Comparative Analysis Of “Japanese And Korean” Management Practices
Comparative Analysis Of “Japanese And Korean” Management Practices
INTRODUCTION
This report focuses on the management styles of two countries i.e. Japan and Korea. Although Korea is now administratively divided into two countries (North and South), for the purpose of this report we will consider both countries as having the same management styles in their government and private organizations.
Both Japan and Korea are one of the world’s developed and technologically advanced countries. Although many people think that management styles in these two countries is quite similar, it is easy to think that the Koreans are totally different from the Japanese. However, neither of these two extremes is true. Both countries have many similarities and many differences.
Management is getting organizational work done with the help of employees and other resources of the organization. Management includes an array of activities. The main activities of management are planning; staffing; scheduling and controlling. Although these are the main activities that constitute the management activity within a firm, but the element that can be considered the core of all management activity is decision-making. All the four elements named above and in fact all of the activities included in the function of management require decision-making.
Decision-making is although nowadays done in an organized and scientific way, culture, society and other norms influence the decision making process. Firstly, we will try to gain an insight into the culture and society of the two countries which influence the decision-making and hence the management style of the two countries.
Secondly, the role of economic development in the defining and forming the respective management styles will be discussed. Economic development is itself an indicator of the effectiveness of the management style and it also serves in developing and refining the management style.
In the third section, the report will bring out the differences in the management styles and practices in the two countries. This part also deals with the management styles adopted in the different areas or departments of organization in the two countries.
The last part of the report looks at the future outlook of the two management styles and what further similarities and differences have arisen between the two styles of management. The last part also gives the conclusion tot the report and what lesson can we learn from the two management styles and how can we apply them to our environment.
Every part of the world and some countries have their own distinct and specific management styles. The style may be unique or it may a combination of previously existing styles or could have been adopted from some other country or region and then minor changes could have been made keeping in mind the local environment, practices and culture. The most common and widely accepted management in the world did not come up by themselves but they were developed over many years taking in positive things from other styles of management and combining them with their own environment, culture, society and other norms. The most widely accepted and renowned management styles in the world today are:
European
American
Latin American
Islamic
Japanese
Russian
BACKGROUND OF THE TWO COUNTRIES
Both the nations share thew same Oriental heritage including many long-held values. The characteristics of both these countries were also deeply influenced by environmental and historical factors.
GEOGRAPHIC COMPARISON
When we compare the two countries geographically, we can see that Korea is a Peninsula and Japan is a conglomerate of islands. Although South Korea is smaller than Japan in landmass, both the countries share the same problem of lack of useful land and natural resources. Due to this lack, Korea’s economic development strategy has many aspects adopted from that of Japan.
CULTURAL ISOLATION
When we take a look into the history of Japan, it had an ample opportunity to examine foreign cultures through missionaries. It was able to isolate itself from invasions of foreign forces and cultures. It was able to choose what to acquire and adapt from foreign cultures and countries. This was not the case with Korea. Korea had a much lower degree of freedom with respect to cultural values that were imposed on it than Japan. Korea is called the “Land of the morning calm” but throughout its history it has had continuous foreign invasions and internal revolutions. Compared to Japan, Korea could choose neither what cultural values to adopt and nor how to inherit them. This is the point from where the cultural diversity between thew two countries began.
STABILITY
Japanese have had a relatively stable value system. Their social practices are considered to have been originated far back in history. Japanese have become exceedingly good at thriving in a stable environment and therefore an unstable environment drives the Japanese crazy. The Japanese are conditioned by their history, either not to change or to change in a slow and orderly manner. On the other hand, Korea never enjoyed the luxury of a long period of stability and as a result inherited a very different kind of outlook from that of Japan. Although, no one likes the uncertainty associated with instability, one does get used to such an environment. So did the Koreans. They’ve learned to accept change at the pace at which it is imposed and try endlessly to turn the situation to their advantage.
RELIGION
Confucianism and Buddhism heavily influence Korea while Christianity came into Korea only quite recently. However, Korea has been exposed to foreign influence on a multitude of occasions and its effects are still visible today. Due to this influence of foreign cultures, Koreans are more inclined towards learning English and are easily able to communicate with foreigners. Japanese culture is influenced by Confucianism, Buddhism and Shintoism. As compared to Koreans, many Japanese are not motivated enough to develop their English capability for the fear that they will become outcasts of their own society. Many Japanese managers are unable to communicate freely in English and therefore usually have to take help from an interpreter. Long years of isolation have made it more difficult for the Japanese to accept foreign thoughts, behaviors and influences.
