Search results

The purpose of this paper is to analyze the drivers that influence subsidiaries of international companies in the automobile industry in Thailand and how automobile companies pursue localization in response to these drivers.

Using case research method, examined seven leading automobile manufacturers – Toyota Motor (Thailand); Hino Motors (Thailand); Honda Automobile (Thailand); Isuzu Motors (Thailand); BMW (Thailand); DaimlerChrysler (Thailand); and Auto Alliance (Thailand) – as well as 14 of their dealers and suppliers in Thailand. In total 120 Thai and expatriate managers were interviewed.

Extending the knowledge body from existing research, this study found that there are four drivers for automobile manufacturers to adopt localization strategies. Those are host country characteristics, industry characteristics, company characteristics, and market characteristics. The results show that automobile manufacturers react to drivers by localization of their decision making, building and exploiting knowledge pool of local suppliers and distributors, increasing numbers of Thais at the management level while decreasing the number of expatriates, increasing R&D activities locally, localizing products, increasing usage of local suppliers, adapting manufacturer processes, reinvesting at subsidiary, and localizing corporate image. However, these vary in degree from company to company. Localization strategies produce benefits that go beyond allowing automobile manufactures to compete within the local situation, also enabling them to overcome challenges and use their successes to transform the parent company and other subsidiaries and eventually contribute to the parent company's globalization strategy.

Managers in subsidiaries may first implement localization strategies to cope with driver factors to mitigate risks and uncertainty. By adopting localization, managers should not focus only on short term benefits to gain local advantages in host countries, but these advantages at the subsidiary should be transmitted to the parent company and other subsidiaries to build a competitive international strategy.

CEOs of subsidiaries in emerging markets can learn what drivers influence localization strategies and how to cope and create local advantages for global competitiveness by implementing wide range of localization strategies.

To analyze the challenges and solutions in developing local employees for managing subsidiaries – the implementation of Thainization philosophy at Toyota Motor Thailand (TMT).

In‐depth interviews were conducted with Thai and Japanese employees, and Imai Hiroshi, one of the architects of Thainization philosophy.

For successful implementataion of Thainization philosophy in TMT, the management had to demonstrate respect for local employees and build trust between Thai and Japanese employees. Once the employees related to each other on the basis of mutual respect and trust, it was relatively easy to collaborate and find solutions.

CEOs of multi‐national companies, particularly Asian subsidiaries, can learn how to cope with challenges in developing local employees, building their technical and managerial capabilities.

Many international companies are struggling with the important issue of building capabilities of local employees for leveraging their global competitiveness. The successful implementation of Thainization philosophy of TMT offers a major breakthrough in this direction.

To describe how Toyota Motor Thailand (TMT) is using local Thai employees instead of the traditional Japanese workforce, and why.

In‐depth interviews with Thai and Japanese employees, suppliers and dealers of TMT; and Imai Hiroshi, architect of the philosophy.

A total of seven initiatives were discovered in which people played important roles in bringing the company into the community.

For building and harnessing local advantages, multi‐national companies have to bridge cultural, knowledge and skill gaps between local and expatriate employees. The actions of these companies have to demonstrate long‐term commitment to host countries.

CEOs of multi‐national companies, particularly Asian subsidiaries, can learn how to build and harness local advantages for global competitiveness.

The purpose of this paper is to analyze the nature and the evolution of manufacturer–supplier relationships in Thailand's automobile industry and to identify the factors that influence the evolution of these relationships.

The study is based on case research method involving in‐depth interviews with 120 local and expatriates of 7 companies and their 14 suppliers.

In Thailand, the manufacturer–supplier relationship starts out as a market‐exchange‐type relationship, and then gradually moves to a partnering type. The stages in evolution involve constant efforts on the part of foreign manufacturers to develop the suppliers by offering resources, training, feedback and solutions. The supplier capability building programs, bridging of cultural differences and formation of trust provides the basis for enduring partnerships. These partnerships are symbiotic relationships in which manufacturers benefit from suppliers' knowledge of local production and market factors and suppliers benefit from manufacturer's technical and managerial support. Additionally, closer collaboration with suppliers helps to prevent the leakage of business intelligence and theft of intellectual property and to prevent suppliers from working with competitors, thus allowing manufacturers to devote undivided attention to smooth supply of parts without any shortage.

In emerging markets, the local suppliers play key role in the success of foreign automobile companies. However, the local suppliers need technical and managerial support from manufacturers. The process of building a network of competent local suppliers consumes time and resources, therefore manufacturers should take a long‐term view of the market. The undeniable importance of overcoming cultural differences and building trust is the hallmark of successful partnerships.

The paper highlights the importance and process of developing local suppliers in emerging markets using Thai automobile industry as an example.

To analyse the scope of localization strategies and corresponding benefits of these strategies to subsidiaries of international companies in the automobile industry in Thailand.

The authors have adopted the case research method to investigate localization strategies of subsidiaries of seven companies (Toyota, Hino, Honda, Isuzu, DaimlerChrysler, BMW, and Auto Alliance) as well as 14 of their dealers and suppliers in Thailand. The information was gathered by conducting in‐depth multiple interviews with 120 local and expatriate employees at various levels in the organizations; by referring to annual reports, policy documents and internal reports of these companies; and by observation during plant visits.

Contrary to the belief that international companies implement localization strategies to simply match the local market environment, it was found that these companies implement a wide range of localization strategies to achieve multiple benefits. The paper identifies nine areas of localization: localization of strategic decision making; building and exploiting the local knowledge pool; deployment of local human resources; localization of R&D; localization of products; use of local supplier networks; adaptations to manufacturing processes; local deployment of subsidiary profits; and localization of corporate image. These localization strategies are not just based on the principle of “cost‐based localization” but are based on “value‐based localization.” These strategies work in tandem and create value through a system of multiple benefits, such as managements' ability to comprehend and deal with uncertainty in the operating environment; make informed decisions to respond to challenges in developing efficient local assembly and marketing systems; cost reduction; higher degree of commitments by local employees; product customization and acceptance; and greater brand equity and image as a good corporate citizen.

Based on concrete illustrations of seven companies, this study identifies nine distinct areas for planning and implementing localization strategies and their corresponding benefits. The managers of subsidiaries can benefit by focusing their localization efforts in these areas to gain maximum advantage from host country context and then translate these advantages into a competitive international strategy.

CEOs of subsidiaries in emerging markets can learn how to build and harness local advantages for global competitiveness by implementing a wide range of localization strategies.

In order to identify expatriate roles in a subsidiary it is necessary to go beyond those functions which are subservient to the headquarters. This paper sets out to prescribe a new spectrum of development roles with respect to varying capabilities and development needs of local employees.

The roles of expatriates are analyzed based on seven case studies conducted with top automobile manufacturers in Thailand: Toyota Motor Thailand; Hino Motors (Thailand); Honda Automobile (Thailand); Isuzu Motors (Thailand); BMW (Thailand); DaimlerChrysler (Thailand); and Auto Alliance (Thailand).

Four types of expatriate roles – commander, conductor, coach, and connector – are proposed; the roles correspond to the degree of task readiness and managerial capabilities of local employees.

The paper provides a tool that will help expatriates understand their roles according to the technical skills and managerial capabilities of local employees.

The paper offers practical advice for diagnosing expatriate roles and their training prior to assignment to a subsidiary.