Introducing Quality Control to Uruguay: Will Japanese Management Be Accepted in

another Culture?

Case synopsis

Government officials and top business executives of the Uruguayan manufacturing

industries were concerned about increased imports from Brazil and Argentina. Officials were

afraid of losing their market shares to competitors because of the impact of these two countries.

The case facts show that Uruguayan officials were alarmed about Brazil and Argentina because

of the opening up of the markets under the Mercosur agreement. The Mercosur agreement was

designed to increase economic cooperation among countries of South America.

One of the key problems facing the Uruguayan markets was issues of poor product

quality and high production cost in the domestic manufacturing market. As a solution to these

problems, Uruguay officials had studied Japan’s strong record in product quality control and

opted for the Quality Control Circles way to help improve the production process. Uruguayan

officials believed that the concept of small group activities at production site and technological

innovation would improve the production process. Thus, Uruguayan officials, with the help of

Japan Aid’s Quality Control Circle specialist Mr. Kazuo Sakamoto, took steps to introduce QCC

to the Uruguayan production markets.

Mission Statement

“To implement Quality Control Circles to the Uruguay business community and

government officials that it may be utilized in Uruguay’s manufacturing system giving Uruguay

a competitive advantage in Latin America and global markets”

Mapping Goals: Short-term

Goal 1: Understand the business culture in Uruguay

Hailing from halfway across the globe, Mr. Sakamoto is coming from a country whose

language, customs, and business culture greatly differ from Uruguay. Although he is a guest and

was invited to help implement QCC, he will likely be treated as an outsider. The better he learns

to acclimate himself; he will more likely be well-received in Uruguay. In order to prevent

himself from suffering from culture shock and feeling like a fish out of the water, he will need to

educate himself about Uruguay’s history, political climate, economic climate, business culture,

and most importantly, learn the native language.

In Latin American, national pride is a big aspect of their culture. For many Latin

Americans, nationalism is a defense mechanism against the outside world (Miller 203). Latin

American countries have embraced horizontal camaraderie as why to combat the outside world’s

view of them as homogenous and lacking sound culture. When examining the identities of the

individual countries within Latin America, however, each country has its own interpretation of

what nationalism means within the context of their own historical background, dialect, culture,

and regional traits (Miller 216-217).

Goal 2: Phase out paternal hierarchal structures within the pilot companies by introducing and

teaching flat management concepts

One of the problems Mr. Sakamoto encountered with the pilot companies was a rigid,

hierarchal structure. Employees in the pilot companies could be placed into three hierarchal

categories: upper management, middle management, and front-line workers. Within this

hierarchy, there was little room for worker mobility, and turnover among the front-line workers

was high. Communication between the three groups was also a problem.

In QCC, employee input, particularly that of front-line workers was a crucial aspect in

order to make it efficient. In Japan, what made QCC successful was the usage of small group

activities at the production site to improve the production process. QCC was a team effort, and

in particular, involved input from front-line employees. According to a case study involving

similar hierarchal problems within healthcare settings, positive job experiences and employee

productivity come from a perception of team effort (DiPalma 296).

Mapping Goals: Long-term

Goal 3: Conduct on-site training with pilot companies and government officials

One of the reasons Mr. Sakamoto was brought to Uruguay was because of his past

experiences with QCC and implementing similar programs in other countries. Mr. Sakamoto

had 10 years experience working with Japan Aid and another 30 years working for the private

sector. One of his more successful ventures included increasing the number of companies

implementing QCC in Singapore, from 500 to 5000. Due to his successes with implementing

QCC programs and his knowledge base, Mr. Sakamoto is obviously very capable of creating and

conducting training sessions and seminars.

It is important to note that one of the reasons Mr. Sakamoto was brought to Uruguay was

due to the business community and the government’s lack of experience with QCC, as well as

productivity and efficiency problems within the manufacturing industry. With high production

costs, low labor productivity, and poor product quality, Uruguay was falling behind in the global

market. Implementing QCC was becoming a necessary step. In many Latin American countries,

the economies are sustained through a few specific industries and these industries need to

consistently increase production and efficiency in order to compete both locally and globally

(Colburn 29).

Goal 4: Increase production by 30 percent and efficiency by 40 percent

As previously mentioned, the Uruguayan manufacturing industry suffered from high

employee turnover, low productivity, efficiency problems, and producing products of poor

quality. Uruguay also had to worry about competition from both Brazil and Argentina, who

were increasing imports and had larger manufacturing industries, thus creating a sense of

urgency for Uruguay’s manufacturing industry to act quickly in order to compete with the recent

commodity boom. Many economists theorize that commodity booms can undermine efforts to

develop an economy that is robust, innovative, and globally competitive if not the boom is not

managed properly (Colburn 29). For Uruguay, learning QCC concepts and implementing it into

its manufacturing industry was a necessary step from preventing an unstable commodity boom.

In studies conducted in countries where QCC is heavily used in the manufacturing

industry, i.e. Japan, Taiwan, and Korea, most employees agreed that the quality of the product

was the most important parameter when evaluating the efficiency of QCC within a company

(Kristensen, Dahlgaard and Kanji 80). The study also noted that QCC was effective because it

provided quality motivators for the employees. Quality motivators include bonuses, other

economic rewards, and job rotation, a popular practice in Japan that allows for employees to

engage in hands-on experiences in other company positions. With quality motivators, company

productivity increases, as well as employee performances and overall efficiency (Kristensen,

Dahlgaard, and Kanji 83-84).

Mapping Problems/Risks: Goal 1

Problem 1: Government officials and business community may never be fully accepting of Mr.

Sakamoto because he is not from their country and they may resist threats from the outside world

for fear of exploitation

As mentioned previously, Latin Americans and Uruguayans carry tremendous pride in

their culture and historical background, and nationalism is often used a defense mechanism

against the outside world. Interestingly enough, nationalism was not really viewed as a concept

in Latin America until the Cold War-era. Latin America was never viewed as having its own

ethnic distinction or securing state consolidation, like Europe or the United States. Latin

America was also never viewed as an economic power, like the U.S. or Canada; therefore, it was

often viewed as incomplete nation. It wasn’t until the Cuban Revolution and the threat of Soviet

interference that nationalism started becoming a growing force in Latin America (Miller 201-

202).

