Politician in a Leather Suit and the Paradox of Japanese Capitalism Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

The paper attempts to portray the Japanese economic conditions prior to the stock market collapse in the year 1990 which has severely affected the country’s economy and its businesses even in the current era. The organizational culture prior to 1990 had been based upon fast reforms from the crisis and its risk taking ability which has been diminishing in the current economy. The particular country’s culture has deeply affected the corporate governance and the transparency in the business setup. The paper attempts to perform a situation audit which reflects the current strengths and weakness of the country along with its opportunities and threats. Furthermore, the paper provides comparison and contrast of the Japanese organizational culture with that of American culture.

As the country faces a decline in the Foreign Direct Investment (FDI) due to many reasons amongst which the corporate governance tops the rest, many foreign companies are reluctant to invest deeply on the country as they fear that their company might not be able to survive due to Japanese organizational culture. Therefore, the paper attempts to identify problems faced by organizations in demoting the FDI in Japan. Moreover, the paper provides different alternatives and solutions to the problems faced by organizations, whereas, it entails to selecting the best alternative and to present it as the recommended strategy. Lastly, the paper describes the action plan or the implementation for the recommended strategies.

Situation Audit

SWOT Analysis

Strengths

Third largest economy in the world
Unemployment low at 4.2% compared to other first world countries even in the financial crisis.
Enhanced lifestyle could be reflected by having greater number of Michelin three star restaurants than in Paris.
World’s highest internet penetration
Longest life expectancy for individuals
A sense of community and social cohesion flows in a country
Low crime rates which ensures safety for citizens

Weaknesses

Foreign direct investment declining since the stock market collapse in 1990
Negative FDI in Japan for the year 2011
Poor transparency in Japan’s corporate world and a corrupt corporate culture emerging
Foreign imports have reduced by more than half a percentage from 9.3% to 4.3% from the year 2000 to 2010 amongst EU countries.
The top management for organization remains resistant change
Lowest birth rate in the country with 1.37 per women
Resource poor geography and a deficiency of arable land

Opportunities

Reducing barriers for FDI
Making the Japanese owners and management to think as global leaders
Increase FDI to release pressure on the local companies
Transparency in the corporate governance
Providing extra benefits to people with more than one child to increase child birth

Threats

A consistent insolvency for Japanese economy
Financial institutions holding on to the bad loans of industrial companies
Reluctant to change
Corporate capitalism where employees and the business satisfies their own interest irrespective of the shareholder’s wealth

The big American business groups are mostly those business groups which are related to financial investment industries. These are the groups that have influential power over other companies in the different industries. These investment groups possess the rights to make corporate policies, financial policy of a company, business strategies, or even manage to operate the marketing and devising labor policies. These financial institutions have good hold over different businesses as companies borrow loans from these financial institutions. However, in the case of the Japanese firms the majority of control is under the power of the owner where the management and the employees work for their own targets and goals. These stakeholders are primarily not concerned with increasing the shareholder’s wealth, which was once their core business principle.

The efforts of Japanese firms for Corporate Social Responsibility have been cussed for many years since the 1990 economic downturn. However, Japan is currently facing a boom in the CSR activities from companies investing in the country. Companies are highly focused upon addressing the environmental issues by investing on developing environmental friendly products which could help the company in satisfying their customers. Companies have also started to realize that their CSR activities on environmental issues can also make their business competitive as customers would be more likely to prefer their products than their competitor’s products (Brucksch & Grünschloß, 2014)...........................................

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Two lost decades, capitalism in Japan represents a kind of contradiction retains the richness and social stability in the face of declining economic power. Scarce transparency in the Japanese corporate practice plays an important role in this phenomenon. Sometimes justified as the embodiment of Japanese culture, Japanese corporations opacity attribute empowering managers to make long-term business decisions to maintain employment and business relationships and maintain social harmony. But the lack of transparency also promotes fraud and corruption, which undermines investor confidence and contain risk. Kotaro Tamura bright politician tries to raise awareness about this tension, but his provocative style gives him few friends in the conservative political elite in Japan. "Hide
by Karthik Ramanna, Matthew Shaffer Source: Harvard Business School 25 pages. Publication Date: November 26, 2012. Prod. #: 113026-PDF-ENG