B. Draw a parallel between the practice of new product development in different countries. Discuss their advantages and disadvantages.

2.7 CASE STUDY & ROLE PLAY

The Case

Modern Industrial Equipment (MIE) is a manufacturer of industrial electrical equipment. In addition to large domestic plants the company has several wholly-owned subsidiaries abroad. In 19XX the financial performance of the foreign subsidiaries was good with the exception of the Taiwan facility, which was losing money. Despite an infusion of $3 million from the parent company the Taipei office reported further substantial losses. After considerable study, the president of the Taiwan plant, Mr. Yang, was fired. He was replaced by Henry Tanaka, 38, a second generation Japanese-American who had formerly been vice-president of operations at one of the domestic plants. Tanaka was the youngest person ever to become a MIE president and during his three-year tenure he had initiated policies, including a managerial reorganization that had resulted in phenomenal growth.

Tanaka disposed of a part of the assets and inventory in order to offset liabilities, shut down the manufacturing of heating and cooling equipment, and introduced a radically new management system. As a result of that both the vice-president of operations and the plant superintendent resigned. The middle- and upper-level managers sent a letter to the President of MIE, James Hill, seriously questioning Tanaka’s policies.

The management of MIE is torn between the need for sweeping changes to restore the financial soundness of the subsidiary versus the need to maintain the confidence of the staff. Tanaka is in a difficult position. On the one hand a number of the problems need to be solved before any recovery can be achieved. On the other hand, he is replacing a seemingly popular Chinese national. Tanaka must make some decisions that are not likely to be readily approved of by his all-Taiwanese staff (he believes that the reason for the resentment between him and the staff is partly that he is a Japanese-American). If he develops an antagonistic relationship between him and his managers, his measures will hardly ever succeed. Still Tanaka assumes that renewed financial solvency will outweigh the present difficulties resulting from the reorganization.

Case Analysis

Summarise the situation at MIE-Taiwan both before and at the time Tanaka took over.