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Society Report 7/15/95

I have learned from experience and from reading that by doing only what they specialize in and subcontracting the rest, Japanese companies restrict the services they perform to a range which is much smaller than the range of services they offer their customers.

As a result, there are some companies which exist only because other companies subcontract to them, and conversely that some companies could not survive long without other companies to subcontract to. Hence, it is natural that Japanese companies huddle together into "groups" and rely on each other for protection from disasters that sometimes plague the economy and market.

They buy each other's stock, they buy each other's services, and they give each other loans and credit to keep the services and commodities flowing. And this partnership exists not just on a company level, but on a personal level as well. Company workers are encouraged to seek services from *within* their group as much as possible, and they will, because their own welfare and success at work depends largely on the success of their company, which in turn depends largely on the success of other companies in the group.

When a company needs to expand its range of services, it usually does so by giving birth to an independent "baby company" which forever -- or at least until it grows big and strong -- relies entirely on its parent company for patronage. Naturally, the baby company is obligated to be in the same group as its parent company, for it could not survive without such association. It is also in this way, as I mentioned in the beginning, that Japanese companies are able to keep their services very specific and keep their feeling of team spirit and united purpose.

In my next report I shall give specific examples of how my own company exhibits each of these characteristics of the "typical Japanese company."