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The article looks at what motivates Japanese salespersons and explores what sales-management techniques work best in Japan. Research conducted by professors R. Bruce Money and John L. Graham suggests that companies seeking to create a successful sales force in Japan should do as the Japanese do -- foster teamwork rather than financial rewards. The research, compiled in a University of South Carolina working paper entitled "Salesperson Performance, Pay, and Job Satisfaction: Tests of a Model Using Data Collected in the U.S. and Japan," shows that if the price is right, salespeople in the US are much more willing than their cohorts in Japan to work for a company that has different values than their own. Conversely, the study showed that Japanese salespeople are more willing to trade off salary for a congenial company culture in which shared values and teamwork are central.

In this article the authors examine the 1988 Basle Accord on the supervision of international banking. The goal of the agreement was to have all international banks based in the Group of Ten industrial countries institute an 8% ratio of capital to risk-weighted assets. The manner in which various countries institute the provisions of the agreement, particularly any moves by the United States and Japan, will have an impact on international financial competition. Member countries have agreed to have the Basle Accord in place by 1992.

The article examines the importance of good communications between employer and the employed. The major reason for this is that organizations have been faced with a different set of employee requirements in their jobs. Workers are seeking increased job satisfaction, personal options and the need to derive meaning from their labor. U.S. businesses are under pressure to examine the success of the Japanese corporations who regard their employees highly and who have achieved great success in human resource management. The author states that employers must understand that effective management is closely linked to communication. He also stresses the importance of face-to-face communication with employees. Poor business communication could cost American business dearly, leading to a decline in efficiency, productivity and competitiveness.

Toyota has become one of the world's greatest companies only because it developed the Toyota Production System, right? Wrong, say Takeuchi, Osono, and Shimizu of Hitotsubashi University in Tokyo. Another factor, overlooked until now, is just as important to the company's success: Toyota's culture of contradictions. TPS is a "hard" innovation that allows the company to continuously improve the way it manufactures vehicles. Toyota has also mastered a "soft" innovation that relates to human resource practices and corporate culture. The company succeeds, say the authors, because it deliberately fosters contradictory viewpoints within the organization and challenges employees to find solutions by transcending differences rather than resorting to compromises. This culture generates innovative ideas that Toyota implements to pull ahead of competitors, both incrementally and radically. The authors' research reveals six forces that cause contradictions inside Toyota. Three forces of expansion lead the company to change and improve: impossible goals, local customization, and experimentation. Not surprisingly, these forces make the organization more diverse, complicate decision making, and threaten Toyota's control systems. To prevent the winds of change from blowing down the organization, the company also harnesses three forces of integration: the founders' values, "up-and-in" people management, and open communication. These forces stabilize the company, help employees make sense of the environment in which they operate, and perpetuate Toyota's values and culture. Emulating Toyota isn't about copying any one practice; it's about creating a culture. And because the company's culture of contradictions is centered on humans, who are imperfect, there will always be room for improvement. [ABSTRACT FROM AUTHOR]

Many managers think that developing and rolling out a major IT system is like putting up a warehouse: You build it and you're done. But that does not work for IT anymore. Taking that approach results in rigid, costly systems that are outdated from the day they are turned on. What's needed for today's businesses is IT that serves not only as a platform for existing operations but also as a launchpad for new functions and businesses. In this article, the authors present a path-based approach that addresses the primary challenges of IT: the difficulty and expense of mapping out all requirements before a project starts because people often cannot specify everything that they need beforehand; the other unanticipated needs that almost always arise once a system is in operation; and the tricky task of persuading people to use and "own" it. Japan's Shinsei Bank emerged during the authors' research as a standout among the companies applying the path-based method. The firm designed, built, and rolled out its system by forging together, not just aligning, business and IT strategies; employing the simplest possible technology; making the system truly modular; letting it sell itself to users; and ensuring that users influence future improvements. Some of the principles are variations on old themes, while others turn the conventional wisdom on its head. [ABSTRACT FROM AUTHOR]

