Global Business Today: Asia-Pacific Perspective 5th edition by Charles W. L. Hill Solution manual
Teaching Tip: The 2008–12 economic slowdown in the global economy has had an effect on India’s IT sector and on India’s economy more broadly. For more information, see for example www.ijtef.org/papers/105-D10003.pdf; Sudhansh Kumar Sharma & Beena Sharma, 2014, ‘Reflections on monetary and fiscal policies and economic growth in India’, International Journal of Trade, Economics and Finance, Vol. 5 (6), pp. 551–6; and www.doingbusiness.org/data/exploreeconomies/india. The first part of this latter article ranks the ease of doing business out of 189 economies and the distance to frontier measure overall and by topic. The second part summarises the key indicators for each topic, benchmarked against regional averages.
VII. Opening Case Analysis: Kaihara: Globalisation of a shinise, a long-lived company
Summary
The Opening Case focuses on the internationalisation of Kaihara, a family-owned Japanese company that supplied high-quality denim to overseas markets. The organisation’s success in the competitive global markets was due to its focus on technology and innovation. For example, to meet the company’s customer Levi Strauss’ stringent requirements, Kaihara adopted a data-driven scientific method to control quality. The organisation also emphasises employee training and development. The employees are multi-skilled, and they are expected to continuously improve the company’s production process. Kaihara established a global supply chain to supply international customers, and to internationalise to sustain production capacity.
Suggested discussion questions
- From inception Kaihara focused on the high-end market segment. Discuss the merits of this strategy.
This strategy allows Kaihara to compete with its domestic competitors, and to earn 20‒50 per cent price premium over its competitors’ products.
- Kaihara is a Japanese long-lived company. What factors contributed to its longevity?
Kaihara focused on the high-end market segment to gain a competitive advantage over its domestic competitors. The company also invested in technology and innovation to produce high quality products; and to enhance its production capacity, and cost-effectiveness to meet both domestic and international markets. Kaihara also adapted to its changing external environment, and seized new markets. For example, the company ventured into denim production when there was a domestic market for jeans.
- Kaihara was a Japanese company that produced kasuri, a product focused on the Japanese market. However, it was able to achieve international success. Discuss the strategies behind its international success.
Kaihara leveraged on its core competency—its technology—to gain a sustainable competitive advantage over its competitors in the global markets. The company’s innovation provided the organisation with the production capacity to meet overseas markets’ demands. Kaihara also invested in employee training. The employees are multi-skilled, and the workforce is nimble and quick to respond to customers’ demands. The employees are also expected to continuously improve the company’s production process. Kaihara adopted a long-term view of its operations instead of focusing on short-term financial results. The organisation also expanded its production overseas to supply its international markets, and to maintain production capacity.
- What were the reasons for establishing the Thai subsidiary?
The Thai subsidiary was set up to supply the global market and to maintain prospective production capacity, with the understanding that in the long term, Kaihara’s current location in rural Japan means sourcing factory labour will be a challenge. The decreasing and ageing population in rural Japan are significant factors to consider. In addition, Thailand is a good place for targeting emerging Asian markets that demand higher quality denim jeans. Kaihara imposed quality standards in setting up its Thai subsidiary, installing the most advanced machines and training Thai factory workers to meet Japanese standards of manufacturing and denim jean quality.Kaihara was successful in advancing into the global denim market even though it was a comparatively small company. Why was it so successful?
First, Levi recognised the quality of Kaihara’s denim when Levi was sourcing new suppliers. Kaihara had a good customer, a world-class jeans company, Levi Strauss, from which it learned how to meet the highest standard for the best denim. Kaihara was a good and quick learner and continuously bettered its products and production facilities focusing on developing a niche market of high-end denim. Levi’s production quality specifications to Kaihara supported Kaihara to develop and meet world standards for quality and new methods of quality control. In the process, Kaihara collected data during each production step, leading to a data-driven scientific method of quality control.