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Explain the Keiretsu inter-structure, and discuss why it is no longer the case that the keiretsus are a source of competitive advantage.

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Introduction

ESSAY Topic: Explain the Keiretsu inter-structure, and discuss why it is no longer the case that the keiretsus are a source of competitive advantage. This topic deserves our special attention on Asian business groups because they are closely identified with the region?s industrialisation and subsequent economic growth. They are well known by various names, such as Korea?s Chaebol, China?s Qiye Jituan, and especially Japan?s Kereitsu that we will explain according to its impact within inter-firm structure and also discuss why it is no longer the case that the keiretsus are a source of competitive advantage. We have firstly to know that the keiretsu has played a pivotal role in the economic success in Japan and it has already been mentioned that the state supported the former of cartels as one element of industrial policy. Following this idea, in order to achieve economic growth, Japan also actively supported the re-formation of industrial groups from parts of the Zaibatsu, as well as the diversification into several news areas of the economy, such as inter firm-structure. To have a well-defined cohesion in our plan, we going to explain, firstly and briefly, the precedence of industrial financial change and the beginning of Japan?s keiretsu, secondly the keiretsu inter-firm governance and structure, finally the case of keiretsus? problems as source of competitive advantage. Keiretsu has a long history. During the decades leading up to Japan wartime economy, the Zaibatsu, a group of firm played an important role of Japanese economy. ...read more.

Middle

In its strategy of inter-firm, General Motors hasn?t cultivated a steady network of supplier firms. To a certain extent, its correlation with supplier firm is more market-based and the relationship between General Motors and its suppliers may not sure and variable based on the price suppliers offer to it and other factors. On the one hand, Toyota tried to build long-term relationships with its supplier companies by actively facilitating knowledge sharing, transferring management practices such as operations management, transferring its personnel to suppliers. As a consequence, Toyota's network ties with its suppliers are further than transaction levels. On the other hand, it doesn?t without difficulty change its suppliers even if other suppliers offer lower prices to it. Instead, Toyota encourages its suppliers to lower their production costs by providing consulting services, information about cost reduction technologies, and so on. As the case of Toyota, many Japanese companies within keiretsu networks made investment for establishing prosperous network ties. Thus, letting members go into economic failure means that they are losing valuable ties that are developed by important investment. This may be one of the reasons that member firms try to rescue troubled firms within networks. The third way put in evidence cultural factors. Some scholars argue that Japanese firms emerge to have been successful at generating valuable network ties in part because of a country-specific institutional environment that fosters goodwill trust and cooperation (Dyer & Singh, 1998). ...read more.

Conclusion

After a long period of inertia and the fitful and uncertain restructuring, should the Japanese keiretsu still be regarded as exemplary model of reform? Khanna and yafeh (2005) are not confident that japans? corporate groups hold many lessons for business groups that encounter problems in other emerging economies? markets. They contend that Japanese business groups are fundamentally different from groups found in other parts of the world: they are centred on banks, they are not controlled by families, they haven?t alternative organised mechanism of joint decision making, and the vertical keiretsu are essentially operational elements. REFERENCE Dyer, J. H., & Singh, H. (1998). The relational view: Cooperative strategy and sources of inter-organizational competitive advantage. Academy of Management Review, 23 (4), 660-679. Gerlach,(1998). The Japanese corporate network - A block model analysis. 37 (1), 105-139 Lincoln J. R., Gerlach M. L., Ahmadjian C. L. (1996). Keiretsu networks and corporate performance in Japan. American Sociological Review, 61 (1) 67-88. Lincoln, J. R., Gerlach, M, & Takahashi, P. (1992). Keiretsu networks in the Japanese economy: A dyad analysis of inter-corporate ties. American Sociological Review, 57, 561-585. Moorman, R. H. & Blakely, G. L. (1995). Individualism-collectivism as an individual difference predictor of organizational citizenship behavior. Journal of Organizational Behavior, 16 (2), 127-142. Nolan, B. (2001). Social structure and competition in interfirm networks. Asian Business Group, 42, 35-67. Khanna and yafeh (2005). Social structure and competition in interfirm networks. Asian business Group,111,112 Gedajlovic and Shapiro (2002). Social structure and competition in interfirm networks. Asian business Group,88,89 WEB DOCUMENTS http://books.google.co.uk/books?id=AX-aqAguawAC&pg=PA43&lpg=PA43&dq=advantages+and+disadvantages+of+the+japanese+firm&source=web&ots=cGVGNmzjRQ&sig=_jCztXpikTee-71Q6uqyiAnotMM&hl=en&sa=X&oi=book_result&resnum=8&ct=result#PPA61,M1 http://www.icmrindia.org/casestudies/catalogue/Economics/The%20Rise%20and%20Fall%20of%20The%20Keiretsus%20in%20Japan.htm http://www.sciencedirect.com/science?_ob=MImg&_imagekey=B6W45-46HS8HF-7-1&_cdi=6533&_user=983321&_orig=search&_coverDate=04%2F30%2F2002&_sk=999549997&view=c&wchp=dGLbVlW-zSkWb&md5=74de1ccc8c5071f298ee0de8eb8d78fd&ie=/sdarticle.pdf http://www.wtec.org/loyola/polymers/fh7_19.gif ...read more.

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