This article was controversial when first published in 1980. At the time, American business was suffering from marked deterioration in competitive vigor and economic well-being, which most economists and business leaders attributed to factors such as the virus of inflation, the limitations imposed by government regulation and tax policy, and the feverish price escalation by OPEC. Not quite right, say the authors. In their judgment, responsibility rests not with general economic forces alone but also with the failure of American managers to keep their companies technologically competitive over the long run. Drawing on their extensive work in the manufacturing sector, as well as their association with Harvard's International Senior Managers Program in Vevey, Switzerland, the authors prescribe some strong medicine for American business. They compare the U.S. system of management with those of Europe and Japan and call for fundamental shifts in management attitudes and practices. In advocating change, they also reaffirm the importance of following business basics: to invest, innovate, lead, and create value where none existed previously. The original article now includes a sidebar by Hayes, who summarizes what has--and what has not--changed in American management over the past 27 years. He encourages managers to go beyond the traditional fundamentals to implement a new set of essentials for today's networked, virtual world. INSET: "Managing Our Way...". [ABSTRACT FROM PUBLISHER]

More and more businesses are counting on their suppliers to lower costs, improve quality, and develop innovations faster than their competitors' suppliers can. To this end, many experts agree that American firms, like their Japanese rivals, should build supplier keiretsu: networks of vendors that learn, improve, and prosper in sync with their parent companies. As history has shown, however, that's easier said than done. Some U.S. corporations created supply chains that superficially resembled those of their Japanese competitors, but they didn't alter the nature of their relationships with suppliers. As a result, relations between U.S. manufacturers and their suppliers have sunk to the lowest levels in decades. But reports of keiretsu's demise are overblown. The Japanese supplier-partnering model is alive and well--in North America as well as Japan. During the past ten years, automakers Toyota and Honda have struck successful partnerships with some of the same suppliers that are at odds with the Big Three and created effective keiretsu across Canada, the United States, and Mexico. So how do Toyota and Honda do it? The authors, who have studied the American and Japanese automobile industries for more than 20 years, found that Toyota and Honda have built great supplier relationships by following six steps. First, they understand how their suppliers work. Second, they turn supplier rivalry into opportunity. Third, they monitor vendors closely. Fourth, they develop those vendors' capabilities. Fifth, they share information intensively but selectively. And sixth, they help their vendors continually improve their processes. Toyota and Honda succeed because they consistently follow all six directives. Thus, the automakers have not only stayed in the game with the Big Three but have also redefined the playing field. [ABSTRACT FROM AUTHOR]

When Renault and Nissan entered into a strategic alliance in March 1999, Nissan was in trouble. The Japanese automaker had been struggling for eight years to turn a profit. Its margins were notoriously low, and purchasing costs were 15% to 25% higher at Nissan than at Renault. Adding to the cost burden was a plant capacity far in excess of the company's needs: The Japanese factories alone could produce almost a million more cars a year than the company sold. And the company's debts, even after the Renault investment, amounted to more than $11 billion. This was, quite literally, a do-or-die situation: Either Nissan would turn the business around, or it would cease to exist. A veteran of turnarounds at Renault and Michelin, Carlos Ghosn was asked by Renault's CEO to go to Tokyo to save Nissan. He faced an uphill battle as a non-Japanese, non-Nissan outsider--and he knew it. In this first-person account, Ghosn tells the story of Nissan's turnaround. He explains how he relied on cross-functional teams and how they became a powerful tool for getting line managers to see beyond functional and regional boundaries. Ghosn also contends that success is not simply a matter of making fundamental changes to a company's organization and operations; the company's identity and the self-esteem of its people must also be protected. Those two goals--making changes and safeguarding identity--can easily come into conflict; pursuing them both requires a difficult and sometimes precarious balancing act. The key, he says, is to nurture a strong corporate culture that taps into the productive aspects of a country's culture. INSETS: Building Trust Through Transparency;From Cross-Function to Cross-Company. [ABSTRACT FROM PUBLISHER]