Although Mr. Sakamato was invited to Uruguay, facing resistance to outside interference

is a common attitude in Latin American countries. If Mr. Sakamoto is not proactive about

immersing himself in Uruguayan culture, he will find himself fighting a losing battle in terms of

expecting cooperation. If he wants government officials from the UITPC and members of the

business community to be on board from the beginning, he must acclimate to their culture, as

well as present QCC within their cultural needs.

Problem 2: Language barriers

It was established in the beginning that Mr. Sakamoto did not know Spanish until months

into his stay in Uruguay. At the time, he had been working with UITPC officials who spoke a

mutual language, English, but would later be reassigned to officials who only spoke Spanish.

Although Mr. Sakamoto had learned conversational Spanish-speaking skills by that time, he

would have put himself in a better situation had he learned Spanish prior to visiting Uruguay.

Learning Spanish sooner rather than later could have alleviated some of this resistance he faced

early on.

Problem 3: Due to cultural contrasts between Japan and Uruguay, Mr. Sakamoto might have a

hard time acclimating

In this particular situation, business culture is being discussed, but that is not to say that

Mr. Sakamoto could suffer from homesickness and cultural shock while contending with an

extended stay from home. Since QCC was an idea that originated in Japan, the Japanese

business community has put an emphasis on values such as innovation, quality product,

efficiency, worker input, and continuous improvement. Continuous improvement is viewed as

team effort in QCC (Kristensen, Dahlgaard and Kanji 81).

In contrast, Uruguay’s manufacturing sector lacks the team effort approach that is highly valued

in the Japanese business community. Every worker has his place and neither open

communication with authority nor constructive criticism from the front-line is valued.

Hierarchies, which will be discussed into more detail later, are a cultural norm in many Latin

American countries, and Uruguay is no exception. Mr. Sakamoto’s 30+ years of experience was

put to the test in this type of environment.

Mapping Problems/Risks: Goal 2

Problem 1: Latin American culture based around class structures and hierarchies, which meant

middle management did not care for the input of front-line employees

Since the basic principles of QCC revolve around team effort and activities are centered

on front-line employees, Mr. Sakamoto saw a lot of resistance from middle management in terms

of working together with factory workers. Many middle managers expressed disdain for having

to take input from the front-line, with one middle manager saying that it is the job of middle

management to tell the workers what to do, not the other way around. This attitude is rooted in

class struggles in Latin America that date back to post-Spanish colonization. Although Uruguay

has a considerably sized middle class in comparison with some of its neighbors, the population

of most Latin American countries is split into two classes: the wealthy class and the

underprivileged class. This division in class plays a heavy influence on the attitude towards

status in many private and public arenas (Dozer 274).

Problem 2: Due to social and political climate, Uruguayans are resistant to change, and

management may resist implementation due to fears of short-term losses

Although government officials from the QCC and many members of the business

community liked the concepts of QCC and appreciated Mr. Sakamoto’s knowledge base, they

were often reluctant to take action on their own accord. Part of this mentality could date back to

pre-90s reform in Uruguay, where bureaucracy was very rigid and structured around hierarchal

power. The mentality of rigid hierarchies and authoritative control leaked into Uruguay’s

culture, leaving many people with the mentality that it is always someone else’s job to take

control of the situation. Even though the private sector had always been a separate enterprise,

public opinion often showed strong support for an economy that was operated and owned by the

state. It wouldn’t be until the early 1990s when Uruguay broke away from these rigid structures

and started opting for a more efficiently operated public sector (Panizza 11-12).

Problem 3: Business community had problems with the Unions

One of the problems within the manufacturing industry pertained to strain relations

between the business community and the labor unions. Many companies noted that it was

impossible to have open communication with the unions. The labor unions believed that

companies who did not emphasis the importance of front-line workers or treat them equally

would be futile in terms of learning about how to make continuous improvements on production

sites.

Historically, the relation between unions and the business community has never seen

positive cooperation with each other. When Uruguay’s private sector attempted to participate in

the global market, its efforts were weakened by unions. Particularly in the 1980s, Uruguay

needed short-term job and capital destruction to increase its economy’s international exposure.

Labor unions were able to prevent this job and capital destruction, but the long-term effect of this

destruction would have increased productivity growth, which was hindered due to the labor

unions (Casacuberta, Fachola and Gandelman 226).

Mapping Problems/Risks: Goal 3

Problem 1: No one was compelled to be proactive

Due to Uruguay’s culture structured around hierarchies, structure, and institutionalized

resistance to taking charge, no one in from either the UITPC or the business community wanted

to take the lead in terms of moving forward with implementing QCC. Resistance to change had

been an ingrained virtue in Uruguay’s political and social culture (Panizza 1). While Mr.

Sakamoto saw success in teaching QCC, he could not get them to take a role in the

implementation process.

Problem 2: Getting everyone on board and in the same room proved to be a difficult task

On top of Mr. Sakamoto’s troubles with middle management refusing to take input from

the line workers, he also struggled with getting senior management to partake in training

activities with middle management. Because of the emphasis on hierarchal structures in the

manufacturing industry, getting everyone to train together seemed counterproductive. Based on

studies conducted in industrial clusters in Latin American and Southeast Asia, the level of

cooperation within industries and among local economic players has an outcome effect on

productivity (Schmitz 324).

Problem 3: Language barriers could cause confusion in workers, particularly if mission and

goals of training are not made clear

Because of the delicate process involved in training and implementing QCC, language

barriers could hinder success. Assuming that many of the line workers come from a working

class background, the likelihood of them speaking English or any other language is low.

