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Keiretsu

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Keiretsu is a Japanese term referring to a form of corporate organization, or marketplace structure, that emerged in Japan shortly after World War II to replace family-owned conglomerates called zaibatsu. It is a grouping of companies formed around a main bank with interlocking relationships based on a high level of cooperation. The central objective of a keiretsu is for companies to work together for mutual success. One way this is accomplished is through stock sharing, which provides a degree of corporate stabilization.

Government support is an essential characteristic of a keiretsu. Financial backing from a major bank, along with government support, enables the keiretsu to control every link in the economic chain. It also allows them to be connected to other key industry players: manufacturers, suppliers and distributors.

The organizational structure of a keiretsu can be horizontally or vertically integrated. Some of Japan's largest keirestu are actually controlled by banks, including Mitsui, Mitsubishi, Sumitomo, Fuyo, and Dai-Ichi Kangyo Bank Groups. Horizontally-integrated keiretsu include industrial companies that connect manufacturers and parts suppliers or manufacturers, wholesalers and retailers. Vertically-integrated keiretsu include car dealers and electronic manufacturers, such as Nissan, Honda, Hitachi, Sony and Toshiba.[1]

[edit] References

  1. Keiretsu. Tech Terms. TechTarget. 07-10-2009.