Many companies throughout the world, seeking ways to develop products more efficiently, are recasting their relationships with suppliers--often modeling their efforts on approaches used by world-class Japanese manufacturers like Toyota and Nissan. The favored Japanese practices include using fewer suppliers and forging longer-term relationships with them, prodding suppliers to improve continually, and involving suppliers in design and development. Those practices are being eyed, too, by suppliers that hope to win or increase business with large Japanese manufacturers. But Rajan Kamath and Jeffrey Liker argue that many managers who adopt the Japanese-style practices have an incomplete understanding of them and, as a result, may be unable to gain all the benefits Japanese manufacturers enjoy. Successful partnerships depend on the right balance among a supplier's technological capabilities, a customer's willingness to share information, and both companies' strategic requirements. Using the Japanese approach as a model, the authors describe four different roles that suppliers can play in a long-term cooperative relationship. Each role carries different responsibilities during product development, and the relationships between supplier and customer vary considerably in closeness and intensity. Suppliers interested in working with Japanese automakers or with companies like Ford and Chrysler, which are changing their approach to managing suppliers, must understand their role in the customer's product-development cycle. If they don't, they will miss out on some valuable opportunities. INSET: Four Supplier Roles. [ABSTRACT FROM PUBLISHER]

In the opinion of some journalists and business leaders, Japan's preeminence in product quality is a direct consequence of lectures delivered 40 years ago in Tokyo by two Americans--W. Edwards Deming and Joseph M. Juran. According to Dr. Juran, this view is pure chauvinist nonsense. Despite the shoddiness of Japanese consumer goods before the war, the Japanese did have a quality tradition in the superb workmanship of certain ancient crafts and in the design and manufacture of their military hardware, which, at the outset of the war, was highly competitive with our own. It was just that the Japanese had never devoted engineering expertise, capital, or management attention to the quality of exportable consumer goods. The shock of losing the war changed that mind-set. When Dr. Juran first lectured in Japan in 1954, his audience consisted of 140 CEOs. He had given the very same lectures dozens of times in the United States, but never to top management. American CEOs concentrated their attention on financial reports. Quality was a discipline that they delegated to engineers and special quality departments. In Japan, senior executives took personal charge of managing for quality; trained their managers, engineers, and employees in quality methods; developed quality measurements; pursued quality change at a revolutionary pace; and kept at it year after year until, by the mid-1970s, Japan had passed the United States in quality manufacturing. The unsung heroes of the Japanese quality revolution were Japanese managers, not American experts. Now Dr. Juran sees the beginnings of a quality revolution in the United States as global competition drives managers to focus on their nondelegable responsibilities in quality management. INSET: Rates of auto quality improvement.. [ABSTRACT FROM PUBLISHER]

In an open letter, Sony's chairman addresses the present deterioration of U.S.-Japan relations and offers his view of how the two countries can patch up their differences and work as partners toward mutual economic success. He argues that mistrust and fear embodied in "bashers" and protectionists on both sides are holding back a relationship of historic importance. Just as it was once in America's interest to rebuild the economy of postwar Japan, the Japanese know that an economically weakened United States dims the prospects of Japan's future success. Indeed, the U.S. market is critical to Japanese companies. But more important, the United States is a laboratory for scientific, technological, and social innovation from which Japan and the rest of the world benefits. Morita suggests that by moving more manufacturing operations to the United States, Japan can make meaningful contributions to revitalizing the U.S. economy. He laments the erosion of the U.S. manufacturing base, believing that an economy that does not manufacture well cannot continue to invest adequately in itself. To allay American fears of foreign investment, Morita points out how the expansion of the Sony Corporation 30 years ago occurred only because of U.S. investment. Sony was the first Japanese company listed on the New York Stock Exchange. Likewise, Japanese capital added to American technology today can create new, competitive companies that are beneficial to both sides. Pooling Japanese-U.S. talents in research and commercialization can lead to the development of new productive technology and new solutions to pressing global problems. Without a partnership between the two countries, neither side has much hope for economic success or social harmony in the twenty-first century. [ABSTRACT FROM PUBLISHER]

Several letters to the editor are presented in response to articles from previous issues. Articles critiqued include "Partnering for Competitiveness: The Role of Japanese Business," by Akio Morita and "The New Boundaries of the Boundaryless Company," by Larry Hirschhorn and Thomas Gilmore, from the May-June 1992 issue, and "The Vision Trap," by Gerard Langeler from the March-April 1992 issue.

