Main Business Systems found in Asia

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Kaisha business system uses an authoritative approach while CFB is a family owned business in Taiwan and Hong Kong. However, the two above models are smaller than Japanese Kaisha and Korean Chaebol, but they do not run capital and energy intensive enterprises. In contrast, both Kaisha and Chaebol coordinate activities in a number of industries. Another significant difference is that Japanese, Korean and Chinese Kaisha model have a high level of managerial autonomy and independence from shareholders unlike Chaebol and CFB (Whitley, 1992). Additionally, as a result of mutual interests between the members of business groups and Keiretsu, which is the market for corporate control, managerial autonomy is weak in Japan since financial institutions are independent of large firms in Anglo-Saxon societies. For example, senior management in the business system does not face pressure from shareholders and makes decisions independently. In contrast, both CFB and Chaebol come under pressure in the process of decision-making (Thompson, 1998).

Secondly, authority influences the three business systems in different ways. For example, promotion of senior managers depends on experience and skills. The Japanese Kaisha focuses on specialization, while the Korean Chaebol on diversity in portfolios. Additionally, CFB demonstrates a clear distinction between specialized management activities. They contract managerial expertise from large enterprises and organization structure owned by the family. As a result, firms concentrate on one field of practice or production, but the entire family business may ventures in different economic activities through shareholdings, partnerships, and alliances. Therefore, family can acquire a range of investments but cannot integrate through formal hierarchies (Whitley, 1992).

Another significant difference is how the business systems adapt to change or develop. Unlike the Korean Chaebol, the Japanese Kaisha focuses the general patterns of change and growth on increasing the market share. For example, the Korean Chaebol change of approach is discontinuous in terms of activities and resources. Their growth occurs through vertical integration and diversification into different portfolios. Unlike the Kaisha and CFB, growth in Chaebol business models happens through acquisition of firms. CFB achieves growth not only through an increase in volume, but also from opportunities of diversification if partners and prospects are available. Therefore, strategic change is rapid but discontinues (Whitley, 1992).

Specialization of managerial competence and capability in Japanese Kaisha encourages separation of ventures as soon as the business grows and can sustain its operations. Additionally, fast growing subsidiaries develop own funding arrangements and enterprise unions since they have a small number of shareholders. In contrast, Korean Chaebol integrates new activities through the managerial hierarchy to maintain central control. For example, CFB diversifies through partnerships with associates or through separate firms run by the family. Integration is therefore through a combination of financial control, ownership and personal loyalties. For example, the degree of integration and control of activities and subsidiaries from the main economic activity of a business differs greatly in Chaebol, considerably in CFB and least in the Kaisha business models (Whitley, 1992).



Variations in the above also reflect approaches in risk taking and management of business uncertainties. For example, the Japanese Kaisha avoids risk associated with diversification by developing employee competence. However, the business system is vulnerable to significant changes in product and input market. The Japanese Kaisha manages such risks by limiting a firm's commitment to human and material resources through subcontracting, separation of expertise staff from manual laborers, and developing partnerships with creditors, customers, and suppliers. The approach enables firms to cope with market changes since such condition can be planned jointly for mutual interest. Additionally, the model fosters employee training and staff mobility with an aim to adapt to market needs (Thompson, 1998).

In contrast, the Korean Chaebol manages risk through vertical integration and diversification into different portfolios. As a result, they allow risky ventures. However, the Korean Chaebol business model manages risk through partnership with state agencies (Thompson, 1998). Additionally, private firms contribute little capital to most capital projects such as heavy industries. The degree to which the three business models manage market risk varies significantly. For example, the Japanese firms manage risks by focusing on one portfolio with suppliers and partners on the long-term basis. As a result, they form a network of mutual commitments, which influence strategic choices for change. On the other hand, CFB focuses on flexibility and limited commitments to supplier, traders and consumers (Whitley, 1992).

Lastly, although CFB is independent to subcontractors, employees and other associates, the relationships are more personal and restricted than in Kaisha business models, which hinder radical changes. As a result, CFBs prefer to set up new firms for a new venture in different fields rather than risks exhibited in existing partnerships. Secondly, the Chaebol has lasting ties with other entities, especially state agencies and political figures (Thompson, 1998).

"Asian Miracle"

Over the past three to four decades, Korea, Singapore, Taiwan and Hong Kong among other Asian states transformed from technologically backward and poor countries to modern and affluent economies. Most of the countries have experienced more than 4 folds of increase in per capita income. Additionally, each of the economies has a large number of firms producing technologically complex products that compete against products from the West. The growth in the performance has significantly outpaced all other economies with comparable output and income in the 1960. Asian businesses have maintained cultural values that have added significantly to the economies. Therefore, Asian nations have emerged as economic giants because of effective alignment of economic policies to cultural values.

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The term "Asian Miracle" is a result of growth of tangible inputs such as capital labor and technical progress that led to increase in total factor of productivity. In contrast, the economic growth of developed countries in the west such as France, Germany, and the United Kingdome, and the U.S. is a result of technical progress (Berger & Borer, 2002). Schuman argues that there is no single culture that caused the "Asian Miracle" because the nations have different philosophies and political systems. He advances the thesis that government intervention played the key role in the growth of the economies. For example, the countries experienced economic boom under the supervision of autocratic regimes that controlled the private sector (as cited in Mahbubani, 2013).

During the emergence of the "Asian Miracle", most of the political leaders came from the nobility, but still poor class. I agree with Schuman's argument that the leaders ignored Western economy theory and used their own discretion and traditional values to run the economy. As a result, they made choices in line with traditional values, which suit the need of the society. Secondly, corporate cultures derived from society gave businesses a common ethic and strategic direction. With the government involvement in the economy and social values instilled in the markets, there was adequate capacity for the economy to expand in one direction. Otherwise, the government could not have developed feasible policies and implemented them efficiently.

Additionally, the government tailors the economy to meet social need of civilians and other economic players. Moreover, all the early boomers had inadequate natural resources, and to acquire them, they had to import. As a result, they specialized in different production lines, which they exported to gain financial capability to import. They targeted the U.S., which had an elaborate market. Secondly, since the United States focused on attaining new allies, it accepted the goods to create a buffer against the communists. It also provided logistical and military support to the countries, allowing Asian nations to focus on the economy (Parmar & Cox, 2010). Mahbubani and Kurlantzick partly agree with the above sentiments. For example, Mahbubani (2013) believes that expatriate support given to Asian students in the west has led to the "Asian Miracle". Students who graduate from the U.S. universities return home and use the knowledge to steer growth. Additionally, they agree with the idea that cultural values significantly influence the growth of the economies.

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In conclusion, business systems in Asia differ significantly in terms of size, economic activities, competitiveness, managerial experience and autonomy of senior manager from shareholders. The differences also result from business strategies such as coping with change, growth patterns, and management of subsidiaries and philosophies in dealing with risks. Asian businesses have maintained cultural values that have led to significant growth of the economies. For example, Korea, Singapore, Taiwan and Hong Kong among other Asian nations transformed from technologically backward and poor countries to modern and affluent economies.

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