Empirical Findings In Business Research Methodology Commerce Essay

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The following data regarding Tokai Carbon's Structure and coordination between Tokai Carbon (headquarter) and TCP & Tokai Tianjin (subsidiary) is acquired from company's website, interviewing via telephone with assistant sales manager of TCP and E-mail interview with manager of Tokai Tianjin in order to understand its structure and coordination of company. Nevertheless, some data could not be accessed owing to confidentiality policy.

Tokai Carbon Co., Ltd. is a multinational company which is the pioneer of carbon black industry in Japan almost century, established in April 8, 1918 with the head office at Tokyo. Tokai Carbon as a leader who has always maintained a high-performance products and the world's top-class R&D, has manufactured and sold four main carbon products which consist of carbon black, graphite electrodes, fine carbon and friction materials. Each one is used for specific purposes. Carbon black is used as agent for tires production and coloring agent for printing inks, plastics and paints. Graphite electrodes are used for recycling steel in electric furnaces. Fine carbon is used in a wide range of new energy-related fields, such as solar batteries etc. Friction materials are used for making up the brakes and clutches on engineering vehicles, motorcycles and automobiles, etc. Presently, the company has registered its capital to 22.45 Million Dollars (157.14 million Swedish Krona). (Tokai Carbon's Annual Report, 2008)

In addition, Tokai Carbon first established in Japan to produce carbon black for local demand and export to foreign markets. According to increasing of customers' demand in worldwide, the company has developed international strategies by expanding its business to global market so that company can improve its position to be leader in carbon industry around the world, and gives better and more comprehensive services to its clients. As a consequence, based on higher trend of internationalization, Tokai Carbon found up affiliated firm in abroad and the technology is exported in order to respond market demand and compete in worldwide level. Tokai Carbon, mother company which has produced and performed sales activities globally in more than 20 subsidiaries in 8 countries has located in Japan and diversified its businesses into three main regions such as North America, Europe and Asia where is coordinative center between headquarter and subsidiaries. (Ibid.)

In Thailand, Tokai Carbon who had jointed venture with local partner, Thai Oil Co., Ltd., established Thai affiliated company on October 19, 1989 known as Thai Tokai Carbon Product Co., Ltd. (TCP). TCP is well known in Thai carbon black manufacturing and industries. The head office is located in Sathorn, Bangkok and the plant is located in Sriracha, Chonburi. TCP has 6 manufacturing plant units. Each unit can produce different carbon black grade (hard grade and soft grade), with different capacity. Their total annual production capacity recently was 111,000 metric tons. TCP has divided the carbon black sales into 2 parts - domestic and export sales. TCP has manufactured and exported carbon black to almost 30 customers in 15 countries all around the world, including Japan, Spain, France, New Zealand, Taiwan, Pakistan, India and the ASEAN countries. In present, TCP aims to expand its market further in Asia Pacific and Europe. As the ISO-9002 certificate, the firm has a passport to international markets, and can produce carbon black with clear proof of global standards. Additionally, TCP operates the plant and takes responsibility to the environment and surrounding society with the care. (Thai Tokai Carbon Product, 2010)

In China, Tokai Carbon Co., Ltd. had jointed venture with Sumitomo Corporation (China) Co., Ltd. to set up Tokai Carbon Tianjin Co., Ltd. (Tokai Tianjin) of which Tokai carbon own 80% and Sumitomo own the rest 20%. The plant was established in April 2004 and located in Tianjin Economic and Technological Development Zone for production and sales of Carbon Black, capacity of 40,000 tons per year. (Tokai Carbon Tianjin, 2010)

China is very important market to actively expand business since the consumption rate of carbon black is rising at more than 10%, representing its booming auto industry in China. In year 2001, the demand for carbon black in China has exceeded that in Japan. The move to China is the first time a Japanese carbon black company has set up operations in China. China main products currently are divided into hard and soft two series more than 10 varieties. For the tire, automotive rubber parts, non-rubber manufacturers use to provide variety and high quality carbon black products. In December 2006 the company achieved ISO9001 quality management system certification, in January 2008 obtained ISO14001 environmental management system certification, product quality and environmental management to provide a reliable guarantee Tokai Carbon Co., Ltd. Besides, Tokai Tianjin adopts many years the production of carbon black are formed with high-end technology, and gradually expand the energy used to produce special carbon black tires, car parts for low-carbon and the sieve residue use for non-conductive rubber and for the black pigment, production of carbon black ink. Tokai Tianjin provides users with high-quality products and satisfactory, good service, committed to social contribution and the Earth's environment symbiosis. It intends to cooperate with the community and seek common development, continue to give strong support and encouragement. (Ibid.)

