Japanese Business Organisation: Keiretsu
Japan and South Korea are two leading countries in Asia. Trough years in both countries developed own typicall business formations. We already wroted about Korean form of business structures named Chaebol. Chaebol is cluster of companies with main parent company in the center. Japanese Keiretsu is similar business structure to Korean Chaebol, but with some differences. We know two types of Keiretsu.The horizontal and the vertical one.
Horizontal Keiretsu is a group of large companies of equal status. Members of Keiretsu are often from diverse industries and they are connected among themselves by cross shareholds. Strong bank plays important role in Keiretsu. Bank together with trading company, acts as the linchpin of the group (Yoshihara, 1994: 154). Around them there are the core members, usually three firms: A life insurance company, a non-life insurance company, a trust bank and one or two very large manufacturers. Together the financial firms, the trading company and the key manufacturers give the keiretsu its identity (Miyashita and Russel, 1994: 10). Most importan horizontal Keiretsu are: Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa, and Dai-Ichi Kangyo.
A vertical keiretsu is formed by one very large company (assembler) and hundreds or thousands of small companies (suppliers). The vertical keiretsu usually occurred in automotive industry in Japan. A good example would be a large company like Toyota. The vertical keiretsu is also common in the electronics, although many other fields have its own vertical keiretsu, including advertising, publishing, broadcasting, and other non-manufacturing businesses (Miyashita and Russel, 1994: 12). Biggest vertical Keiretsu are: Toyota, Nissan, Honda–Matsushita, Hitachi, Toshiba, Sony.