Introduction:
This assignment will present the Japanese business network structure. It will contain an explanation of the inter- corporate relationships known as the ¡§keiretsu¡¨ system.
I will explain the main strength and weaknesses this system bears and the contribution of this system to the rapid growth of Japans economy after World War 2. Finally I will explain the change in this system. Why it is changing and how this is changing.
History and founding of the Keiretsu
The keiretsu were founded after World War 2, after the American occupational authorities have made the Zaibatsu, holding companies illegal in 1946. By doing so they wanted to enforce their type of democracy and economic system into Japan. They believed that by doing so they would spread the concentration of wealth and economic power.
Shares of companies owned by the holding companies ( Zaibatsu) were given to employees and locals.
But because the smaller companies within the former Zaibatsu had often no own financial department and lacked the knowledge of how to operate individually, they banded together by means of cross shareholding. These major groups were then led by their respective banks which held most of the shares.
The cross holding of shares led to very stable business. The shares were not to be traded at any price, so therefore there was hardly any stock exchange. If a company had shares in another one they would refuse to sell them at any price fore that would effect the business relationship in a negative way.
Types of Keiretsu
There are two different types of keiretsu present in Japan. The horizontal and the vertical one.
?« The horizontal keiretsu
This is a group of large companies (that are of ...