1. Japanese Management (1)
Corporate Strategy

2. JAPAN Japan is Asia’s most developed and 2nd largest economy.
. “Despite its impact on the world, Japan remains somewhat of an enigma to many.”
Japan is Asia’s most developed and 2nd largest economy.
A densely populated country of 128 million people in an area about the size of Germany (82 million people) and somewhat smaller than California (36 million people)
Japan was first among the Asian nations to industrialize
Japan’s modern economic development began in the second half of the 19th century, almost one century ahead of the Asian ‘Tiger’ states
Knowledge transfer was selective and adaptive, so Japan did not become a clone of the West but evolved its own unique ways of doing things
Despite slow growth for most years since 1990, it still accounts for about 30 percent of nominal economic output in Asia-Pacific (including China)
Japanese managerial innovations have had a major impact on business worldwide

4. Evolution of Japanese Corporate Strategy
Cost Leadership
Global Segments
Caterpillar McKinsey
Honda
Canon
Integration
Killing Two Birds with One Stone
Nestlé SAP
Multidomestic
Localization

5. Ways to Enforce Standardization while Meeting Different Needs of Customers
Core Component / Template Standardization
Seiko Watches
Black & Decker Hand Tools
McKinsey & Co.
Product Design Families
Toyota Lexus, Camry, Corolla
Gap, Old Navy, and Banana Republic
Marriott, Courtyard by Marriott, Fairfield by Marriott, etc.
Universal Product with Different Positioning
Honda Accord
McDonald’s Hamburgers

7. Planned selling price less If cost is too high, return to design phase
U.S.
JAPAN
Product Development
Style
Market Research
Market Research
Product characteristics
Product characteristics
Product Design
Planned selling price less
desired profit
Engineering
TARGET COST
Sourcing Costs
Design
Engineering Sourcing
COST
Target costs force marketers, designers, and engineers to struggle and negotiate tradeoffs
If cost is too high, return to design phase
Manufacturing
Manufacturing
Periodic cost reduction Continuous cost reduction

8. Where Can A Firm Reduce Cost? Where Can A Firm Add Value?
Sources of Competitive Advantage
U.S. Perspective
Where Can A Firm Reduce Cost?
V a l u e C h a i n
R&D
Manufac.
Marketing
Where Can A Firm Add Value?
Japanese Perspective

9. Perceived Value-to-Cost Ratio of Competitive Advantage
Typical U.S. Corporate View
R&D
Manufac.
Marketing
Typical Japanese Corporate View
R&D
Manufacturing
Marketing
US Solution:
Low Fixed Cost Strategy
(Reduce Fixed Cost by Outsourcing Manufacturing)
JPN Solution:
High Value-Added (Low Variable Cost) Strategy
(Invest in Manufacturing to Add Value by Lowering Variable Cost)

10. Break-Even Point Analysis
– U.S. Perspective –
Cost,
Sales
Sales
VC + FC .
VC + FC’ . FC
FC’
BE’ BE
Units Sold

11. Benefits of Outsourcing (Financial Perspective)
Lower Break-Even Point  Less Susceptible to Recession
Lower Fixed Investment  Higher ROI

12. Break-Even Point Analysis – Japanese Perspective –
Cost,
Sales
Sales
VC + FC . .
VC’ + FC’
FC’ FC BE
BE’
Units Sold

13. Contrasting Case in Point Apple (USA) vs. Sony (Japan)
Low-Tech? High-Tech?
Apple (USA) vs. Sony (Japan)

14. Top 30 Patent Holders in the U.S. (2015)
Source:

15. Top 30 Patent Holders in the U.S. (2010)
Source:

16. Top Patent Holder Ranking in the U.S.
Sony vs. Apple:
Top Patent Holder Ranking in the U.S.
( )
2000
2003
2005
2008
2010
2013
2015
Apple
187th
218th
184th
106th
55th
15th
12th
Sony
6th
11th
10th
8th
4th
Apple’s
NPD
iPod
(2001)
iPhone
(2007)
iPad
(2010)
iWatch
(2015)
Sony’s NPD
PS2
(2000)
PS3
(2006)
PS4
(2013)
Source:　Intellectual Property Owners Association,

17. Relationship between Technology and Commercial Success?
Despite their technological strengths, why are Japanese firms (e.g., Sony) not doing well commercially, compared to U.S. firms (e.g., Apple)?

18. Three Fundamental Sources of Competitive Advantage
Legal Protection: The extent to which a firm can keep its technology/know-how from being imitated or learned by competitors (Patent, Trademark, Copyright)
Dominant Design: Setting an international and/or regional standard
Mass Marketing and Distribution Capabilities: Ability to mass-produce and mass-market products/services

19. Let’s Take A Break!