Japanese-style management, already recognized by Westerners for its practices, is now making room for Japanese-style entrepreneurship. Meet Masayoshi Son, the 34-year-old founder, president, and CEO of SOFTBANK Corporation of Tokyo, whose global outlook and generational attitudes reflect the emerging world of Japanese high-tech startups. Born in Japan of Korean heritage, Son left Japan to attend high school in the United States, entering as a sophomore. "After one week, I was promoted to junior," he remembers. "After three or four days as a junior, I was promoted to senior. I was a senior for another three or four days, then I took an exam and graduated." He went on to the University of California, Berkeley, where he started several businesses and invented products--one of which became the Sharp Wizard after Son sold it to Sharp for $1 million. "I got much more freedom in my thinking from my experiences in the United States," says Son. But he returned to Japan to start his own company, largely because "Japanese workers work harder, they have a stronger loyalty to the company, and they tend to stay in the company for a very long time." To win the first major account for his startup, SOFTBANK, Son told the prospective customer, "I have very little money, very little business experience. What I do have is the greatest enthusiasm, the greatest desire to succeed." During his first year. Son's monthly revenue went from $10,000 to $2.3 million. Originally a software distribution business, today SOFTBANK has six divisions in different businesses, all of which are related to the personal computer. SOFTBANK also has five wholly owned subsidiaries and participates in five joint ventures. INSET: The business of SOFTBANK; A brief autobiography of a Japanese.... [ABSTRACT FROM AUTHOR]

As a man who has spent his life building up his own group of manufacturing companies at the subcontractor level, Kuniyasu Sakai knows Japanese business. It is not, he says, what it appears. In fact, writes Sakai, "I am amazed at how little Americans and other foreign businesspeople seem to know about the realities of Japanese industry." What are the realities? Small and midsize companies make up 99% of Japanese industry. These are the enterprises that are the real foundation of the Japanese economy and the source of Japan's manufacturing muscle. The high-quality goods that come bearing a famous maker's name on the case are seldom the product of that company's factory--in fact, usually one small company designed it, another put it together, another stuck it in the box with the famous maker's name on it, and then shipped it to the distributor. These subcontractors are like serfs in a highly structured feudal system. The big companies are the daimyo--feudal overlords who control the fates of their subjects. In modern Japan, the large corporations and the keiretsu function the same way: from the day small subcontractors accept their first contracts from larger companies, they have lost their freedom. Subcontractors are told what to make, when to put it on line, and how much to charge. Now, however, Mr. Sakai says, cracks in the keiretsu, caused by international economic changes, are creating new opportunities for foreign companies. In particular, foreign companies should seek their own relationships with Japanese subcontractors--a "Spartacus strategy" to free the slaves--capturing for themselves the benefits of their manufacturing excellence and giving the subcontractors a better deal than they now get from the keiretsu. INSET: Subcontracting 101.. [ABSTRACT FROM PUBLISHER]

Global economics has made politics a critical source of competitive advantage. "What cannot be gained in the marketplace through price, quality, innovation, marketing, and service," Choate writes, "can be won in the corridors of Congress and the back halls of the White House through purchased political influence." Today the most sophisticated and successful political economic machine in the United States belongs to the Japanese. Each year, Japanese companies and the Japanese government invest $400 million in an ongoing campaign that is designed to keep the U.S. market open for Japanese exports, to smooth the way for additional purchase of key assets in the United States, to prevent discovery or criticism of Japan's adversarial trade practices, to neutralize or capture the political influence of U.S. companies that compete with Japan, to influence U.S. trade policies toward Japan and Europe, and to create an integrated U.S.-Japan economy that prevents the United States from confronting Japan. The campaign consists of six basic messages that are repeated through a variety of credible messengers--most of them Americans--and five techniques for delivering the messages: intelligence gathering, lobbying and influencing policy, politicking at the grass roots level, dispersing propaganda, and influencing U.S. education and classroom instruction. All of these activities are completely legal. They also corrode the economic and political system of the United States. U.S. business leaders should regard Japan's campaign for America as a wake-up call--to recognize both the importance of politics to their corporate strategies and to insist on honest and ethical conduct in the global political arena. INSETS: The scarlet M;Japan's Six Excuses;Japan in Europe;How to Make an American Governor a Japanese Lobbyist [ABSTRACT FROM PUBLISHER]

