Japanese keiretsu is considered to be a strong cooperative strategy that will have an impact in global marketing. Describe what it is and how it can affect U.S. businesses

Question

What will be an ideal response?

Answer 1

Japan's keiretsu represents a special category of cooperative strategy which is an interbusiness alliance or enterprise group. It exists in a broad spectrum of markets, including the capital market, primary goods markets, and component parts markets. Keiretsu relationships are often cemented by bank ownership of large blocks of stock and by cross-ownership of stock between a company and its buyers and nonfinancial suppliers. Also, keiretsu executives can legally sit on each other's boards, share information, and coordinate prices. Thus, keiretsu serves as a cartel that has the government's blessing. Although it is not a market entry strategy per se, it played an integral part in the international success of the Japanese companies as they sought new markets. Clyde Prestowitz provided the following example to show how keiretsu relationships have a potential impact on U.S. businesses. In the 1980s, Nissan was in the market for a supercomputer to use in car design. Two vendors under consideration were Cray and Hitachi. Cray was the worldwide leader in supercomputers, and Hitachi had no functional product to offer. When it appeared that the purchase of a Cray computer was pending, Hitachi executives called for solidarity since both Nissan and Hitachi were members of the same big six keiretsu. Hitachi was pushing Nissan to show preference for Hitachi, and the United States had to put pressure on both Nissan and the Japanese government to have the sale proceed with Cray. Because keiretsu relationships are crossing the Pacific and directly affecting the American market, the U.S. companies have a reason for concern. In California alone, keiretsu owns more than half of the Japanese businesses. Other keiretsu businesses are moving into different parts of the United States.