Comparison and Contrast of Small Firms and Zaibatsu Firms - Case Study Example

Comparison and Contrast of Small firms and Zaibatsu Firms. Introduction Each country has its own business history. Its history may include the succession of kings on the throne like what occurred in England. A country’s history could include a king who is idolized as a god just like the pharaohs in Egypt and the King in Japan. The following paragraphs focus on the history of businesses in different locations specifically in Japan and China. Compare(Similarities) small firms situated in geographic districts, and zaibatsu forms of business development: BODY Bother the small firms and the Zaibatsu were formed to generate sales. Businesses squabble for a bite of the current and prospective clients by combining the raw materials, capital and labor resources to fill the needs and wants of the customers in time. The competitors outwit and outdo each other by producing goods that are of better quality than their rivals in the industry. Businesses would increase their sales if there is easy transportation access to its current and prospective clients. One very successful strategy to outwit competitors is for the companies to shift to high volume and low cost productions management styles Plus, the industrialization of businesses in Britain is characterized by the popularity of the small and medium scale firms. These types of businesses were normally managed by the owners and their relatives. These small scale markets were transformed into regional markets. The established marketers would implement the business laws and political laws of the land in order to have a peaceful and harmoniously fair competitor relationship. Both the small firms and the Zaibatsu were established to generate profits. Further, many companies decided to focus the scarce resources on the production of specialty products that satisfies the needs of a niche market. Many companies were also forced to vertically integrate like the small and medium scale industries. A few businesses were segregated by the government into districts from 1750 to 1850. Some of the businesses had to research to develop new products and processes in order to keep abreast with their wily competitors. Many of the small firms and the Zaibatsu were family owned businesses. These small and micro industries are often single proprietorships and partnerships. The family as a whole may acquire wide range of expertise in terms of diversification into other businesses. Normally these types of industries generate slow sales activities resulting to low volume sales which in turn generates correspondingly low profits. Some f the Japanese industries were characterized by merchants enveloped in the industrial world called Ukiyo or floating worlds(Whitley,66). Contrast(Differences) smaller firms situated in geographic districts, and zaibatsu forms of business development: Many of the Zaibatsu companies are bigger than the small firms. Also, many Japanese companies had to close shop because they were not able to adapt to the new playing field rules. Only Mitsui and Sumitomo were able to withstand the economic attacks on its markets in 1896. The new battlefield rules were enumerated in the Incorporation Act of 1893. The Zaibatsu management style had flourished at this time. The industry at this time was characterized by family centers and core companies like Sogo Shosha. This period also bore witness to the importance focused on trade, technology imports, and Japan on rare occasions. Many companies were able to survive at this time. The Meiji government from 1868 to 1912 focused on a flourishing silk reeling as another very popular export business. The period saw the downfall of Tornioka Filature and importance that businesses put on quality control to increase sales volume. The government at this time gave financial support to the former Samurai men. The government had just abolished the feudal system(Genzberger,3). The smaller firms have lesser sales volume than many of the Zaibatsu companies. The disadvantage of the small firm is that its sales are normally lesser than the Zaibatsu firm’s sales. Consequently, another disadvantage is that the small firm will generate lower gross profits than the large firms. Small firms would be able to cover only a small territory as compared to the Goliath Zaibatsu firms’ territory(Reid,230). Many smaller firms have synergized whereas Zaibatsu companies do not synergize. Many small firms have combined to create synergy. Synergy can be explained in the formula: one plus one is equal to more than two. Many workers also have joined together to help each other accomplish the individual goals that management has set for them. Many companies have also set up shop in other locations in order to corner a wider customer base. An example of this type of marketing strategy is the chain store. It also includes the big five banks of the United States. Dexter Corporation that has merged with other firms(Agnon & Drobnick,16). How did each form of business develop? Small firms were usually formed by