October 7, 2010 2 Comments
Minority networks of Japanese organizations have shares in the other organizations to create a larger network. The network collaborates to boost each other’s interest (Jones, 2007).
Financial Keiretsu link and group various companies which have their own large banks. The capital Keiretsu is used to manage input and output linkages between the small networks of organizations (Jones, 2007).
Toyota is using capital Keiretsu by owning as large as 40% share from the companies that supply it with inputs. With this share, Toyota is able to exercise good control on its resources (Jones, 2007). The Fuyo Keritsu is a financial Keiretus that has Hitachi, Nissan, Canon and many other companies joined by Fuji bank which provide the financial services to the group.
Just In Time (JIT) principle is part of the Keiretsu theory where companies depend on receiving the needed parts just in time for their use from a supplier that produce the right amount for the user. Keiretsu enabled Toyota to have the strong relation with its suppliers without the cost of owning and managing them. General Motors (GM) has full ownership of its suppliers than any other carmaker which made GM incur the cost of the supplier while the supplier running inefficient operations knowing that GM will buy their products regardless of their business efficiency.
Ford the car manufacturer formed its Keiretsu by owning minor share in its engine supplier, windows producers, body parts and wheels manufacturer. Ford also had notable ownership in the car rental company Hertz which use Ford’s cars only (Jones, 2007).