International Management – Supreme Canning Company
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Today’s world corporations must deal with all kinds of restrictions concerning entering foreign countries. Marketers and finance managers play a key role when it comes to making decisions concerning entering a foreign country and managing worldwide money matters. It is extremely important for international marketers to possess insight into multinational finance and accounting functions, because traditions are heterogeneous from one country to another.
This case contains a problem concerning two companies who come from different cultures and want to do business with each other.
Was the chairman of the US company wrong for not having found out in advance about Japanese business practice?
Not seek information
Yes it was wrong for not having found out in advance about Japanese business practice. The tomato market in US has not been exceeding its goals because it was not enough to absorb increasing imports. To enter the Japanese market was one of the potential bright spots for the Supreme Canning Company. Japan has been decreasing their trade barriers and attempting to encourage imports. Since the US firm did not have well-known brand name/image of it own like the Japanese firm, which was much larger and handled a large number of products with great success, it was a good business opportunity for the US company to enter the Japanese market and act as a large-scale supplier of products made to customer’s specifications. The US company should have considered that Japan’s business practice is a lot different than is recognized in US with various cultures both in business and day to day life and they should have sought knowledge of how the Japanese carry out their business practice. If the US Company had done that there is a big possibility that they could have a long lasting successful collaboration in the tomato market in Japan.
The president and chairman of the board of Supreme Canning Company went on a four-day business trip to Japan to discuss business matters with the Japan Company. Some misunderstanding came up but the visit was concluded successfully and the Americans invited the Japanese to visit their plant in California. The Japanese company was willing to sign up a mutual contract but the US Company rather wanted some specific agreements and contract which is the first sign of different business culture. When the Japanese were supposed to visit the US company for four days they only could stay for 2 days and the president was not able to come; instead a senior executive came. The vise president of the board of the California company was offended and wrote them a letter saying he was not satisfied with their behavior and the Japanese decided to cancel the visit and no further negotiations or serious contracts were made.
If the US company had sought information about Japanese business practice this misunderstanding would never have occurred. The Japanese found it offending when the vise president wrote them a letter asking why they were not going to send their president and were only staying for two days instead of four. The older the people get in Japan the more respect they receive. Therefore the Japanese company sent an older man who did not present a card nor did introduce himself when he and three other middle aged local businessmen of Japanese extraction visited the plant some months later. The older man just got along and listened what they talked about. This behavior is recognized in Japan but the vise president and the chairman of the US company did not know that because they did not seek information about Japanese business practice. Whether companies are going to export their product’s in Japan or some other countries it is extremely important to study the business practice so that communications between the companies can go as smooth as possible with few misunderstandings and respect.
Where the Japanese wrong for not having found out about US business practice
before they initiated contacts?
Not seek information
The Japanese were both right and wrong. They were wrong because they didn’t do their homework, they didn’t know enough about western negotiation habits. If they would have some knowledge of western culture they would have understood the chairman’s reaction, even as he reacted a little harshly. Even though the Japanese company was much larger than the US company, the Japanese had no right to behave like they owned the US company. If they wanted this contract they would have learned that US negotiators typically prefer direct statements, vigorous defense of their position, agreements on a point-by-point basis, the covering of all contingencies in a written contract, and rapidly get to know their potential associates first, prefer to avoid argument and confrontation, wish to consider the agreement as a whole, and need to concur frequently among themselves and with their colleagues at the company before agreeing anything. If these differences are not recognized and allowed for, feelings of mistrust may cause failure in reaching agreements that would otherwise be beneficial to both parties. Methods of negotiation also are culturally influenced.
But the Japanese were not wrong about several things. The managers of the US company should have also learned more about Asian negotiation techniques before they arrived in Japan. The only thing that went wrong was huge misunderstanding between the two companies. The managers of the both companies were insulting each other without even noticing. Dealing with foreign managers or subordinates in overseas offices presents potential for misunderstanding and conflict. That is exactly what happened between these two companies.
What should the president of the US company do now?
The presidents of the US company should apology on behalf of the company for not being so globalized, and try to have the Japanese back to the negotiations. The president should try to meet the Japanese in the middle, i.e. not let the Japanese have the total control of the negotiations. He should study Japanese culture in business to be prepared for any surprised act on behalf of the Japanese.
He should also consider whether there are more Japanese companies who are more willing to negotiate with them. Since he has learned from his mistakes with the first Japan company he could be prepared to negotiate with another Japan company if the agreements do not go through with them.