5.2 Organization Structure

The vision of company is to become the worldwide leader in carbon industry and provide high-quality products as well. Thus, the company attempt to strengthen the abilities of technological development, achieve stakeholder's expectation and pay attention to social development. (Tokai Carbon's Annual Report, 2008)

The goals and objectives of firm consist of net sales, operating margin, return on equity and return on asset as significant indicator of performance. In order to fulfill the higher of the sales amount, earnings and the capabilities of developing products and technology, the company shows emphasis on the importance of human resources by exchanging personnel regularly among headquarter and foreign subsidiaries. Also, it fosters employees' ability in order to make them succeed easier in expanding its global business. In addition, the firm attempts to develop high quality products through joint partnership with other firms, support education with public institutions in order to strengthen the collaboration between divisions and within organization. The firm also focuses on promoting activities by improving business procedures, increasing the development of innovative value-added products. In the company management, it not only measures the strength of operations in abroad and builds cost-competitiveness in compliance with principle of reliability and four guidelines, but also have internal controls through reporting financial information in accordance with Financial Instruments and Exchange Act (J-SOX). Moreover, the firm goes on to realize environmental preservation, safety, corporate governance and corporate social responsibilities for activities. (Ibid.)

In relation to corporate governance, the company concerns organizing corporation, improve quality of business management and assure of advanced corporate value. Based on corporate governance, the organization is managed and function of top management is enhanced. (Ibid.)

Management policy and strategies are designed by Board of Directors which comprises nine members. Their meetings are arranged once a month. Board of directors is responsible for making decisions on critical business matters needed by corporate laws. Due to Executive Officer system launched in 1999, Board of Directors chooses and appoints Executive Officers who are in charge of handling with business operations in various departments of firm so as to encourage in operational decisions and represent responsibilities clearly. At the same time, the meetings are managed and held by the president and the Executive Officers in diverse business operations in order to consider on managerial issues. Moreover, Board of Corporate Auditors consists of four people who are needed to perform as auditors. It is necessary to attend the meeting of Board of Directors, Executive Meeting and other critical meetings in order to supervise the determination, the business performance and express their ideas. These meetings are also arranged once a month or as requested. (Ibid.)

Moreover, the firm has internal auditing office consisting four people who have duty to improve internal system which originates surveys on all business practice within organization. These surveys are encouraged to perform and all comments for improving are considered and adopted. The outcomes of these audits are informed to the executive directors. In addition, the Corporate Auditors not only attend Board meetings and essential meetings in compliance with policies and work allotment setting specified by Board of Corporate Auditors, but also read through and make decisions on key documents. More importantly, they investigate asset management and business action within head office and other subsidiaries and require subsidiary companies to send reports when needed. When internal auditing office has to inform the auditing results and issue instructions, they arrange meeting with Corporate Auditors to start to cooperate examination and exchange ideas on suggestions. This normally assures that information is transferred on personal level and communicative connections are kept existence. (Ibid.)

Board meeting has been conducted quarterly called as the corporate meeting between HQ and Thai subsidiary. Managing directors and some Chief Executive Officer from Tokai Carbon come to attend board meeting in Thailand. Normally, management team presents the TCP's financial performance to all company's shareholders and committees in order to follow work progress and report the current situation of the company. Moreover, supply meeting are held on monthly basis in order to share customer information and inform current sales volume among department managers so that they all know the TCP situation and then set up the strategies for each department to work efficiently. (Ms. A & Mr. B, personal communication, April 26, 2010) ขาดของจีน

According to interview results, under the normal practice, most of decision-making have to be approved from Tokai Carbon although managing director at each subsidiary has the authorization to control over the management of its subsidiary. Tokai Carbon has primarily authority to control TCP and Tokai Tianjin's decision making in terms of marketing, strategic and manufacturing operations. But secondarily, it usually not only coordinates its significant activities like marketing, sales, stocks, finance and performance but also finally TCP and Tokai Tianjin make summary reports to Tokai Carbon. Normally, number of stocks are checked and reported to headquarter every month whereas sales amount are summarized and sent to headquarter everyday in order to inform financial performance. Also, asking for approval from Tokai Carbon is needed before performing any related activities. Additionally, Tokai Carbon still control TCP and Tokai Tianjin by checking financial performance and comparing to goals that TCP and Tokai Tianjin have to perform activities to reach them. (Ibid.)