Although Mr. Sakamoto’s proficiency in Spanish increased over the duration of his stay,

knowing Spanish from the get-go and knowing how to translate certain industry terminology into

Spanish would have created a more productive environment from the beginning.

Mapping Problems/Risks: Goal 4

Problem 1: The Uruguayan manufacturing sector’s inefficiencies and high employee turnover

may prevent this from happening

Even with an implementation of QCC and incorporating more flat management-based concepts

into the Uruguayan manufacturing sector, increases in production and efficiency could be

deterred by the cultural mentality of resistance and high employee turnover. Due to Uruguay’s

history of slow acceptance to changes implemented in state and economic reform, incorporating

QCC and flat management concepts will take considerable time and getting use to for the

business community. On top of that, employee turnover will remain high for a period of time,

which could delay successful implementation.

Problem 2: Cultural resistance to change and lack of desire to take charge may lead to reverting

back to old system

Acceptance of new systems and concepts and incorporating them has always been a cultural

challenge for Uruguay, both socially and economically. Although anti-export policies had been

reformed in the 1970s, it still took many years for Uruguay to accept the necessity of

participation in the global market (Casacuberta, Fachola and Gandelman 226). Until the

Uruguayan manufacturing sector can accept responsibility for its inefficiencies and is willing to

move forward, implementation of QCC will prove to be a slow and tedious process.

The Internal and External Players: Goal 1

Players: Mr. Kazuo Sakamoto; Uruguayan government officials.

Mr. Sakamoto is a key player in the implementation of QCC. The speed in which he

understands and comprehends the Uruguayan culture will affect the success of the program. In

this case, Mr. Sakamoto himself can be a hindrance in understanding the culture. Government

officials in Uruguay can have a positive impact on Mr. Sakamoto’s ability to understand the

culture. As government officials accept Mr. Sakamoto as an ally in the expansion of production,

this would allow the business community and general public to be more receptive to sharing

cultural information.

The Internal and External Players: Goal 2

Players: Mr. Kazuo Sakamoto; Uruguayan pilot companies; Manufacturing industry and

Unions.

The organizational management structure of an organization greatly impacts the manner

in which work gets done. Management styles are pivotal to the success of an operation.

Companies that functions under a flat management style have managers that are more successful

than that of hierarchal managers. In flat management organization, managers assume greater

responsibility and are seen as independent leaders working in concert with upper management.

Although hierarchal managers work with upper management as well, these managers often rely

on upper management for guidance and strength (Ghiselli and Siegal 618).

In order to have successful implementation of Quality Control Centers in Uruguayan

manufacturing companies, Mr. Sakamoto must change the management culture from a hierarchal

to a flat management structure. The concepts of QCC’s rely heavily on front-line workers having

direct input on solutions to problems. This is in direct opposition to the management structure of

the Uruguay manufacturing markets. Phasing out hierarchal structures to flat management-based

concepts is not an impossible task for Mr. Sakamoto. The primary focus of implementing quality

control centers is to improve product quality and lower cost. With improved production and

lower cost; companies would begin to see firm financial gains.

Uruguayan manufacturing industry

The Uruguayan manufacturing industry consists of manufacturing businesses with a

hierarchal management structure. This structure involves upper-management, middle-

management, line workers, and unions. Manufacturing industry has the potential to hinder

progress of the flat management based concepts. Manufacturing industry can reject orders based

on belief that product may not be of superior quality. Upper management must provide solid

support and leadership by communicating the benefits of QCC’s. Middle managers have power

over front-line employees and could resist changes in management style, thus giving front-line

employees no incentive to execute changes. Front-line workers may resist change in

management style altogether.

Because front-line workers are a key element of QCC’s care must be taken to ensure the

outcomes of production changes. Unions have tremendous power to insert themselves in

opposition to any changes that will affect worker productivity. Researchers Bradley and Hill

noted that in most companies that implemented QCC’s, middle managers had negative attitudes

towards circles. However, this dissonance was due to transitional issues that would be cleared up

as managers gain trust in the new structure (Bradley and Hill 72). Researchers suggest that

union involvement in production changes can be positive verses adversarial. Managers must

form new alliances with unions through channels of communication that integrate labor and

management as team members (Bradley and Hill 71).

The Internal and External Players: Goal 3

Players: Mr. Kazuo Sakamoto; Uruguayan pilot companies; Japan Aid and other Associations.

Mr. Sakamoto and Japan Aid represent an outside agency that has teamed up in Uruguay

in developing QCC’s in production markets. The literature review for QCC’s in South America

revealed that the role of Associations responsible for promoting quality, as well as business

association play a major role in the success of QCC’s. In Columbia for example, The Columbian

Quality Control Association helped to organize international congresses to promote national

circle project competition (Navarrete 21). Thus, Mr. Sakamoto’s goal of on-site training can be

achieved through continued cooperation from Japan Aid and other similar organizations.

Quality Control Circles are normally implemented is a series of five steps or stages. The

five stages include Initiation, Pilot plan, Expansion, Growth and Maturity. The initiation

(training) stage is used to allow program leaders such as Mr. Sakamoto the opportunity to inform

of how the entire plan would be accomplished. Pilot plan is an important educational tool for

implementing QCC’s. Once the plan of action is drafted, pilot companies are selected for small

scale implementation of centers. Pilot companies represent the infant stages of the program yet

provide the perfect opportunity for introducing new systems in a controlled way as to make

changes to implementation methods as needed.

The Internal and External Players: Goal 4

Players: Mr. Kazuo Sakamoto; Uruguayan pilot companies; Government officials; Unions,

Competitors-Argentina and Brazil, Suppliers.

The overall goal of the QCC program is increased production output and production

efficiency. As the QCC’s program is fully absorbed within the overall culture of the Uruguayan

manufacturing community, long-term improvement will be seen. In order to achieve our goal of

increased production by 30% and efficiency by 40% we must first establish a baseline from

current production numbers. Information obtained from pilot companies will provide measurable

data for consideration. The success or failure of QCC’s is linked to the involvement of several

key players. The case highlights the leadership of the Uruguay and the Minister of industry and

Energy as being proactive in seeking solution to Uruguay’s current market position. Government

officials having taken initiative to hire specialist in quality control showed their commitment to

production increases from QCC’s implementation.

