European headquarters often set Japan’s salary‑increase rate based solely on inflation, but this approach ignores Japan’s unique labor‑market reality. Japan’s salary‑increase budget frequently exceeds inflation, and inflation‑based raises lead to real wage declines, lower motivation, and reduced competitiveness. True global management requires a Think Global, Act Local approach grounded in Japan‑specific data.

Global MATRIX structures often fail in Japan because LOB‑based KPIs assume dedicated teams, while Japanese subsidiaries must cover multiple businesses with limited headcount. LOB and Entity KPIs conflict, priorities collide, and workload concentrates on the local team. This is not a cultural issue but a structural mismatch in organizational design.