The Changing Dynamics of A Japanese Company Amid the Globalizing Business Environment:
A Case Study of Hitachi Construction Machinery Company

Mentors: Ann Ericson, Department of Business Administration; Mari Nagase, Department of World Languages, Literature, and Cultures
Students: Shawna Ables’17, Stephanie Drago’15, Sarah Funke’17, Trang Ho’17, Gage Meyers’17, Emily Stanevicius’16

Project Abstract

Japan’s mature market combined with its decreasing population leaves little room for domestic market expansion. Therefore, for many Japanese companies, it has become imperative to explore overseas markets in order to maintain and expand their sales revenue. However, many large Japanese companies have been slow to change their traditional business model that led them to financial success in the past. While many Japanese companies have struggled in adapting to globalization, Hitachi Ltd., a Japanese multinational conglomerate, has become a forerunner in its organizational transformation. A recent example is its move from the traditional, seniority and lifelong employment system, to a merit-based salary system that aims to attract talented high-level workers overseas. Hitachi Construction Machinery (HCM), one of Hitachi Ltd.’s eleven businesses, has also been making a concerted effort to transform itself from a limited Japanese company to a global company. Our six students spent three weeks investigating HCM’s on-going, momentous transformation through first-hand experiences. They brought back from Japan their observations as well as insights into this company’s globalizing effort and the challenges it faces.

The students in pairs are working on three related sub-topics. One pair is examining the company’s training programs to prepare employees for the global business environment. A second pair is investigating the human resource strategy that the company is modifying in response to the global standard. This pair is also investigating employee satisfaction in the workplace as well as the employment of female workers and foreign workers. The third pair is focusing on HCM’s development of energy efficient machines and exploring whether these eco-friendly machines are enhancing the company’s competitiveness in the global market. The students are sharing their research on campus and beyond, through a blog maintained during the trip, a photo exhibit, presentations at an Augustana College symposium, a research poster, and submission of a paper to an undergraduate research journal. We believe this research is of great interest for many Asianists, in particular business experts and economists.

Shawna Ables
My trip to Japan and visits at Hitachi Construction Machinery (HCM) facilities have given me a wonderful opportunity that I am very thankful for. As I interacted with native Japanese people, I was shown hospitality that welcomed me to this country filled with new experiences. I was able to learn more about Japanese culture and work life than I had known in the past, and I found many aspects of the culture pleasing. This journey has further inspired me to continue to learn about Japan and develop the skills which will help me to work there in the future, as well as how to interact with diverse people in other cultures.

Before going to Japan, my partner and I did extensive research to learn about the company. This initial research helped us to develop questions to ask during our interviews. The bulk of our information came from these interviews where we learned even more details about language training, cultural training, and Kenkijin Spirit training. However, we were left with other questions that could better be addressed by additional research on the international branches of Hitachi. This additional information will be added to our findings.

Stephanie Drago
My research trip was an invaluable experience, which introduced me to aspects of the Japanese culture that I was never aware of. It also allowed me to further analyze and understand parts of the culture that I was familiar with. The hospitality of the Hitachi Construction Machinery staff was unequaled and I will never forget how they went out of their way to make sure we had all of the information we needed in order to complete our research. This experience will be incredibly valuable as I continue my career as a geographer. Although I have experience with scientific research, our research in Japan has opened me up to qualitative, interview-based research, which is equally important in the field of geography. These skills will help me as I go on to receive further degrees in my field and develop my career. Also, I plan to make traveling a significant part my life and this opportunity has given me valuable experience traveling to new places with a group and on my own.

Our project focused on Hitachi Construction Machinery’s motivations with their Eco product line, how globalization may or may not have influenced their decisions to create their product line, and if it is improving their competitiveness in the global market. We learned that rising global emissions standards are a major influence on the development of these products, as well as the Japanese ideal for conserving resources and environmental sustainability. As an island nation with limited resources, the Japanese are forced to consider their resource use, waste, and environmental impact. We will need to continue to organize the information that we gathered from Hitachi Construction Machinery, develop our final research paper, and present our findings.

Sarah Funke
Although each day differed in its own way, the days I witnessed and participated in communications with HCM were similar to those in which I communicated and interacted with the native Japanese culture. All the people were exceptionally respectful as well as accepting, leading to my admiration of the country of Japan. Universally, independent of location or rank in the company, all employees treated us similarly. We received honest but reserved answers with no question going unanswered providing for what I feel to be a successful collaboration. With such an open and accommodating native culture, the trip revealed a variety of positive and intriguing opinions I was unaware I could have about work and life in another country. The trip in general showed me that I am not only able to survive but thrive in situations that make me feel uncomfortable. We can learn the most about ourselves when we are uncomfortable, therefore, I plan to and have already started practicing putting myself into uncomfortable situations in order to allow myself to grow and build skills and knowledge in which I would not otherwise. The trip to Japan taught me more than I could ever express on paper, and I will forever be grateful for that.

