Managerial_Principles

Far Eastern University Makati Graduate School of Business MBA Program Principles of Managemet 2nd Trimester, SY 2012-2012 ARTICLE 1 PRESENTATION Prepared by: GROUP I Nerissa T. Luanzon Claire Tumangday Submitted to: Prof. Mundy Gonzales September 19, 2012 Wa, Guanxi and Inhwa: Managerial Principles of Japan, China and Korea SUMMARY Japanese, Chinese, and Korean business organizations do not run on the same managerial principles. Each society has its separate, distinctive philosophy which leads to specific behavior appropriate to the setting and having knowledge of these principles is not only helpful but also critical to success in dealings with managers from those countries. Although each of the three principles is unique, each also resembles the others to some degree. | Japan | China | Korea | Managerial Principle | Wa | Guanxi | Inhwa | Definition | Wa refers to the value the Japanese place on group loyalty and consensus. | Guanxi refers to special relationships two persons have with each other. | Inhwa stresses harmony between persons who are unequal in rank, prestige and power. | General Description | Members of the group are expected to submerge their individual goals in favor of the group’s. | The two persons involved assume that each is fully committed to the other and agrees to exchange favors in spite of official commands to act neutrally. | Requires that subordinates be loyal to their superiors and superiors be concerned with the well-being of subordinates. Categorized as clan management. An individual must be loyal to hierarchical rankings | Coverage | Takes place in a group context. | Operates on the individual level. | Relatively individualistic. | Time Dimension/ Duration | The group’s survival and eventual success are keyed to a long-term perspective. | Guanxi relations that are no longer profitable or based on equal exchanges are easily broken. | There is little organizational loyalty. | View of Contracts | Allows the Japanese to view contracts as personal agreements that should be changed when conditions change. | Contracts are binding only as long as the circumstances at the time and the signers of the agreements remain constant. | The intentions of the parties are more important than contractual clauses. Renegotiations and redoing of contracts are expected behaviors. | Implications | Demands that strangers already have established some type of social relationship before they meet- through a mediator. | The development of one’s own Guanxi relations is preferable, because these informal affiliations are more important than more formal ones.The Chinese bureaucracy inhibits action while Guanxi facilitates action. | Business relations should be between friends or on a personal footing.Foreign business persons must establish their own personal networks in government circles as well because government officials direct much of Korea’s economy. | Other implications | Japanese prefer to maintain the illusion of surface agreement until a consensus has been reached. | The exchanges tend to favor the weaker member. Claims of inadequacy should be seen as subtle demands that the other person has the obligation to be magnanimous. | Intrinsically an unequal relationship but personal relations occur only with those who have some claim of equality - especially age and prestige. | Do’s and Don’ts | Mediators are important because criticisms of colleagues and fellow members threaten the group’s wa.Discussions at a bar can be semiserious and hint at disagreements that would be unwelcome in more formal settings. | Those who wish to deal with the Chinese must develop guanxi relations themselves or know persons who enjoy guanxi with those in central position. | No one who is part of an inhwa relationship dares to upset the other, thus, bad news will not be delivered until the late afternoon so the recipient will not have his whole day disrupted. | CRITIQUE RELATED TO MANAGERIAL PRINCIPLES As emphasized by the author of the article, one must have an understanding of the unique philosophies of the Japanese, Chinese and Koreans or any other country in order to be successful in dealing with the managers from that country. This means that as a leader a manager must have a global mindset and can adapt to cultural diversity to be effective in influencing people with different cultural backgrounds. Japanese The principle of group loyalty and cooperation which is embedded in the Japanese culture can be viewed as one of the strengths of Japan as a nation. One practical benefit is the loyalty of the employees in their organization. This ideal of lifetime employment can be found in Japanese corporations. While managers from other countries struggle to cultivate a culture of teamwork in their organization, Japanese had this already in their system. We know that teamwork and cooperation are essential in attaining any organization’s objectives. Another good aspect of wa is the long-term perspective. With long-term relationships, business could enjoy continuous ties that can translate to several advantages to the participating parties. This in effect will help both parties to depend on each other for stability due to continued business activities. Chinese The guanxi concept in China can also be seen in the Philippine setting. It is similar to “utang na loob” in Filipino. In this context, people are more loyal to their personal relations than upholding organizational goals and government policies. As a consequence, employees tend to easily change employment if they see