U.S. and European information technology companies face a stark choice: cooperate or become subordinate design and marketing arms of their Japanese competitors. No matter that the United States still leads in developing the most innovative technologies. U.S. and European companies have been paying an increasing fraction of their revenues to Japanese components and hardware suppliers, the same companies that are their primary future competitors. Why? Because digital technology is ushering in an era of inexpensive personal systems built from standard, mass-produced components. We are witnessing the digitization of everything. Previously unrelated industries--cameras, stereos, typewriters--are converging to form a huge information technology sector. In view of this commoditization of product markets, companies able to manufacture (or corner the market it) components are gaining ground. These facts play directly to the strengths of Japanese companies such as Canon, Matsushita, and NEC. Embedded in industrial combines known as keiretsu, they make continuing investments in technology and manufacturing, command the supply chain from components to end products, and coordinate their strategic approaches to block foreign competition and penetrate world markets. The U.S. industry has failed to develop the structures and strategies necessary for commercial success in the markets created by U.S. innovations. But several U.S. and European companies show signs of vision in the embryonic alliances they've created. Now is the time to build on these alliances and form American versions of the keiretsu. [ABSTRACT FROM AUTHOR]

For more than two years, Americans have heard rumors of Japan's real estate boom. But the impact of skyrocketing Japanese land prices actually reaches far beyond the confines of downtown Tokyo. Land value inflation has now become a vehicle for Japanese companies to use in pursuing their global competitive objectives--leveraging their land holdings to raise low-cost capital for new investments in equipment, technology, or foreign market share. And because the value of the land is whatever the Japanese decide it is, the land bubble has given the Japanese what no other country has ever had: economic power from the ground up. The coming together of three powerful forces has led to the virtual--although unintentional--government sponsorship of the Japanese land boom: Japan's lagging investment in infrastructure, its promise to its trading partners to stimulate domestic demand, and the spectacular rise in the value of the yen following the Plaza Accord of 1985. As the land spiral took off, Japanese companies began to leverage the land and even to tie land values to the equities markets. One consequence of this is major capital increases. But another is a national economic system that cannot tolerate declining land prices--a system where the government, one way or another, must effectively guarantee existing land values. All of this has powerful implications for the rest of the world, as well. Japan's net overseas assets at the end of 1988 led the world for the fourth consecutive year; the world's ten biggest banks are Japanese--and the banks are using their capital cost advantages to gain world banking market share. Access to capital is the ultimate advantage in global competition. Today, in part because of their land bubble, the Japanese enjoy the best and cheapest access to capital. [ABSTRACT FROM PUBLISHER]

The competitiveness debate that today focuses on America's industrial performance will soon confront something even more fundamental: money. The rise of Japanese financial power and the contradictions of U.S. economic policy are weakening the U.S. financial services industry. Indeed, we may soon face the same market erosion in banking and brokerage that has afflicted producers of machine tools, automobiles, and semiconductors. There are no easy ways to reverse this competitive slide. Liberalizing Japan's financial markets may create more problems than opportunities by denying U.S. banks the few specialized niches in Tokyo they now enjoy. Adopting policies to enhance long-term financial competitiveness by raising the savings rate threatens the short-term profitability of Wall Street and U.S. commercial banks by slowing the leverage boom that drove their expansion in the 1980s. The likely outcome is fiscal and political gridlock, leading the United States to ignore its traditional commitment to free trade and embrace a global financial system based on "managed trade"--an ad hoc, results-oriented process that uses targeted protection, corporate self-restraint, and moral suasion by the Federal Reserve and Japan's Ministry of Finance to set new political rules for financial competition between the United States, Europe, and Japan. Why might the United States support managed trade? Because under current economic conditions "free trade" in financial services would dramatically increase Japan's already rising share of the U.S. market. Japanese banks' and investment houses' advantages over their U.S. rivals grow out of Japan's corporatist model of economic organization--a model that America has little leverage to modify and that U.S, financial services companies cannot emulate. INSET: Banking on 1992: Europe embraces managed trade. [ABSTRACT FROM AUTHOR]

