When Japan’s Fujitsu joined forces with Spain’s recently privatized national telephone company, Telefónica, and several local banks to create Secoinsa (Sociedad Espanola de Comunicaciones e Informatica S.A.), everyone knew that it would be a challenging alliance, but few realized just how challenging.¹⁸ The Japanese managers that arrived to help run the new partnership seemed totally unprepared for the Spanish culture or way of doing business. At the same time, their Spanish partners were equally perplexed about how to work with the Japanese. Problems began almost immediately. The first problem involved language. Both partners relied on English, since few Japanese partners could speak Spanish and no Spaniards could speak Japanese. The Japanese soon became frustrated because they could not express their true feelings in English, while the Spaniards were equally frustrated with what they considered to be the Japanese’s “all business all the time” approach to interpersonal relations. The Spaniards concluded early on that their Japanese counterparts were not well rounded because all they talked about was business. They also felt that the Japanese were looking down on their local Spanish traditions and customs. The Japanese, in turn, questioned the work ethic of their Spanish counterparts because of their excessively long meals and time away from work. Neither side had an easy time building rapport, and numerous misunderstandings emerged. Stress levels increased on both sides. Substantial disagreements also arose over the ways in which decisions were made at the new company. The Japanese tried to use a consensual decision process that required considerable time but led to broad-based support for final decisions. The Spaniards preferred to have senior managers make decisions more autocratically and lost patience with the endless rounds of discussions requested by their partners. Finally, problems arose in manufacturing and quality control. Fujitsu managers insisted on maintaining strict controls over production processes to ensure quality control and prevent imitation by their competitors. They wanted all components used in the manufacturing process to be manufactured in Japan. If this proved to be infeasible, they wanted all the parts at least to be tested in Japan at Fujitsu’s testing facilities. Their Spanish partners preferred using components manufactured in Spain (or at least the European Union) and saw no reason to ship them to Japan for testing. Fujitsu finally agreed to this arrangement so long as the components were manufactured by Secoinsa and not by an outside vendor. Both sides came to see the other as difficult, narrow-minded, inflexible, and overly nationalistic, but the venture continued because Fujitsu wanted access to the Spanish (and European) market and the Spanish wanted access to Japan’s leading-edge technology. But neither side was happy.

QUESTIONS FOR DISCUSSION

1. What is the fundamental problem in this strategic alliance? Why did this occur?

2. What could the Japanese managers at Fujitsu do now to rebuild trust and get the partnership back on track?

3. What could the Spanish managers at Secoinsa do now to rebuild trust and get the partnership back on track?

4. If the two companies could start over, how might each side have approached the alliance differently in order to enhance the chances of long-term success?