation of your office site, etc.) Yes No (B) If yes, what kind of changes are they? (Explain. Suggest their reasons.) What are the main lines of products your company sells in America? What roles do the Japanese trading companies perform in the sales of your company's products in the United States? (Please explain.) (Such as direct import and sales, financing, paper work only, etc.) 309 What are your current, basic channels of distribution for your products? (The following list is illustrative of the marketing organizations involved.) (B) (A) (B) (0) Japanese trading companies Own sales force (American salesmen, the Japanese staff, etc.) Industrial distributors Manufacturers' agents Original equipment manufacturers Importers, import agents, etc. Wholesalers, wholesale merchants, etc. Retailers, dealers, franchised retailers or dealers, etc. Mass merchandising outlets (chains, discount stores, etc.) Main Channel(s) Used? (Explain.) Other Channels Used? (Explain.) Did your company have any form of establishment in the area of your current operation before your present establishment was formed? (Check answer.) Yes No If yes, what form was it and when was such a change made? (Explain chronologically if there were more than one change.) What were the reasons for the change(s)? 10. 11. 310 In what year did your company set up your present establishment in its current form in_your area? (Write in the year it was established in your area.) When did your company first begin selling itspproducts in America? (Write in the year in which the products were first sold in America. This may be long before any establishment was set up in your area.) For what reasons did your compapy first begin selling such products? (Please explain.) (A) Which organizations or individuals were most helpful and influential in starting the sales of your com- pany's products in America? (B) For what reasons were they so helpful and influential in starting such sales? (C) Were there any others who were helpful and influential at that time? (EXplain any other organizations or individuals, their roles and relations.) 311 12. (A) When your company first entered the American market in_your area, what was the manner of initial entry? (Explain. Licensing? Joint ventures? Exporting? Any other form?) (B) What kinds of channels of distribution did your company use? 13. What were the obstacles and the problems which your company faced during this beginning stage of selling its products inpyour area of operation? I“. How didpyour company overcome such initial obstacles and problems? This ends the questionnaire. Your Mailing Address: [II] Check here, if you want a (For the report.) report. NAME Thank you very much for your ADDRESS cooperation. 312 APPENDIX III INTERVIEW GUIDE (MAIN QUESTIONNAIRE) New York Area Firms First, the structured personal interviews were con- ducted by the use of Interview Guide, which is reproduced in the following pages. The structure was generally sound, except for the few firms which considered the form to be somewhat lengthy and cumbersome. It was discovered that the best results were usually obtained by handing the re- spondent this guide, and then using it as a self-administered questionnaire to be Jointly filled-in by the respondent and the interviewer. Most respondents were conscientious and seemed to possess very high level of general intelligence. Almost all were college graduates. Care was taken to interview Japanese executives with sufficient experience, usually higher-up in the organizational hierarchy. But the control of the respondents in this respect was sometimes very difficult. In many cases se- curing of the cooperation was considered more important than endangering it by an effort to locate the "right" individual in the organization surveyed. Los Angeles Area Firms After the personal interviews with the firms in the New York area, it was discovered that some of the firms had their headquarters in Los Angeles area and therefore 313 referred the request for a personal interview to their headquarters. In view of the inadequate control of the respondents in New York area, and in view of the relatively expensive nature of the personal interviews, it was thought that extending the investigation to Los Angeles area, which was the second largest in terms of the number of Japanese manufacturing firms operating in America next to New York would increase both the validity and reliability of the data. Thus the Interview Guide was mailed to all the establishments of the Japanese manufacturing firms in the area. Care was taken, however, to solicit only the most cooperative of the establishments. This was actually accomplished by not mailing a follow—up reminder to the questionnaire. There were 11 firms replying to the questionnaire and they supplemented the New York data. The cover letter to this phase of mail survey is reporduced at the end of the Guide, which follows. 