As far religion is concerned, Buddhism has a much stronger influence in Japan than in Korea. Compared to Japan, Korea has much more Christian and Confucian influence today than Japan does.
CONFUCIANISM
Confucianism has one important aspect of Scholarship i.e. a scholar entails a rather prestigious status in the society. However, Koreans show a stronger emphasis on scholarship than the Japanese emphasis on applied knowledge. Another aspect of Confucianism is effort. Both in Korea and Japan effort is a very important part of the performance appraisal process.
INDIVIDUAL VS. TEAM
Koreans tend to be more individualist in their work while the Japanese are good team players. In both countries family-community orientation is quite strong. But instability drives the Koreans to behave differently in this regard. In the quest for a sense of belonging, Koreans tend to associate themselves with those who come from their home province or school. Thus a Korean organization is made up of a heterogeneous network of family, school and home-province ties. In Japan, where a community tends to remain stable for a long period of time, people tend to understand the values, strengths and weaknesses of others in the community. In Korea few people understand or accept a person’s potential and as a result the only way to get ahead is to oversell oneself. Ego and pride are continuously brought into use and the individual himself stands high on the priority list.
JOB-HOPPING AND CORPORATE LOYALTY
Japanese are considered to be loyal to their employers since the cost of deviance and switching to another employer is quite high. In Korea, job-hopping is more acceptable, but it can be afforded by only those who are skilled. For those who are not, the cost is even higher than in Japan.
MODE OF OPERATIONS
Korean organizations are more inclined towards a top-down mode of operation i.e. decisions are implemented as orders for the employees to follow and comply with and they have little say in the planning and decision making phase in their organizations. While in the Japanese firms, bottom-up approach is more common and the employees have a greater say in the planning and decision making phase and so the decisions are easier to implement in the Japanese organizations. The Koreans are more inclined towards top-down approach even because every male Korean has to spend atleast three years in military service where they are conditioned to accept a top-down approach.
COMMERCE
Japanese has for centuries placed great value on commerce and their ability to transact business in a professional manner is the result of centuries of experience. Korea on the other hand has stressed the value of scholarship over commerce.
EMOTIONS
The Koreans believe in outward beauty and emphasis is on vibrant colors and fancy designs. In Japan, the most valued form of beauty lies in subtlety that usually exists below the surface. Koreans are outright in showing their emotions and tend to be fairly true to their emotions while the Japanese do not consider it correct to show their emotions. In fact, for the Japanese, a display of emotions is a sign that the relationship is not really intimate. Koreans feel that the Japanese are cold, and their politeness is only superficial. They argue that how could one not shed tears at the demise of a loved one? The Koreans are more overt in expressing their feelings and emotions than the Japanese. The Japanese act in groups and the usually anyone who is inclined to be overt is motivated to stay in line.
ECONOMIC DEVELOPMENT OF THE COUNTRIES
In both the countries the need for economic development has been badly felt. In Japan the implementation of the economic plans and policies has been much more consistent than in Korea because it has frequently suffered from political and social disturbances and riots. Although, Korea took Japan as its role model in economic policy decisions, it was unable to precisely implement the policy modified to fit the Korean environment. One disadvantage South Korea faces is that it has to spend a significant amount of it’s GNP on defense while Japan has never spent more than one percent of it’s GNP on this sector. The main reason for this difference is that South Korea faces a danger from North Korea due to which it has to spend much on defense. The reason for Koreans weak economic position is that Japanese save much more than the Koreans and it is one reason due to which South Korea has to take large amounts of foreign and domestic loans. We will briefly discuss the economic development and planning experience of the two countries.
JAPAN
Japan’s is not a planned economy but is based on the principle of private enterprise. The economic plans give a long-term orientation to the government, while, as regards to the private sectors, the plans only provide with projections based on the government policy. Thus, the private enterprises are directly restricted in their activities by the government economic plans. Longer-term economic plans formulated in Japan were ultimately designed to bring full employment and improve the people’s living standards.
However, the concrete objectives of respective plans have changed drastically according to the stages of economic development. For example in the 1960s the main policy objective was to extricate the country from the dependence upon American aid and achieve economic self-support. Three highest priority problems were considered to be the expansion of exports, promotion of accumulation of capital and rehabilitation of key sectors like transport and energy.
The main factor which helped Japan achieve economic success was the will of its people to make their country the best in the world. This desire helped the economy in an indirect way to easily implement the plans of economic development and the public supported the plans.
During the late 1960s many changes were brought in the economic planning. The outstanding changes were the shift to an open-door economy through liberalization of foreign trade and the change from surplus to shortage in the labor market. Other emphasis was on the increasing consumer prices and income differentials. Social development was given much importance in order to recover a proper balance between the economic and social progress of the country. From this we can see that the country not only paid attention to economic development but also to social and cultural development.