The Japanese are now teaching U.S. corporations the hard lesson Americans taught the rest of the world earlier this century: product leadership can be based on imported science and technology if this is coupled with unparalleled skill in the management of production. Innovative technologies become commercial products in two ways. The first is reduction to practice of cumulative scientific knowledge. A company's scientists explore a new field and develop products no one else can match. They descend a ladder of science. The hallmark of the second kind of innovation is not scientific breakthrough but incremental improvement. It is governed not by the ladder but by the product cycle: engineers (not, typically, scientists) improve the materials and design of an original model, get out a new one, and start work immediately on an even newer one. For high-technology companies, cyclic, incremental innovation is far more important than the ladder of science; it is critical to manage to the end of the product cycle more quickly than a competitor. After only a few product turns, the fastest company can build up an insurmountable lead. Indeed, a company should be organized to make the best fourth version of a product--ultimately, it hardly matters who made the first. Since product development is one step ahead of manufacturing, manufacturing engineers must participate in design from the start. And since design engineers understandably tend to resist technological ideas that do not fit with the tools and skills they have, companies must get them to expand their skills--scout for science at scholarly conferences and universities and stay in touch directly with corporate R&D. The point is to "pull" in technological solutions at the start of the product cycle. Halfway through is too late. [ABSTRACT FROM AUTHOR]

As president and CEO of Motorola, Inc., George M.C. Fisher is striving to build a company in which customer needs shape product development--without weakening Motorola's creativity or technology leadership. How do you strike this delicate balance? "Our answer is to develop a management system that essentially flips the organization," he says. "A system that empowers the sales force as surrogates for customers." In an extensive interview, Fisher describes the management techniques Motorola uses to understand, anticipate, and respond effectively to customer needs. He describes several of the company's most important products and systems--a new generation of portable telephones, a sophisticated radio communications system designed for IBM, a secure telephone network built for the National Security Agency--and explains the lessons each offers for effective technology management. Fisher also reviews technology-based competition with Japan. He offers an optimistic forecast for U.S. companies. "We are more receptive to change than the Japanese," he argues. "And that's becoming an increasingly important factor for competitive success: to change designs quickly, to customize products for specific markets. The imperatives of business success are moving in directions that favor the strengths of the United States." But Fisher distinguishes between the future of U.S. companies and the United States as a nation. "Here's the basic question: Does being a successful global company headquartered in a particular country also mean that country will be successful as an economic entity? Increasingly, the answer is no." [ABSTRACT FROM AUTHOR]

According to author Kenichi Ohmae, many Japanese managers mistake good strategic thinking with two related notions: the powerful influence of "companyism" and the simplistic idea of "do more better." Companyism, Ohmae says, blinds managers to the changing conditions of competition. In particular, it causes managers to think that their company will always be able to add capacity, increase market share, and grow without any regard for what other companies are doing or what the effect will be on the overall health of the industry. In one industry after another, the Japanese have practiced this kind of companyism--with disasterous results. The only way that the Japanese get out of these industry morasses is through "the Kabuki of competition"--a delicate negotiation dance that provides a ritualistic way for all competitors to lose together. If all lose, no one loses. "Do more better" also represents a shortsighted approach to strategy. As one Japanese CEO told Ohmae, strategy is like a boat race: if you want to win, just hunch over and pull harder. Never mind that you don't look where you are going, or even in what direction you are heading. Just do more better. Sometimes doing more better works. And companyism does have its benefits. But strategy today requires more. It requires managers to look at their businesses and their customers' needs with fresh eyes. They need to equip themselves with a more diverse tool kit. For example, leading companies discover whole new ways to compete: Hitachi couldn't provide better service than IBM. But could they design a machine that needed no service? Strategy today requires "Torawarenai sunao-na kokoro"--a "Mind that does not stick." [ABSTRACT FROM AUTHOR]

Will many small, entrepreneurial companies do more for U.S. competitiveness than a few, large, integrated ones? George Gilder has argued the affirmative: In HBR's March-April issue, he attacked MIT's Charles Ferguson and other supporters of industrial consortia, claiming that advanced computer technology--engendering the "law of microcosm"--lowers barriers to market entry and promises to make talk of a national industrial policy obsolete. Charles Ferguson now joins the debate, refuting Gilder's claims in a no-holds-barred analysis of the U.S. semiconductor industry. Ferguson shows that U.S. companies lose out, not to nimble, small companies but to huge, protected Japanese complexes that are embedded in a stable, concentrated coordinated alliances. As for Gilder's law of the microcosm, Ferguson is dubious--voodoo competitive doctrine he calls it. Personal computing he concedes, lowers the minimum initial costs of obtaining systems technology. But computers are becoming cheaper and more powerful because the semiconductors and software they use have become mass-marketed products. R & D costs in the companies producing them are enormous, as are startup costs. Big companies are racing to develop dominant system protocols and huge communications networks. Big, integrated corporations, Ferguson insists, are the only institutions likely to protect and develop intellectual property and invest in the training and career development of key people. Given crucial changes in the tax system, big companies are the only ones that can operate with reasonably long-term horizons. The witch doctors have spoken, Ferguson concludes; the patient urgently needs real medicine. [ABSTRACT FROM AUTHOR]

