Stephanie Hilgeford Charlotte Ford-Cunningham Al Renner

 Pre-World War II  Goal = realize economies of scope ◦ Manufacturing, distribution, and banking industries  4 major zaibatsu ◦ Matsui, Mitsubishi, Sumitomo, and Yasuda

 Family-controlled monopolies  Holding company at the top of hierarchy  Wholly owned bank subsidiary  Supplied military forces

 Post – World War II ◦ Dissolution of zaibatsu ◦ Removal of decision-making executive  Modified zaibatsu 1950s = keiretsu ◦ Occupation force support because of Mao’s communism and the Korean War  Benefit ◦ Solution to last-period problem  Issue ◦ Monopolistic

 2 forms ◦ Horizontal ◦ Vertical  6 major keiretsu ◦ Mitsubishi, Mitsui, Sumitomo, Fuyo, Dai-Ichi Kangyo, and Sanwa  4 pillars of keiretsu ◦ Lifetime employment, seniority wages, enterprise unions, and consensual capitalism

 1899 – company was incorporated  Early 1920s – involvement with Sumitomo  1925 – ISE transferred 15% of ownership to Sumitomo  Sumitomo took full control  Sumitomo ordered to dissolve  Mid-1950s computer industry  1960s- Honeywell collaboration  C&C initiative  Merger with Packard Bell  NEC goes public

 President: Kaora Yano  Senior Executive Vice Presidents: ◦ Botaro Hirosaki and Masatoshi  Major operations ◦ IT service, IT products, and network systems  166,800 employees  328 consolidated subsidiaries  Operation in 44 countries

SWOT Analysis: NEC Corporation Strengths:  Diversified products  Strong strategic relationship  Research and development  Strong industry position Weaknesses:  Geographic concentration  Corporate governance issues  Declining revenues and profitability Opportunities:  Innovated technology  Demand for digital products  Increase efficiency Threats:  International market competition  Global economic slowdown  Adequate protection of intellectual property rights

 No demand for products  Strategies ◦ President Watanabe’s vision ◦ Public works contracts ◦ Adapt military technology to civilian market ◦ Laid off 2,700 employees ◦ Closed 3 plants and R&D facility Outcome - Recovered in 50s due to new telecom markets

 Telecom market saturation  Strategies ◦ President Kobayashi’s vision ◦ Future success in knowledge based products ◦ Total Quality Control movement ◦ Zero-Defect movement ◦ Restructured to 14 autonomous divisions Outcome - Global expansion

 Performance hurt by: Japanese recession, strong yen, US competition  Strategies ◦ Expand global markets ◦ PCs sold in Europe ◦ Joint manfacturing ventures in Asia ◦ Merger - Packard Bell NEC PCs Outcome - FY 96: ◦ Net worldwide sales $41 billion ◦ 89 domestic & 38 overseas subsidiaries ◦ 152,719 employees

 Packard Bell NEC fails, $1.5 billion net loss  Strategies ◦ Investments: 97 - $285 million, 98 - $225 million ◦ NEC is majority owner ◦ Pulls plug on US retail PC market ◦ Closed CA plant, laid off 2,100 workers Outcome - FY 00: $10 million net income

 Kerietsu system emerged after WW II  Incentivize cooperation, minimize risk, & maximize future profits  NEC a member of Sumitomo since 20s  Kerietsu are less centralized and integrated  NEC’s future: IT service/products, network systems, personal solutions, and electron devices