314 Interview Guide (Main Questionnaire) "An Analysis of Marketing Strategies Employed by the Japanese Manufacturing Firms Operating in the United States" June 1965 Hirofumi Matsusaki Assistant Instructor Department of Marketing and Transportation Administration Graduate School of Business Administration Michigan State University East Lansing, Michigan Objectives of This Study 1. To gather general data concerning the marketing manage— ment activities of the Japanese manufacturing firms Operating in the United States. 2. To clarify the beliefs, attitudes, and opinions of the Japanese executives stationed in America when approach- ing marketing management problems. 3. To predict the direction of change in such activities in the future. Procedure and Instruction 1. This questionnaire is a part of an academic research project, and therefore the data collected will be held strictly confidential, except for the statisti- cally processed and tabulated results to be published in general form. 2. To answer this question accurately, you may need any- where between 30 to 50 minutes. You can answer most questions simply by check—marking appropriate state- ments given. 315 I. What is the form of your establishment? (l) A manufacturing subsidiary (includes assembly lines). (2) A sales subsidiary, incorporated under American law. (3) A sales office. (A ( ) A representative office. 5) Other 2. What is your present position in the company? Here in Comparable Position the U.S. in Japan (1) President.......... ................ (l) (2) Vice-President...... ............... (2) (3) General Manager. ....... .. .......... (3) (4) Manager .............. .... . ......... (A) (5) Bucho..... ......................... (5) (6) Kacho.................... . ........ . (6) (7) Kakaricho ............... . ... ....... (7) (8) Representative ........ ... .......... (8) (9) Management Staff... ..... . . ......... (9) (10) Technical Staff... ................ . (IO) 3. How old is our establishment? And how old is your parent company? Here in Parent Company the U.S. in Japan (1) Less than 1 year ....... .. ......... (l) (2) 1-3 years................ ......... (2) (3) 3-6 years................ ......... (3) (A) 6-15 years... .......... .. ......... (A) (5) 15-50 years...... ...... .. ......... (5) (6) Over 50 years ..... ....... ......... (6) 4. Does the parent company have similar subsidiaries or offices in other parts of the world? (1) Yes (2) No. If "Yes," indicate the comparative importance of such overseas operations to the parent company. Mark the most important one with (l), the second most important with (2), and the third most important with (3). (1) Africa. (2) North America. (3) South America. (A) Asia. (5) (6) (7) Europe. Oceania. U.S.S.R. 316 5. Do you have any establishments (including your branches or main offices) in other parts of the United States? (1) Yes. (2) No. If "Yes," what is the number of such establishments other than your own? (1) 1. (2) 2 to 3. (3) 3 to 5. (A) 6 or More 6. What is the size of your organization here? Japanese Nationals Local Employees Number of This All This All Employees Office U.S. Office U.S. (1) None ................ .... (2) l—2 .......... ‘ ........ (3) 3-5 ................. (A) 6-10 ................ (5) 11-20 ..... ..... ' ..... (6) 21-50 ............... (7) 51-100.... ..... .... (8) Over 100.. .......... 7. Do you use any Nisei, Sansei, or American salesmen? Nisei or Sansei American Salesmen Employed Employed This All This All Office U.S. Office U.S. (1) None ................ .... (2) 1-2 ................. (3) 3-5 ................. (A) 6-10 ................ (5) 11—20 .......... ' “' ..... (6) 21-50 ............... (7) 51-100.... .......... (8) Over 100.. .......... 8. What is your relationship with the parent organization in Japan? (Mark as many statements as you wish.) (1) Tightly controlled in all matters. (2) Controlled in all policy matters. (3) Operate autonomously, and our recommendations usually get adopted. (4) Operate autonomously, but our recommendations sometimes are not adopted. (5) Can make all operating decisions without inter- ference. 317 \0 Which method is used for your normal communications with the headquarters in Japan? Daily Weekly Monthly Annually None 1) Telephone .......... 2) Teletype ........... 3) Written Reports.... 4) Interview Reports.. ( ( ( ( 10. Which language is used for your internal communication? Language Used Communication With Japanese English Both (1) The Headquarters ...... (2) The Japanese Staff.... (3) The Local Employees... H (D What is the general organizational structure of your U° operations? (1) Highly centralized. (2) Fairly centralized. (3) Rather decentralized. (A) Very decentralized. 