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Porter, M. E., M. Sakakibara and H. Takeuchi. 2000. Can Japan Compete? Perseus.

Note by James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Japanese Management Main Page | Strategy Main Page

In the introduction, "What America should learn from Japan" Porter begins with a brief discussion of the history of Japan's rise to the most competitive nation status in the 1970s and 1980s and subsequent slide to a much lower position in the rankings during the 1990s. During this period there were two explanations for Japan's rise. One explanation was based on the government's activist roll in economic development. Porter refers to this as bureaucratic capitalism. The other explanation was based on Japanese management practices such as continuous improvement, total quality and just-in-time. Porter explains that elements of the Japanese model were emulated by both republican and democratic administrations giving the National Cooperative Research Act of 1984 as an example. This act was later extended to provide antitrust exemptions for joint production ventures by the Clinton administration. But Porter says the book shows that the United States learned the wrong lessons from Japan about government policy and emulated the policies that did not work in Japan.

However, U.S. companies recognized the effectiveness of Japanese management methods and aggressively emulated these practices. Porter argues that this is one important reason U.S. companies are now so competitive. But, according to Porter, although the lessons about management practices were correct, they were dangerously incomplete. A flaw in the Japanese model produces what Porter refers to as "competitive convergence" where competitors imitate each other in a zero-sum competition that destroys profitability. The missing element is strategy, described as offering a unique mix of value. Continuous improvement is not sufficient as many U.S. companies still appear to believe (See the Porter 96 summary for more on this point).

In the last part of the introduction, Porter refers to some problems and weaknesses in both countries.

Japans problems include:

a financial crisis,
an aging population
ineffective leadership,
inbred management and
lifetime employment.

But Porter says, "Make no mistake. Japan remains a formidable international competitor with many strengths." The Japanese could rebound quickly if the blind spots in strategy and government practices change.

Porter ends the introduction by saying that a renewed Japan will encourage the U.S. to deal with weaknesses including:

a poor education system,
the breakdown of organizational loyalty,
adversarial approaches to problem solving,
a declining commitment to basic research, and
short-term thinking in both business and government.

Finally, Porter points out that a revitalized Japan would be good for the United States. As Deming said many years ago, the worse thing that can happen to you is to have a poor competitor.

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Related summaries:

Chow, C. W., Y. Kato and K. A. Merchant. 1996. The use of organizational controls and their effects on data manipulation and management myopia: A Japan vs. U.S. comparison. Accounting, Organizations and Society 21(2-3): 175-192. (Summary).

Cooke, T. E. 1993. The impact of accounting principles on profits: The US versus Japan. Accounting and Business Research (Autumn): 460-476. (Summary).

Cooper, R. and C. A. Raiborn. 1995. Finding the missing pieces in Japanese cost management systems. Advances in Management Accounting (4): 87-102. (Summary).

Crawford, R. J. 1998. Reinterpreting the Japanese economic miracle. Harvard Business Review (January-February): 179-184. (Summary).

Dillon, L. 1990. Can Japanese methods be applied in the western workplace? Quality Progress (October): 27-30. (Summary).

Hayes, R. H. 1981. Why Japanese Factories Work, Harvard Business Review (July-August): 57- 66. (Summary).

Hiromoto, T. 1988. Another hidden edge: Japanese management accounting. Harvard Business Review (July-August): 22-25. (Summary).

Howell, R. and M. Sakurai. 1992. Management Accounting (and other) Lessons from the Japanese. Management Accounting (December): 28-34. (Summary).

Imai, M. 1986. Kaizen: The Key To Japan's Competitive Success. New York: McGraw-Hill Publishing Company. (Summary).

Ittner, C. D. and D. F. Larcker. 1997. Quality strategy, strategic control systems, and organizational performance. Accounting, Organizations and Society 22(3-4): 293-314. (Includes results for firms in the U.S., Canada, Germany, and Japan). (Note).

Johnson, H. T. and A. Broms. 2000. Profit Beyond Measure: Extraordinary Results through Attention to Work and People. New York: The Free Press. (Summary).

Lee, J. Y., R. Jacob and M. Ulinski. 1994. Activity-based costing and Japanese cost management techniques: A comparison. Advances In Management Accounting (3): 179-196. (Summary).

Martin, J. R. Not dated. World Competitiveness Reports. Management And Accounting Web. http://maaw.info/WorldCompetitivenessReports.htm

Monden, Y. and J. Y. Lee. 1993. How a Japanese auto maker reduces costs. Management Accounting (August): 22-26. (Summary).

Porter, M. E. 1980. Competitive Strategy: Techniques for Analyzing Industries and Competitors. The Free Press. (Summary).

Porter, M. E. 1996. What is a strategy? Harvard Business Review (November-December): 61-78. (Summary).

Sakurai, M. 1989. Target costing and how to use it. Journal of Cost Management (Summer): 39-50. (Summary).

Spear, S. and H. K. Bowen. 1999. Decoding the DNA of the Toyota production system. Harvard Business Review (September-October): 97-106. (Summary).

Takeuchi, H. 1981. Productivity: Learning from the Japanese. California Management Review (Summer): 5-18. (Summary).

Tanaka, T. 1993. Target costing at Toyota. Journal of Cost Management (Spring): 4-11. (Summary).

Tanaka, T. 1994. Kaizen budgeting: Toyota's cost-control system under TQC. Journal of Cost Management (Fall): 56-62. (Summary).

Wheelwright, S.C. 1981. Japan - Where operations really are strategic. Harvard Business Review (July-August): 67-74. (Summary).