Research shows that the union reaction to QCC has in most cases been positive. Unions

saw no threat to collective bargaining, partly because circles dealt with condition specific to a

particular process that did not come under common rule. From a health and safety perspective,

unions were content as quality circles could persuade management to introduce changes that

were previously impossible for the union to accomplish (Bradley and Hill 80). The degree of

influence that Mr. Sakamoto has on this goal can be seen throughout each phase of QCC’s

implementation. He acts as vehicle that drives QCC’s from the beginning to the end, thus, Mr.

Sakamoto’s role is crucial to the success or failure of QCC’s in Uruguay. Mr. Sakamoto is both

and internal and external player. As thus positioned, Mr. Sakamoto can impact the manufacturing

companies in which QCC is being implemented, and the larger production industry. If our goal

of increased production and efficiency are going to be achieved, careful consideration must be

given to the neighboring competitors. Argentina and Brazil pose a direct threat to Uruguay’s

strategic positioning with the implementation of QCC. With a regional trade agreement in place

(The Mercosur), countries such as Uruguay, Argentina, and Brazil are part of a global economic

network yet they are also competitors. Countries like Argentina and Brazil are known to be

more innovative and entrepreneurial in dealing with growth and economic development. As

Uruguay increases in output and production efficiency, this will improve their standing in the

global markets. This will force competitors to adjust some part of their economic system to

compensate for potential losses to Uruguay. (Dana 99). It is important for leaders to thoroughly

consider all potential players that may help or hinder the accomplishment of goals and

objectives.

Having considered the above players, another critical external player must be examined

in this goal. Key to the success of any manufacturing growth is that of the suppliers. If parts or

goods are not manufactured internally, they must be ordered from an outside source. This could

create what in know in the production industry as supply chain break down. As QCC comes on

line, increase production will increase demand for supplies. Thus, suppliers must be able to

absorb the increased demand. If not, Uruguay’s production will suffer. As we improve or

production process we must also consider how this would impact the entire production operation.

Currently, supply chain break down is occurring as Japan is suffering from the effects of

earthquakes and a tsunami. Japan is the biggest supplier of parts used in the auto and the

electronics industry. (BBC). Knowing the actors helps leaders to develop short-term and long

term strategies for goal success.

Tools

Knowing what tools area available to you and how they will impact your objectives is an

essential skill leaders must possess. However, tools of a given situation may either help or hinder

you in reaching your objectives. Therefore, careful attention must be given to the identification

of tools so leaders can develop a plan that makes the best use of those tools. In our analysis of

this case there are several significant players that have implemented Quality Control Circle or

Total Quality Management, with enormous success. Players like Toyota, the general Japanese

business community provide a model for QCC success and is an effective resource to inspire

Uruguayan official and the business community to further embrace QCC.

Tool 1: Players like Toyota other corporations who have been successful with Quality Control

Circles: a good resource and teaching tool.

Today’s business markets have become more global in nature. This change brings with it

competition and stiff demand for high quality products on the international level. In order to

compete in such a competitive environment businesses as well as countries must make changes

to ensure low cost production and high-quality products in meeting the demand. Companies like

Toyota recognized the rigors of international competition as it introduced a system that relied on

the decision making skills and problem solving skills of their employees to eliminate waste and

improve productivity. (Krumwiede, Kummus, and Vokurka 14). In general, Japanese companies

invest in their people and empower them to meet or exceed the company expectations. This is the

foundation of QCC where front-line employees are allowed input in help to solve problems and

grow the company’s bottom line.

The organizational model in Japan is centered on delegation and the ability to change

(Campos and Aspainwall 429). Although there is some semblance of a hierarchal system, it is

flexible enough to be considered flat. Unlike the rigid Uruguayan organizational model, Japan

embraces a global perspective in its business operations. In this case, the end result of any

production or manufacturing process is overshadowed by high business service ethic. Japanese

business uses QCC and TQM as tools to help them reach their overall goal of producing quality

products. Although organizations and countries are unique in culture and business ethic,

Japanese companies agree that there is a common underlying organizational model because

organizational concepts are based on rigid established principles (Campos and Aspainwall 429).

Thus, the principals of investing in Human capital and innovation shared by Toyota and other

Japanese businesses provide a good model for Uruguayan official to follow. Quality Control

Circles and Total Quality Management are excellent resources for business success and Japanese

companies are excellent tools if used can inspire QCC sustainability in Uruguay’s organizational

structure.

Tool 2: Interactive on-site training: to further elaborate on the concepts of Quality Control

Circles and give the Uruguayan business community the opportunity to interact with other

business communities who have successfully implemented QCC.

One of the main problems this case highlights is poor communication and lack of internal

leadership when Mr. Sakamoto initially began to introduce QCC to the manufacturing markets.

In order for QCC to be effective, it requires buy in on all levels. Top managers must design the

plan of action that middle-managers and front-line employees will follow. Although Mr.

Sakamoto faced obstacles early, he was able to get QCC implemented in several pilot companies

with moderate success. With positive feedback from pilot companies and staff in key places, Mr.

Sakamoto had the foundation set voyage ahead with confidence. Our analysis of the case

revealed limitations in Mr. Sakamoto’s ability to convince key players in the QCC map to fully

embrace the changes he suggested. Because QCC was new to the Uruguayan business culture

and the country as a whole, Mr. Sakamoto needed a tool to help him communicate the merits of

QCC to all players involves.

Our researched discovered that interactive training is a tool that will aid Mr. Sakamoto is

his training and QCC implementation efforts. We define interactive training as a positive

partnership between the business community, Uruguayan officials and other quality management

professionals working towards a common goal. Latin America is characterized by strong values

of its people, its language and religion. These are strong common points in this land covers a

distance bigger than any other in the world with one same culture (Leiter et al. 90).

