AbstractAs the number, size, and complexity of Japanese multinational companies' (MNCs) overseas operations increase, many of them have begun to realize that they face some fundamental and difficult organizational challenges. Drawing on research undertaken with several large and successful Japanese MNCs, the authors define the nature and source of some of these organizational challenges, and describe some approaches that can be taken to resolving them. The article starts with a brief assessment of the traditional organizational capabilities and existing managerial approaches of Japanese companies, comparing them to the emerging challenges in the international environment. Then, after identifying some constraints and barriers to an effective response to the new demands, the authors propose a series of actions to overcome the problems.