The Keiretsu Are Direct Descendants of Earlier Integrated Groups of Firms Known as Zaibatsu
The keiretsu are direct descendants of earlier integrated groups of firms known as zaibatsu.
These were large, diversified groups of businesses formed during the Meiji era that were vertically controlled by family members. Whereas Keiretsu is a post war phenomenon. The prototypical keiretsu are appeared in Japan during the “economic miracle” following World War II.Where possible, keiretsu companies would also supply one another, making the alliances vertically integrated as well. In turn, these core companies had subsidiaries of their own, resulting in a large, diversified group of networked companies. In this period, official government policy promoted the creation of new robust trade corporations which could withstand heavy pressures from intensified world trade competition. For the foreign company point of view, japan use the keiretsu system which they were not common to coordinate with foreign company, this is a new market for the foreign company. If they can enter japanese market successfully, they may get a large market share in japan and gain impressive revenue.
Many foreign companies think that the keiretsu system in japan acts as a barrier to foreign companies entering the Japanese market. The keiretsu is a set of companies with interlocking business relationships and shareholdings. Also it is a type of business group. The character of these groups is to cooperate, support and supply each company within the group and it can protect companies from growing world competition. But when foreign businesses those want to enter the japanese market may feel discrimination because these cultural barriers have no formal form such as trade organizations. Therefore, foreign investors entering japanese market need to face culture barrier, which is the strong interlocking business relationship between the Japanese companies. The japanese companies are often chosen the relative company rather than a less suitably
qualified blood relative such as the foreign company. That is why foreign business people feel keiretsu as the barrier with no way to overcome. (Answers, 2014)
In the international business environment, the business people are trying to reduce their cost make a higher profit. When information technology become common, people are easy to looking for the cheapest supply, they can easier to reduce their cost, also they can sell in a cheaper price to increase their sales quatities. But in the keiretsu system, they may have stable partners over many years, the supply cost may not been easy to reduce. Therefore their competitive advantage will be reduce in the international market. After the world war II, japans economic bubble break out, the japanese company were facing trouble- period of their business.
Therefore,