According to the Latin America Japan Association for Overseas Technical Scholarship

Consulting Network, countries and businesses in Latin America can benefit from building on

common points and sharing them with our fellow men. These joints efforts can work to foster

continuous improvements of every country in this region. The LAJACONET is a consulting

network that seeks to contribute to the human, economic and organizational development in

Latin America. Like Mr. Sakamoto, LAJACONET partners with organization in Latin America

providing training in Total Quality Management. LAJACONET work to build networks within

Latin America of businesses that successfully utilizes TQM in its management structure. This

network is an extraordinary resource that could aid Mr. Sakamoto in his QCC efforts in Uruguay.

The LAJACONET article suggests that its organization is experienced in the implementation of

TQM in Latin America and has done so with great success (Leiter et al. 93).

Tool 3: Peer mentoring

With Peer mentoring we envision bringing in players who have had success with QCC.

This we believe will help ease tensions with reluctant members within Uruguayan business

community. Instead of Mr. Sakamoto trying to explain the concepts to everyone, he could have

players participate in peer mentoring. Initially, Mr. Sakamoto he had to deal with resistance from

middle management who did not want to be participatory with line workers. By utilizing middle

managers from other companies who have had success with QCC as liaisons, Mr. Sakamoto

would have a better chance for achieving his QCC goals. For this tool to be effective, companies

must be willing to promote those who may be their competitors. This openness in the

manufacturing industry would require a broader global view of economics in this region.

Therefore, Mr. Sakamoto would have to first explain to the business community the

impact of an improved manufacturing delivery system. The manufacturing industry is

multifaceted and contains many players. The implementation of TQM comprises organizational

redefinition, evaluation and development of personnel through education and training;

communicating new management philosophy to customers, suppliers, and banks; product-market

strategy for profit optimization (Leiter et al. 93). In the manufacturing chain it is important to

take all of the previously mentioned players into consideration. Suppliers must be able to handle

to increased demand for product once QCC is implemented. Hence, sharing of ideas and

experiences regarding QCC within the manufacturing industry is a great tool that advances the

entire production market.

Tool 4: Cultural and language training

One of the major problems in the case is cultural clashing between Mr. Sakamoto and the

Uruguayan business community. In order to ease tensions with the implementation of QCC, Mr.

Sakamoto would greatly benefit from some form of cultural and formal language training.

According to the Springhill Group, intercultural or cross-cultural business communication is one

of the most critical factors contributing to business growth and success in today’s ever complex

global marketplace- whether in Toronto, Canada or internationally.

The ability of companies to acquire intercultural competence can either make or break

their chances of success in an increasingly competitive international business arena. As a result,

many companies and organizations are wisely investing in cultural awareness training for their

leaders and employees in order to tap into some huge potential international markets (Springhill

International Group).

Here we see a clear argument for the need of cultural training prior to accepting

international assignments. Although Mr. Sakamoto had some knowledge of Uruguay, his limited

language skills slowed communication and hindered progress. When cultural diversity is not

properly handled it can become a huge obstacle to achieving your objectives. So how should Mr.

Sakamoto deal with and manage the cultural integration process? According to Elena Granell,

Cultural and Globalization: A Latin American challenge there are three steps for cultural

integration: 1.) Self-cultural knowledge- requires a recognition of our own values, assumptions

and beliefs, stereotypes and ways to interact with the world, the people and the organization. 2.)

Understanding the other cultures we will be interacting with. 3.) Identifying gaps and integrating

strengths. Without ignoring weaknesses, we should concentrate on defining, promoting and

modeling the best strengths from each culture and the best fit for the company’s strategy.

(Granell 92). Granell highlights a key weakness in Mr. Sakamoto approach to Uruguay.

Understanding the culture prior to his arrival would have allowed Mr. Sakamoto the opportunity

to have better initial success with the Uruguayan business community. It is my belief that Mr.

Sakamoto overestimated his strengths in Quality Control Circles and underestimated the culture

of Uruguay. Mr. Sakamoto appears to have relied on his vast QCC knowledge and did not

prepare for the cultural clash he experienced.

Constraints

Organizations are designed around missions, goals, and objectives. Achievement of those

goals can be greatly hindered by constraints. Constraints are factors within organization that have

the potential to hinder the completion of objectives. Constraints impose limits and restrictions on

a given course of action. In this case we’ve listed four constraints that may hinder objective

completion.

Constraint 1: Hierarchal structures within Uruguay’s business community.

Organizational structure is major factor for the success of any business. The structure of an

organization refers to the nature and of the distribution of the units and positions with in it, and

to the nature of the relationship among those units and positions (Ghiselli and Siegel 617). Like

an organization’s mission, the structure of an organization guides management, frontline workers

and potentially others connected to the organization. Hierarchal structures lend to problems like

high employee turnover and lack of worker mobility. An organizations operating structure can be

used for decades without a need for change. In our analysis of this case the hierarchal

management structure within the Uruguayan business community is constraint that must be

managed.

Hierarchal management structures operate from a top down style of leadership. This type of

leadership style tends to foster closed communications where middle managers don’t frequently

share key information specific to problems with frontline workers. Over time, subordinate grow

weary within hierarchal management systems and leave the company. Employee turnover is

costly and should not be viewed as part of the normal process of running organizations. Human

capital is a valuable resource that must be handled with care. If the work is going to get done,

someone has to do it. Thus, the introduction of a flat management system in the Uruguayan

manufacturing markets through QCC’s is a great way to manage this issue. The primary

advantages of flat organizational structures are their utility for coordination or integration,

optimal use of technical specialist in project management and flexibility in creating cross-

functional teams to meet project or client requirements (Apelbuam et al. 23).

Constraint 2: Longstanding system in the manufacturing industry.

