The Competitiveness and Profitability of Japanese Automakers vis-à-vis their Western and Korean Counterparts: An analysis of the 1980s, 1990s, and 2000s

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Type de publication:

Conference Paper

Source:

Gerpisa colloquium, Kyoto (2014)

Résumé:

This paper reviews the relationship between firm competitiveness and profitability, while investigating how the sustained co-existence of competitiveness and profitability may be obtained. The empirical analysis of the paper is done on the performance of Japanese automakers in the 1980s, 1990s, and 2000s vis-à-vis their Western and Korean counterparts.

Competitiveness is discussed in the paper from the perspective of performance in the market (“surface-level competitiveness”) and performance in product development and manufacturing (“deep-level competitiveness”). The current literature reveals that Japanese automakers outperformed their Western counterparts in (1) deep-level competitiveness from the 1980s to the 2000s, and (2) surface-level competitiveness in the 1980s and early 1990s. Our original analysis of Japanese automakers confirms that they outperformed their Western counterparts in surface competitiveness in the 1980s and early 1990s, as well as shows that this superior performance continued into the late 1990s and 2000s. In addition, we show that Japanese automakers were able to achieve superior profitability performance in the 2000s. Thus, Japanese automakers successfully achieved the co-existence of both competitiveness and profitability in the 2000s.

The paper argues that Japanese automakers were able to improve their profitability in the 2000s by strategically using product planning and product development to build brand value, while keeping product costs down. The academic literature reveals that from the 1990s Japanese automakers pursued two new initiatives for cost reduction, both of which are related to the development of new vehicles. First was the elimination of excessive engineering of components that are invisible to the eyes of the user. Second was sustained success in solving problems earlier in the product development cycle. Advances in front-loading and concurrent engineering, supported by a high level of skill in manufacturing engineering, seem to have been an important enablers of early problem identification and early problem-solving.

Finally, the paper proposes three ideas that could contribute to Japanese automakers preserving the co-existence of both competitiveness and profitability into the 2010s and beyond. Namely, the paper recommends that Japanese automakers and suppliers extend the elimination of excessive engineering into those components that are visible to the eyes of the user, the overseas expansion of the manufacturing engineering function which is important for the establishment of a link between factory flexibility and profitability, and lastly, the transformation of the corporate headquarters of Japanese automakers into ones that are better able to lead balanced capability-building by further utilizing the strengths of Japanese-style (Toyota-style) manufacturing engineering.

Copyright© Gerpisa
Concéption Tommaso Pardi
Administration Géry Deffontaines

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