In addition, main carbon products are initially designed by mother company and developed by research & development in Japan so as to respond local and international market. Referring to research & development, Tokai Carbon has experienced about developing technology for carbon black for sixty years. Tokai Carbon has cooperated with Toyohashi University of Technology and Japan Fine Ceramics Center in order to study carbon products. Since Japanese firms are the experts in advanced technology, R&D for new carbon black grades are conducted at Tokai Carbon as a center of product development and technology. (Tokai Carbon, 2010)

In case of TCP's research and development, it concerns the modification of production process. TCP tries to achieve the maximization of production capacity by improving productivity through debottlenecking. In capital-intensive carbon black industry reducing bottleneck can smooth the production process in the existing plant and increase the output of the whole plant system. The key to success is excellent teamwork which go a long way to implementing this system from the start. Good communication and co-operation are concerned as part of ensuring success. Another TCP's development is production expansion which means expanding a new production unit, not creating a new product type. (Thai Tokai Carbon Product, 2010)

With the assistance from HQ in Japan, Tokai Carbon Co., Ltd., there are continuous developments of new grades of carbon black in order to meet the changing demand of automotive industry. TCP aims to provide the premium quality products in accordance with well trained employees. With support of Tokai Carbon, TCP has been able to raise the product quality and control product standard until the products have met the criteria for ISO9002 certificate. Moreover, TCP also keeps personnel along side with the latest developments since managers and employees at all levels have contributed and done hard working. This accomplishment is along with TCP's corporate philosophy, recognized as state of the art production system from inception. Furthermore, TCP tries to non-stop develop both technology and human resources at the same time to keep up with changing technological innovations, for tire industries and synthetic rubber. (Ibid.) ขาดของจีน

In addition, concerning strategies, main strategies which not only involve with marketing, products and advertisements are mostly designed, planned by Tokai Carbon and conveyed to Thai and China subsidiaries in order to apply according to their own capabilities, but also both of them are able to set strategy for local competition even though managing directors have to request the approval from headquarter prior to implementation. (Ms. A & Mr. B, personal communication, April 26, 2010)

In relation to main resources in production such as feed stock oil, TCP and Tokai Tianjin can purchase oil in the name of Tokai Carbon whereas other minor raw materials are purchased by each subsidiary. TCP buy raw materials from both indigenous suppliers which are from olefin plants and imports from the United States which are from refinery and blender factories. For the US supplier, purchasing agreement has been made in advance at current market price whereas the transit time to deliver the products will take about 1 month. To be number one of manufacturer in carbon black industry in Thailand, TCP has forcefully tried to maximize customers' satisfaction through product quality and on-time delivery. (Ms. A, personal communication, April 26, 2010) Meanwhile, for Tokai Tianjin, high logistics and distribution costs of carbon black make it desirable for manufactures to have a production base close to a market where products are consumed. Raw materials are available in China. Therefore a manufacturing base in China meets all requirements for operating overseas. Tokai Tianjin is scheduled to supply high-quality carbon black mainly to Japanese and Euro-American tire manufacturers and Japanese automotive rubber component manufacturers, under a service structure equivalent to that in Japan. Furthermore, Tokai Tianjin envisions entering into non-rubber markets such as those of high value-added products requiring colorants such as inks depending on the local situation. (Tokai Carbon Tianjin, 2010)

For other resources like know-how, human resource and money, TCP and Tokai Tianjin use only know-how from headquarter but human resources are acquired from hiring local people and headquarter whereas TCP and Tokai Tianjin use their own capital. Nonetheless, TCP and Tokai Tianjin have competitive advantages over other subsidiaries such as Singapore since TCP has lower production cost and cheaper price of carbon products. (Ms. A & Mr. B, personal communication, April 26, 2010)

Furthermore, it can be found that Tokai Carbon is preliminarily responsible for designing management structure for TCP and Tokai Tianjin, nevertheless both subsidiaries adopt this structure in compliance to local contexts and requirement. Furthermore, Tokai Carbon has issued policies which are applied globally therefore, TCP and Tokai Tianjin adjust some policies in order to match with international laws & regulations which differ from each subsidiary. (Ibid.)

In addition, Tokai Carbon has promoted rotation and training between headquarter and subsidiaries. Concerning with doing rotation, Tokai Carbon has useful policy to foster managers or employees to do job rotation both within same country and among other subsidiaries so as to encourage people to learn new knowledge and experience in various aspects from different cultures such as Thailand and China. For instance, Japanese managers, managing directors or management team from headquarter are sent to subsidiaries in order to manage the business and operation production in Thailand as well as share knowledge about technology or learn new thing such as how to control stock in warehouse in China. On the contrary, Thai subsidiaries' managers and employees are also rotated to headquarter in order to learn organization management, cultures, working lifestyles and control operations. Besides, training is not only another way of increasing knowledge, but also is seen to relationship creator between headquarter and subsidiaries. For Thai subsidiary, not only on the job training and plant visiting orientation are concerned, but also some technical staffs need to be trained by sending to Tokai Japan for attending further seminars to gain new knowledge about technology from headquarter, conversely, expert technician from Tokai Carbon are also sent to TCP as a consultant for customers in Thailand and provide expertise to TCP. While China subsidiary, Japanese trainers came to give knowledge about job, goals and rules in order that everyone understand and know how to meet the targets. Along with improving the efficiency of working at subsidiary's environment, both managing directors and technical advisor have a Thai course to learn how to speak and communication in Thai language. In addition, organization culture is embedded through the behavior of Japanese managing directors. (Ibid.)

