CASE STUDY I:
CULTURAL DIVERSITY AT NIKKO HOTELS INTERNATIONAL
Nikko Hotels international is a subsidiary of the Japan Airlines (JAL) Development Company, Ltd. It was created as JAL’s diversification and globalization strategy to strengthen the company’s marketing and financial position. Known for its aggressive global marketing and application of new technology in hotel operations, the company is determined to establish a worldwide network of hotels comparable in number to Hilton, Sheraton, and inter-Continental. It has forty-four properties in its worldwide portfolio by 1997. Relating to the theme of this chapter, this case study focuses on the cultural diversity of Nikko’s management team and the cultural adjustment made by Nikko’s executives when they first entered the U.S lodging market.
The decision to enter the U.S hotel market was intended to establish Nikko’s identity and reputation in the large and competitive U.S travel market. But, Nikko’s entry into the market presented some cultural challenges to the company, particularly the transfer of a corporate culture based on Japanese cultural values to a multicultural workplace in the United States.
The first hotel Nikko hotels International acquired in the United States was the Essex House in New York City. The famous Essex House was to be a springboard for Nikko’s future growth. Nikko’s executives believed that if they could do well with the Essex house in the competitive New York market, they would do well in other markets in the United States. Nikko’s strategy and management operation would be tested in this major world commercial city and adjusted to the competitive and changing requirements of the U.S. lodging market.
The Essex House was originally managed by Marriott Corporation. When Nikko took over the ownership and management, all on-site Marriott managers and staff were invited to stay with the new company. In response to Nikko’s invitation, six managers decided to stay. These six director of rooms, an Austrian director of food and beverage, an Irish director of human resources, a Lebanese chief engineer, and a north American director of marketing. A Japanese controller was later added to this executive management team, which represented a highly diversified cultural group of managers.
Because of the diverse group, the corporate office of hotel Nikko (USA) Inc. decided to develop an executive team building program. With the assistance of several professors at Cornell University, Nikko Executive Team Development Program was formulated for executive leadership exercises and stimulations. This program included an overview of the hotel development trends in the United States and a perspective on Japanese management. The end result of this four-day retreat was to create a Nikko Mission Statement.
The executive retreat was held in May 1985 in Ithaca, a city in upstate New York. The participants were divided into small working groups to discuss group leadership issues and the hotel’s mission statement. The president of the company, Yasuyuki Miura, did not participate in the group work, which was natural for a Japanese company president. After the group sessions, the teams reconvened to present their discussion results. At the time, Miura came to the presentations and commented on them in a manner that the non-Japanese executives found annoying.
The managers began to complain: “If you have already formed your own mission statement, don’t waste our time and energy, just give it to us! We don’t like being tested like Students.” “On the other hand, if you don’t have on yet and would like to contribute, why did you join us from the start?”
Miura was shocked to hear these sharp criticisms from his subordinates. It took a few minutes before he could control himself. He then told the mangers: “Okay, you guys go to the student pub and keep complaining and accusing me over as much as you can drink. It’s on me. My poor Japanese executives will accompany you and listen to you patiently. Who knows, they may even agree with you. In the meantime, I will go to my room and do my homework like a good student. First thing tomorrow, I will tell you about my career, experiences, management philosophy, and aspirations. If that is acceptable to you, let’s begin again.”
The managers drank happily that night, while Miura worked very hard. The next day, Miura began his speech to the executive team in a frank and all humble manner. He described the global strategic development by JAL, and explained why Nikko had come to the United States. Then he shared with the executive team his twenty-seven-year experience with JAL, and concluded with an appeal for cooperation. After this speech, he joined the executive team as a working participant to develop the Nikko Mission Statement.
This executive retreat was a great experience for all the executive and managers since they all worked hard to find common ground. After heated discussions and sincere attempts to reach a consensus, the team formulated the Nikko Hotels Mission Statement in the most participatory manner. The statement reads:
At Nikko Hotels, our guests always find:
together in harmony.
Case Study Source
Yasuyuki Miura, “Success Strategy: Nikko Hotels International Smiles a hearty Smile,” In World-Class Service, eds. Germaine W. Shames and W. Gerald Glover ) Yarmouth, ME: Intercultural Press,1989), pp. 35-43.
Case Study Questions
1. Why did Japan Airlines Development Company decide to develop a hotel company in the mid-1980s?
2. Why did Nikko Hotels International choose the Essex House in New York City as its first property in the United States?
3. Can you describe the cultural diversity of the management team at the Essex House?
4. What was the purpose of the executive retreat?
5. When did Miura join the managers at the executive retreat?
6. How did he annoy the non-Japanese managers during their presentations?
7. Why was Miura shocked to hear complaints from his managers? What did he do after he regained control of himself?
8. What happened the next day?
9. What is the mission statement for Nikko Hotels?
10. Can you explain what cultural blunder Miura committed during the executive retreat and how he ridged the cultural gap and brought the team together?