the drive of one person to be one’s own boss. One individual would set up his or her own small business in to fill the needs of a geographic district. The owners of these businesses have gone through many years of hard work and determination to build and maintain one’s own small firm. The British and Japanese call these small firms as their castle. They can do whatever they want with their businesses. The small business owners would not entertain the idea of abandoning their business once it starts operations. The small business owners often join associations composed of small business owners in other geographic districts in order to share and learn from the experiences, suggestions and criticisms of their fellow small business owners(Whittaker,6). Zaibatsu firms were usually formed by the combination of two or more small firms. Zaibatsu means a collection of diversified enterprises. The founding Zaibatsu managers were political merchants who strong connections with the Meiji oligarchs. The oligarchs aided the Zaibatsu to own large chunks of assets for their large firm businesses since the 1880s. The government would sell its assets to Zaibatsu business. Sumitomo is one such Zaibatsu company(Mosk,90). Why did each form of business develop? Small firms developed because there is a need for such organization. Many large companies need the subcontracting services of the small firms. Subcontracting is a stable economic relationship that keeps the customers and the large firms in a harmonious and profitable relations. Many small firms are actively involved in networking in order to financially survive(Curran & Blackburn,54). Zaibatsu businesses developed because there is a need for a big organization. The Zaibatsu focused on infrastructure projects, trade and transportation, raw materials production and banking. Others concentrated on the manufacturing sector of the business environment. Mistui is one Zaibatsu company that engaged in the banking, mining and trading industries(Mosk,90). What were the advantages and disadvantages of each? Be sure to use some specific examples to support you generalization. The advantages of small firms are many. One advantage is that the small firms act as shock absorbers for large firms. They would accept subcontracting jobs from the large firms because the small firms are expandable and expendable depending on the time and the place. The small subcontractor firm in involved in vertically integrated operations without its full participation. The small firms can easily move from one geographic district to another or to change its products and services which may be difficult for larger firms to pursue(Dicken,256). The disadvantages of small firms are many. The disadvantage of the small firm is that its sales figure is usually lower than the large firm’s sales. Another disadvantage is that the small firm has lesser net profits than the large firms. Small firms cover only small territory as compared to the large firms’ territory(Reid,230). The advantages of Zaibatsu firms are many. The Zaibatsu is a large business enterprise as compared to the small firms. The Zaibatsu engages in different products and services. The Zaibatsu can get the help of its affiliates or subsidiaries in case one sector faces financial difficulty. These firms are advantageously oligopolistic because there are only a few competing in one market segment(Nafziger,86). The disadvantages of Zaibatsu firms are many. One disadvantage is that the organizational structure could be too complex to allow flexibility. The Zaibatsu firm could not enter a small market easily because its projected sales figures could be lower than its large projected costs and expenses. Another disadvantage is that there are too many levels of management thereby confusion could start. Zaibatsu firms will loss more in a new market because its costs and expenses are greater when compared to the small firms. For example, petrol allocation of subsidiaries and affiliates in some of Japan’s Zaibatsu firms put them at a disadvantage(Godement,164). CONCLUSION: All types of businesses must generate profit any time and any day. All the above companies innovated in order to outsell their competitors in the same market segment. There are advantages and disadvantages of choosing between a small firm and the Zaibatsu type of business plan. REFERENCES: Class Discussion Notes Whittaker, Hugh, Small Firms in the Japanese Economy, Cambridge, Cambridge University Press, 1999 Dicken, Peter., Global Shift: Reshaping the Global Economic Map in the 21st Century, Oregon, Sage, 2003 Agmon, Tamir, Drobnick, Richard, Small Firms in Global Competition, Cal, University of Southern California Press, 1994 Mosk, Carl, Japanese Industrial History: Technology, Urbanization, and Economic Growth, N.Y.,M. Sharpe Press, 2001 Reid, Gaving, Small Business Enterprises, N.Y., Routledge, 1993 Nafziger, W., Learning From the Japanese,N.Y., M.E. Sharpe,1994 Curran, James, Blackburn, Robert, Paths of Enterprise, N.Y., Routledge,1991 Godement, Francois, The New Renaisance, N.Y., Routledge,1997 Read More