Companies going to Washington to seek protection from imports are courting disaster. In case after case, according to the author, protectionism has proved damaging--not to the company that loses but to the one that wins. Getting Japan to accept voluntary restraints on low-priced auto sales to the United States seriously damaged General Motors's strategy to blow away the competition with high-priced foreign cars. The quotas sought and won be Bethlehem Steel and the United Steelworkers helped create a new niche in the steel industry--for mini-mills--that hurt the big steel companies much more than imports would have. Industrywide relief schemes, like the U.S.-Japanese semiconductor agreement, are unlikely to meet the divergent needs of U.S. companies. Japan will open its market for 256K dynamic random access memories as well as refrain from selling chips below cost to other countries. But U.S. production capacity is too small to reach the allowable level. And slumping demand for the chips in the United States makes the artificial price cushion less lucrative than expected. Given short-term trade problems, it's not surprising that so many companies turn to a protectionist strategy for some short-term relief. But the short-term search can turn up a long-term strategic albatross. Protection is at odds with strategic adaptation, if you don't want to come out of the protected environment staggering under the weight of a leaner and meaner competition, don't enter that environment in the first place. [ABSTRACT FROM PUBLISHER]

When the subject of industrial competitiveness comes up, criticism of U.S. management is seldom far behind. And in many cases it looks well deserved, since executives often seem to concentrate more on quarterly profits and price-earnings ratios than on product quality or customer service. Yet the assumption that senior managers consciously choose between long-term corporate growth and short-term gains rings hollow as does the suggestion that many if not most of them are motivated largely by compensation packages structured around quick returns. In the analysis presented here, the author implicitly takes up this question of behavior by exploring the ways in which capital markets color the choices management can make. Turning first to the United States, he shows how market standards for shareholder returns and financial leverage lead to corporate financial goals that divert executives' attention from the product-market needs that build long-term competitive strength. He compares these goals to West German and Japanese growth-centered objectives, which their capital markets reinforce. Thus he raises serious questions about the contribution our country's capital market conventions have made to our industrial malaise. He challenges business and government leaders to rethink the financial policies they have heretofore accepted as givens. [ABSTRACT FROM PUBLISHER]

As American companies face up to the challenge of restoring manufacturing competitiveness, they usually turn their attention first to reducing the costs of the visible operations on the floors of their plants and factories. But those costs--for all their importance--have long represented a decreasing percentage of the total value added by manufacturing. Less immediately visible but every bit as critical to the improvement of operations are the overhead costs incurred by the "hidden factory" of off-line transactions. The indirect work embodied in logistical, balancing, quality, and change transactions now accounts for the lion's share of value added in most production-based industries; but because of our greater familiarity with the tasks involved in managing direct labor, these costs have received relatively little management attention. From their research, the authors show how a transaction-based analysis of overhead costs affords strong leverage to management action. [ABSTRACT FROM PUBLISHER]

For many in the West, the term Zen connotes puzzling aspects of Eastern culture. This article attempts to unlock these puzzles as they apply to management of organizations. In the most exhaustive study to date of Japanese-managed companies in the United States and Japan, the author finds that when technology and government factors are equal, the Japanese companies' U.S. subsidiaries do not outperform their American counterparts (despite what has been reported in the U.S. press). Furthermore, and contrary to the conventional wisdom, American managers use a participative decision-making style as often as Japanese managers do. The author explores nuances of the administrative process that appear to account for more effective organizational functioning. He concludes that the arts employed by successful Japanese and American managers include subtle ways of dealing with others in the organization, such as permitting a certain situation to remain ambiguous instead of striving for a premature conclusion. While American managers are often as skillful in these areas as the Japanese, an Eastern perspective makes many of these tools more tangible and their potential more evident. [ABSTRACT FROM PUBLISHER]

