Transcript SOTO - 2005
SOTO January 2005 intake Echenne Vincent Donescu Stefan Graham Russell Petrucci Massimo Zhu Yinfeng Best In France 2005 Report Note At the request of the company investigated, “Soto”, is not their real name. Also, certain details have been omitted which would otherwise indicate the identity of the company or individuals. This request was since the company is going through a sensitive startup period in France and publicity of this nature is not desirable in the eyes of the Japanese headquarters. On Wednesday June 14th we met with Mr. Myers the General Manager, Business Development for Soto in France. Mr. Myers explained to us at this meeting and via previous telephone discussions Soto’s activities in France and approach to working here. The team wishes to thank Mr. Myers for his willingness to share with us his insights into Soto and it’s experiences coming to France. HEC MBA, Best In France, Soto Corporation / 2 Background Précis Soto corporation manufactures automotive sub assemblies for supply to automobile Original Equipment Manufacturers (OEM’s). Soto is a Japanese company which has traditionally sold 80% of its production to Nissan, a Japanese OEM. With the recent merger between Renault and Nissan, Soto has been forced to begin operations in France to supply Renault plants here components which are now shared between Nissan and Renault. Soto faces challenges to integrate a largely Japanese workforce into the French culture and vice-versa for their French workers to understand how to succeed in a company with strong ties to Japan and Japanese business culture. Primary among these challenges has been the transition of control from Japanese transplanted workers to French counterparts. This ongoing need has forced the Soto management to work with it’s employees to instil new values and expectations to ensure success in France. HEC MBA, Best In France, Soto Corporation / 3 Report Structure Background Précis Company background • Products • Markets Served • Growth Objectives Best In France findings • • • • • French objectives Difficulties Faced Adaptation to France Key Benefits of France Essential Advice HEC MBA, Best In France, Soto Corporation / 4 Soto Organisation Name Headquarters Established Capital President & CEO Employees « Soto Corporation » Tokyo Aug. 25, 1938 ¥40,606 million (as of March 31, 2005) ~ omitted 16,347 (as of September 30, 2004) Consolidated subsidiaries 47 (as of September 30, 2004) Affiliates accounted for under the equity method 12 (as of September 30, 2004) Stock Exchange Listings HEC MBA, Best In France, Soto Corporation / 5 Tokyo Stock Exchange Soto Corporation company mission Basic Philosophy We shall contribute to the people around the world by creating a comfortable environment through the interactions of the earth and the human beings. Management Policy We aim to: 1.Coexist with the environment and treasure the nature and lives of all human beings. 2.Lead the market by producing attractive products. 3.Promote an open and visible management style with integrity and fairness. 4.Become an organization that can make continuous improvements by making the best of each individual uniqueness and capabilities. Action Guideline 1.Strive to make one's best without avoiding difficulties. 2.Respect each individual humanity and culture. 3.Think freely and act speedily. HEC MBA, Best In France, Soto Corporation / 6 Major Products Produced Main Automotive Products HEC MBA, Best In France, Soto Corporation / 7 Cockpit Modules, Front End Modules, Car Air Conditioners, Compressors, Condensers, Instrument Panels, Meters, Electronic Components, ITS, Radiators, Mufflers, Converters Major Clients Audi AG Isuzu Motors Ltd. Suzuki Motor Corporation General Motors Corp. DaimlerChrysler AG Nissan Motor Co., Ltd. Nissan Shatai Co., Ltd. Nissan Diesel Motor Co., Ltd. BMW AG Ford Motor Co. Volkswagen AG Peugeot S.A. Fuji Heavy Industries, Ltd. Honda Motor Co., Ltd. Mazda Motor Corp. Mitsubishi Motors Corp. Renault S.A. and others HEC MBA, Best In France, Soto Corporation / 8 Soto Company key objectives The following 8 slides detail the opportunities that Soto has identified as being critical to its future growth. This presentation was made by Soto to investors in late 2004. HEC MBA, Best In France, Soto Corporation / 9 HEC MBA, Best In France, Soto Corporation / 10 HEC MBA, Best In France, Soto Corporation / 11 HEC MBA, Best In France, Soto Corporation / 12 HEC MBA, Best In France, Soto Corporation / 13 HEC MBA, Best In France, Soto Corporation / 14 HEC MBA, Best In France, Soto Corporation / 15 HEC MBA, Best In France, Soto Corporation / 16 Growth Targets HEC MBA, Best In France, Soto Corporation / 17 Message from the president The world's automakers are targeting the global optimization of their procurement systems. In other words, they seek to achieve one global standard for quality, cost, and timely delivery. Soto has met that challenge. Through modularization made possible by our industry-leading development and production technologies, we are meeting our customers' needs at locations around the world. Soto aspires to be the No. 1 module supplier globally. We are continuing to refine our overall technology capabilities in development, production, procurement, and other areas. We also are boosting our competitiveness by progressing with the globalization of all aspects of our business activities. Based on these efforts, we intend to make a leap forward onto the global stage as a company with a superior ability to make speedy and strategic business proposals. HEC MBA, Best In France, Soto Corporation / 18 Report Structure Background Précis Company background • Products • Markets Served • Growth Objectives Best In France findings • • • • • French objectives Difficulties Faced Adaptation to France Key Benefits of France Essential Advice HEC MBA, Best In France, Soto Corporation / 19 French Activities Soto is an extremely traditional Japanese company. Historically most of it’s business (80%) has been in Japan with Japanese customers. As a result, the challenges