Tuesday, August 31, 2004

Japanese Conglomerates One major relic from the age of conglomerates can be seen in some of the largest Japanese corporations. These companies are among the most famous in the world - Sony, Suntory, Panasonic (Matsushita), Canon, Mitsubishi, Toshiba, Sharp, and so on. Some are based on banking operations (Mitsubishi, Sumitomo) and are called keiretsu, though that terms is sometimes loosely applied to all Japanese conglomerates, These companies (or, more accurately, company clusters) are all involved in a shopping list of diverse enterprises. For example, Sony makes movies, produces and sells recordings, sells televisions, cameras, Walkmen, Playstations and computers, manufactures semiconductors and cell phones. Matsushita makes computer and home entertainment equipment too, along with semiconductors, kitchen appliances, welding machines, medical equipment, phones, batteries, electrical motors, laminates and other things. Mitsubishi is one of Japan's top banking firms, as well as a maker of agricultural machinery, hotel owner, real estate developer, a manufacturer of steel, paper, aluminum, and textiles, brewer (Kirin), sugar producer, and car company, just to name a few. It's often been noted that these companies are reluctant to leave any market once they've entered it. That's why digital cameras, laser printers, stereo systems, and CD media all come from all so many competitors that few of them can earn significant market segment, Add in the similar Korean companies like Samsung and LG (Goldstar) only add to crowded markets. These companies are often rigidly hierachical and they are so complex that they are very difficult to manage, especailly as they are being threatened by agile, small companies from China, Taiwan, and other places. A lot of management effort is put into propping up faltering divisions. But even these conglomerates are changing. In the last few years there have been significant mergers, including Kyocera and Mita, as well as Konica and Minolta, Suntory Pharmaceuticals and Dai-Ichi Sumitomno and Sakura. Furthermore, some have been bought out by foreign companies (Nissan by France's Renault, Mazda by Ford). This is far more activity and some key areas are seeing more concentration. The latest round in all this movement in the Japanese market is the unprecedented bidding war between Sumitomo Mitsui and Mitsubishi for banking rival UFJ. As with similar US moves, whoever wins is likely to axe around 10,000 jobs, unthinkable a decade ago. The creation of tight, cost-cutting oligopolies through big mergers is an indication that the oligopoly corporate culture has having major impact even in Japan. 5:36:58 PM

comment []