The Thai companies had 25. 5 percent share each, while Office Systems owned 29 percent shares and Executive Design owned the remaining 20 percent shares. The company targeted the South East Asian market with Thailand as its base. Thailand was chosen because of its strong economic growth and its strategic location that provided easy access to the markets of Indonesia, Singapore, Malaysia, Taiwan and Philippines. Case Analysis The partnership was successful in capturing 25 percent market share in office furniture segment in Thailand.
The export sales of the company accounted for nearly 10 percent of its total sales value. However, this joint venture was soon falling apart owing to cultural differences and gross inadequacy of the management to deal with operational difficulties. In the year 1996 Executive Design wanted to end the joint venture agreement with ODP. A detailed study of the case history revealed some of the strategic issues facing the company. he cultural differences between the Thai, Taiwanese and American managers led to conflicts. Perception and communication was one of the major issues facing the company at all levels.
The Taiwanese management style did not work in Thai environment and the workforce reserved strong opinions on the way management functioned. This created animosity and dissatisfaction that affected productivity. The company lacked direction in setting common goals and objectives. The four partners had come together to pursue individual gains. The 25. 5 percent share owned by each of the Thai companies combined to provide a 51 percent local ownership that facilitated the establishment of ODP in Thailand. The Thais were not much involved in the daily operations of the business.
Executive Design had an advisory role in the company; hence the company management was overseen by Alex Chen and Robert Chang, both from Taiwan. The company management had not created distinct lines of roles and responsibilities for their managers. Job responsibilities and accountability shifted in tune to the involvement of partners in the execution of projects. This led to confusion and misunderstandings in interpreting management instructions. The interactions between the employees were restricted owing to the language barrier between the Thais, Taiwanese and Americans.
Inability to understand the language and cultural conflicts led to communication problems within the workforce. The company also faced a high rate of attrition that is a result of increasing job opportunities in the country facing high economic growth. Trained personnel quit within few months lured by higher wages offered by other companies. The above issues highlight the inadequacy of the management to understand cultural differences and resolve managerial conflicts. The withdrawal of Executive Design from the joint venture agreement has many implications on ODP’s business strategy.
These implications are listed as follows:
Office Systems and Executive Design had setup sales office and furniture showrooms in Hong Kong and Singapore. Executive Design’s withdrawal from the joint venture agreement meant that the showrooms will now be the responsibility of Office Systems alone.
Executive Design would sell its 20 percent stake to Office Systems that will raise the ownership of the Taiwanese to 49 percent.
ODP will lose on the expertise of Executive Design on manufacturing American style of furniture that is in great demand in Thailand and other South East Asian countries.
Based on the analysis of issues and challenges faced by ODP, the senior managers Alex Chen and Robert Chang have decided to re-design their managerial strategy in resolving cultural conflicts and ensure effective management of operations. The management feels that focusing their attention on human resources and cultural issues is one of the most critical factors that could make this trans-cultural business venture work successfully. In light of the issues facing the company the following steps are recommended by the management:
Establish company mission and vision statements
Appoint a strong management team comprising of individuals having persuasive leadership skills.
Introduce personnel development plans to review talent and help employees to grow within the company in accordance to their personal strengths and weaknesses.
Conduct regular training and development programs that are aimed at promoting team work, increased level of coordination and cooperation, improving effective communication, and promoting group activities.
Introduce regular briefings on projects, one-to-one interactions, team meets and updates on procedural and operational front to promote communication and cultural cohesion.
Promote Thai employees to key positions to promote increased cooperation and understanding in case of cultural conflict.
Establish company mission and vision statements The primary task of the management will be to establish the company’s mission and vision statements that reflect its core ideals. This will provide its workforce with specific goals and objectives that need to be identified in the short term or long term operations. It helps in building an organizational culture that instills a sense of pride among its workforce. Appoint a strong management team comprising of individuals having persuasive leadership skills
The senior management will appoint or promote people having strong leadership qualities at key positions to help the management in resolving operational and business issues. Organizations are rapidly moving towards persuasive style of leadership that is more effective in building management-employee relationship and promoting trust within individuals. This form of leadership is also advantageous in situations that require tactful handling of human resources. Introduce personnel development plans and conduct regular training and development programs
Retention of talent is one of the main focal point in the strategic revamping of company management. The management will have a separate human resource department that will be responsible for nurturing talent through effective personnel training and development programs. The training team will roll out personnel development plans that will assist the staff in defining their professional goals and objectives, analyze their strengths and weaknesses, and placing them in business processes that meet their individual capabilities. This will ensure proper utilization of talent and the individual will also have greater sense of job satisfaction.
Based on their individual training requirements, the staff will attend regular training workshops on team work, communication development and leading and managing people. Working as a team and taking initiatives at work front will induce enthusiasm and motivation at work. Promote communication Promoting effective communication and resolving cultural conflicts will require team building efforts from the line managers. Regular team meets, group activities, and interactive sessions with the management will facilitate a better understanding amongst the workforce and create an encouraging atmosphere to work in.
The management will take initiatives to reduce the communication and cultural barriers between the Thais and Taiwanese workforce. Promote Thai employees Thai managers will be appointed in key positions to promote better understanding and cooperation between the two cultures. Among other steps the management plans to roll out regular feedback sessions, one-to-one interactions between workforce and line managers, and project briefings at the initial stages of the project start-up to define the project milestones, details of operations, and identify individual roles and responsibilities.
These steps will ensure smoother communication between the various levels of management, help in identifying problems and limitations existing within the operations, and provide specific guidelines on the work processes. Summary The implementation of the recommended measures will bring about a transformation in the existing work and cultural environment within ODP. The management needs to ensure effective planning and leadership practice to successfully resolve the existing issues and challenges.
Harzing, Anne Will. 2004. International human resource management: managing people across borders. SAGE publication.