Business Sector Development in Japan - Research Paper Example

International Business Table of Contents Table of Contents 2 0 Overview 3 3 2.0 Principal Business Sector of Japan 4 3.0 Socio-Economic Issue and Political Issue Relating to Future Business Growth, GDP Growth and Economic Development 6 4.0 Impact of Business Growth in Population of Japan 8 5.0 Conclusion 9 9 References 10 Bibliography 12 Appendix 13 1.0 Overview Japan is considered as an emerging economy in the world. The industry growth rate of Japan is quite high. Japan is considered as one of the developed countries in the technological sector as well as in the manufacturing of automobiles. It has become a large exporter of automobiles. The population of Japan is declining due to certain reasons. Japan is experiencing an intensive change as a result of its aging population and decrease in labour force. The country has faced challenge from deflation from previous years, but due to the help of government and political factors, the country is gradually gaining economic advantages at present. In this paper, major business sectors of Japan will be discussed. Socio-economic and political issues have a serious impact on the business growth, GDP growth along with economic development of the country. The growth of business has an impact on population of the country, which has been discussed in this paper as well. 2.0 Principal Business Sector of Japan Japan is one of the highly developed nations in the world. Since resources are limited in the country, companies import raw materials and process them to finished products. Fishing industry in Japan is a growing business sector because a huge amount of marine resources are available in the country (Kids Web Japan, n.d.). Manufacturing industries is a key sector in business of Japan. The development of manufacturing industries has been in the first rank. The country is one of the world’s leading shipbuilders. Majority of ships are exported along with large oil tanker in the world (Country Studies, 2011). Automobile business sector is one of the core industrial sectors of Japan. The country is also considered as one of the top automobile producers. Advanced technology of Japan in the design of buses, motorcycles, bicycles and high-speed trains are the major factors in the business growth of transport industry. Chemical in addition to petrochemical industry are primary business sectors. Semi-conductor business of Japan developed in size and thereby stimulating profits. Automotive products comprise of 16.9% of the entire value of manufacturing shipment of Japan and manufacturing industry comprises of 36.3% of combined shipments (Japan Automobile Manufacturers Association, 2010). Figure 1: Major Manufacturing Sector in Value Terms Source: (Japan Automobile Manufacturers Association, 2010). Japanese computer manufacturers (JCMs) play a leading role in the technology as well as business sector of Japan. As a core competence, JCMs have absorbed and mastered expert system technology (Feigenbaum, 1993). 3.0 Socio-Economic Issue and Political Issue Relating to Future Business Growth, GDP Growth and Economic Development Socio-economic issues of Japan have tremendous impact on the economic development of the country. The economic development of the country is facing challenges due to decrease in birth rate as well as aging population. At domestic and global level, socio-economic development can only be achieved by dealing with global warming along with environmental issues. A variety of economic activities are conducted on the assumption that environmental issues need to be properly addressed. Japan produces about 90 percent of global warming gases that originate from sources of energy. Japan has incorporated an approach to the issues of energy as well as global warming and they are responding to waste management issues by means of “3 Rs” (reduce, reuse and recycle). On the supply side, a point of competitiveness suitable for an advanced industrial economy is essential to achieve economic development in Japan. The government is assisting the efforts of companies to overcome certain surpluses, push ahead with management alteration, launch new technology as well as improve industrial competitiveness. For business growth, the infrastructure cost is reduced and extremely competitive environment is created to improve the ability to compete in global environment (Technology Development, n.d.). The government and politics have