Throughout the economic planning history of post-war Japan, the main emphasis was on the following points:
• Expansion of foreign trade.
• Modernization of industrial and public infrastructure.
• Promotion of science and technology.
• Better utilization of the labor force.
• Improvement in the living conditions of the common man through improvement of housing, expansion of physical environment facilities and strengthening of social security programs.
• Channeling of funds and resources into sectors in which there was competitive advantage and which were most suited to expand commodity production.
• Promotion of savings through various measures and incentives given by the government and channeling these resources into industry.
• Encouragement of joint ventures between domestic and foreign entrepreneurs.
• Promotion of overseas investments which brought profits and remittances back into the country.
• Encouragement of indirect financing through promotion and development of the banking and other financial sectors.
• Training of manpower in not only the technical sector but also in management and other specialized sectors.
Besides this, there are no general restrictions on investment and the location of industrial enterprise. Neither there are any particular regulations to classify the fields of investment. Since Japan is short of natural resources, it depends on imported raw materials and therefore, the raw materials are almost free from customs duty.
The above discussion portrays that the Japanese style of management is quite unique and the major emphasis is on cutting costs and finding of new and more efficient ways of production. Emphasis is on training and the development of the employees with the whole firm. However, due to abundant financial resources available, the banks easily allow big loans to the companies, which increases the risk. Recently we are experiencing a financial crunch in Japan due to default of many big companies that had taken huge loans to finance their operations.
One thing that should be said over here is that Japan’s development is considered to be an economic miracle because the country was never endowed with the physical environment in which such an accomplishment would come about easily. People had to work practically inhumane hours and society had to tolerate such restrictions on availability of land for housing.
KOREA
No plan dealing with industrial development has been officially formulated in Korea. Economic development is as important for Korea as for any other country in Asia. As a result of the division of the country into North and South Korea after 1945, the country’s economy was left seriously unbalanced. Since districts with major mineral deposits such as iron, zinc, lead, copper and heavy industrial districts were mainly located in the north, the south remained in the agricultural and light industrial area with modest mineral resources.
In terms of human resources, Korea has one of the highest growth rates in Asia. However, as regards to other natural resources Korea is quite dependent on imported raw materials and so the emphasis in the manufacturing industries is on cost cutting and reducing wastage. As described above that most of the policies adopted by Korea were influenced by the Japanese policies of economic development. Hence most of the measures taken by Korea in the way of economic prosperity are quite similar to those of Japan. Even the ministries that formulate the policies and regulations are practically mirror images of those in Japan.
Economic planning Board is the central planning agency for economic affairs in the government. In the early stages of economic development the government considered foreign capital incentives to be of primary importance and priority was given to attracting foreign capital. This was due to weak financial position of the government and low savings rate of the Korean people.
In the early years of economic development, there was no feasibility surveys carried out due to which the resource allocation was not effective. But in the later years the government carried out extensive survey programs and hence the resource allocation was brought into lines of the governmental plans. After partition, Korea was left with little infrastructure and hence the government had
to spend a lot of resources for the development of the infrastructure. The main areas in which infrastructural development took pace was:
• Transportation.
• Electric power.
• Export industry centers for the promotion of exports.
In the investment policies the major emphasis was on attracting foreign capital and several laws were enacted to guarantee payment of foreign loans and law concerning introduction of capital goods on a long-term settlement basis. There are no investment regulations that distinguish legally between fields of investment open to foreign and domestic investment. To mobilize resources for industrial development the government first improved the capital market by encouraging new banks and other financial institutions to come up. Besides this the stock and bond markets were developed. One major development was the establishment of trusts and insurance companies, which boosted the confidence of the investors both local and foreign.
Several measures were also taken to promote savings and increase the domestic saving rate. Besides encouraging personal savings, business savings were encouraged by such measures as provision of tax holiday, exemption and reduction in Corporation Tax Law and Business Tax Law. There is also the asset Revaluation Law that enables business to accumulate sufficient funds to replace worn-out businesses. One of the important measures taken to mobilize private capital was to mobilize domestic savings into banking institutions from the unorganized money market.
To attract more and more foreign investment and to encourage new industries the government had no regulations governing the procedure for establishment of new industries financed by local currency or domestic resources.
For economic development, the training and availability of trained human resources is very essential and therefore Korea paid attention to this matter. Manpower surveys were done and the need for trained personnel was determined.
