This article consists of 6 pages and 2674 words.
In order to have full access to this article, please email us on thedocumentco@hotmail.co.uk
Introduction
Economics for Business, Historically, Japan was isolated from foreign direct investment and investors showed little interest in its economy. In recent times however, with the growth in its economy, Japan has attracted FDI which further propelled growth in the region. In particular, the automobile, finance and health care industries have felt the impact of FDI inflows as more foreign firms emerged in these industries. Other industries have also seen the impact of this investment but to a lesser degree. These include the wholesale and retail sector and telecommunications sector.
Japan saw the first major boom in FDI from 1998 to 2002 and the entire receipts exceeded the post war inflows. The fact that more than 10 percent employment is provided by foreign firms in Japan testifies the growth and role of FDI in the country. These firms are spread across many industries like chemicals, electronics, motor vehicles, transport equipment, financial services, pharmaceuticals, and insurance. In these and less dominated industries as well, foreign firms have massive impact through not only their products, but also their management and business practices. In fact, the differentiating factors of these firms are actually their skills, human resources, intellectual property and reputation or brand name and goodwill. These firms revamp the landscape of the industries they touch and inspire competition.
About Japan
Japan’s GDP is $ 4901 billion and this accounts for 7.9 percent of the world’s economy. Japan stands at the third position in the world’s largest economies. It grew extensively post World War II and the remarkable growth in the second half of the twentieth century.
Japan itself is a major donor to many countries and active in trade. It invests heavily in foreign countries. However, it has also been at the receiving end of considerable Foreign Direct Investment (FDI) which affected its economy.
FDI in Japanese automobile industry:
The case of FDI in Japan can be examined through the automobile industry, a major contributor to the economy. The alliance between Renault and Nissan is a well renowned and highly impactful on the Japanese automobile sector.
Nissan was a Japanese owned car
company which was going into severe decline, its local and foreign market share shriveling up, production capacity unmet, volumes shrinking and recording losses for six years from 1992 to 1999. At one point, Economics for Business the firm recorded a loss of 700 billion Yen. It was at this low that foreign direct investment found Nissan. (Ghosn & Ries, 2005)
The new management from Renault brought in new skills and methodologies, making drastic changes. Not all the changes brought about were popular, with more extreme measures seeming harsh like the shutting down of five factories due to excess capacity and laying off 21,000 people globally, 16,000 of these being in Japan.
The main shift that occurred was that all policies were tweaked and at times radically changed to advance the firm’s profit oriented new system. The new system also aimed at making Nissan a truly global firm instead of just having operations worldwide with no coordination or centralized policies. The global perspective was reflected in the firms supply chain policies, Economics for Business financial policies, product design shifts and asset allocation policies.
Supply chain:
Renault dissolved Nissan’s keiretsu whereby it had owned many non-strategic assets including its holdings in above 1,100 suppliers. Supplies themselves…
Recent Comments