Keiretsu


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Keiretsu

A network of Japanese companies organized around a major bank. The term is also used outside of Japan to describe how a large corporation with many subsidiaries and associated firms can manipulate revenues. For example, firm A and B are controlled by firm C. Firm A is forced to buy its input from firm B at a high price. As a result, A is unprofitable and B is very profitable.

Keiretsu

In Japan, a number of independent but related companies centered on and financed by a single bank and/or a joint stock company. That is, the institution (and no other) provides financing for companies in the keiretsu. There are two main types of keiretsu. A horizontal keiretsu is essentially a diversified conglomerate; that is, it may have companies in several, completely unrelated industries so as to reduce the risk of loss if one industry or other has a bad year. A vertical keiretsu, on the other hand, is more centrally controlled such that companies in the same keiretsu provide all steps on the supply chain. For example, a mining company may sell a metal to a refinery in the same keiretsu, who then sells it to an auto company, who then sells cars to consumers. In Japan, these consumers are often employees of the very same keiretsu. Critics of this system contend that they are inefficient; proponents, however, argue that they are sustainable and have helped Japan recover from the post-war period. See also: Japanese miracle, Zaibatsu, Chaebol.

keiretsu

a Japanese term relating to a network of customers and their suppliers working within a related industry, or with a single customer. Developed by the multinational organizations in Japan initially with the idea of exercising control over suppliers. Kereitsu has developed to mean closer links between customer and supplier and includes the sharing of technologies, of skilled employees and of product development. See SUPPLIER DEVELOPMENT, LEAN MANUFACTURING.
References in periodicals archive ?
Parent and subsidiary firms not affiliated with any keiretsu groups, however, had similar asset turnover ratios.
Because of their obligations to keiretsu firms to serve as a stable shareholder, the banks were required to repurchase the stock immediately.
Tabb does point to some recent changes: the keiretsu structure is being challenged by younger managers and the increasing bargaining power of more efficient suppliers; industrial policy is more difficult to implement because of foreign pressure, more open financial markets, and the independent resources of strong Japanese transnational firms; and increasing numbers of shinjinrui, the new breed of young people, reject their parents' traditional values.
The horizontal keiretsu are deeply involved in services such as banking, insurance, transport and trading.
While this paper provides a possible rational explanation of Keiretsu behavior and supplier preferences, there are other explanations that may be unique to Japan.
Perhaps surprisingly, given the "bad press" they receive, keiretsu were not regarded as being a significant retardant to effective business relationships by the majority of European and U.
Lawrence identifies both "horizontal" and "vertical" keiretsu as retarding imports.
Only 22 percent cited non-tariff barriers such as keiretsu.
While we offer no comment on the specific elements of the SII (in fact, the keiretsu structure's efficiency may be a source of the exclusionary effects), academic theory would profit by seeing, as SII does, keiretsu cross-ownership not only as a managerial monitoring mechanism but as a productive structure as well.
Main Stage has live music on the Sunday, with headliners Keiretsu rapidly gaining national recognition for their huge live drum `n' bass/breakbeat sound.
Ask Rick Wagoner or Bill Ford how they feel about the fact that the Mitsubishi keiretsu, or industrial group, is about to give a $5 billion bailout to Mitsubishi Motors on top of an earlier $5 billion infusion.