Foreign Ownership: Ten Tips for Success

By Mason, Julie Cohen | Management Review, February 1993 | Go to article overview
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Foreign Ownership: Ten Tips for Success


Mason, Julie Cohen, Management Review


If you work for a foreign-owned firm in the United States, you might want to consider the following strategies for continued management success.

The results of a ground-breaking study, which pinpointed 15 common problem areas for foreign-owned companies operating in the United States, were presented at a recent American Management Association's Membership Briefing in Los Angeles. The study, conducted by the joint venture management consulting firm Strategies for a Global Economy (S.A.G.E.) for one of Japan's most influential organizations, analyzed the experiences of 40 Japanese and 10 European companies in their U.S. operations (see MR January 1993, page 50 and MR December 1992, page 10).

Among the problems the Japanese companies cited most frequently were language barriers, cultural differences, attracting and retaining employees, family adjustment and protectionism. Similarly, European companies also cited many of these problems.

Many executives confronted by S.A.G.E.'s challenging study are aware of the problems (for a comprehensive list, see chart on page 60), but are not necessarily armed with the solutions. At the briefing, Matthew D. Levy, Soji Teramura and Arthur H. White outlined 10 approaches that will help smooth operations for foreign-owned companies in the United States. Matthew D. Levy is a cofounder and principal of WSY Consulting Group, a U.S.-owned and New York-based general management consulting firm he established in 1986 with Arthur H. White, Florence Skelly and Daniel Yankelovich (formerly of Yankelovich, Skelly & White). Soji Teramura is founder and president of Teramura International, a leading Japanese-owned consulting group with offices in Tokyo and Washington, D.C. In 1987, the two firms formed S.A.G.E. to meet the changing needs of their major clients.

I Work with the non-U.S. parent to place at least one U.S. national on the board of directors. Ideally, the best strategy would be to include two U.S. nationals: one who has come from the ranks of the top U.S.-based management and an outsider who will bring additional expertise and a fresh perspective. Sony, Nomura and Nestle are already pursuing this strategy.

2 Create multi-person chief executive office functions. Following the U.S. trend of having a multiperson office of the president or chairman can significantly modify the communications and cultural difference barriers faced by foreign-owned firms. An excellent way to accomplish this is to have two people in the office of the president in the United States--one American and one national from the home country-which would develop a true partnership. This approach also would be consistent with the Japanese consensus management approach. AT&T, Microsoft, Seagram and Xerox have created multiperson offices.

3 Set an internal goal to reach a higher level of comprehension in both English and the home language of the non-U.S. parent. Companies should encourage American employees to learn the native language of the parent company through tuition reimbursement programs. Japanese and European executives should receive extensive English training before arrival in the United States. For example, one executive from a writing instrument manufacturer said that every Japanese manager in his firm has to be able to conduct business in English with-in six months of arriving in the United States.

Cultural differences can best be addressed through sensitivity training for American executives, as well as for Japanese and European executives working in the United States. In-depth training on cultural differences for non-U.S. executives headed for the United States should take place before arrival here and should continue formally during the first year after arrival.

At one Japanese-owned electronics firm, U.S.- and European-based executives spend 90 to 180 days in Japan to develop an understanding of its culture. "Japanese managers need indoctrination in the United States as well," said a human resources manager at the briefing.

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