CAN_JAPAN_COMPETE

CAN_JAPAN_COMPETE - CAN JAPAN COMPETE By M Porter H...

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CAN JAPAN COMPETE? By M. Porter, H. Takeuchi, & M. Sakakibara
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In the 1970s and 1980s Japan was acknowledged to be the world’s most competitive nation. 2 explanations were offered: 1. Its distinctive form of bureaucratic capitalism, in which the government played an activist role in directing the economy; 2. The distinctive approach to management pioneered by Japanese firms, involving the now famous practices such as total quality, continual improvement, and just in time.
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Elements of the Japanese model began to be emulated in the U.S. But (according to Porter, et al .) the U.S. learned the wrong lessons from Japan about government policy. Japan’s bureaucratic capitalism explains its competitive failures much better than its successes.
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A study of the entire spectrum of Japan’s industries reveals that the government played a surprisingly small role in many of Japan’s most internationally competitive industries, in cars, VCRs, robotics, cameras, and video games. In these sectors there was little government intervention in competition, few subsidies or cartels and little cooperative research.
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But in uncompetitive sectors, such as chemicals, aircraft, software, and financial services, there was extensive government intervention, much collaborative activity, and sustained protection—in other words, IP at work. So many U.S. policymakers attempted to emulate policies that did not work in Japan, while overlooking other more subtle lessons form Japanese practice.
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Japanese firms had an even stronger influence on American firms than its example had on the American government. U.S. firms were among the first to emulate the Japanese. U.S. firms recognized the remarkable operational effectiveness of the new Japanese methods. For example, total quality became almost a religion in the USA and other practices as well. The fact that U.S. firms moved quickly to introduce these practices is one important reason why U.S. industry is now internationally so competitive.
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So in the areas of corporate practice, the lessons the USA learned fro Japan were correct but incomplete. Japan’s style of competition on total quality and continual improvement did lead to success in the 1970s and first part of the 1980s but at the price of chronic low profitability. Western firms then adopted the same practices and later surged ahead, capitalizing on Japan’s weaknesses in white collar productivity and IT.
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Developments in the 1990s have underscored the flaw inherent in best practices competition: it results in competitive convergence, which means all competitors in an industry imitate each other in zero-sum competition that erodes price and destroys profitability. Strategy rests on choosing a unique position by offering a
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This note was uploaded on 04/15/2008 for the course POLI 364 taught by Professor Connolly during the Spring '08 term at Gonzaga.

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CAN_JAPAN_COMPETE - CAN JAPAN COMPETE By M Porter H...

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