As a consequence of this market-driven production philosophy , firms must also take on new organizational structures such as the 'flat organization' or 'polycentricism' .sx The case studies of Sony and Honda which follow are ample illustrations of this , and an even better case would be IBM which , consciously or unconsciously , acts as a role model for the Japanese corporations ( Morris and Imrie 1991) .sx GLOBAL LOCALIZATION :sx TWO CASE STUDIES .sx One problem with the study of Japanese overseas investment is that it tends to treat all Japanese corporations as an amorphous mass .sx As Cusumano ( 1985 ) has illustrated , however , even firms in the same industrial sector - in this case Toyota and Nissan - can display very different business strategies .sx The two case studies described here are in some ways untypical , as they are at the leading edge of global localization among Japanese companies .sx Nevertheless , it is arguable that these firms display characteristics in their internationalization strategies which other Japanese corporations are starting to adopt .sx Sony Sony have been at the forefront of the globalization of the Japanese consumer electronics industry ; they were the first company to start production in North America when they located a plant at San Diego in California in the early 1970s and their Bridgend plant in South Wales was the first Japanese television plant in the EC ( Morris 1987 ; Morris and Imrie 1991) .sx Essentially , Sony have divided their production and market into three major supranational trading blocs - Japan and the western Pacific rim ( Japan , East and South-East Asia , and Australasia ) , North America ( including Mexico ) , and Western Europe .sx This has also been driven by Sony's export orientation .sx Indeed they are one of Japan's most international companies with only 34 per cent of total sales in 1988 in Japan ( Wagstyl and Buchan 1989) .sx Accordingly , production is being reorganized on an integrated scale in these blocs :sx ( a ) Japan , East and South-East Asia , Australasia .sx There has been a considerable shift of production of consumer electronic products and components from Japan to other south and east Asian countries .sx This is especially true of lower value added and mature products such as consumer electronics , as opposed to the new product markets into which Sony has been diversifying such as semiconductors , computer workstations , computer disk drives and high-definition televisions .sx As part of this strategy , for example , in 1989 Sony announced the location of a plant in Singapore to produce tubes for colour television assembly factories in Malaysia and Thailand which will replace production from Japan .sx ( b ) North America .sx The San Diego facility has been considerably expanded since its inception in the 1970s to produce higher volumes of its initial product , colour televisions , but also to produce a diversified product range .sx Computer workstations , for example , are the latest product to be added to the plant .sx In addition the company has set up a R&D centre at San Jose in California , to service the North American operation .sx ( c ) Western Europe .sx Sony's extensive European-wide complex of plants is rivalled only by that of Matsushita Electric .sx Moreover , this is set to expand further in the 1990s .sx The hubs of the operation are the Bridgend plant in South Wales , the largest plant and the only one to produce colour television picture tubes , and the Stuttgart operation in West Germany where , in addition to a large plant producing colour televisions , the European CTV headquarters are located .sx The company now has eight Western European plants spread across the UK , France , West Germany , Spain , Italy , and Austria ( see Table ) .sx caption&table .sx While there is a degree of duplication between plants , production is also strongly integrated .sx The Bridgend plant , for example , supplies picture tubes to the West German and Spanish plants .sx Similarly , the Colmar plant makes components and sub-assemblies for other European plants .sx Sony's expansion in Western Europe extends beyond the number of plants .sx It includes diversification of product lines and global localization through increased local sourcing .sx On some products , for example , local content levels are close to 100 per cent .sx This localization policy is being achieved in three ways .sx First , Sony have made extensive use of the growing number of Japanese suppliers who have located in the EC and in the UK in particular ( Morris and Imrie 1991) .sx Morris and Imrie estimate that there are at least fifteen such suppliers currently operating .sx Second , through transferring production of key and other components from Japan to Europe ( CTV tubes would be one such example) .sx Moreover in the 1990s Sony plan to transfer the production of semiconductors , video cassette recorder heads , optical pick ups and magnetic tape coating ( de Jonquieres and Dixon 1989) .sx Third , Sony are upgrading local suppliers through their supplier development programme in the EC and attempting to localize component sourcing to areas proximate to their main plants in order to fully operate a just-in-time system .sx In South Wales , for example , the corporation is aiming to source 80 per cent of its local content within a five mile radius or one hour's drive time ( Morris and Imrie 1991) .sx Sony's global localization strategy in Western Europe , therefore , comprises transferring production of a wide variety of products and sourcing high percentages of content locally .sx Its product range is set to diversify considerably further in the 1990s to mobile communications , computers , medical electronics , robotics and security systems , plus the key components already mentioned ( de Jonquieres and Dixon 1989) .sx In addition to transferring production , Sony is transferring some of its R&D capacity to the EC .sx Bridgend is already the R&D centre for CTVs , and the company plan two telecommunications R&D centres , in the UK and West Germany and a high definition ( HDTV ) research centre in West Germany .sx Research for HDTV in North America will be centred at the San Jose facility .sx The commitment to this policy of global localization is repeated in the autonomy given to international managers .sx In 1989 , for example , Sony Corporation appointed a European and an American to its main board , the first Japanese company to do so .sx This is part of a strategy of a largely self-sufficient industrial and management infrastructure with substantial freedom to run its own affairs .sx