The case facts show that Uruguay’s manufacturing industry produced poor quality

products and high cost and remained unchanged for some time. The export industries also

operated under unstable labor productivity and depended on imported raw materials. The

manufacturing industry lacked viable quality control practices that aided in low production and

inefficiencies observed in the case. If businesses and countries like Uruguay are going to survive

in today’s global markets leadership must develop a mission as well as identify those constraints

to achieving the mission. This mission will then guide top officials in changing systems that are

counterproductive to the mission.

However, organizational and industry change is not simple. Leaders must decide on the

best plan for change that fits the organizational culture. Whether they start slow with transitional

change, use developmental change that is more natural, or transformational change which moves

us into the unknown, successful organizational change is a collaborative effort (Apelbaum et al.

23). Thus, Uruguay’s manufacturing system is in dire need of an overhaul. In this case Mr.

Sakamoto is the change agent. Through the implementation of QCC’s Mr. Sakamoto can turn the

manufacturing industry around.

Constraint 3: Communication problems.

Early in the case Mr. Sakamoto did not speak the Uruguayan language which created

gaps in the QCC training process. Communication problems were also observed within the

hierarchal structures of the Uruguayan business community as well as with the labor unions. A

lot of the confusion in communicating QCC’s to each stakeholder in Uruguay was based on the

culture’s resistance to outsiders and the change they presented. This confusion was further

exacerbated because Mr. Sakamoto lacked relevant knowledge of the culture and his ability to

speak the language. A key element in implementing a new management structure is

communication. Leaders must be able to properly articulate their vision and outline the

objectives needed to accomplish them.

A study conducted by Global Leadership and Organizational Behavior Effectiveness 62 defined

leadership as “the ability of and individual to influence, motivate and enable others to contribute

toward the effectiveness and success of organizations of which they are members” (Apelbaum et

al. 24). In this case, Mr. Sakamoto is the key leader in the implementation of QCC’s to the

Uruguayan manufacturing community and unions. Having limited Spanish speaking skills and

cultural understanding, Mr. Sakamoto was in a place where failure on all levels, was inevitable.

Research in the area of leadership and communication suggests that strong communication of the

vision is a skill that today’s leaders must possess. Mr. Sakamoto’s inability to communicate his

vision caused stagnation in the process of implementing QCC’s to Uruguay.

Constraint 4: Tense relationships between business community and the labor unions.

One of the side effects of a longstanding top down management structure is the negative

impact it may have on all stakeholders in the industry. In Uruguay, the manufacturing industry is

represented by bargaining unions which existed within a culture of distrust. The implementation

of Quality Control Circles depends heavily on union workers in Uruguay. The case facts suggest

that the relationship between unions and business community was not peaceful. Prior to the

introduction of QCC’s, unions believed that management would not consider their employees as

equal partners. With employees not seen as equal participants, unions feared that suggestions

from frontline workers would not be received.

Therefore, any attempts to improve productivity through empowered frontline workers

would not be successful. As mentioned earlier, Uruguay’s manufacturing industry is part a global

system. The inability of Uruguay to improve its efficiency ultimately affects the countries

position in global markets. Thus union involvement is crucial in the implementation of QCC’s

Robert Cole suggests union workers represent an immobilized resource and that many firms are

suffering in competition because of their failure to mobilize this resource (Cole 222). Thus, it is

in the best interest for organizations to develop a new dialogue with union leaders, build

coalitions that move both the worker and the company forward. The success of a

transformational change depends largely on leadership. Mr. Sakamoto must build relationships

among the business community and labor organizations if he is going to overcome this

constraint.

Opportunities and Outcomes

Despite setbacks and constraints, there is still room for improvement when working with

QCC implementation in Uruguay. While cultural and historical backdrops have created certain

barriers that make it harder for Uruguayan markets to transition into newer, more innovative

structures, there are still ways to make improvements and seek opportunities within the confines

of the Uruguayan culture. Problems pertaining to productivity and efficiency, employee

turnover, and tense union relations can be addressed.

Opportunity 1: Increase efficiency, production growth, and lower production costs

As mentioned numerously in this case, the Uruguayan manufacturing sector suffered

heavily from efficiency problems, high production costs, and output of products of poor quality.

Problems within the Uruguayan manufacturing sector date back to the 1970s when current at that

time policies prevented Uruguay from being able to import goods (Uruguay-Industry).

Uruguay’s economy was also built on protectionist policies and state intervention, hence taking

some time before moving towards exporting and resource allocation as a means to grow

(Casacuberta, Fachola and Gandelman 225).

In Uruguayan markets and in the manufacturing sector, studies have shown that

reallocating capital and labor from the least efficient areas to more efficient areas creates a

source of productivity and growth (Casacuberta and Gandelman 1). As stated previously with

long-term goals, Uruguay could potentially increase efficiency by 40 percent and productivity by

30 percent within the next two years. According to literature on the topic of QCC, improvements

in efficiency and productivity begin at the front-line, with increases in employee participation,

decision-making, and job satisfaction (Bradley and Hill 292).

Opportunity 2: Decrease employee turnover

Besides dealing with inefficiency problems, the manufacturing sector in Uruguay had

problems with employee retention. One of the reasons Mr. Sakamoto saw resistance in group

training sessions was not only because middle management saw themselves as above the factory

workers due to hierarchal structures, but because they often had to contend with high employee

turnover. In their minds, why should they have to work with employees that were likely to be

gone in a short-period of time? This attitude continues a vicious cycle of employees leaving

companies because of poor treatment and lack of mobility within the company, as well as middle

and upper management refusing to work with front-line workers because of their lack of loyalty

to the company. What can be done to address employee turnover and encourage management to

work with its front-line employees?

One of the reasons Quality Control Circle has had a track record of success is because it

unlike other forms of managerial styles, QCC calls for team effort and joint problem solving.

Because of QCC’s inclusion of every employee in a company, everyone’s input is on equal

footing and everyone is held accountable for producing a quality product (Bradley and Hill 291).