Webster defines symbiosis as "the intimate living together of two dissimilar organisms in a mutually beneficial relationship." This well describes the close cooperation between the government and the business community of Japan, which has done so much to make postwar Japan a power among the world's industrialized nations. In this article an expert on the subject describes this interaction, which has earned the respectful sobriquet "Japan, Inc." He shows how Japan's huge export surpluses are forcing that government to eliminate some export promotion devices and remove many import restrictions, despite resistance from Japanese companies and trade associations. The author gives pointers for foreigners in dealing with government departments and trade groups. [ABSTRACT FROM PUBLISHER]

This article presents letters to the editor in response to articles in previous issues including "How to Stay on Top of the Job," by James C. Harrison, Jr., published in the November-December 1961 issue, "The Honorable Picnic: Doing Business in Japan," by Dudley L. Miller, published in the November-December 1961 issue and "Lease or Borrow--New Method of Analysis," by Richard F. Vaneil, published in the September-October 1961 issue.

This article offers a look at the legal and cultural problems which Westerners and United States businessmen encounter in seeking business in Japan. The author mentions the book "The Honorable Picnic," by Thomas Rauçat. He stresses the importance of businesspeople placing themselves in the Japanese culture while establishing business opportunities and negotiating with Japanese businessmen. The article discusses business management practices in the country, the impact of culture, and strategies for coping with differences in culture and organizational practice.

The article reports on East-West trade and the Free World's interest in Japan as part of a military defense strategy. There is concern about the deficit in Japan's sterling account and balance of payments in 1953. Opposition to Japanese trade with countries in the Communist Bloc is due to the West's trade sanctions and the possibility that economic or political cooperation with communist China could result in a security threat to the United States. Topics include the Japanese export program and American economic aid to Japan.

The article discusses the differences in reconstruction in wartime China between Japanese Occupied China and Free China. The author first looks at the differences between Occupied China and Free China before the invasion of Japan. Occupied China was much more modern and industrialized, while Free China was more traditional in its agricultural roots. Under the reign of Japan, Occupied China has succeeded in consolidating its transportation system and exploiting China's natural resource reserves. In agriculture, however, Japan has failed almost everywhere, whereas Free China has succeeded introducing industry, building a transport system, and having increased prosperity in agriculture.

The article discusses the use of economic sanctioning in international relations. In particular the League of Nations is highlighted for its use of economic sanctions to prevent armed conflict. Economic sanctions were first provided for internationally through the Covenant of the League of Nations. The League of Nations is an international organization established in 1919 as a result of the Paris Peace Conference following World War I. The League of Nations is attempting to effect an amicable settlement between China and Japan. Japan is considered particularly vulnerable because of its dependence on foreign imports.

US suppliers in Japan still face a number of obstacles to doing business there. One is the Japanese distribution system. In 'Retail Buyer Decision-Making in Japan: What US Sellers Need to Know,' by Frank Alpert of the University of Wollongong in Australia, and four other researchers, the authors report on a survey that examined that barrier by studying Japanese retailers' relationships with suppliers. The authors identified marked differences in how business is conducted in the two countries, and point to ways in which US suppliers can overcome the disadvantages they face in Japan. The ideal supplier, then, is Japanese, caring, loyal, and large, with an innovative product. The authors suggest doing the following: Distribute pioneer products; Meet seemingly unreasonable demands; and Adapt to cultural norms.

The article analyzes the impact of electricity prices on trade and national competitiveness by comparing electric utility regulation in Japan with that in the U.S. In comparing the Japanese and U.S. regulatory regimes, the author found that if Japanese utilities had to operate under U.S. regulatory rules, electricity rates in Japan would rise by roughly 30 percent. Meanwhile, if the U.S. implemented electric utility regulation as Japan does overall annual trade deficit would fall by almost 4 billion dollars. These studies show that electricity prices play an important role by creating or destroying competitive trade advantage.

The article reports Japanese manufacturing and research by Michael Cusumano of Massachusetts Institute of Technology's Sloan School of Management. Limitations challenging the manufacturing industries in Japan include huge traffic jams created by suppliers who are trying to make just-in-time deliveries. Japanese corporations are expanding into new countries, but they are having a difficult time finding suppliers who can meet their standards. Cusumano says there is opportunity in this competitive environment.

A letter to the editor is presented in response to "Patent Protection or Piracy--A CEO Views Japan," by Donald M. Spero, from the September-October issue.

The letter to the editor refers to the Peter Drucker article "Behind Japan's Success," which is in the January-February 1981 issue.