...Keiretsu Translated literally, it means headless combine Keiretsu is a Japanese word which, translated literally, means headless combine. It is the name given to a form of corporate structure in which a number of organisations link together, usually by taking small stakes in each other and usually as a result of having a close business relationship, often as suppliers to each other. The structure, frequently likened to a spider's web, was much admired in the 1990s as a way to defuse the traditionally adversarial relationship between buyer and supplier. If you own a bit of your supplier, reinforced sometimes by your supplier owning a bit of you, the theory says that you are more likely to reach a way of working that is of mutual benefit to you both than if your relationship is at arm's length. American trade officials, however, disliked Japan's keiretsu because they saw them as a restraint of trade. Jeffrey Garten, once under-secretary of commerce in charge of international trade and then dean of Yale School of Management, said that a keiretsu restrains trade “because there is a very strong preference to do business only with someone in that family”. Despite its government's disapproval, corporate America liked the idea. Jeffrey Dyer wrote in Harvard Business Review in 1996 that Chrysler had created “an American keiretsu”. The company's relationship with its suppliers, which were reduced in number from 2,500 in 1989 to 1,140 in 1996, had improved to such an extent, claimed...
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...Conclusions Conclusions are very similar to introductions in that they should give an overview of the way in which the essay answered the question. They frequently include a very brief summary of the main points (pieces of evidence, data, and so on) from the argument you constructed to answer the question. It is extremely important that you explain, explicitly and very clearly, precisely how the argument you have produced answered the specific question or task set in the essay title. Here are some real examples with comments: Example 1 The question: 1. ‘The most important factor in explaining Japan’s Twentieth Century international trading success has been the willingness of other countries to buy Japanese exports.’ Discuss the validity of this statement A student conclusion Therefore as long as Japanese manufacturers are encouraged to export their products to countries such as the US and as they are forced to pay high margins to distribute their products at home they will use the alternative to export them abroad as there is a ready made market for their products. The Japanese trading companies also stand ready to offer them simple, direct and efficient export distribution channels. Comment Far too short, and no mention of how the argument they constructed answered the question asked of them. Example 2 A student conclusion Japan discourages imports of manufactured goods, the only goods it allows to import...
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...MITSUBISHI MOTORS CORPORATION : Announces Fiscal 2013 First Quarter Operating Results 07/30/2013 | 03:14am US/Eastern Recommend: 0 Tokyo, July 30, 2013 - Mitsubishi Motors Corporation (MMC) today announced its sales and financial results for the first quarter of the 2013 fiscal year (FY) ending March 31, 2014. 1. Performance overview MMC posted a consolidated net sales of 409.4 billion yen for the first quarter of fiscal year 2013 (April 1, 2013 through June 30, 2013), a 2% or 9.9 billion yen decrease over the first quarter of fiscal 2012, showing a decrease in wholesale volume. MMC posted an operating income of 16.0 billion yen, a 7% or 1.1 billion yen increase over the same period last fiscal year. The increase was due mainly to favorable exchange rates as well as reductions in material and other costs which together overcame such negative factors as decreases in wholesale volume and increases in sales expenses including advertising costs. Along with the increased non-operating income from factors including foreign exchange gains MMC posted an ordinary income of 22.3 billion yen, a 57% or 8.1 billion yen increase year-on-year. Net income for the term amounted to 16.4 billion yen, an 18% or 3.6 billion yen decrease year-on-year without the benefit of a 11.4 billion yen in extraordinary income from the sale of stock in affiliates like what was recorded in the first quarter of last fiscal year. 2. Sales volume (Retail) Global retail sales volume for the first quarter...
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...After reviewing all of the requirements of Investor Group A as well as multiple supply chain strategies it is recommended that a Keiretsu network is implemented. By employing the Keiretsu network strategy the group of investors not only owns the production facility but also have the opportunity to invest in and/or own suppliers to ensure the lowest costs. The Keiretsu network is the best choice for Investor group A because it is part collaboration part purchasing from a few suppliers and part vertical integration. It combines the benefits of using few suppliers such as suppliers having a large commitment to the buyer and more likely to have a better understanding of the broad objectives of the manufacturer and the end consumer. The Keiretsu network provides an assured price structure, predictable inventory and delivery schedules as well as clear quality and performance standards. A stable environment such as this close cooperation between the supplier and the manufacturer can lead to quality improvements, continual product development and reductions in cost. As stated before vertical integration is a component of the keiretsu network, with vertical integration the manufacturer has the ability to produce supplies that were previously purchased or to actually buy a supplier. Advantages of this would be inventory reduction and scheduling, cost reductions, and adherence to quality standards. The strategy of using many suppliers and playing them against one another is a strategy...
