The Japanese Keiretsu System

Due of the globalization of the marketplace many countries are in a continuously competition. However, all countries have a different culture, and also different organizational culture or corporate governance. For global companies it is clever to have an understanding of the different corporate systems, because of its impact. One unique category of cooperative strategy exists in Japan and is called ‘keiretsu’. This keiretsu system has great power, so for companies with visions to enter the Japanese market it is important to understand the working of the keiretsu system.

Keiretsu are large industrial conglomerates, which are regarded as the continuation of the prewar zaibatsu (Yuzuo, 167). Zaibatsu is a Japanese term referring to industrial and financial business conglomerates in Japan, whose influence and size allowed for control over significant parts of its economy until the end of World War 2. Since the 19th century zaibatsu accumulated assets and diversified them into various businesses (Okazaki, 3). Zaibatsu were large vertical monopolies by family controlled, consisting of a holding company on top, with a wholly owned banking subsidiary providing finance. Keiretsu are flowing from the prewar zaibatsu, but there is an important difference: where the zaibatsu initially exclusively owned by a family, is the center point of a keiretsu a bank, which is both a shareholder and lender. It is an inter-business alliance that resembles a fighting clan in which business families join together to vie for market share (Keegan & Green, 315). The companies in a keiretsu are interconnected through cross-shareholdings linked to hostile takeovers from the outside to avoid. This structure made it possible to start new investments immediately the necessary resources to, without having to render directly.

Officially, there exist horizontal keiretsu and vertical keiretsu. The Japanese economy has traditionally been dominated by six major horizontal keiretsu, also called...