Analysis Of Key Lessons From 3 Multinational Corporations Of Asian Origin

Asia Pacific (AP), being the world’s most economically dynamic region, has captured the attention of many researchers and economists. Some of their well-established corporations as well as their distinctive characteristics, economic histories such as the FDIs and role of governments, were covered through the Asia Pacific Business (APB) course. The informative presentations and lectures from Mr Ailson, RHUL APB module leader and Ms Magdalene, Kaplan tutor, had enhanced our understanding about the AP. Hence, this diary will summarise and compare five AP multinationals in terms of their strategies, corporate organisation, core capabilities and the role of governments. A short overview of the corporations will provide some background before the analysation. Three of the featured corporations are from Japan, namely Secom, Toyota and Hitachi Corporation.

Secom, Japan

Japan’s first security company, Secom Co. Ltd, which means Security Communication, was established in 1962 by Makoto Iida. As of March 2018, they owned 198 group companies, 179 subsidiaries and operated in 19 countries outside Japan including Asia, Europe, Oceania and America. Besides advanced security system, Secom provides other services such as fire protection, geospatial information and medical under the subsidiaries Nohmi Bosai, Nittan, PASCO and SECOM Medical System. Strategy Secom competes and obtains overseas customer base by mainly acquisition or joint ventures with other companies. Their first OFDI was to Taiwan in 1978 in which they became Taiwan’s first online security systems provider. Similarly, Secom joint ventured with Samsung to establish S-1 Corporation in South Korea in 1981. In 1992, Secom set up a holding company in Beijing, China and subsequently established 12 subsidiaries there. With the world constantly changing and the rise of uncertainty, Secom announced the development of the ANSHIN Platform, the formulated vision for 2030.

One of the key strategies was collaborating with governments, institutions and corporations who retain the same goal as Secom. According to the Secom Roadmap 2022 (2018), they would mainly invest in upgrading their core system, increase spending in R&D as well as improving operational quality and efficiency with latest technologies in 2018 and 2019. Besides that, Secom intends to expand its overseas market, increase foreign customer base as well as cultivate its employees by providing training. Corporate Organisation Secom functions with Corporate Governance System and three of its board of directors are from outside the company. The three outsourced directors were accounted for the company’s performance as well as providing viewpoints when planning for the Secom. All directors will meet every month and exchange opinions on the problems faced. Comparing to the Korean chaebol like Samsung, their management structures were different as the chaebols are family-oriented. Thus, opinions from outsiders are not considered.

Core Capabilities

With the advanced technology of today, people have been provided with endless information. However, it also functioned as a weapon for the terrorists and a platform to commit cybercrimes. The goal of Secom was to ensure “safety and peace of mind” of its clients and the public. Therefore, their core capabilities include R&D and human resource policies. In order to optimise the use of equipment and human capabilities, they had invested in “advanced AI, IoT technologies, drones and robots”. They constructed Secom Trust Systems to receive precise details in the event of a disaster and detect viruses and terrorism in the cyberspace. Secom particularly stresses on training its employees where four staff training centres were built and approximately 10, 000 employees had undergone training annually.

The Role of Government

Secom retains a strong relationship with countries’ government. For instance, the government of Australia is dependent on Secom in numerous areas such as the biometrics system, access control system, entry barriers and monitoring system. Additionally, the Japanese government owns over 10 percent of Secom’s share.

Toyota, Japan

Toyota was founded by Kiichiro Toyoda in 1937. The company’s main segment is automotive; nevertheless, they also do businesses in financial services, housing and marine. They are one of the 6th largest companies in the world.

Strategy

Toyota exported its first vehicle in 1957 to the US and established a wholly-owned subsidiary in Brazil to obtain resources and secure a position in 1958. From 1963 to 1964, Toyota joint ventured and established their first office in Denmark. The business was subsequently developed into Czech Republic, Poland, Russia and Germany. Furthermore, in 1983 and 1987, they joint ventured with General Motors in California and Australia respectively to seek for greater market access. Toyota’s strategy shifted from securing its export trade to market-seeking FDI in order to “utilise its capabilities in production, products and prices”. Since 2002, investments were flowed to East Europe due to its skilled and cheap labour. Besides that, Toyota stresses on R&D and currently has 15 R&D centres in Asia, Europe and the US.

Corporate Organization

Toyota is a horizontal keiretsu who operates in more than an industry, practice interlocking share ownership and owning a bank just like many other large keiretsus. They heavily utilised expatriate employees, which enabled its overseas subsidiaries to have a similar management style as the home country.

Core Capabilities

Toyota core capabilities are none other than its ‘Toyota Way’, in which the company expects all its subsidiaries to follow since 2001. The ‘Toyota Way’ consists of two pillars, the ‘continuous improvement’ and ‘respect for people’. “The essentials were its production management, customer service mentality and high skills philosophy”. Therefore, it includes the notable ‘Just-In-Time’ which eliminate waste by only manufacturing when needed and ‘Jidoka’ to produce high-quality products. Besides that, Toyota established their institutions in Japan and human resources training organizations in their overseas affiliates to provide training and programs like the Global 21 to enhance excellence human resources. Additionally, with its own bank, Toyota enjoys ample financial resources.

The Role of Government

According to Fitzgerald and Rui (2016), the Japanese government launched an intricate system to encourage industrial development through collaboration with large companies. The Japanese government allows keiretsu to own or control a financial institution, resulting in them benefitting from low-interest loans and other financial support.

Hitachi Corporation, Japan

Hitachi was founded in 1910 by Namihei Odaira where it was initially a machine repair shop in Hitachi City, Japan. As of currently, they had secured businesses in numerous sectors such as financial services, information and telecommunication systems, social infrastructure and industrial systems, electronic systems, construction machinery, high functional materials and components, automotive, smart life and eco-friendly system as well as logistics and other services. As of March 2017, Hitachi operates its businesses in 68 countries and possesses a total of 864 companies worldwide.

Strategy

In 1959, Hitachi first established a wholly-owned subsidiary in the United States. Similarly, in 1982, 1989 and 1994, wholly-owned subsidiaries were built in Europe, Singapore and China respectively (Hitachi, 2018), The Hitachi Asia Ltd in Singapore serves as a regional headquarter for seven countries across Southeast Asia. Hitachi strategic focus depends on four business domains. Firstly, power or energy. Secondly, industry, distribution or water. Thirdly, urban. Lastly, finance, public or healthcare.

Corporate Organization

Similar to Secom, Hitachi operates with Corporate Governance System but has eight board of directors from outside the company who owns a bank. Besides that, Hitachi practices interlocking share ownership in which they hold shares of 388 companies including joint venture subsidiaries.

Core Capabilities

According to Hitachi (2018), their core competencies were their development of various systems, business software, product development and platform solutions. All of them are achieved through their strong emphasis on research and development. In 2017, they spent 3. 5 percent of their revenue on R&D and have 11 R&D centres globally. Some of their achievements included the development of DNA sequencer in 1997, EMIEW2, a lightweight interactive robot in 2007, AI technology in 2015 and the launching of Lumada IoT platform in 2016.

The Role of Government

Japanese government provide funds infusion to Hitachi before the World War 2 which enables them to diversify into metallurgy and communications equipment. Besides that, from the 1960s to the 1990s, a series of Hitachi projects were fully funded by Japan’s Ministry of International Trade and Industry. With the diversified segments, Hitachi works closely with the state's government especially the US.