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...Task 3 A. Analyze whether a Keiretsu network, a virtual company, a vertical integration, or a different supply chain strategy should be adopted. Identifying a strategy is the first step in a supply chain management strategy so that is where we start. There are many options when selecting a strategy that will work best for our market and each strategy has advantages as well as disadvantages. No matter what type of strategy we chose we will face the same main question of if we should make the parts for our product or buy them. By choosing to make them we would chose a vertical integration strategy where we buy the suppliers and take over the management of more or perhaps all of the supply chain. This strategy could lower our cost of each product but we would take on more risk in owning the additional infrastructure as well as losing flexibility in changing the product by changing suppliers. In my opinion we would only want to use this strategy if we could not find suitable suppliers that we could be assured could meet our desired quantities and quality. Another option would be a sort of hybrid called a Keiretsu network where we would help fund our suppliers or work very closely with them and in turn be part of a network that is interdependent and works together to achieve the best result for all. This seems like a clear winner but again depending on the level of commitment to the suppliers we lose flexibility and take on added risks if the supplier fails. In turn...
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...Keiretsu Membership, Firm Size, and Corporate Returns on Value and Cost∗ Xueping Wu† , Piet Sercu‡ and Charles Chen§ First draft: November 1998; this version: October 2000 ∗ Jun Yao and Shu-Chuen Chong provided helpful research assistance. The authors thank Kathryn Dewenter, Amar Gande, Larry Goldberg, Ser-Huang Poon, Kazunori Suzuki, and other participants at the 1999 WFA and 2000 EFA Conferences and workshops at HKUST, K.U.Leuven, and Strathclyde; and Yasushi Hamao, Nancy Huyghebaert, Shuhe Li, Xijia Su, Linda Van de Gucht, and Cynthia Van Hulle for useful discussions or comments that have substantially improved content as well as presentation. All remaining errors are the authors’. † City University of Hong Kong, Department of Economics and Finance, Tat Chee Avenue, Kowloon, Hong Kong. Tel: (852) 2788 7577; Fax: (852) 2788 8806; email: efxpwu@cityu.edu.hk. ‡ (Corresponding author) KU Leuven, Graduate School of Business Studies, Naamsestraat 69, B3000 Leuven; Tel: +32 16 32 6756; Fax: +32 16 32 6620; email: piet.sercu@econ.kuleuven.ac.be. § Department of Accountancy, City University of Hong Kong; Tel: (852) 2788 7909; Fax: (852) 2788 7002; email: accpj@cityu.edu.hk. Abstract We test how keiretsu membership affects the Fama and French (1999) required IRR on value (or cost of capital) and the IRR on cost (or return on investment), 1974-95, of all listed non-financials in Japan. Rather than computing point estimates from aggregate data, we employ...
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...1. How does Mr. Honda’s history with suppliers relate to Honda’s current supply management strategy? The current supply chain management strategy reflects Honda’s long-term goal of manufacturing products where they are sold, and its determination of buying parts where it manufactures vehicles. A. Increased local content is due largely to purchases Honda makes from many of the other 3 Japanese automobile firms that were established during the late 80’s. B. Focusing on 4 regional markets has allowed Honda to develop strong sales, research and development, and manufacturing operations in each region to ensure that the product mix in each region is appropriate to the needs of the region. C. Suppliers are involved in the development process to the extent that they are asked and invited to submit suggestions about how certain designs could be made better, faster, with less weight, or less expensively. Today, purchasing is done by the Honda research and development department. 2. Why is purchasing so important to Honda? The International Purchasing Division of Honda Corporation has full responsibility for coordination between Honda and its overseas plants. Honda’s purchasing department carries out the localization strategy. This strategy involves: A. Finding and qualifying local suppliers B. Developing a second source when volume doubles, or when quality or on-time delivery problems occur. C. In situations in which the goals or the philosophies of the...