posed by a significant expansion in France with new customers and a new culture to adapt to will be challenging. In January 2001 a holding company was setup in France to prepare for the French operations. In January 2004 this was first registered as a French company to begin operations serving a joint Nissan / Renault platform. The French company presently employs 60 people, 35 of whom are Japanese nationals. HEC MBA, Best In France, Soto Corporation / 20 Why France? Soto, like most tier 1 automotive suppliers is forced to follow the production strategy of it’s major customers into new markets Due to the merger between Renault motors of France and Nissan Corporation of Japan, Soto’s major customer Nissan is now sharing considerable technology and joint platforms with Renault. This means that Soto must now serve Renault operations in Europe more than in the past and France was the obvious choice for expansion as Renault is headquartered here. Soto has limited production and distribution facilities in Wales, however these were deemed to be insufficient to meet Renault’s needs so over the next 3 years much of the services offered from Wales will be transferred to France. HEC MBA, Best In France, Soto Corporation / 21 Difficulties Faced Cultural difference This is the most significant challenge faced by Soto in adapting it’s workforce to the European business and French culture in particular Integration of Japanese employees into the French society Eg. Necessary to encourage them to consider France as a long term assignment worth adapting to rather than just a temporary leave from Japan Integration of French employees into Soto Eg. Difficulties faced by new employees who do not have experience working in Japan or with Japanese who may have different expectations and methods Expectations of Japanese head office Eg. Tendency to not embarrass managers with the faults of their division had repercussions when European customers expected to discuss these face to face. Obedience to management above all else difficult in Europe HEC MBA, Best In France, Soto Corporation / 22 Difficulties Faced Company culture Japanese employees are less likely to volunteer to embrace responsibilities unless directed to by their manager Tendency to obey without considering the implications of the action because it was a management directive. These two cultural differences stood out initially until the French General manager was appointed who understood western management 35 hour working week Japanese culture is for employees to occasionally work extremely long hours whether to impress management or to fulfil a difficult assignment French employees who left at 5pm were questioned on their commitment initially by Japanese colleagues This has had to be discouraged by management as it contravenes French industrial law HEC MBA, Best In France, Soto Corporation / 23 Difficulties Faced Cultural differences result in Soto-developed solutions Very few external consultants have been hired to assist with development of operations in France Communication Predominantly only Japanese language used with communication between head office in Tokyo English is the second language therefore French workers must be proficient in it Language barriers cause many problems to be handled internally within the organisation rather than using external resources HEC MBA, Best In France, Soto Corporation / 24 Adaptation to France Recruitment There currently is no HR department Recruitment is done directly by managers Tendency to hire only Japanese (75% of the total number of employees) Actions taken and plans for the future Recruitment of a French development manager Invert the proportion of Japanese employees working for the company Providing training sessions on Japanese culture for new French recruits HEC MBA, Best In France, Soto Corporation / 25 Adaptation to France Performance appraisal To-date has been subjective appraisals by immediate manager No set evaluation sheets Compensation policy Fixed salary plus limited bonuses Company car, apartments and other benefits No salary based on performance from Japanese background Job design No use of job description Has been necessary to create role descriptions and use in appraisal HR manager to be appointed will develop this appraisal system HEC MBA, Best In France, Soto Corporation / 26 Adaptation to France Training Japanese headquarters in Tokyo, but no training for employees transferred to Europe yet International transfer and use of expatriates Transfer of Japanese from the headquarters English language requirement but no French requirement for Japanese expatriates assigned to France Development manager is a French expatriate with 35 years experience with Japanese company Ad-hoc training and immersion programs developed within the office to help immersion HEC MBA, Best In France, Soto Corporation / 27 Key Benefits of France R&D grants given by French government These have resulted in the transfer of the European R&D headquarters to France Highly educated workforce – Japanese have been impressed so far with the skills of the French engineers particularly in product design Location benefits Proximity to major European clients Understanding of the European market Expansion opportunities HEC MBA, Best In France, Soto Corporation / 28 Essential Advice Integration of cultures The most obvious impediment to efficient growth has been the barriers which have existed between the Japanese and French business cultures and a lack of commitment of either party to embrace the other This has begun to change now that the senior French management is Japanese and understands the western business culture and how to succeed in Europe Hiring of more French employees with Japanese experience Establishment of a shared team culture within the French workforce rather than two different groups – Japanese and French. For an Asian company coming to France: Do not underestimate the effort necessary to communicate with and understand the western / French «business philosophy » HEC MBA, Best In France, Soto Corporation / 29