Apart from that, in order to affirm that all departments commence managing risks on steady levels by minimizing and avoiding them in operation of business, the firm builds system in which all relevant departments are connected together and proper measurements are implemented quickly and precisely. For Thai and China subsidiary, managers in each department have to send report directly to managing director and then these reports are forwarded to headquarter. (Tokai Carbon's annual report, 2008)

TCP has divided and allocated work to each department based on functions which comprise of nine departments named as Production Operations, Marketing, Engineering, Maintenance, Technology Environment and Quality, Logistics, Finance & Accounting, Procurement and Corporate Affairs. TCP's activities focuses on sales and marketing (60%) and production (40%). Marketing department is responsible for taking care of both existing and new customers from which are divided into two groups; main customers and minor customers. TCP has freedom to choose customers and headquarter find new customers for TCP in order to sell products as well. Also, importing and exporting products are two main duties of marketing officer. Generally, Tokai Carbon can produce and distribute carbon products to customers by itself but if the products are out of stocks, carbon products are imported from other subsidiaries such as China and Singapore. On the other hand, other subsidiaries run out of stocks, Thai subsidiary has to support raw materials instead. (Ms. A., personal communication, April 26, 2010) ขาดของจีน

Moreover, referring to quality department, the products are tested in the lab through this department to make sure that they are met the criteria of customers' specification before delivering to both domestic and oversea customers. Total sales compose of 80% domestic sales and 20% export sales. TCP's customers have been classified into major customers, minor customers, auto-parts customers, agent customers and export customers. (Ibid.) ขาดของจีน

In addition, concerning with production management, forecasting is the fundamental of corporate strategic planning in long-term and critical components of a manufacturing system. TCP need forecasting to effectively improve production operations. Production operations performance has been affected by forecasting accuracy, because forecasting and planning cannot be separated in manufacturing. Error forecasting can damage the best effective plans, and accurate forecasts can be useless by poor planning. Commonly, sales forecast is predicted based on past sales data and performance, furthermore, the market conditions are analyzed and used for forecasting sales. Forecasting plays two basic roles in organization. One is to reduce the range of uncertainty that challenges management. Other is to broaden the range of alternatives available to managers. (Ibid.) ขาดของจีน

In each department of TCP, forecasts provide the guidelines to perform each functional area. For finance and accounting department, forecasts are used for cost controlling and budgetary planning. Meanwhile the marketing department is highly relative to production department since marketers are responsible to inform sales forecast in number to the production department based on their experiences and expert opinion to predict customers' demand then production manager can use as references to make the decisions on the scheduling, production capacity and inventory management on a monthly basis. This plan helps the company to balance demand and supply. It can also save opportunity costs of losing sales and inventory cost of holding products in warehouse. Traditionally, these activities involve management team, sales & marketing, finance, and production. It's an aggregate planning, called cross-functional planning. (Ibid.) ขาดของจีน

However, management team ของใคร is the decision maker who set the strategic planning including working process, time plan, budgets and goals for each department to implement. Nonetheless, the report of sales forecast and planning has to send to Tokai Carbon and approval from Tokai Carbon is required before implementation. (Ibid.)

The data from several departments are collected and then sent to managing directors for considerations. For instance, finance department has to report financial position report, cash flow statement and company liquidity, whereas marketing department has to send sales report and customers' requirement through research. Production department has to send production report and production control flow as well. Managing director is the top management who has a decision making on this expansion. However, managing director has to propose this project to HQ and ask for approval as restriction. When the expansion has been approved, most of employees are rotated from related and existing department or come from Tokai Carbon for expanding a new production unit. (Ibid.) ขาดของจีน

5.3 Administrative System

There are four guidelines for members within organization under corporate philosophy. To begin with, everyone has ability to create added value from existing resources in order to achieve the mission. Power and effort enhances the capability of value creation. Next, firm focuses on fair management in order to build value and maintain profits continually. Then, firm concerns environment as one of important stakeholders and business resources. It cares the business management harmony with ecology. Later, firm realizes internationalism and require agreeable guidelines to respond global since it supports manufacture expansion and trustworthy to worldwide. (Tokai Carbon, 2010)

The company issued fair business activities, one of corporate policies which controls all activities and is noticed by all top management and other employees. What's more, the firm has also issued a various kinds of internal rules concerning the business affair practice so as to explain the work allotment of organization clearly as well as responsibility and authority. It puts effort to build fair business practice system and obvious financial reports are assured. (Ibid.)

