Please use this identifier to cite or link to this item: http://hdl.handle.net/1946/2458
The Japanese business model, and how globalization is changing it. Is change necessary for Japanese companies?
The Japanese business model is one of the most intriguing aspects of Japanese society in my view due to its ability to export high quality products at low prices. The model’s success after the Second World War meant that Japan was the first Asian country to become a first world nation where living standards and longevity were among the highest in the world.
Recently however, it can be said that the model has been changing in order to fit into the emerging global business environment where companies are both manufacturing and marketing their products in many different areas of the world.
Japanese companies used to enjoy the advantage of being able to produce and export products at cheaper prices than their foreign competitors. However because of rising production costs and inefficiency at home, as well as fiercer competition from abroad this is no longer the case. In order to stay competitive maximizing cost efficiency is necessary, and globalization is what makes big companies most cost efficient today. The efficiency changes that are being made in Japan today clash significantly with the traditional business model and that is what makes the topic all the more fascinating.
Globalization has had the effect that export companies are marketing their products to many markets with different types of customers with many different types of needs. Diversifying company staff with foreign and female labor is vital to understanding those customer needs.
The topic leads to the question whether these changes, despite not going hand in hand with Japanese norms, are necessary for Japanese companies to make?
Cheaper labor and manufacturing processes, professionals with specific knowledge and backgrounds and practical business relationships found outside of Japan are things that can improve cost efficiency and innovation at traditional Japanese companies. To most companies it is rather clear that by taking advantage of what the world has to offer instead of just relying on one country’s resources is bound to bring a company not only more success, but it is inevitable for survival in today’s business environment and the aim of the thesis is to prove just that.
This thesis comes in four chapters.
The first chapter is a description of the typical traits of the traditional Japanese business model in order for the reader to understand the following chapters. The things that will be discussed in this chapter are isolationism, high-context culture, low foreign investment rate, long-term employment contracts, collectivism, discriminations against female employees, power of corporate management, keiretsu relationships and the role of government.
The second chapter is about the current fundamental changes that are being made throughout the Japanese business world due to globalization. Due to the fact that today’s environment is very different from what it used to be only a couple of decades ago the Japanese system has been changing in order to adapt. These changes come in many forms. Examples are western methods of cutting costs and the process of acquiring access to resources outside of Japan in order to recover from the economic downturn of the 1990s and stay competitive against rising global competition. Changes at the workplace will be discussed with focus on the rise of short-term contracts in line with a global business model and promotion based on skill rather the seniority. Other things will be discussed as well such as the rise of female involvement and the increase in foreign staff. Changes in the composition of corporate management, keiretsu relationships, foreign investment, and the role of government will then be made clear.
The third chapter tells the story of the carmaker Nissan after it was bought by French carmaker Renault. Nissan was the first big Japanese company to hire a foreign CEO. Carlos Ghosn changed the corporate organization and culture of Nissan in line with a global standard by reorganizing its staff and making use of global resources. This chapter gives good insight into what globalism can bring to Japanese companies.
The final chapter will be conclusions based on the information at hand. It explains why utilizing global resources are steps necessary for Japanese companies to prosper.