As mentioned previously, QCC uses motivators and extrinsic rewards, such as bonuses and job

rotation to encourage better employee performance and make their job experience more

enjoyable (Kristensen, Dahlgaard and Kanji 83-84). QCC also values innovation and continuous

improvement, which can be only achieved as a team effort (Kristensen, Dahlgaard and Kanji 81).

Implementation of QCC has potential to decrease the employee retention problem the

manufacturing sector suffers from.

Opportunity 3: Mend relationships between business community and labor unions

When a military regime took over in the early 1970s, union activity was banned, and

would not be resumed until 1985 (Cassoni, Allen and Labadie 9). Since then, the unions have

played an integral role in the markets, much to the dismay of the business community. It has

long been established that the Uruguayan business community, particularly the manufacturing

sector, has endured a tumultuous relationship with the labor unions.. The labor unions, in

essence, disliked how many companies treated their employees, and the business community had

become wary and hesitant to work with the labor unions because of their influence and ability to

control the markets. Their relationship had come to the point where neither party was willing to

discuss negotiations with each other.

Since being reinstated in 1985, labor unions have impacted the markets, negotiating

higher wages and protecting employees from job losses (Cassoni, Allen and Labadie 42). At the

same time, labor unions are also viewed as barriers that prevent markets from operating fully,

preventing the implementation of new technology, and preventing management from being able

to streamline productions (Cassoni, Allen and Labadie 5). Since the concepts of QCC value

employees as assets rather than expendable labor, the labor unions would likely not object to its

implementation, especially since their biggest complaint regarding the business community

revolves around the treatment of their employees. If the manufacturing sector can successfully

adapt to the implementation of QCC, it could potentially ease the tensions of collective

bargaining with the labor unions later down the road.

Opportunity 4: Build relationships between Uruguayan business community and Japanese

business community

For many years, Uruguay’s economy depended on substitute imports, isolating itself from

the global market. This was in many respects, due to the military control from the early 1970s

until the mid-1980s. As political changes occurred in the 1980s, changes to the market occurred

as well (Casacuberta and Gandelman 3). Overtime, industries, including the manufacturing

industry, formulated outside relationships with private investors from abroad. This created a

paradox from Latin American economies where an emphasis was put on internal growth for local

economies, while maintaining external ties that funded this growth (Cardoso and Faletto).

This could be a perfect opportunity for Japan to extend its hand in helping Uruguay’s

economy and its industries grow in the global market. Japan Aid is already funding to help

Uruguay implement QCC, so why not continue to take a vested interest in its pilot program, even

after Mr. Sakamoto’s stay is completed? Uruguay can continue to be mentored by Japan’s

knowledge and successes, while Japan has made a market ally and could also potentially profit

from Uruguay’s market gains through private investments.

Additional Outcomes

While evaluating the constraints and seeking potential opportunities, it is also important

to evaluate the potential outcomes. Within these constraints and opportunities, there are three

potential outcomes worth nothing: 1.) improvements to efficiency and production growths, 2.)

opening up the lines of communication between the business community and the labor unions

and 3.) easing hierarchal barriers within the business community. Achieving these outcomes

seems reasonable within the limitations set by constraints.

Improving efficiency and productivity, as well as relationship problems between labor

unions and the business community has already been discussed, but improving hierarchy

problems is just as important. Hierarchal structures and class struggles had been a common

element in the development of Latin American as a nation-state. Three groups are viewed as the

possessors of power and political advantage: 1.) the wealthy, upper-class, 2.) state bureaucracies

and 3.) the military. Due to this mentality, civil society is often cooperative with this power

structure (Cardoso and Faletto).

While it might be impossible to undue decades and even centuries of hierarchal

structures, management in the business community must recognize the important of inclusion,

extrinsic reward, and mobility for its front-line workers in order to improve productivity and

efficiency. QCC stresses the need to change work place environment in order to accommodate

innovation and improve workplace relations among employees (Bradley and Hill 69).

Long-term Improvements

While Mr. Sakamoto’s stay in Uruguay was met with mixed reviews, his teachings of

QCC did have some success. Upon returning to Uruguay in 1996, Mr. Sakamoto saw that his

attempts to bring QCC concepts into the Uruguayan business community had not been in vain.

Many of his teachings had been translated to textbooks and were being taught in academic

settings. Still, Mr. Sakamoto rated his efforts as merely passing, noting that he did not

accomplish many of the feats he desired. There were still many long-term improvements to be

made, but he did cement the foundation for QCC’s implementation into Uruguay’s marketplace.

Here are some long-term improvements, as well as how to strive for them, that could help

continue Uruguay’s success into implementing QCC and participating in the global market.

Improvement 1: Keeping production costs down

One of the reasons Uruguay struggled to participate in the global market was due to their

inability to manufacture goods at low production costs. High productions costs will also prevent

the business community from being able to turn higher profits, and would hinder long-term

economic growth. High production costs would also equal higher market price for manufactured

goods, which means buyers would turn to places like Argentina and Brazil for imported goods at

a lower price.

When an industry is going through an export boom, it must be able to compete globally,

think innovatively, and increase production growth efficiently. If not able to do so, this puts the

industry and its local economy in a vulnerable position where commodity prices will fall

(Colburn 29). Studies conducted on the Uruguayan manufacturing sector have shown a

correlation between productivity increases and increases in commodity booms (Casacuberta,

Fachola and Gandelman 234). Based off of this evidence, the Uruguayan manufacturing sector

would need to be smart when it comes to both producing export commodities and competing in

the global market. Implementing QCC can help them for being overwhelmed in a growing and

demanding market.

Improvement 2: Decreasing employee turnover

High employee turnover in the manufacturing industry was also a major problem for

many businesses. Besides being costly in the long-run, it prevents companies from functioning at

a full capacity since employment was often a revolving door. To further the problems with the

business community’s hierarchal system, middle management, already lacking respect for front-

line employees, saw no point in communicating or working as team with the front-line workers.

