Different forms of business organisation
The Japanese organisation is characterised by many large enterprises; these differ from their UK and US counterparts in that there is concentration on a limited range of business activities and homogeneity of skills and resources. Much of the work though is specialised and there is much subcontracting out. Much has been made of the importance of Kiraetsu as a way of maintaining control over operations.
In contrast with Anglo‐Saxon firms, Japanese firms attempt to maintain authority hierarchy over their suppliers by working with them to ensure constant improvements in productivity and quality, as well by insisting that any cost savings are passed on to the large enterprise. Anglo‐Saxon firms, on the other hand, attempted to maintain control over their supplier by engaging in horizontal and vertical integration. In some ways, a number of Anglo‐Saxon firms of late have moved towards outsourcing. The advantages of this include the fact that there is more competition from a wider source of supply and this can lead to lower prices. There is also the advantage in that many large Anglo‐ Saxon firms that have grown from vertical integration have suffered from the undesirable effects of increased bureaucracy and diseconomies of scale. The privatisation programme and the encouragement of small business by many European governments have forced many Anglo‐Saxon firms to question the benefits of acquiring suppliers through the integration process.
Other Anglo‐Saxon firms, in contrast, such as the Ford Motor Company operating in the UK, are starting to focus on a smaller number of suppliers; these are the most competitive ones. Ford is also trying to exert more control over a smaller number of suppliers. The benefits of this approach would include reduced transaction costs. For example, there is less need to draw up bids from a large number of suppliers. In addition there may be long‐run benefits of building up suppliers you can trust, as well as reduced risks of opportunism, according to the Williamson approach (1981). This mixed approach may become more popular in the future. Indeed, a few years ago, it was believed that the Japanese approach was the way forward. Much was made of the importance of having flexible labour markets in the UK. However, in practice, firms operating in the UK have been more interested in achieving flexible working hours to cut costs rather than focusing on allowing workers to complete flexible tasks and encouraging job rotation within the firm, as has often occurred in Japan. However there are certain limitations in trying to transplant Japanese practices into Western plants, no matter how superior the skill maybe.
Issues of trust and variations in culture become very much apparent and some practices work better in some societies but not in all others. With reference to Japan, it is possible that alternative organisational structures may be considered in view of the current economic crisis. For example, the possibility of merger activity as a possible solution may prove a viable alternative for generating economic activity as well as a more open approach to foreign trade. There have been many mergers in the banking sectors. Furthermore, it has been shown how the Japanese started to initiate Western practices in the early post‐war period when little was understood of a specific Japanese approach to management. Indeed, recent evidence by Williams and Willis (1995) has suggested that Japanese techniques such as just‐in‐time, pioneered in the 1980s, were little more than a variation of Fordism.