Historical Development of Management in Japan

Transcription

1 Historical Development of Management in Japan Copyright 2007 Keio University

2 Quote of the Day Ganbare, Nippon!!! Copyright 2007 Keio University 2

3 This Lecture Overview of the historical development of management in Japan The Japanese recession Expectations for the 21st century Copyright 2007 Keio University 3

4 Prerequisites of Japanese Success Japanese tendency to work hard Japanese drive for formal education Japanese skills in mastering difficult technology e.g. rice cultivation and casting of metals Taking up Western technology after the Meiji Restoration Partly developed institutions like a highly monetized market and a single nationwide market (the two main centres at that time were already Tôkyô and Ôsaka) Japan felt a strong urgency to keep up with the West (Reischauer and Jansen 2005, p. 295 ff.) Copyright 2007 Keio University 4

5 The Background From 1600 to 1868 Japan was ruled by the third dynasty of Shoguns (Tokugawa) Black ships of Commander Perry (1853) Meiji restoration (meiji ishin 明治維新 ) in 1868 Start of industrialization (paper, textiles, glass, munitions and cement) Investments in infrastructure Zaibatsu emerge (Sumitomo, Mitsui, Mitsubishi, Yasuda) Copyright 2007 Keio University 5

6 What did the Meiji Government Do to Establish the Japanese Economy? It established modern economic institutions A nationwide monetary system Modern banking institutions Western types of taxes A national budget It hired Western experts to gain technological skills It dispatched promising youths abroad It did away with feudal class restrictions and allowed individuals from all backgrounds to achieve success in the business world (Reischauer and Jansen 2005) Copyright 2007 Keio University 6

7 The Prewar Economy By 1870 Japan had almost bankrupted itself because of its attempts to reform and the costs of liquidating the ancient régime But the economic effort started to pay off right in time Under private management businesses began to strive and agricultural production increased because of modern technology Copyright 2007 Keio University 7

8 Prewar Economy The economy was further stimulated by the Sino-Japanese War ( ) and the Russo- Japanese War ( ) World War I left the Asian empires (of the European powers) open to Japanese industrial exports The worldwide economic crisis hit Japan too, but because of renewed military expansion the current quickly returned to its upward industrial surge (Reischauer and Jansen 2005) Copyright 2007 Keio University 8

9 Reasons for Success Classic Western pattern Increased agricultural production, improved communications and an efficient centralized government set the stage First light industries (e.g. cotton weaving) were the focus, later heavy industries and chemicals Early exports were often shoddy and only targeted Asian markets but by 1930 Japan was one of the leading industrial nations of the world. Copyright 2007 Keio University 9

10 Particularities 1 Dual Structure of the Japanese Economy Many Japanese economic activities (e.g. agriculture, small handicraft industries, also many retailers) continued little changed from Tokugawa times (lower level of the Japanese economy) Large scale industries were built on this foundation (Upper level of the Japanese economy) This also created some problems economically (e.g. rice farmers) Copyright 2007 Keio University 10

11 Particularities 2 Strong ties between employer and employee Similar to family ties Create a feeling of harmony in Japanese corporations Strong ties between government and business (unlike in many other countries) In Japan business traditionally developed under the protection of the government, even today they remain strong partners Copyright 2007 Keio University 11

12 Zaibatsu Thetermzaibatsu 財閥 is applied to certain giant financial, commercial, and industrial combines Is loosely used for prewar big business in general The four largest zaibatsu in the 1920s were Mitsui, Mitsubishi, Sumitomo and Yasuda Copyright 2007 Keio University 12

13 Zaibatsu A typical zaibatsu is not like an American conglomerate, which brings together totally unrelated businesses under the same ownership They were rational outgrows of evolving economic activities and are therefore better described as combines They cluster around a bank that finances the various acitivities (vertical relationships) e.g. a series of seperate companies may produce certain products, transport these abroad on the combine`s shipping line, sell them abroad and purchase raw materials for the whole process through the combines general trading company (sogo shosha) and all these activities would be financed by the combine`s bank. Zaibatsus never developed into monopolies because they mostly operate in similar industrial areas They allowed investments in risky markets and innovative technologies which would only pay off far ahead in the future. They so laid the base for Japan`s spectacular growth after World War II (Reischauer and Jansen 2005) Copyright 2007 Keio University 13

14 Sogo Shosha Refers to the Japanese trading companies From the beginnings of its industrialization Japan lacked raw materials and Japanese companies lacked capital and experience in finding raw materials abroad Some trading companies did this only for the members of their combine while other also serviced other companies They started to build and provide excellent worldwide services which other companies could not provide (later also in Japan) Copyright 2007 Keio University 14

15 Effects of World War II Japan was defeated in World War II Restructuring of the Economic and Political System Dissolution of zaibatsu 財閥 (they are said to be now keiretsu 系列, but there is not more central ownership and no more rigid controls and exclusive relationships as in the zaibatsu) Education for all Formation of trade unions Women can vote Copyright 2007 Keio University 15

16 Postwar Development The first few years after World War II were very hard for the Japanese Recovery was much slower than in any other postwar industrialized country and did not start until the United States had carried out its stringent retrenchment policies of 1949, stopped further American reforms of the economy and started heavy purchases for the Korean War (1950 to 1953) By 1995 per capita levels of wealth had reached prewar levels By late 1989 Japan had already pushed ahead of other Western countries Copyright 2007 Keio University 16

17 Reasons for Success Rebuilding everything (similar to Germany) Korean War Changes in the political and economic system enforced by Americans Little spending on defense Copyright 2007 Keio University 17

18 The Road to Success In 1960 Prime Minister Ikeda Hayato announced the double income plan Economic growth of 9% for about 10 years would double the GNP Japan was far ahead of the plan 1964 Tokyo Olympics Several large scale economic booms (e.g. Jimmu boom and Iwate boom ) were based on capital investment from the heavychemicals industry. In 1971 Nixon stopped the convertibility of US dollars into gold (Nixon shock) and the yen exchange rate went up. This and the oil crisis in 1973 brought Japan`s growth to an end Copyright 2007 Keio University 18

19 The mid80s 1985 Plaza Accord triggered the bubble economy The yen appreciated rapidly (from 242 to 200 yen per dollar) US bonds lost value Money was driven to Japan Lowest exchange rate since the war Led to an investment boom Copyright 2007 Keio University 19

20 Copyright 2007 Keio University So, what is a bubble?

21 The End of the Bubble Japan`s bubble economy collapsed at the beginning of the 1990s In 1989 the Bank of Japan changed to a tight-money policy 1990 the Ministry of Finance requested banks restrict their financing of property assets New land taxation laws (landholding tax) Copyright 2007 Keio University 21

22 The Lost Decade Financial institutions suffered from nonperforming loans Companies` three excesses: Excess capital investment Excess employment Excessive debt Deflationary spiral and higher unemployment This period is called the Lost Decade Copyright 2007 Keio University 22

23 Market Adjustments and Recent Changes Changes Consumer behavior Working styles Retailing Easier entry for foreign companies Copyright 2007 Keio University 23

24 Copyright 2007 Keio University 24