Keiretsu

So what is keiretsu? Well, Dagogo Altreide defines it as being "like a cartel, but nicer" (Cold Fusion TV, 2024, 5.19). Keiretsu is a Japanese concept, relating to a "system, series, grouping of enterprises, [or an] order of succession)", which is built around "a set of companies with interlocking business relationships and shareholdings" (Wikipedia, 2024). Think an informal alliance of producers which collectively produce cars: chip suppliers; glass manufacturers; hub and wheel assemblers; paint and coatings specialists; wiring and loom manufacturers; car plants; seat and trim makers; die cast makers; handle and lock technicians; heating and cooling plants; rubber and tyre factories; technical writers; shipping companies; car design firms; and marketing companies. 

Keiretsu could be thought of "as a club where independent [Japanese] companies banded together to share resources and protect themselves from outside competition". This "created a strong co-operative relationship" (Cold Fusion TV, 2024, 5:17). While some of these elements may be done in house, specialty work may be outsourced with an informal arrangement - i.e. handshakes rather than contracts - in Japan (McGuire & Dow, 2009). 

Organisations may be horizontally (supplied component assembly) or vertically integrated (i.e. ore, steel, moulding, welding, car body), with keiretsu too also being horizontal or vertical (McGuire & Dow, 2009). There are three horizontal keiretsu: "Mitsui, Mitsubishi, and Sumitomo" which "are descend[a]nts of pre-war zaibatsu, while the other three (Dai Ichi Kango, Fuyo, and Sanyo) developed around major banks during the post-war period" (McGuire & Dow, 2009, p. 334). Vertical keiretsu are "major automobile manufacturers such as Toyota and Honda" (p. 334). 

This type of alliance has dominated Japanese industry since William Deming in the 1950s (Best, 2005) and - though this type of arrangement is now waning - keiretsu remain important for the economic powerhouse that is Japan (Wikipedia, 2024).

Sam

References:

Best, M. (2005). W Edwards Deming: father of quality management, patient and composer. Quality and Safety in Health Care, 14(4), 310–312. https://doi.org/10.1136/qshc.2005.015289

Cold Fusion TV. (14 May 2024). Japan's Lost Decade - An Economic Disaster [Documentary] [video]. YouTube. https://youtu.be/lmnVP35uZFY

McGuire, J., & Dow, S. (2009). Japanese keiretsu: Past, present, future. Asia Pacific Journal of Management, 26(2), 333-351. https://doi.org/10.1007/s10490-008-9104-5

Wikipedia. (2024). Kieretsu. https://en.wikipedia.org/wiki/Keiretsu