Case Study: Joint Venture Between Health Snacks and Toka Foods

Every country in the world has its own unique culture, its practices different customs and beliefs although with the increased globalization the world is becoming smaller thus enabling people of diverse cultures to mix (Wang, Chan, & Luk, 2006). As organizations expand globally, they experience cultural variances in individuals, corporate or national cultures. Regular clashes are reported daily amongst Americans, Asian, Japanese and Europeans as they conduct their routine business especially through presentations, business meetings and technological transfers (Elashmawi, 1998). Various companies from various backgrounds join together to exploit each other capabilities to gain a viable competitive lead. In a joint venture, companies share assets and ownership, knowledge and pool skills, join management and mix employees. This paper is a critical analysis of a case study that involves a joint venture (Hana) among an American company, Healthy Snacks and a Japanese food store, Toka Foods. The joint venture is on the verge of collapsing due to intercultural communications hitches.

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Lack of attention paid to cultural differences is one of the main failures of joint ventures. Both companies can make the venture succeed. However, several cultural issues prevent the success. Firstly, during the initial stage, the negotiations took much longer than the Americans had planned. The Toka Foods executives were slow and their approach to negotiating, once they made up their mind on a certain issue it was difficult to change, and any alterations had to be re-discussed by the executives (Duncan, C., & Mtar, M., 2006). The concept of age was also significant since they refused to agree with the young American engineers until Tim Davis intervened. Secondly, American side prefers to express information explicitly while the Japanese side tends to be vagueness and ambiguity to convey meaning (Bekkers, 2010). Thirdly, Japanese companies' status and promotions are determined by seniority value, hierarchical culture while American use personal practice performance. American side preferred a different form of electronic communications while the Japanese prefer face-to-face since they felt it was more convenient. The joint venture is a win-win therefore each company must be willing to understand and respect the cultural difference for it to succeed.

The success of a global venture is directly proportional to the amount of time put in at the beginning of the project to create the right behavior (Farkas & Avny, 2014). The two companies should have realized that the cultural gap between the Japanese company and the American company had an important role to play in the venture, therefore since Toka Foods is the host company the American side should have considered whether they were willing to give up most of the control over the operations. Before entering the joint venture, both parties should have had a clear agreement over the objective of collaboration that should have been translated into a simple written agreement that illustrates each partner's accountabilities.

They should have established the management style that the venture should have and the working relationships (Liu, 2012). Healthy Snacks was less involved in the joint venture, the fact that they first sent two young engineers who had little knowledge of international ventures. Secondly, they choose a representative who was barely interested in the cultural aspect of the Japanese instead of choosing a vibrant representative. On the Japanese side, they were too rigid on the company culture, therefore, were not willing to sacrifice their values for the success of the venture. The key success of any venture is to invest as much time and cash to integrate both cultures and establish the right behavior for the venture (Ahmed & Pang, 2009).

To be successful, both sides should have a mindset that they have to change some of their internal procedures and culture (Mckeon, 2014). Successful joint ventures in the country and try to reason the characteristics that make them successful and integrate them. Both parties should draft a clear agreement on how the venture should be managed, meaning that all management slots should be decided initially and the format for selecting the management articulated. Toka Foods should elaborate clearly to Health Snacks how their management is run and vice versa so that they can establish a common ground for Hana's success. Clear communication is vital in this case, this means that they should re-establish the most appropriate mode of communication that both sides are comfortable with and the frequency of reporting should be established. Healthy snacks should add more representatives or exchange Mr. Russell with a more vibrant technical director with international experience in global ventures.

Hana is a joint venture, and therefore it is not fully owned by either the company. Therefore, the Japanese side should be more willing to give up some of their cultures. The main changes are that both sides should go back to the drawing board, acknowledge their differences, integrate their similarities, and make their vision more clear. They should also learn from other successful joint ventures in the country and try to reason the characteristics that make them successful and integrate them into their own ( Zhang, Jing, & Fu, 2008). They should identify their interdependencies, set up the right leadership style and align everyone in the project to the main goal. They should try to negotiate whether Mr. Ota should be trained on how to run an international venture in respect of the Japanese culture or he should be replaced with a more suitable candidate for the success of the business. For any international joint venture to succeed both sides should be willing to sacrifice their beliefs and adapt to any changes easily.

Hana can be saved if both sides are not too rigid to appreciate and accept each other's diversity. Health snack and Toka Foods should work jointly to solve the problem, that means that new well stipulated guidelines and a concise agreement is the only way to save the venture. It will also mean a clear communication strategy and a clear chain of commands while leaving nothing to chance to avoid future disagreements (Llewellyn, 2015). To be fully successful the venture should be separated entirely from the parent's companies and treated as an independent entity whereby both cultures have little influences on the management style. However, the American side should be more open and flexible to changes since Toka Foods is the host company. Management flexibility is the answer to effective ways of managing intercultural businesses in the dynamic global market, with the increased competition each of the companies has a common goal of profit-making, and therefore they should be able to integrate their differences to achieve this objective.

References

Ahmed, A., & Pang, Z. (2009). Corporate culture in an international joint venture. International business and entrepreneurship, 5-34.

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Duncan, C., & Mtar, M. (2006). Determinants of International Acquisition Success: Lessons from FirstGroup in North America. European Management Journal, 24(6), 396-410.

Elashmawi, F. (1998). Overcoming multicultural clashes in global joint ventures. European Business Review, 98(4), 211-216.

Farkas, F., & Avny, G. (2014). Cross-Cultural Issues of International Joint. Researchgate Publication, 2-15.

Llewellyn, T. (2015, September 27). Why cultural differences often cause joint ventures to fail - and what to do about it. Retrieved April 26, 2018, from Linkedin: https://www.linkedin.com/pulse/why-cultural-differences-often-cause-joint-ventures-fail-llewellyn

Liu, Y. (2012). The Perceived Importance of Cultural Priority for Global Business Operations: A Study of Malaysian Managers. Research and Practice in Human Resource Management, 57-65.

Mckeon, M. (2014). Cultural Considerations for Expanding Abroad: A Q&A with International Business Expert Anthony Gioeli. Insight, Partnerships.

Wang, G., Chan, K., & Luk, V. (2006). Conflict and Innovation in International Joint Ventures: Toward a New Sinified Corporate Culture or 'Alternative Globalization' in China. Asia Pacific Business Review, 461-482.

Zhang, Y., Jing, R., & Fu, W. (2008). Do Ownership and Culture Matter to Joint Venture Success? Journal of Comparative International Management.