12. What is your country of citizenship? (1) Japanese Citizen. (2) U. S. Citizen. (3) Other 13. How old are you? 51—60 Years. 61 Years or More. (I) 20-25 Years. (2) 26-30 Years. (3) 3l—AO Years. (A) 41-50 Years. (5) 6) ( }_I A. What is your educational background? Level of Education Major Field Locatipp (l) Kyusei Chugaku (2) Kyusei Koko or (I) Bunka Senmon Gakko (2) Rika (3) Kyusei Daigaku (3) Horitsu (1) Japan (A) Shinsei Koko (A) Keizai (2) U.S. (5) Shinsei Daigaku (5) Liberal (3) Other (6) High School Arts (7) College (6) Engineer- (8) University ing (9) Graduate School (7) Business 318 [—1 5. Have you visited any foreign countries other than America? (1) Yes. '2) No. If "Yes," which of the following areas have you visited? (1) Africa Canada or Mexico Central or South America ) ) ) Asia ) ) ) I Europe Oceania U.S.S.R. 16. How long have you been in the United States? (1) Less than 1 year. (2) l to 3 years. (3) 3 to 6 years. (A) 6 to 14 years. (5) 15 or more years. 17. How long do you expect to stay in America? (1) Less than 1 year. (2) About 1 more year. (3) About 2 more years. (A) 3 to A years. (5) (6) (7) 5 or more years Indefinitely. I do not know. H 8. What is the average length of stay of your Japanese staff members? Average Length of Stay in Years 1 1-3 3-6 6 or more No Definite (1) Single Pattern Staff....___ (2) Married Staff....___.. ... 19. Have you had work experience outside of the present company? (I) Yes. (2) No. If "Yes," indicate the type of your experience and the number of organizations. (See next page.) 319 Type of Experience Number of Organizations (1) Government (1) 1. (2) Trading Company (2) 2 or 3. (3) Trade Association (3) A or 5. (A) American Company (A) 5 or 6. (5) Other Japanese Company (5) 7 or more. 20 Do you play golf, tennis, bridge, mahjong, g9 or shoogi? I can play, but Yes Np have no time (1) Golf . ..................... (2) Tennis ...................... (3) Bridge ...................... (A) Mahjong ...................... (5) pg .......................... (6) Shoogi ............... y_ ....... 21. To which industry does your company belong? A i—’ V Electrical Machinery Non-Electrical Machinery Chemicals Textiles Shipbuilding Steel Ceramics Mining Food Other O\O GDN OUT JZ'UO [\J vvvvvvvvv 22. What is your market share for the main product? In America In Japan Less than 1% ........................ (1) Between 1 and 5% .................... '(2) Between 5 and 10% ................... (3) Between 10 and 30% .................. (A) 30% or more- ......................... (5) Afixfief‘\/\ UT :00 N F" vvvxxv m 3. To what extent do you use a consultant or professional firm? Weekly Monthly Quarterly Annually Never 1) Legal matters...___ ................ 2) Sales ................ 3) Advertising ..... 4) Marketing Research ............ OOOOOOOOOOO —— < __ __ ( _ __ __ ( _ ................. ( 320 2A. To what extent have you contemplated (thought about) using a consultant or professional firm? Weekly Monthly Quarterly Annually Never Legal matters... ..... . ..... Sales........... ..... Advertising..... Marketing Research..... .......... 00000000000 — _ ——— ................. —— _ -——_ . . . . . O . . O O O O 9 a C C u—-— —— f“./\/_\/\ :00 m H VVVV 0 O O O O O 00000 25. How do you compare your use of a consultant or pro- fessional firm to other companies in the same industry here? Compared to Other Compared to Other Japanese Companies Here American Companies More Same Less More Same Less (1) Legal matters.. ... ........ (2) Sales... ....... . ........ (3) Advertising.... . ........ (4) Marketing Research ..... ... ... ........ [\J 6. If there is an opportunity for your Japanese staff members to participate in a special training program or a free seminar, what kind of program would you like them to have? Pick up four areas from among the following and rank them in order of your preference from (1) to (A). (1) Language (English) (2) American Business Practices, Manners and Customs. (3) American Culture, Politics, and Socio-Economic Conditions. (A) Engineering. (5) Sales. (6) Management. (7) Advertising. (8) Marketing. (9) Marketing Research. 10) Other 27. Are you familiar with the parent company's marketing operations in Japan? Yes. No. 321 If "Yes," indicate how well you know about your parent company's marketing operations back in Japan. Knowledge About Parent er Fairly Well Company's Well Well Enough Customers & Prospects. ....... Products & Services .......... Promotion & Marketing ........ Channels & Distribution. ..... C Ill HI (1 (2 (3 (u 28. What is your company's approach to marketing in America and in Japan? In America In Japap (1) Very progressive, with aggressive promotion and product innovation.............. ........ (l) (2) Rather progressive, with considerable attention to marketing research........ .... (2) (3) Rather conservative, but there is some pro- duct innovation and the use of marketing research. ................... ..... ..... (3) (A) Very conservative, with limited product innovation. ........ ........... ..... . ...... (A) 29. From your company's standpoint, how competitive is the American market? (1) Very much more competitive than in Japan. (2) More competitive than in Japan. (3) Just about the same in competition as compared to Japan. (A) Less competitive than in Japan. (5) Far less competitive than in Japan. 30. In order for your company to succeed in the marketplace, which one of the following is the most important? Mark the most important one with (l) and the second most important one with (2). In America In Japan (1) To promote our products as superior and better ..... . ...... .... .... ............. (l) (2) To organize sales force to push our products.... ... ... . ........ . ........... To develop new products ...... ..... . ..... . To set up service network for repair works. To establish dealer or distributor network. (3 (A (5 VVV 322 L0 1. In order for your company to win over competitors, which one of the following is the most important? Mark the most important one with (l), and the second most important one with (2). In America In Japan (1) A better product to sell ...................... (1) (2) Lower and competitive pricing ................. (2) (3) Cooperation of good distributors, dealers, or retailers .................................. (3) (A) Better advertising and sales promotion ........ (A) (5) More able salesmen and the sales force ........ (5) (6) Better repair services ........................ (6) 32. What is the future prospects for your company's main products? In America In Japan (1) Very fine, ample opportunities available ...... (1) (2) Fairly good, should prove to be profitable.... (2) (3) Profitable, but difficult to stay in the race. (3) (A) Not bad, but cannot expect too much ...... ..... (A) (5) Rather poor, our market is getting smaller.... (5) 33. Are you in the industrial markets or consumer markets? In America In Japan (1) Industrial markets only ....................... (l) (2) Consumer markets only ......................... (2) (3) Both industrial and consumer markets .......... (3) (A) More industrial than consumer markets ......... (A) (5) More consumer than industrial markets ......... (5) 3A. How many different models or variations are there in your major product line? In America In Japan (1) 1-3 product models or variations .............. (l) (2) 4-10 product models or variations ............. (2) (3) 11-20 product models or variations ............ (3) (A) 20 or more product models or variations ....... (A) 35. How diversified are your company's product offerings? In America In Japan (1) One basic line of products offered ........... (l) (2) Two different lines of products .............. (2) (3) Three related, but different lines ........... (3) (A) Four or more product lines offered ........... (A) 323 36. How many different products (items or models) are there in your total product-lines? In America In Japan (l) 10 or less .................................. (l) (2) 10-30.. ..................................... (2) (3) 30—100 ..................................... . (3) (A) 100-300.. ................................... (A) " (5) 3oo-1,ooo ................................... “—“(5) (6) 1,000-3,000 ................................. (6) (7) 3,000 or more ............................... (7) 37. What main segments of the market do you try to serve with your company's major products? (Mark as many as you wish.) In America In Japap (1) High income group .......................... (l) (2) Middle income group ........................ (2) (3) Low income group ........................... (3) (A) All income groups .......................... (A) (5) Upper social class ......................... (5) (6) Middle social class ........................ (6) (7) Lower social class......................... (7) (8) Status conscious people. ................ (8) (9) Educated people ....... . ..... . .. ..... __ (9) (10) Anyone who tries to buy the product........ __(10) (11) ................................ (Write in) —(ll) (12) ................................ (Write in). (12) 38. What appeals do your company's major product's have? (Mark as many as you wish.) In America In Japan (1) Low price .................................. (l) (2) High value ............. . ................... (2) (3) High quality .............................. . (3} (A) Good styling and design .................... (A) (5) Careful after—services .................... .. (5) (6) Newness in product features................ (6) (7) Good brand image.. .......................... (7) (8) ................................. (Write In) (8) (9) ................................. (Write In} -(9) 39. How frequently have you introduced new products in the market? if you can. In America Less than one new product per year ......... 1-2 new products per year .................. 3-5 new products a year .................... 6-10 new products a year................... 10-20 new products per year ................ 20 or more new products per year ........... C\U'| 5U) [\J H vvvvvv _( :( _( ( ( ( Take the average of the past two years, In ca ap (l) (2) (3) <4: «:52 (6; L. 324 A0. In introducing new products into the market, which factors are most important in determining your product prices? Choose 3 factors, and then rank them in order of their importance from (1) to (3). In America In Japap (1) Economic reasons, following the law of supply and demand ......................... (l) (2) Financial soundness, assuring target rate of returns or target profit ............... (2) (3) Competitive strength, due to similar pricing as the competitors'........... .... (3) (A) Psychological impact, with prestige prices for insuring high product values .......... (A) (5) Sociological appeal, mainly as a status symbol ....... .. ........................... (5) Al. When advertising your company's products, which appeals do you emphasize most? (Mark as many as you wish.) In America In Japan (1) General benefits derived from products... (1) (2) Uniqueness of the company products ........ (2) (3) Emphasis of the value of the products ..... (3) (A) Brand or company name stressed ............ (A) (5) Quality of the products ................... (5) (6) Factual information about the product ..... (6) (7) ................ . ............... (Write in) (7) (8) .................... .. .......... (Write in) (8) 42. Which method of sales promotion do you use most? In America In Japap (1) Dealers sales contest ..................... (l) (2) Customers sales contest ................... (2) (3) Participation in trade shows and exhibits. (3) (A) Invitation of prospects to special events. (A) (5) ................................ (Write in) (5) (6) ................................ (Write in) (6) A3. What role does product design play in your marketing effort? (Mark as many as you wish.) In America In JEEEQ (1) Not very important ........................ (l) (2) An important marketing tool ............. .. (2) (3) Very important to marketing success. ...... (3) (A) Recommendations of marketing people usually get adopted in designing .......... (A) (5) Recommendations of marketing people are not reflected on designing ............. ... (5) (Continued) 325 A3. (Continued) In America In Japap (6) Our engineers usually come up with good designs ................................... (6) (7) Our engineers do not necessarily respond to what the market desires ................ (7) (8) .......................................... (8) AM What is the extent of your R & D activities? (Mark as many as you wish.) In America In Japap (1) Less than other Japanese competitors ...... (l) (2) About the same as other Japanese firms.... (2) (3) Much more than other Japanese competitors. (3) (A) Plan to increase future R & D significantly (4) (5) Plan increasing emphasis on R & D activities................. ............... (5) (6) No major change in R & D policy ......... .. .f/ (7) .......................... ........ (7) 45. What is the product image of your company? (Mark as many as you wish.) In America In Japap (l) Well-known, reliable ...................... (l) (2) Leading brand, trustworthy ................ (2) (3) Major brand, many attractive features ..... (3) (A) Low cost, high quality .................... (A) (5) Best value for the price .................. (5) (6) Unknown brand, but a good buy ............. (6) (7) Superior engineering and technology ....... (7) (8) Careful workmanship ....................... (8) (9) .......................................... I9) A6. What is your basic channel of distribution? (Mark as many as you wish.) In America In Japan (1) Use trading firms.. ....................... (l) (2) Use wholesalers or distributors ........... (2) (3) Use retailers ............................. (3) (4) Sell direct to customers and prospects.... (A) (5) Use one level of middlemen ................ (5) (6) Use two levels of middlemen ............... (6) (7) Use three or more levels of middlemen ..... (7) (8) .......................................... (8) (9) .......................................... (9) 326 A7. What are the chief problems in your channel of distri— bution? (Mark as many as you wish.) In America In Japap (1) Legal matters...... ....................... (l) (2) Resale price maintenance .................. (2) (3) Maintenance of direct control ............. _____(3) (A) Prevention of price-cutting ............... (A) (5) Cooperative advertising ................... (5) (6) Promotion to push the product ............. (6) (7) After- service problems .................... (7) (8) Customer- care ..... . ................. ..... (8) (9) Market communication ...................... (9) (10) ................ ....................... (IO) A8. What is the ideal channel of distribution for your company? (Mark as many as you wish.) In America Ip_£apap (1) Selling direct to customers ............... (l) (2) Selling direct through franchised dealers. (2) (3) Selling direct through various retail outlets... .. ..... .......... . (3) (A) Selling indirect through wholesalers and distributors... ...... ................. (A) (5) Selling both direct and indirect at the same time. ............... .............. (5) (6) Selling through mass-merchandising out- lets (supermarkets, discount stores) ...... (6 ) (7). ......... ...... (7) A9. What role does the trading companies perform in your marketing effort? (Mark as many as you wish.) In America In Japan (1) None. . ....... . ...................... (l) (2) Supply market information ................. (2, (3) Handle the paperwork related to import— export procedures ..... ... .............. (A) Provide additional personal selling effort *(A) (5) Take care of the actual sales of product. (5) (6) We function as liaison and representative, the trading companies do actual work ...... (6 (7) .......................................... (7) 327 50. What is the extent of your "after—service" and technical services? (Mark as many as you wish.) In America I Japap (1) We have no need for them.. ................ (l) (2) Our own engineers handle them ............. (2) (3) We have a network of specially trained "service" dealers or stores ............... (3) (A) We have a warehousing system for the necessary parts. ..................... -.... (A) (5) We emphasize their importance and do whatever the best we can .................. (5) (6) .......................................... (6“ 51. Do you use personal selling or the sales force? (1) Yes. (2) No. If "Yes," what are the chief problems With the use of sales personnel? (Mark as many as you wish.) In America In Japan (1) Recruitment, selection, and hiring ........ (l) (2) Training and developing.... ............... (2) (3) Compensating and motivating ............... (3) (A) Supervising and directing ................. (A) (5) Competence and quality of sales personnel. (5) (6) Turnover (due to resignation, firing, etc. ). ......... ..... . .......... . ........ _(6) (7) Loyalty to the company .................... *(7) (8) . . . ..... ......... .................. _(8) (9) ................ . ......................... _(9) 52. What are the chief sources of your market information? (Mark as many as you wish.) In Ameripa In Iapap (1) Outside sources such as marketing research agencies ..... ........ . ............... (1) (2) The government statistics. ................ (2) (3) Trade associations and other publications. (3) (A) Trading company people........... ......... (A) (5) Our marketing research staff .............. (5) (6) Our technical and engineering staff ....... (6} (7) Our dealers or distributors ............... (7) (8) Our salesmen gather it... ................. (8) (9) . . . ................................. I9) (10) ................. . ........................ (10) 328 June 30, 1965 Representing a Japanese manufacturing firm, your marketing operations here in America have contributed to strengthen- ing healthy economic relations between Japan and the United States. As an assistant instructor and a graduate student in marketing management at Michigan State University, I have conducted a comparative study on the marketing manage- ment activities of these two nations' business. By filling out and answering the enclosed questionnaire, you can help me immensely in obtaining additional oper- ational data of the Japanese manufacturers in the Los Angeles area. On the top page of this questionnaire, you will find the objectives and procedures, as well as the return address, for this questionnaire (titled as inter- view guide). As you see, this study is a part of a larger project. I have already conducted a series of interviews with many Japanese executives in the New York area using this guide. You can answer most questions by simply checking-off appropriate statements. But if you wish to include any additional information, please feel free to write in available space in the questionnaire. Your cooperation is a key to the success of this project. Sincerely yours, Hirofumi Matsusaki Assistant Instructor 30A Eppley Center, Michigan State University East Lansing, Michigan HMzhm Enclosure lllli‘! (lull lv III. I].