Honda Honda's place in Japan's motor vehicle industry is very similar to that of Sony's in the electronics field ; it was a late entrant into the market , is considerably smaller than the two major companies and has used its internationalization strategy as a competitive advantage - given its relative weakness in its domestic market .sx Honda's initial production overseas dates to the late 1960s when it took a share in a domestic Malaysian producer .sx It now has a network of production facilities throughout south , south-east and east Asia , in Taiwan ( 1983 ) , Malaysia ( 1978 ) , Indonesia ( 1975 and 1978 ) , Thailand ( 1984 ) , and India .sx Honda holds a minority share in all seven plants which produce motorcycles , vehicles , and vehicle parts .sx It also has a plant in New Zealand .sx Despite Honda's entry into the Asian market via local production , it is in North America that the company's global localization efforts are concentrated , although the company will follow this with major production facilities in the UK .sx Honda's first , and main plant at Marysville , Ohio , is part of Honda's North American-wide production complex which comprises eight manufacturing operations ( see Table ) .sx caption&table .sx Car production started at Marysville in 1982 , following motorcycle production , and as such Honda were the first Japanese company to build a manufacturing operation .sx Moreover , the company were also the first Japanese company to build engines in the USA at the Anna facility and the first to produce automatic transmissions .sx The company is the most integrated of the Japanese producers in North American automobile production ; they were the first to export vehicles outside of North America , have the largest R&D and engineering facilities , and the highest local content of the Japanese transplants in the USA .sx The company is now the fourth largest vehicle producer in the USA after the 'Big Three' domestic producers ( Economist Intelligence Unit 1989) .sx Currently Honda of America is undergoing a five step strategy to become self-reliant in the USA , including :sx boosting exports ; increasing local content to 75 per cent by 1991 ; expanding production engineering ; developing the second US assembly plant at East Liberty , and increasing R&D activities .sx The Ohio and California R&D centres have already doubled in size and will increase employment further from 100 to 500 .sx Honda , therefore , have gone through a rapid expansion of capacity in their various integrated North American facilities .sx The Marysville plant , for example , started with a planned capacity of 150,000 cars per annum which has subsequently been upgraded to 500,000 units .sx In addition , significant investment has taken place at the facility to upgrade it from an assembly to a full manufacturing operation , with plastic moulding , stamping , welding , painting , and sub-assembly facilities .sx The plant supplies components to Honda's plants in Ontario and at East Liberty , Ohio .sx The two main omissions are engines and automatic transmissions , which will be built elsewhere .sx Car engine production started at the Anna plant in Ohio in 1985 , which has undergone reinvestment to increase capacity to 500,000 engines , plus an iron casting facility for front and rear suspension components , and aluminium cylinder head and aluminium wheel production facilities .sx Two further car assembly units have started production - one at East Liberty , Ohio , which will produce a capacity of 150,000 cars per year , and a plant at Alliston in Ontario which has a capacity of 80,000 cars per annum .sx As Florida and Kenney illustrate in Chapter 5 , Honda , therefore have pushed forward a strategy of global localization of car production in North America in little over one decade .sx This has included siting R&D and engineering facilities , in transferring full manufacturing operations , and in increasing local content through transferring the production of components from Japan to Honda operations in North America .sx Local content has also been increased , however , by increasing component sourcing from locally based suppliers .sx Local content levels at Honda in North America will be 75 per cent by 1991 .sx Indeed , as Florida and Kenney note , it is claimed that by the mid 1990s it will be as high as that at Chrysler .sx This has been achieved by being the most 'Americanized' of the Japanese transplants .sx For example , 95 per cent of the steel for fabricated components is from the US and 50 per cent of machine tools are from US-based plants .sx The company has three subsidiary component suppliers :sx Bellemar Parts Industries produces seats and exhaust systems from plants on - site at Alliston and Marysville ; KTH Parts Industries produces stamped parts in St. Paris , Ohio , and CALMAC produces air conditioning units at Cerritos , California .sx Other supplier firms are spread throughout North America in places as far flung as Florida , Massachusetts , and Canada .sx However , as Florida and Kenney's chapter notes , the vast majority of the 220 suppliers are found in the states in the auto-corridor from Michigan to Tennessee .sx This is particularly true of the forty Japanese-owned suppliers to Honda , all of which are within a one-hundred-mile radius of Marysville .sx Indeed , over a half are in Ohio with a marked concentration around the Ohio Interstate Highway 75 which has been dubbed 'parts supplier alley' ( Economist Intelligence Unit 1989) .sx These tend to be dedicated to the Honda plant , while the out-of-state suppliers tend to serve more than one transplant .sx The spatial clustering is unsurprising given the just-in-time supply system in operation at Marysville , with two hour stocks and certain suppliers delivering to the plant on an hourly basis .sx Honda's global localization strategy is best illustrated , therefore , by the North American example .sx In Western Europe the company's activities have been far more limited although this will change in the 1990s .sx In the late 1970s Honda entered into a manufacturing and technical agreement with British Leyland ( now Rover ) in the UK .sx Rover produced Honda cars under licence at one of their UK plants which later developed into joint development work .sx This culminated in 1989 with Honda taking a 20 per cent share of Rover's car business and Rover taking a 20 per cent share of Honda's UK operations .sx Honda's plans in the UK include an engine plant at Swindon which is already operational , and an assembly plant , also at Swindon , which will produce 100,000 cars per annum by 1994 .sx