The Origins of Japanese Industrial Power by Etsuo Abe Robert Fitzgerald

Author:Etsuo Abe, Robert Fitzgerald [Etsuo Abe, Robert Fitzgerald]
Language: eng
Format: epub
ISBN: 9780714641577
Barnesnoble:
Publisher: Taylor & Francis
Published: 1995-05-01T00:00:00+00:00

V

KEIRETSU DISTRIBUTION AND MARKETING

The establishment and maintenance of distribution keiretsu can be widely observed in Japan, particularly in the consumer goods industries, but Matsushita was both a model for and a driving force in their formation. Distribution keiretsu were a response to intense competitive pressures, and, through them, stability was re-imposed on the marketplace. Through their keiretsu networks, manufacturers could control prices, and they obtained a system for collecting valuable consumer information. In the ‘keiretsification’ of external wholesalers and retailers, manufacturers ranked distributors hierarchically and, through incentives, encouraged exclusivity. The organisation of various ‘associations’ and the provision of information, training, and monetary assistance solidified the formation of close business relations. Finally, manufacturers sought to invest in their distributors, forming in some cases joint sales companies. The needs of manufacturers for market share and stable prices, then, coincided with the needs of weak wholesalers and retailers for protection from price wars. Despite intense competition in the post-war period, manufacturers avoided price competition by focusing on quality, technology, and promotion. But from the 1970s, the keiretsu system began to break down as ‘non-keiretsu* large-scale stores expanded. Home appliance and electronics distribution channels, which had once consisted only of keiretsu stores, were challenged by large independent retailers. Manufacturer-controlled prices invited resistance from consumers. The distribution keiretsu contributed to ‘co-operation and prosperity’ among manufacturers, distributors, and retailers, but not necessarily to the well-being of the customer.

TABLE 8

DISTRIBUTION KEIRETSU OF OTHER MANUFACTURERS Company Linked Retailers Established

Toshiba Mazda Link Stores 1956

Toshiba Stores 1958

Hitachi Hitachi Chain Stores 1957

Sharp Friend Shops 1958

Sanyo Sanyo Superstores 1959

Mitsubishi Diamond Stores 1960

Source: Kaden Seihin Kyokai (Home Appliance and Electronics Products Association), ‘Waga kuni kaden ryutsu kiko no hatten to hensen’ (‘The Development and Transition of the Japanese Home Appliance and Electronics Industry’) (1984).

In March 1992, the Fair Trade Commission carried out compulsory inspections of ten Matsushita, Sony, Hitachi, and Toshiba keiretsu sales companies suspected of infringing the Anti-Monopoly Law. After a year, the Commission concluded that these companies operated unfair trading practices by proposing ‘estimated market prices’ which large retailers were ‘requested’ to adopt. Warnings to stop such practices were issued, but the fact that such a ‘request’ could be made by the large non-keiretsu retailers demonstrates both the tenacity and desperation of the distribution keiretsu networks. Before emerging as successful international competitors, Japanese companies had to establish themselves as indigenous concerns. The development of organisational capability in marketing was, like the more well-known instances of improved supply-side and production organisation, an important component of overall competitive achievement. Although the distribution keiretsu have played an important role in one stage of Japan's economic development, it appears that they will be forced to change, and that we will see a significant erosion of their influence.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.