In order for QCC to be successful, employee turnover would need to be addressed.

Studies conducted in setting where hierarchal structures are most prominent, particularly

hospitals, found that employees felt the most positive from their work experience when their

work was part of a team effort. These positive work experiences were ones were employees of

all departments and levels felt included, valued, and appreciated for their work (DiPalma 296).

QCC works on similar structure as mentioned in the study, encouraging team effort and valuing

each individual employee’s role in the company. This type of work mentality is necessary for

turnover to decrease and worker productivity to increase.

Improvement 3: Produce a higher quality product

Another reason Uruguay struggled with global competition was because it produced poor

quality products, and couldn’t keep up with export demands. Like high production costs, poor

quality products would prevent the economy from growing. In the long-run, poor product

quality coupled with high production costs could bankrupt the manufacturing industry in

Uruguay.

In QCC, many companies who have implemented when surveyed agreed that a high

quality product was the most important parameter for measuring their productivity and their

competitive edge (Kristensen, Dahlgaard and Kanji 80). This way of thinking is what the

Uruguayan manufacturing sector needs to improve its product quality. If QCC can be

successfully implemented in their business community, increases in product quality would occur.

Improvement 4: Improving worker mobility

Due to the long-standing rigid hierarchal structures within the business community,

turnover was high and there were no opportunities for personal growth for the front-line workers.

Specifically within the manufacturing industry, if a worker started out in the workforce as

factory worker, he or she were likely to remain a factory worker until retirement. Due to poor

treatment from management and the inability to move up in a company, job hopping was not

uncommon for many workers.

When surveyed, employees working in a company that successfully implemented QCC

said that promotions and job rotation were motivators to perform better. The ability to work

their way up in a company was just as important as bonuses and other extrinsic rewards

(Kristensen, Dahlgaard and Kanji 84-85). As well as addressing high turnover, the rewards

system in QCC not only work as effective motivators, but allow for workers to work their way

up a company based on good performance and merit.

Improvement 5: Maintaining better relations between the business community and the labor

unions

Throughout this case, problems with the labor unions seem to be a recurring problem.

The business community found the labor unions tough to negotiate with, and refused to even try.

The labor unions disagreed with the treatment of workers, particularly in the manufacturing

industry.

Even though the labor unions have had a tense political history with both the business

community and the government in Uruguay, they can be a resourceful tool in helping the

manufacturing industry have a competitive edge in the global market. Studies have indicated

that unions provide a constructive channel for employees with employer grievances, which will

in turn decrease the likelihood of employees quitting (Cassoni, Allen and Labadie 36). If labor

unions also play an integral role in decreasing turnover, their power and their ability to help

further the Uruguayan business community’s objectives should not be overlooked.

Improvement 6: Teaching Uruguayan’s Business community to think innovatively in a

competitive global market

While implementing QCC concepts into how the Uruguayan business community

operates might be beneficial, it is not indicative of how successful they will be in the long-run.

As mentioned earlier in this case, the private sector in Uruguay has historically been use to the

government taking charge and taking action in regards to decisions made in the private sector.

Mr. Sakamoto also learned the hard way the Uruguayans were reluctant to take charge or take

control of a situation when not being delegated tasks. Teaching the Uruguayan business

community to think innovatively and prepare for constant changes in the market would help

them new concepts and policies in a fickle and ever changing global economy.

Uruguay was not the only Latin American country affected by the implementation of

Japanese management styles. In 1996, a group of consultants from the Association for Overseas

Technical Scholarship (AOTS), a creation of the Japanese Ministry of Trade and International

Industry, came together to form the Latin American Japanese AOTS Consulting Network

(LAJACONET). Their mission was to contribute to the human, economic, and organizational

development in Latin America. Their mission was also to provide management system, common

language, systematic research, publications of successful cases, and materials for system

implementation (Leiter, Andriani and Fukuda 89-91). One successful case study involved

implementing Total Quality Management (TQM) in a Brazilian manufacturer for electrical

insulators. LAJACONET was not only able to fix the efficiency and productivity problems, but

taught management at the Brazilian firm to think outside the box, helping them set up short-,

medium-, and long-term objectives (Leiter, Andriani and Fukuda 92-93). This type of success is

very possible for the Uruguayan manufacturing industry.

How to achieve these long-term improvements?

While Mr. Sakamoto’s stay only lasted the duration of 18 months, continuing his

relations with Uruguay is imperative to their long-term success. Going back to the case of

LAJACONET, the organization was successful with cases in Mexico, Argentina, and Brazil not

only because it gave assistance, but it asked for cooperation on the part of all its participants. In

helping these countries and their industries develop new management styles and help them

become part of the global economy, it is not a one-time event, but an ongoing process, forging a

long-term partnership (Leiter, Andriani and Fukuda 96). Uruguay’s success in implementing

QCC largely depends on the long-term relationship it forms with Japan.

Along with maintaining a long-term relationship, Mr. Sakamoto could participate in

yearly on-site training seminars to keep QCC fresh in the Uruguayan business community and to

help Uruguay with its struggle to implement QCC. LAJACONET sees continued success with

its cases due to continuous training (Leiter, Andriani and Fukuda 97). This long-term support

system is key to Uruguay’s economic success and competitive edge.

Conclusion

In analyzing and addressing the issues in this case, we hope to not only accomplish

helping the Uruguayan business community fix its structural problems, but to help Uruguay be

able to compete globally. While cultural and language differences, labor unions problems, and

historically driven constraints are present, that does not mean the objectives listed in this case are

not impossible to accomplish. When looking for how to make this implementation work, it is

important to look at similar cases that have had past successes and learn from these successes.

Vision

“We envision a future where Uruguay has the tools, resources, and attitude to succeed in

the global marketplace. We hope that Uruguay not only succeeds in implementing QCC, but can

maintain its core values and concepts. We also hope that this implementation process and

learning experience will teach Uruguay to constantly envision success, adapt to changes

efficiently, and to always think innovatively.”

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