Keiretsu

What is Keiretsu?

This one is a Japanese term that refers to a business network created with different companies, including supply chain partners, manufacturers, financiers, and distributors. All of these people work together and have closer relationships.

Sometimes, they also take a minimum equity stake in others’ operations while staying completely independent. If translated in simple words, Keiretsu defines a headless combine.

History of Keiretsu

Once upon a time, influential families, also known as zaibatsus, used to run a majority of significant industries in Japan. However, it changed after WWII when the US stepped in and busted the structure.

Zaibatsus were regarded as the undemocratic and monopolistic, supposedly purchasing politicians for contracts and pricing mechanisms that were meant to exploit the poor section. After the war, life in Japan started being difficult and challenging. And thus, companies responded by reorganizing as Keiretsus.

Explaining Keiretsu

Japanese companies value close relationships and ties with one another. Working together, in Japan, is believed to be a mutual benefit for all the involved parties. Not just that, but even after decades of formation, Keiretsu continues to represent significant parts of Japan’s Economy.

Each of the six car companies in Japan belongs to one of the six Keiretsu, same as the major electronic organizations of the country. In fact, this term has gone ahead to influence business methods and strategies in other countries as well.

In Japan, the companies and corporations are expected to corporate as well. However, Keiretsu is regulated by certain laws. Outside Japan, this term basically refers to casual alliances between two or more organizations.

Also, there are numerous companies and firms operating around Europe and America that seems to have borrowed some or the other thing from this concept.

Example of Keiretsu

Mitsubishi is regarded as the driving force behind the best-known as the largest Japanese horizontal Keiretsu. At the top of the Keiretsu, the Bank of Tokyo-Mitsubishi is seated. Mitsubishi Trust and Banking as well as Mitsubishi Motors, are also major parts of the primary group, which is followed by Meiji Mutual Life Insurance Company that offers insurance to all the members.

Also, there is a Mitsubishi Shoji for the Mitsubishi Keiretsu, which is a trading company. Together, they have an objective of helping each other to provide products around the world. They might look for new markets for Keiretsu firms, help with the Incorporation in different countries and sign agreements with other firms across the world to supply goods used specifically for the Japanese Industry.