INDUSTRIAL COMPLEX OR KERITESU

(Original source -- http://ecuvax.cis.ecu.edu/~mgsimerl/Keiretsus.htm)

DEFINED: "A LARGE INTER-LINKED SET OF COMPLEMENTARY FIRMS PROVIDING MUTUAL SUPPORT. USUALLY ORDERED AROUND A BANK."

CHANDLER's LOGIC OF MANAGERIAL ENTERPRISE NOTED THAT THE ORIGINAL DESIGN OF BUSINESS IN EUROPE PRIOR TO WW I WAS THE INDUSTRIAL COMPLEX. WE TAUGHT THE JAPANESE.

EXAMPLES OF KERITESUs

SUMITOMO BANK:

• TRADING METALS
• CONSTRUCTION CEMENT & GLASS
• REAL ESTATE MINING
• CHEMICALS FORESTRY
• FINANCE INSURANCE
• ELECTRICAL & ELECTRONICS (NEC)

NEC SUPPLY GROUP:

• CONSUMER ELECTRONICS (1)
• INFORMATION PROCESSING (3)
• TELECOMMUNICATIONS (8)
• POWER MACHINERY (2)
• PARTS & COMPONENTS (10)

THE KERITESU SYSTEM THUS COMBINES:

• HORIZONTAL SCALE
• CONCENTRIC DIVERSIFICATION
• VERTICAL TECHNICAL COORDINATION
• MARKET DISCIPLINE

THE SYSTEM PROVIDES:

• STABLE CASH FLOWS
• ABSORBS SHORT TERM LOSSES
• SUPPORTS RISKY R & D
• ELIMINATES SHORT TERM FINANCIAL PRESSURE

HOW THE PROCESS WORKS:

• BEGIN WITH FOREIGN TECHNOLOGY
• IMPROVE PROCESS TECHNOLOGY
• MOVE TO PRODUCT DEVELOPMENT & BASIC R & D

BASICS OF COMPETITION SHIFTS:

• COST & QUALITY IN COMMODITIES
• COST/PERFORMANCE BASED ON PROCESS TECH & ENG
• PRODUCT FUNCTIONALITY

RIVALS IN JAPAN:

 

INDUSTRY	NUMBER
AUDIO EQUIPMENT	25
AUTOMOBILES	9
CAMERAS	15
CAR AUDIO	12
CONSTRUCTION	15
COPIERS	14
MACHINE TOOLS	112
SEMICONDUCTORS	34
SEWING MACHINES	20
SHIPBUILDING	33
TELEVISION SETS	15
TYPEWRITERS	14
VIDEOCASSETTE RECORDERS	10

ROLE OF GOVERNMENT

• RAPID DEPRECIATION: TECHNOLOGY PROGRESSES SO RAPIDLY THAT EACH GENERATION LASTS ONLY ABOUT FOUR YEARS, AND THE USEFUL LIFE OF CAPITAL EQUIPMENT IS ABOUT FIVE YEARS.
• LOOSE ANTI-TRUST LAWS: ALLOW LINKAGES AMONG FIRMS, INCLUDING BANKS, TO ELIMINATE THE "PROFIT CENTER" MENTALITY, AND CREATE NECESSARY ECONOMIES OF SCALE.
• LOW COST OF CAPITAL: LINKED TO FEDERAL DEFICIT.
• BLOCK FOREIGN ACCESS TO HOME MARKET.

TAXES

• TAX CONSUMPTION, NOT INVESTMENT
• TAX GASOLINE
• ELIMINATE SECOND MORTGAGE WRITE-OFFS
• ELIMINATE TAX ON SAVINGS ACCOUNTS AND DIVIDENDS
• PLACE HIGH TAX ON SHORT-TERM CAPITAL GAINS, ZERO TAX ON LONG-TERM GAINS

THIS SUPPORTS INVESTMENT AND SAVINGS

• IN 1990, CAPITAL INVESTMENT WAS $674 billion IN JAPAN COMPARED TO $525 billion IN U.S.
• MANAGE INVESTMENTS IN U.S. WITH SPECIFIC POLICIES AIMED AT INCREASING NET NEW EMPLOYMENT. KEEP CONTROL AND HIGH WAGE JOBS IN JAPAN. (LOGAN ACT PROHIBITS STATES FROM MAKING FOREIGN POLICY.)

Homepage Testimonials How to Order Feedback

About The Trudel Group | © Copyright