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...investigates if bankruptcy of Japanese listed companies can be predicted using data from 1992 to 2005. We find that the traditional measures, such as Altman’s (J Finance 23:589–609, 1968) Z-score, Ohlson’s (J Accounting Res 18:109–131, 1980) O-score and the option pricing theory-based distance-todefault, previously developed for the U.S. market, are also individually useful for the Japanese market. Moreover, the predictive power is substantially enhanced when these measures are combined. Based on the unique Japanese institutional features of main banks and business groups (known as Keiretsu), we construct a new measure that incorporates bank dependence and Keiretsu dependence. The new measure further improves the ability to predict bankruptcy of Japanese listed companies. Keywords Bankruptcy risk measure Á Accounting information Á Option pricing theory Á Japanese listed companies Á Bank dependence Á Keiretsu JEL Classifications G15 Á G33 1 Introduction When a company falls into bankruptcy, its stakeholders lose some or all the value they invested in the company. From an investor’s point of view, it is important to M. Xu (&) School of Accounting and Finance, The Hong Kong Polytechnic University, Kowloon, Hong Kong, China e-mail: afxuming@inet.polyu.edu.hk C. Zhang Department of Finance, The Hong Kong University of Science and Technology, Kowloon, Hong Kong, China 123 Bankruptcy prediction 535 assess a firm’s likelihood of bankruptcy so that the bankruptcy risk can be...
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...So as you can see Japanese keiretsu and Korean Chaebols are deeply embedded in both countries' industrial organization and the business system. For my part, I'm going to talk about do these institutions still exist in a meaningful way. So first, start with Japanese keiretsu, there are two types of groups which are horizontal and vertical. As Janet mentioned earlier before. Horizontal keiretsu is a business network, composed of entities and industries, normally centred around a bank and trading companies. So when we look into today's horizontal keiretsu model, their purpose is strictly distribution of goods around the world, which helps incorporate keiretsu companies in other nations; and sign contracts with other companies to supply commodities used for Japanese industry. This shows that group can generate "smooth performances" with stronger firms serving to assist weaker firms. Moreover, close relationships with banks and other group such as insurance companies provide the firms with ready access to financing and reduce the need to carry reserves of long-term debt or liquidity. This closely connected set of financial stakeholders also open the firms to wide-ranging scrutiny, which reduces risk for creditors, network shareholders, and transaction partners. While a vertical keiretsu are composed of a major industrial corporation and its suppliers in a particular industry. The benefits on this vertical group membership is that they provides suppliers with a stable...
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...10216081 Question 1 Many economists argue that the keiretsu system has been a formidable impediment to the entry of Western companies into the Japanese market. However, the absence of liberal market competition may preclude Japanese firms from implementing more cost-effective sourcing strategies at the global standard. Furthermore, it is often argued that the keiretsu system has been partly responsible for the decade-long recession: while there was need for quick changes, the negative features of the keiretsu form of governance maintained the economic slump. The interdependence of suppliers, unproductive cost management and top-down decision making based upon continuity and consensus all contributed to the decade-long recession. We will now discuss the corporate governance issues that may arise, seen from different perspectives. a) From the perspective of financiers. Financiers are always looking for the best investment possibilities. The keiretsu system can make it difficult for (individual) financiers to invest in the best possible option. This is because of the fact that a keiretsu will not allow foreign or alien companies into their system. On the other hand, when the leading company of the keiretsu needs money, financiers can more or less be obliged to invest: the money is invested in a bad project and possible profits are lost (Kawai, 2009). b) From the perspective of owners. One of the key features of the keiretsu system is member cross-ownership. These owners are the...
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...support, the adoption of one of the following strategies by the power tool company: a Keiretsu network, a virtual company, a vertical integration, or a different supply chain strategy. An efficient supply chain is fundamental to the success of any organization. The expense of the supply chain is usually an organizations largest cost therefore implementing a strategy that effectively minimizes costs while maintaining product quality is an effective way to increase profits. The best way to minimize costs and maximize product quality is to adopt a lean operations strategy that includes just in time (JIT) initiatives. Central to the JIT technique is continuous problem solving. JIT requires that items and materials are ordered only when needed minimizing inventory. When inventory is minimized wasted costs in layout, quality, and procurement are easily spotted and immediately dealt with. With JIT very few suppliers are chosen creating large commitments to the organization. The suppliers should also use JIT and offer their expertise in design and quality control to the supply chain. Since the owners of the power tool company are willing to own or invest in any component of the supply chain I would recommend they initiate a Keiretsu. A Keiretsu is a company coalition which includes few key suppliers and secondary suppliers. The power tool company would support key members of the Keiretsu through ownership or loans. The suppliers are assured stability and a long term relationships...