it more beneficial. As mentioned in the article, this results to a high rate of both job mobility and entrepreneurship. This value of self-employment is prevalent to the Chinese. Also with the presence of guanxi relationships, policies are not consistently implemented and can change as those in power are changed or their behaviors are changed. This can be frustrating for those who expect consistency in policy implementation and decision making. This also facilitates corruption not only in the government but also in other forms of organization as people put more value on personal relations than policies, laws and organizational goals. Koreans The inhwa principle practiced by Koreans is similar to the values of respect and courtesy among Filipinos. According to the author, Koreans follow the Confucian ideal that a person owes total loyalty to parents and authority figures, notably rulers, elders, and organizational leaders. The implication is that leaders are to be obeyed as if they were family elders which results to clan management, that is, many of the senior managers in a specific firm are related by family ties. This culture can also be observed among Filipinos especially in closed corporations or family-owned companies. In the Philippines, most organizations especially in government agencies follow the Nepotism Rule. Under Section 9, Rule XIII of CSC Memorandum Circular No. 40 of 1998 which provides the “Revised Omnibus Rules on Appointments and Other Personnel Actions: “No appointment in the national, provincial, city or municipal governments or any branch or instrumentality thereof, including government owned or controlled corporations with original charters shall be made in favor of relative or the appointing or recommending authority, or of the chief of the bureau or office or of the person exercising immediate supervision over the appointee.” It was emphasized in a press release by the CSC Chairperson Francisco T. Duque III that “nepotism is a form of corruption that weakens morale and productivity in the public sector, promotes patronage politics, and breeds public distrust on government.” APPLICATION IN LOCAL BUSINESS SETTING A. Business practices here in Philippines have similarities with the principles of Wa, Guanxi and Inhwa. Throughout history China and Japan have great influence in our culture. For example, Philippines business organization has a strong sense of hierarchy. Filipinos patronize authority in terms of discussion and decision making. Moreover, mutual respect and reputation are given importance in establishing business relationship. Examples of Organizations which exhibit similar managerial principles of Wa, Guanxi and Inhwa: 1. SM Prime SM Group team: Teresita, President of Shoemart Inc. and Chairman of Banco de Oro Universal Bank; Henry Jr., President of SM Investment Corporation and Senior VP of SM Prime Holdings Inc.; Hans, Head of Mall construction and operations ;Herbert, In-charge of SM Supermarket; Elizabeth, Senior VP for Marketing; Harley, SM Prime Senior VP and Treasurer. 2. Philippine Airlines / Philip Morris / Asia Brewery / Eton Properties / Micro Asia Corp. Lucio Tan Sr., son Lucio “bong“ Tan Jr., is the current chairman of Micro Asia Corp. Vivian Tan, second child of Lucio Tan Sr., is a cofounder and chair of Entrepreneur School of Asia. The youngest child, Michael Tan, is the current chairman of Domecq Asia Brand, Director of PAL Holdings, Eton Properties and Chief Operating Officer of Asia Brewery Inc. 3. Port – Container Terminal Service Enrique Razon Jr is an ally of former Pres. Gloria Macapagal – Arroyo. He was named by the former Pres. Arroyo a member in Public Private Sector Task force in reconstruction and development of Iraq. 4. JG Summit / Cebu Pacific / Robinson Land John Gokongwei, Jr., son Lance Gokongwei, is the current COO of Gokongwei’s businesses. 5. DMCI Construction Firm David Consunji is the chairman of DMCI while Isidro Consuji is the current president of DMCI. B. LEARNINGS FROM THE ARTICLE a. Mutual Cooperation and Loyalty in Organization - This principle is usually included in the core values of almost all organization. It is a believed to be essential and imperative in an organization’s quests to attain its goals. Companies today invest in teambuilding activities and training of employees to achieve harmony and cooperation among managers and subordinates. b. Global Mindset, Adaptability to Cultural Diversity and Flexibility - A manager must have a global mindset and can adapt to cultural diversity to be effective in influencing people with different cultural backgrounds. This is important especially with globalization in the picture. c. Value for People - Human resource is the most important asset of an organization. Competent, well-trained and ethical employees can serve as a competitive advantage especially for service-oriented organizations. d. Long-term Philosphy - Activities are evaluated in light of how they will affect the long-term development of the organization based on its mission and vision. REFERENCES: 1. John R. Schermerhorn, Jr., Introduction to Management, 10th ed. (Hoboken, N. J.: J. Wiley & Sons, Inc.) 2. http://hbsp.harvar.edu/discipline/general-management 3. http://www.communicaid.com/cross-cultural-training/culture-for-business-and-management/doing-business-in/Japanese-business-and-social-culture.php 4. http://davaotoday.com/main/2010/07/01/civil-service-commission-reiterates-strict-compliance-of-nepotism-rule 5. Toyota way 14 Principles - http://icos.groups.si.umich.edu/Liker04.pdf