From the above discussion we can summarize that the economic development policy of Korea emphasized on the following points:
• Attract foreign capital inflow
• Manpower and human resource training and their proper allocation
• Encouragement of exports
• Development of the capital market and the financial system
• Development of infrastructure
• Promotion of personal as well as business savings
As we can see that the economic development of Korea relied heavily on foreign investment and foreign capital inflow due to which the management style also portrays this dependence on foreign resources. We see that the Korean management style is heavily influenced by foreign management styles like that of Japan. This on the other hand gives the advantage of benefiting from others experiences and hence they adopt the management principles that are effective and modern as well. Now due to its increased orientation towards export of goods, Korea is trying to improve the quality of its products to world standards and it is going into industries in which it has a competitive advantage.
MANAGEMENT PRACTICES IN BOTH COUNTRIES
PLANNING
The Japanese plans are very flexible and there are seldom any plans that have been followed without changes from time to time. However, since the Japanese hate an unstable environment they usually like to keep things as they are. On the other hand the Koreans are good at coping with changing environment and therefore they usually change their plans as soon as some opportunity comes their way.
In Korea, the plans made in the government ministries, are made by ministers and bureaucrats who have been politically appointed and therefore their knowledge of their respective ministries is often limited due to which improper plans are made. However, in Japan the bureaucrats and the other advisory personnel are not politically appointed but they hold degrees in their respective fields and have vast experience due to which the quality of the plans and the decisions is also good. While the minister has political power the knowledge power that is crucial to the implementation of a given policy is in the hands of the bureaucrats.
STAFFING
The Japanese have a good education system and they have very good universities due to which they have an abundance of qualified and learned individuals to employ in their firms and organizations. The case in Korea is that they have dearth of universities as well as their population is almost one-third to that of Japan and so they have much difficulty in finding qualified individuals from local universities and colleges. The Korean organizations usually have to attract qualified individuals from foreign universities of Japan
and America. The difference in staffing policy of the two countries is that the Japanese emphasize seniority in their promotion and incentive policies while the Koreans emphasize on qualifications of the individual. This means that a university graduate will receive much more than a high-school graduate in Korea upon joining an organization. Promotion and pay system are based more on achievement and qualification rather than on seniority, as is the case in Japan.
As described above, the staffing in most of the government organizations and the ministries are done on political appointments due to which the motivation of really qualified people is subdued and therefore the real knowledge and talent is wasted.
SCHEDULING
Scheduling of activities especially in manufacturing organizations is of prime importance. Japanese want little surprises and so they plan their activities in such a manner that they don’t have to take care of unforeseen situations. They don’t like surprises and therefore their scheduling activity is very meticulous. All the situations and possible outcomes are considered in the planning and scheduling process so that no surprises arise.
The Japanese emphasize on a participative style of management due to which they take the suggestions from the employees and similarly in the scheduling process employee participation is encouraged due to which the scheduling is very efficient and no points or matters are left out. Even the implementation of these schedules is very easy because of employee participation.
Since Koreans follow mostly the Japanese style of management, they also prefer a participative style of management. However, due to their preference for speedy decisions and unstable environment and top-down approach most of the Korean organizations make schedules on a short notice.
Since they are very good at coping with a changing environment, they improvise very quickly and therefore, they don’t spend much time on scheduling activities.
CONTROLLING
Due to less degree of stability in the Korean organizations, there is less degree of control. However, the control procedures in Japan are quite strong and effective due to greater stability. Both in Japan and in Korea individual employees belong to sections, sections belong to departments and departments belong to divisions. Due to this organized workforce the controlling process is rather easy and defects in a product can be easily traced to a particular department or section or employee due to which all the employees work towards achieving the best. Every section is the customer of the previous section and therefore each section and department tries to give the best possible output. This philosophy helps in maintaining highest standards of quality. Due to this, the need for controlling is very seldom needed. Most of us are aware of the concepts of Total Quality Management and Quality Circles, which are trademarks of Japanese management style and which, are now being applied all around the world with excellent results.
MANAGEMENT STYLES
OPERATIONS
The Japanese follow a Just-in-time system due to which they don’t have to spend much resources on materials and finished goods inventory because they have previously planned and scheduled their activities. This prevents any unforeseen occurrences. They can easily forecast their productivity and demand. The Japanese operation system is world-renowned and it is being implemented in many countries of the world. In the early phases of economic development, there is no doubt that manufacturing or efficiency in operations was the key function that provided the Japanese and the Koreans the advantage. The only additional advantage Korea had lower direct and overhead labor costs and in some cases the cost of capital as well.