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...(1) What are some of the worst jobs you know about? Why are they bad jobs? Why do people want these jobs? Telemarketer, embalmer, grave digger, and janitor are a few of the worst jobs that I can think of. There are several reasons why these are less than desirable career fields. I think the poor job design in particular is to blame. Good job design consists of skill variety, job identity, job significance, autonomy, and feedback (Heizer & Render). These jobs have few or none of these attributes. First off let’s talk about skill variety. These jobs, with the exception of the embalmer, are very low skill jobs. They involve doing one basic task, for example calling random phone numbers or digging graves. The next two issues are job identity and significance. While these jobs are specific enough, it is hard to find the real significance in your job as a janitor. Indeed, you do keep the place clean for everyone else, but couldn’t they do that themselves? Autonomy, is a part of all of these jobs, maybe a little too much. Being alone in the work place all the time can be quite difficult since humans are social creatures with a need to interact. The final aspect is good feedback. With these being mostly autonomous jobs, it is unlikely that feedback is provided. As you can see, job design can play a factor is making a job worse than it already is. Why would someone take these jobs? There are undesirable jobs all around the world, and someone has to do them. Maybe the telemarketer...
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...Contents ACKNOWLEDGEMENT ……………………….. ……………………… EXECUTIVE SUMMARY ………………………………………………. 1. PROBLEM STATEMENTS 1.1 How did they do it????...................................................... 1.2 How does being a decentralized organization affect the well-being of employees…………………………………………….. 1.3 Keiretsu………………………………………………….. 2. REVIEW OF LITERATURE 3.1 Structural design of organizations………………………. 2.1.1 Define a hybrid structure ……………….……… 2.2 Placing a substitute value on a brand name- Brand Franchising 2.3 Differenciate between a Transactional and a Transformational leader 2.4 Assets and Liabilities 2.5 Distribution of empowerment – Decentralization 2.6 Interlockig business partnerships 3. ALTERNATIVES 4.2 Design, structure and practices of Virgin………………… 3.1.1 A heirarchy with no rigid control, freedom to authorize 3.1.2 Types of departmentalization 3.1.2.1 Customer based……………………… 3.1.2.2 Location based………………………. 3.1.2.3 Product based………………………... 3.2 Define a leader with vision, openness and relentless thinking capacity 3.3 Encourage, welcome, embrace, discuss and let know 3.4 A store/ IDEA BANK that works as a reception for novelty. 3.5 Nullify the threat of losing market share, cooperate with many buyers or suppliers 4. IMPLEMENTATION 5. CONCLUSION 6. REFERENCES ACKNOWLEDGEMENTS I have taken effort into the matter...
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...The Japanese corporate governance system differs vastly from the US system. Discuss corporate governance issues that may arise under the Japanese Keiretsu system from the perspective of a).financiers, b). Owners, c). Suppliers, d). Employees. Corporate Governance System in Japan (1) Definition of Corporate Governance Corporate governance deals with the agency problem: the separation of management and finance. This basic agency problem suggests a possible definition of corporate governance as addressing both an adverse selection and a moral hazard problem. The traditional definition of corporate governance was such a narrow view as Shleifer and Vishny (1997) mentioned that the ways in which the suppliers of finance to corporations assure themselves of getting a return on their investment. Recent trend, however, express doubts on the definition that solely focuses on shareholder value. EPA (1998) shows the constituents of corporate governance as follows: Table 1: Constituents of corporate governance Stakeholders | Interest | Desired Management | Shareholders | Maximize profitsAsset protection | Profitable managementSound management | Investors | Efficient investment | Exploitation of profitable investment | Creditors | Protection of receivables | Sound management | Main bank | Corporate growth | Sound managementPursuit of productivity growth | Employees | Pay raiseSecure employment RelationshipPromotion | Profitable managementSound managementSustainable...
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...“request for quotation”, with order going to the lowest bidder | Joint Ventures | Formal collaboration | Keiretsu Network | A Japanese term that describes suppliers who become part of a company coalition | It is recommended that KG tools select the Keiretsu network as the company’s supply chain strategy. The strategy is recommended because of its versatility. The tool company need to be able to respond quickly to the need of their customers. Keiretsu is a hybrid of purchasing from a few suppliers approach and vertical integration. The Japanese Word Keiretsu describes suppliers that become part of the company’s coalition. There are two different types of Keiretsu. Horizontal keiretsu are usually organized around a bank and consist of a variety of companies that perform different functions. Vertical keiretsu, are composed of a major industrial corporation and its suppliers in a particular industry. These vertical keiretsu are "held together by fairly predictable transaction patterns and based on implicit long-term contracts, financing and equity ownership. In a vertical keiretsu, the corporation is at the center of operations dominating its family of parts manufacturers and suppliers. One of the most often cited advantages of the keiretsu system is that it allows member companies to plan on a long-term basis, rather than having to focus on short-term profits. Keiretsu will give the tool company’s supplier a guaranteed customer,...
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