My partner and I were quite successful in completing the majority of our research while in Japan. The bulk of our work entailed gaining information from Hitachi Construction Machinery employees. All information was collected with the mindset of how values and practices may differ from location to location while the company as a whole is globalizing. If there were differences to be found then globalization could potentially be hindered by the inconsistencies among the facilities in the headquarter country. My partner and I now must collect our thoughts and summarize a cohesive view as to where we feel the strengths and opportunities lie within the company that may affect globalization. A deeper look into the information we have gathered, and reflection on what the information could mean for the future of the company, will need to happen before a sound report can be written.

Trang Ho
This research trip has given me the opportunity to learn more about Japanese culture and people. No matter where we went, the managers and employees from HCM were very approachable and open to provide us relevant information to our research. Through this research, I was able to go deeper into the study of Japanese business practices, in particular Hitachi Construction Machinery (HCM), and their effort towards globalization. The experience I gained during my twenty days doing research in Japan has enriched my academic fields and improved my transferable skills including interviewing techniques, public speaking and presenting practices. With all of the expertise that I have learned through this research trip, I want to successfully pursue my bachelor’s degree in finance, accounting and communication studies. My desire to work in Japan has grown bigger after this research trip. I had not decided what I want to pursue for my MBA degree two years from now as I pursue three different academic fields as an undergraduate. However, what I have seen while researching Japanese human resource management has interested me in taking the first steps in studying the management aspect of business administration. I believe it would be fascinating to look more into the employment practices and human control aspects of business management during graduate school.

While researching Hitachi Construction Machinery (HCM), I learned that the company has been operating under a Japanese traditional model, which engages in long-term fixed employment and hesitates to use foreign employees. In order for HCM to maintain its productivity, as well as satisfy its employees, the executive board needs new strategies so that the company can retain its position as one of the top companies in Asia. I have been working with my partner, Sarah Funke, to study how Hitachi Construction Machinery’s (HCM) human resource management has adapted to globalization in regards to hiring and promotion decisions while attempting to maintain employee satisfaction. In order to better understand these issues, Sarah and I interviewed managers and employees at six different divisions of HCM. Overall, the company is trying to combine both merit-based and seniority-based system into a mix-based system. Future research should focus on the possible solution for HCM in particular, and Japanese companies in general, to effectively manage their human resource system to adapt to the worldwide integration of globalization.

Gage Meyers
Before taking part in this research I was determined to study maritime law after my time at Augustana. My dream was to practice law between American and Japanese corporations and maritime law seemed to be the best choice for me, with Japan’s large use of naval trading. However, this trip has truly impacted me to change my choice to environmental law. After working with the HCM employees and hearing them discuss the various environmental regulations that corporations have to meet, I found myself inspired to change my field of study. I hope to make a change in the world by trying to reduce the damaging effects of pollution on a global scale through the field of environmental law. This opportunity has been the greatest thing to happen to me since being accepted to Augustana. The sights and experiences are something that I will never forget. Being able to interact and speak with the Japanese people using my second language reinforced my desire to work with Japan.

For our research, Stephi Drago and I examined the motivations and development of Hitachi Construction Machinery’s (HCM) energy efficient machinery to see if the machines improved HCM’s presence in the global market. Stephi and I originally believed that the purpose behind the development of HCM’s Eco products was the humanitarian desire to counter the effects of global warming and to lead the market in green products. However, by developing the Eco products, HCM hopes that when China, one of their largest markets, begins to set stricter fuel emission regulations, HCM will be able to corner the market on regulated machinery. Besides their development of Eco products, HCM is researching algae based biofuel as well as machines that can handle the fuel. Currently, all HCM machines can use biofuel, but continued use has negative effects on the machine’s inner components.

Emily Stanevicius
While researching in Japan, I interacted with a variety of people. All the employees that I interacted with at Hitachi Construction Machinery went out of their way to make me feel like family. As an Asian Studies major, this experience created many opportunities for me. I learned new teaching methods that I could use while participating in the JET program and became more familiar with the Japanese language. Ultimately, this trip solidified my decision to spend part of my life in Japan.

Over this past summer, I conducted research in Japan with Hitachi Construction Machinery. My partner, Shawna Ables, and I focused on Hitachi’s new English language training program as well as the Kenkijin Spirit program. The Kenkijin Spirit is the philosophy that unifies the HCM employees under a common cause. After visiting facilities across Japan, Shawna and I have assessed the progress that HCM accomplished. Our preliminary conclusion is that HCM is headed in the right direction by sponsoring these programs to help it to succeed in a global market.