also played a great role in contributing to the prosperity of the country though economic development of Japan is principally the product of private entrepreneurship. The government has facilitated to develop new industries, reduce economic depression, generate an effective economic infrastructure and maintain standard of living. In fact, the government has influenced the economy which means that several foreign viewers have popularise the term i.e. "Japan Inc." in order to describe its association of business as well as government interests (Country Studies, 2011). The Democratic Party of Japan brought striking electoral victory in 2009 which confirmed that Japanese politics is synonymous to Liberal Democratic Party rule (Rosenbluth, 2011). The economy of Japan, over the past few years, has emerged as a strong performer. The industries are enhancing their competitive advantages; customers are gradually becoming confident, and both foreign and domestic investors are investing funds into plant, equipment, financial securities and equity investments. They have gained revenue from the country’s increasingly attractive economy. Japan encourages foreign investment policy in order to boost efficiency, growth as well as new business practices. In 2003, Prime Minister of Japan had led government organizations to provide incubation offices in addition to consulting services on various issues including intellectual property and marketing. Such proposals coupled with large markets of Japan, skilful labour and technological potential have fascinated the investments by Eastman Kodak, Google and DuPont. On a broader perspective, in 2006 FDI will reach $110 billion as showed by statistics in a cumulative way (JETRO, 2006.) The industrial structure of Japan has been transformed from 2002. In 1970, due to rapid economic growth the primary industry in the country had seen a decline. In 1980, share of secondary industry was reduced gradually. However, the tertiary industry share of employed person in addition to GDP remained constant. For the employed person, in 1970, the primary industry was 19.3%, the secondary industry was 34.0% and the tertiary industry was 46.6%. The shares of each on these sectors were raised to 1.5% (primary industry), 26.8% (secondary industry) and 71.7% (tertiary industry). In 1970, the primary industry was 5.9%, secondary industry was 43.1% and the tertiary industry was 50.9%. The primary, secondary and tertiary industries were lowered to 1.5%, 26.8% and 71.7% in 2005 respectively (Ministry of Internal Affairs and Communication, n.d.). The economy of the country had weakened suddenly in the last financial quarter. The GDP of the country was at 0.1%, which was much lower compared to the US (2.4%) and Germany (2.2%). It had been observed that by analysing the last 8 years of 20th century, the economy of Japan raised to 5% while the Chinese economy rose to 261% (BBC, 2010). Due to deflation in the year 2009, Japan was under the threat of falling prices. The deflation had returned to the second largest economy in the world, i.e. Japan after a gap of three years (Curry, 2009). 4.0 Impact of Business Growth in Population of Japan The statistical agency of Japan has calculated that growth of population in the country has turned negative. In 2006, it has been observed that size of population has been reduced and will steadily fall in the coming years. The sudden change in demography has an impact on business development in the country and thereby affecting the population of that place (Feleke & Kilmer, 2007). The fast progressing age of the population is a key challenge for Japan in the upcoming period. The rise in proportion of elderly person in total population and slower expansion of population rate with a cut in the labour force has a negative influence in business growth. The former result in poor economic performance and the later has an impact on business growth by reducing the labour force that is essential for rise in production process of business (Yashiro & Oishi, 1996). Business growth of a country has a negative as well as positive impact on the population of that nation. The entry of multinational companies in foreign countries may result in reduction of local workforce from its industries. Foreign companies at times prefer hiring workforce from their own nations. As the population rate of Japan is low, it may result in lower workforce, which may result in less availability of workforce for multinational companies. The growth of business in the country also creates difficulties for the population because sudden development in industrial sector affects the changing demography of Japan. 