Major Issues in the Case Study
The merging of National Office Machines (NOM) from the United States and Nippon Cash Machines (NCM) from Japan brings two different cultures together with contrasting marketing strategies. The two significant problems that result from this partnership include: the problem of the ideal compensation plan and the issue of the reciprocity distribution system. On the issue of the compensation plan, NOM finds the use of commissions and incentives to motivate the salespersons as the ideal compensation strategy to exploit the full potential of the sales team. On the contrary, NCM management wants the joint venture to stick to the Japanese compensation strategy of offering straight salaries. On the distribution system problem, foreign companies in Japan find it difficult to cope with the Japanese distribution system that involves reciprocity, where favor is considered a debt that must be settled.
Analysis of the Problems
One of the effective international marketing strategies is partnering, where companies from different countries merge to form a joint venture to penetrate a foreign market. However, cultural differences between the United States and Japan have proved to be a significant problem for NOM to operate in Japan. Japanese companies employ the use of straight salaries as motivation for their salesforce. There is a culture of offering employees job security and lifelong salaries. However, in the American culture, many companies operate based on commissions and incentives. The custom of job security has led to a lack of motivation among the Japanese employees because their wages are guaranteed. As a result, some of these lack the driving force to push the employee to achieve the set objectives.
The problem of the reciprocity distribution system in Japan has significantly undermined market competition. As a result, many US and foreign companies are forced to operate based on the bond established by the stakeholders rather than on competition. According to the reciprocity system, a favor is considered a debt that must be paid. In other words, a company must prioritize transacting with those who helped it rather than those who are efficient in their operation.
Alternative Strategic Marketing Actions
There are various alternative marketing strategies that the joint venture can employ to solve the compensation plan problem and the distribution system. One of the alternative strategies is focusing on the people. People, in this case, involve the sales team responsible for making sales and interacting with the customers (Lim, 2021). The joint venture needs to recruit and adequately train its sales team to conform to emerging market trends. Training should involve young and talented workers who have not experienced either the straight salary compensation system or the commission system. This strategy will make it easier for the joint venture to agree with its sales team on the ideal compensation plan without much resistance. One of the effective compensation plans practical for two opposing cultures is the revenue-based strategy. This strategy allows companies to pay their employee based on the profit margins that the company has generated. This method is essential in motivating the employees to work hard and achieve their targets. Additionally, this compensation plan cushions companies from high expenses on unproductive employees.
Another alternative action for the joint venture is to employ the international strategy to solve the differences in marketing customs between Japan and the United States. According to the international strategy, the joint venture focuses on producing goods meant for the international market rather than on local consumption (Kozlenkova et al., 2021). Given the difficulty in operating in Japan, the joint venture needs to focus on selling its products to other markets outside japan to prevent ideological differences on the ideal marketing strategies to employ. The international strategy is essential in solving the reciprocity distribution system problem that is affecting foreign companies.
Implementation of the Recommendations
Implementing the first action plan about the people requires a collaborative approach between the two companies to identify and recruit top talent. Part of the agreement of the joint venture required recruits to be Japanese nationals while managerial positions were to be occupied by the US nationals. However, it is essential to diversify the workforce to increase creativity and innovation by recruiting the US and Japanese nationals to create a pool of ideas. The recruitment should be done after critically analyzing the workforce to identify areas that require reinforcement and need the replacement of the employees (Uslu et al., 2021). Given that the Japanese culture favors older employees to occupy senior positions regardless of their competence, there is a need to replace unproductive aging workers with young talented employees who have fresh ideas and strategies to increase the company’s performance. Experts and mentors are needed to offer training and knowledge to educate the recruits on how to navigate the market. The joint venture should finance the recruitment and training costs by allocating at least 2% of its budget to cater to the training expenses (Brewer & Davey, 2021). Effective budgeting is essential in cushioning the organization from extra costs.
Implementing the second action plan requires a joint approach between the two companies to find an ideal international market for their products. Since NOM has proved successful in the US market, the joint venture can try penetrating the US market and other markets where NOM has established its roots. Additionally, the joint venture can partner with international trading blocs such as the European Union (EU) and the World Trade Organization (WTO) to market their products to member countries (Chang et al., 2021). Financing this strategy requires analyzing the expenses and allocating a significant percentage from the budget. Alternatively, the companies can contribute individually based on the percentage of revenue that they accumulate from the sales.
References
Brewer, J., & Davey, J. (2021). Making training more effective with shared VR: Lanes Group Plc improves employee retention and reduces the costs of recruitment and training. In XR Case Studies (pp. 25-34). Springer, Cham.
Chang, W. W., Chen, T. L., & Saito, T. (2021). Formation of symmetric free-trade blocs, optimal tariff structure, and world welfare. Journal of Asian Economics, 77, 101373. Web.
Kozlenkova, I. V., Lee, J. Y., Xiang, D., & Palmatier, R. W. (2021). Sharing economy: International marketing strategies. Journal of International Business Studies, 52(8), 1445-1473. Web.
Lim, W. M. (2021). A marketing mix typology for integrated care: The 10 Ps. Journal of Strategic Marketing, 29(5), 453-469. Web.
Uslu, D., Marcus, J., & Kisbu-Sakarya, Y. (2021). Toward optimized effectiveness of employee training programs: A meta-analysis. Journal of Personnel Psychology. Web.