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What are the secrets of success of
Japanese multinationals?
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About Japan
y Japan is an island nation in East Asia. Located in the Pacific
Ocean, it lies to the east of the Sea of Japan, China, North
Korea, South Korea and Russia, stretching from the Sea of
Okhotsk in the north to the East China Sea and Taiwan in the
south.
y The characters that make up Japan's name mean "sun-
origin", which is why Japan is sometimes referred to as the
"Land of the Rising Sun".
y Japan has 6852 islands.
y It has 10th largest population in the world.
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y It is the world's fourth largest exporter and fourth largest
importer.
y GDP (2010 estimate) - Total $4.308 trillion which is 10th in
the world.y Per capita - $33,828 which is 24th in the world.
y Japan's public debt was more than 200 percent of its annual
GDP (1st in the world).
y Japan ranks 12th of 178 countries in the 2008 Ease of DoingBusiness Index and has one of the smallest tax revenues of the
developed world.
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y Japan has a large industrial capacity, and is home to some of
the largest and most technologically advanced producers of:-
y motor vehicles
y
electronicsy machine tools
y steel and nonferrous metals
y ships
y chemical substances
y Textiles
y processed foods
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Exports of Japan
y Japan's exports amounted to US$4,210 per capita in 2005.
y Japan's main export markets are China (18.88 percent), the
United States (16.42 percent), South Korea (8.13 percent),
Taiwan (6.27 percent) and Hong Kong (5.49 percent) as of2009.
y Its main exports are transportation equipment, motor
vehicles, electronics, electrical machinery and chemicals.
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Imports of Japan
y Japan's main import markets as of 2009 are China (22.2
percent), the US (10.96 percent), Australia (6.29 percent),
Saudi Arabia (5.29 percent), United Arab Emirates (4.12
percent), South Korea (3.98 percent) and Indonesia (3.95
percent).
y Its main imports are machinery and equipment, fossil fuels,
foodstuffs (in particular beef), chemicals, textiles and raw
materials for its industries.
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y Japan is a member of the G8, APEC, and "ASEAN Plus
Three", and is a participant in the East Asia Summit.
y Japan signed a security pact with Australia in March 2007and
with India in October 2008. It is the world's third largestdonor of official development assistance after the United
States and France, donating US$9.48 billion in 2009.
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y - Japanese firms are organized in Keiretsus (conglomerate ofcompanies that are financially linked to the same bank) .
y It enables the different company to have more negotiating powerand to fund their credits on a short-term basis.
y This big entities use Sogo shoshas that prospect the foreignmarkets.-the companies usually have many branches-strong hierarchy, all the positions are doubled by assistants.-Sales distribution network horizontally integrated by expatriates
-dedicated workforce
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Cultural factorsy Japanese employees are focused, hard working and dedicated,
because they frequently have a strong sense of loyalty to theircompany
y Because of the importance of honor in the Japanese culture,
Japanese teams tend to develop an acute sense ofresponsibility and commitment in their missions.
y Moreover, the willingness to improve the working andmanagement methods is deeply rooted in the Japanese work
culture, inherited from the Confucianism (concept ofKaizen).
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Economic factorsy Just after the WWII, American capitals were injected in the Japanese
economy to keep it from stalling, and support its development andmodernization
y It also had a politic and geostrategic purpose, which was to prevent theJapan to fall into a communist system and ensure good relations with
USA). These foreign investments helped the Japanese economy torebuild itself and become very effective (with the rapid emergence ofZaibatsus, which are highly powerful and integrated companies, bothvertically and horizontally).
y Japanese companies have progressively developed a strong culture ofinnovation, investing a lot into R&D and into improving their
production plants. This led to the mastery of a very precisemanufacturing of high quality products, which proved to be veryprofitable. A typical example being the ability to lead the electronicsector at the time it was booming all over the world.
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y Apart from that, low exchanges rates set up by the Japanese
government helped to promote exports, and fiscal advantages
helped entrepreneurship initiatives and helped companies to
invest and grow further and further.
y Japanese companies are focused on improvement and
optimization, which led to management innovations such as
lean management (initiated by Toyota Production System
with Just in Time, and jidoka / poka-yoke concepts).
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The environmenty Strategic geographical environment: in between the USA and the
emerging countries such as China, South Korea, Taiwan,
y Cheap credit and low taxes for Japanese companies
y The structure of the economy with really strong companies suchas Zaibatsu (Toyota, Mitsubishi, Honda,) which have stronginternal links which allow them to avoid takeover bid (Themajority of the capital belongs to Japanese shareholders andfinancial independency thanks to their own internal bank and the
cash they are generating.
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The culture
y Japanese workforce is well educated, hard-working,
collective and loyal.
y The Japanese dedicate their life to their job. Thus, it is a
consensual society and as a consequent few strikes occury Within the companies everything is done to ease the well
being of the workers (relaxation center, facilities for babies
and children, social activities,).
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Business Modely Toyotism and the five zero model enabled Japanese firm to
compete with EU and US firms.
y The five 0: no inventory,no manufacturing fault,no delay,nopaper,and no breakdown. Thus, it is a just
in time system which allows more flexibility and a betteradaptation to the demand.
y There is a culture of innovation. Indeed, some of the bestranked companies in the world in the sector of new
technologies are Japanese. There is an integration ofautomated machines, robots, computers and interactivesoftware into manufacturing that allows high quality and highperformances.
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Advantage due to keiretsu
y keiretsu is a set of companies with interlocking business
relationships and shareholdings, it could called also as
business group. The major keiretsu were each centered
around one bank, which lent money to the keiretsu's member
companies and held equity positions in the companies. Each
bank had control on each company. The main effect of this
structure was to minimize the presence of hostile takeovers
in Japan, because no entities could challenge the power of the
banks.
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Other factors
y Workers work in one company for their whole life, so a lot of
money is put into their training and they become very
competent and competitive.
y
They are highly motivated because of team spirit andtogetherness.
y Companies are regarded as social organizations, not just a
collection of financial and physical assets, as something that
belongs to the employees, not the shareholders.
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Cont.
y They have long focused on specific niches, improved the
speed of their business undertaking, and effectively used
information technology.
y
Japanese companies have traditionally given out very smalldividends and instead kept the bulk of their profits as
reserves and so, could invest a lot in R&D.
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