5.0 Conclusion The conclusion can be drawn from overall report that Japan is a developed nation in various business sectors predominantly in automobile sector. The industry structure has been transformed to a large extent. The population in the country is decreasing as a result the labour force has been reduced to a great extent. The decease in labour force has an impact on further business growth of the country. The economy of Japan in recent times had faced challenge from deflation and also due to reduction in the birth rate. The government is trying their best in order to develop the economy and the other developmental sectors in the country. References BBC, 2010. Japan GDP Figures Show Sharp Slowing Of Economic Growth. News Business. [Online] Available at: http://www.bbc.co.uk/news/business-10978958 [Accessed March 12, 2011]. Country Studies, 2011. The Role of Government and Business. Japan. [Online] Available at: http://countrystudies.us/japan/99.htm [Accessed March 12, 2011]. Country Studies, 2011. Industry. Japan. [Online] Available at: http://countrystudies.us/japan/106.htm [Accessed March 12, 2011]. Consensus Economics, 2010. Changes in Consensus Growth Forecasts for Japan. Worlds Leading Macro Economic Survey Firm. [Online] Available at: http://www.consensuseconomics.com/News_and_Articles/Changes_in_Consensus_Growth_Forecasts507.htm [Accessed March 12, 2011]. Curry, M. J., 2009. Deflation returns to Japans economy. Guardian. [Online] Available at: http://www.guardian.co.uk/business/2009/nov/20/japan-econony-deflation-recession?INTCMP=SRCH [Accessed March 12, 2011]. Feigenbaum, E., 1993. Business Sector Applications of Expert Systems in Japan. Conclusions. [Online] Available at: http://www.wtec.org/loyola/kb/c8_s1.htm [Accessed March 12, 2011]. Feleke, T. S. & Kilmer, L. R., 2007. Introduction. Global Competition for the Japanese Fruit Juice Market: A Uniform Substitute Demand Analysis. [Online] Available at: http://ageconsearch.umn.edu/bitstream/9997/1/sp07fe02.pdf [Accessed March 12, 2011]. Japan Automobile Manufacturers Association, 2010. Automobile Manufacturing is a Core Industry. The Motor Industry of Japan. [Online] Available at: http://jama.org/pdf/MIJ2010.pdf [Accessed March 12, 2011]. JETRO, 2006. Japan Addresses Challenges to Future Growth and Development. Recent Data Indicates Japan is Maintaining its Strong Performance. [Online] Available at: http://www.jetro.org/documents/focus/JETRO_Focus_June2006.pdf [Accessed March 12, 2011]. Kids Web Japan, No Date. Economy and Industry. Agriculture. [Online] Available at: http://web-japan.org/kidsweb/explore/economy/ [Accessed March 12, 2011]. Ministry of Internal Affairs and Communication, No Date. Changes in Industrial Structure. Economy. [Online] Available at: http://www.stat.go.jp/english/data/handbook/c03cont.htm Rosenbluth, M. F., 2011. Introduction. Japan in 2010. [Online] Available at: http://www.jstor.org/stable/10.1525/as.2011.51.1.41?&Search=yes&searchText=japan&searchText=economy&list=hide&searchUri=%2Faction%2FdoBasicSearch%3FQuery%3Djapan%2Beconomy%26acc%3Doff%26wc%3Don&prevSearch=&item=19&ttl=106378&returnArticleService=showFullText [Accessed March 12, 2011]. Technology Development, No Date. An Outline of the Current Situation and Issue. The Socio-Economic Situation in Japan and Policy Direction. [Online] Available at: http://www.meti.go.jp/english/report/downloadfiles/c2003polidiree.pdf [Accessed March 12, 2011]. Trading Economics, 2010. Japan GDP Growth Rate. Indicator. [Online] Available at: http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=JPY [Accessed March 12, 2011]. Yashiro, N. & Oishi, S. A., 1996. Aging of the Population and Labor Force. Population Aging and the Savings-Investment Balance in Japan. [Online] Available at: http://www.nber.org/chapters/c8461.pdf [Accessed March 12, 2011]. Bibliography Nakamura, N. & Et. Al., 1994. Japanese Economic Policies and Growth: Implications For Businesses In Canada And North America. University of Alberta. University of Glasgow, 1966. A Nonmonetary Index of Economic Development. Jstor. Vol: 17, No: 4, Pp: 408-416. Appendix GDP Growth Rate of Japan Figure 2: Sources: (Trading Economics, 2010). Consensus Growth Forecasts for Japan Figure 3: Sources: (Consensus Economics, 2010). Read More