Moreover, the company emphasizes on transparent business activities as grounded policy. It is essential to reveal information to clients, shareholders, employees and other parties without realizing to advantages and drawbacks of firm. Disclosure information is done according to appropriate laws such as Tokyo Stock Exchange's Rules and Financial Instruments and Exchange Act. Besides, disclosure information contains forecasted operating performance which is made by judgements or assumptions from available information. (Ibid.)

TCP employees do their work following job description, company culture practices and policies that have been set by HQ. The basic rules for day-to-day operations is come to work punctually and do the jobs according to company's policies. In case of any problems, employees have to report directly to their department manager. The annual holidays and social benefits are also set by HQ. (Miss A., personal communication, April 26, 2010) ขาดของจีน

Management team at HQ has a responsibility to evaluate each subsidiary based on financial performance and production capacity at the end of the year. First, Tokai Carbon set the target in numerical percentage for each subsidiary to easily measure and be clear for the subsidiaries to follow. Profit, return on asset (ROA) and return on equity (ROE) has been considered as the criteria of evaluation. For TCP case, the targets of the year 2010 are set as operation profit 13%, net profit 7.5%, ROA 9% and ROE 8%. The target has adjusted every year for the business challenges. When the targets are reached, incentives such as bonus and salary are given to the subsidiaries. The incentives are viewed as the enhancement of subsidiaries' performances. Subsidiary manager of each department has authority to evaluate employees' performance to give rewards or punishments. The outcomes of evaluation have an effect on their salary, bonus and promotion. (Ibid.) ขาดของจีน

5.4 Philosophy

Firm's operation is based on basic Corporate Philosophy called as reliability. This is defined to reliability between enterprise and its stakeholders who are customers, shareholders, employees and society (Tokai Carbon, 2010). The reliability fosters organization to continuously operate. In addition, organization builds other basic policies to manage activities such as "international cooperation, harmonious relationship and the principles of fair corporate activity" (Tokai Carbon's annual report, 2008). Furthermore, the company has another philosophy, "immersing ourselves in the field of creation an accepting all challenges in order to improve our competitiveness". (Ibid.)

Firm issued Code of Ethics for all directors and employees to promote reasonable business activities according to basic philosophy and guideline for practice. "Code of Ethics consists of fair business activities, compliance, information disclosure, appropriate management of information, Respect for human rights Confrontation with antisocial elements, Respect for overseas cultures and customs, Response to breach of the TOKAI CARBON Code of Ethics". (Ibid.) Initially, firm should perform business activities through fair competition meanwhile good relationship had better be kept with customers, suppliers, managerial organizations and government. Second, business activities of firm should be performed compliance with rules and regulations including social norms as well. Third, reliable information should be revealed in order to represent business activities' transparency. Fourth, internal and external information such as intellectual property rights for third parties should be managed appropriately. Fifth, each individual should earn the esteem of everyone under working environment while human rights and privacy will be considered strongly and secured properly. Sixth, firm will encounter with some groups who torment social safety. Also, firm does not involve with making illegal or taking improper things into organization. Seventh, business activities will be conducted in accordance with regulations of each country, international laws, cultures and customs in that country. Last, in case of breaking the rules based on Code of Ethics, top management directly investigate the causes and effects in order to protect recurrence. (Ibid.)

In addition, concerning with TCP's philosophy, it strives their best to maintain a high quality of products in order to meet customers' satisfactions through state of the art technology and internationally accepted quality system of ISO9002. Furthermore, the company tries to serve customers by assuring that products are delivered to customers in the right time at competitive prices, following the corporate philosophy as ties of reliability. (Thai Tokai Carbon Product, 2010)

On the other hand, the basic philosophy of the Tokai Tianjin focuses on "trust bond" to work for social contributions and the Earth's environment symbiosis. Businesses with customers, employees, investors, and social relations between the so-called powerful people who have a total relationship of trust between the activities of the enterprise support. Pay attention to this "trust bond" business efficiency through business activities, efforts to achieve social contribution of symbiosis with the Earth environment. China has some significance as enterprises seek to develop and grow. (Tokai Carbon Tianjin, 2010)

5.5 Other topics