HUMAN RESOURCES
The current maturity of the human resources on Korean organizations could be characterized as very advanced intellectually but having much room for improvement in terms of actual experience. As in large Japanese firms, Japanese ministries take students right out of college and mold them into realistic bureaucrats. But the Korean ministries recruit some of their people out of foreign universities.
Rotation of personnel between various departments or sections takes place in both countries. However the Japanese tend to maintain some human resources as specialists especially in departments which require high knowledge content. In Korea people are often rotated frequently through various departments and bureaus without regard to their background knowledge and experience due to which some people are actually misfits in other departments in which they are working.
In terms of efficiency the Koreans make the Japanese look lazy. Working or meeting clients on Sundays is quite common in Korea. This gives an idea of the dedication to work in the Korean workforce.
FINANCIAL
The Koreans rely more heavily on foreign debt rather than the Japanese. The Koreans therefore, are more careful of the repayment of debt due to which their focus is sometimes shifted from their actual goals. Many businesses and industries are financed by or are operated by foreign companies due to which the Koreans are not able to completely implement their own plans and their own style of management. In Japan however, the big banks and other financial institutions mostly finance the firms which are not a part of a conglomerate. The tradition has been to form conglomerates around banks through acquisition of shares in these companies due to which the banks are able to influence these companies. Hence, the banks are more willing to finance these companies in any situation because indirectly it’s their own loss if the company goes bankrupt.
CONSUMER RELATIONS
The Koreans and Japanese treat customers in fundamentally different ways. The Japanese believe in a concept called giri, which implies that the customer will be taken care of. So, in Japan even after the good or product has changed hands from the company to the customer, a lot of firms continue to give the customer his or her money’s worth, thus fulfilling their giri. Most companies consider the customer as the king and will try to satisfy his or her desire within reasonable limits. Therefore Japanese customer treatment is largely relationship-based.
In contrast, the Korean perception of and attitude towards customers is much more transaction-based. First, the discussion centers on price and then
since the customer paid so little for the product, the Korean company thinks that the customer can put up with a little inconvenience. However, the trend is changing towards more relationship-based customer treatment.
FUTURE OUTLOOK
Due to their effectiveness and importance in their respective countries and perspectives we can safely say that these two management systems have yet to see their end and these will develop further and strengthen themselves. Besides this, these should work on their weaknesses and try to learn useful lessons from the other cultures and management styles of the world. Due to their closeness and historical relationship, there are many similarities in these management styles and in the future further similarities will take place in both countries and their respective management styles.
The Japanese and Korean domestic market are perceived to be closed to the foreign suppliers through a combination of tariff and non-tariff barriers. Foreign exchange controls prohibit repatriation of funds and there is intense and cutthroat competition in their domestic markets. These and other factors have created some problems for Japan as well as Korea in the international markets. Due to this Japan and Korea are now following a policy to pacify some of the foreign frustrations. The policy concentrates on the following points:
• Import liberalization
• Limited relaxation of foreign exchange limitations
• Stronger enforcement of intellectual property
• Export restraints
• Upgrading industrial base
• Support of small and medium-sized businesses
CONCLUSION
We have taken a look at the two types of management styles that have many similarities and differences. Both management styles are different from each other and there is something to learn from both. In our local environment we can successfully apply many aspects from both these management styles. Our political environment is very similar to that of Korea. Since Korean businesses have learned the art of surviving and managing in these unstable environment, Pakistani businesses and firms can also learn from the Korean experiences and apply the knowledge to deal with these unforeseen changes in the environment.
In the aspect of customer relations we can apply the concept of giri of the Japanese style and apply it successfully in order to increase preference for local goods. The concept of total quality control and quality circles can not only be applied in big businesses but also in medium and small scale businesses like cottage industries.
As regards to planning and scheduling, the usual practice over here is that plans are made without dong any market research and the plans and policies are implemented on the employees due to which the implementation and the achievement of goals becomes difficult. In this regard we can learn from Japan the importance of flexible planning and employee participation and bottom-up planning. These concepts can be applied to an extent in our environment. This would increase the effectiveness of our plans and also those who have to follow them will more readily accept plans and policies.
One important aspect of any manufacturing organization is the relationship with the supplier and the distributor. Both the Japanese and the Korean firms practice the building of long-term supplier and distributor relationship due to which there are several costs that can be saved. This relationship building can help many businesses in Pakistan as well.
The most important lesson to learn is that we should build our values and traditions according to our religion and the only way to make our country prosperous is to follow the teachings of our religion.
The final note is that we should learn from others experiences and try to learn good things from them and be careful in not repeating the mistakes they had made. I hope that this research paper gives an insight into the two management styles and that there is some positive outcome of this report.
