Japanese Quality Systems from a Marketing Viewpoint
| Date | 01 September 1982 |
| Pages | 8-14 |
| Published date | 01 September 1982 |
| DOI | https://doi.org/10.1108/eb057276 |
| Author | William A. Mahon,Richard E. Dyck |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Japanese Quality Systems
from a Marketing Viewpoint
by William A. Mahon* and Richard E. Dyck≠
Introduction
In the decade after the end of World War II, Japan com-
menced a new kind of invasion of the West. Japanese com-
panies, trade associations and government organisations
began to send missions of industrialists, bureaucrats and
scholars overseas to study advanced systems of industrial
production. Japan needed to adopt as much state-of-the-
art technology as possible in order to take advantage of its
abundant labour supply and to produce goods at low
prices and of sufficient quality to penetrate world markets.
The Japanese learned their lessons well; in the late
1960s, Japanese competition started to gain leadership in
world markets. Several advanced industrial nations, in-
cluding the US, began experiencing unfavourable trade
balances with Japan, and a number of industrial fields
such as shipbuilding, steel, optics and household elec-
tronics became dominated by Japanese firms.
Until recently, the common explanation for Japan's suc-
cess was aggressive price competition. According to this
view, Japanese firms tolerate short-term, low-profit
margins in order to buy market share and achieve long-
term prosperity. The fact that Japanese executives take a
long-range view cannot be denied: the permanent employ-
ment system and high debt-equity ratios of Japanese firms
allow for an emphasis on long-term growth over short-
term profits. However, short-term profitability has not
been sacrificed only for share buying, but also for high
rates of capital investment and development of advanced
production technology.
The Japanese have achieved the enviable
position of being able to
sell
at prices
which are often higher than average because
of superior quality and performance
Today, it is more accurate to view Japan as a threat not
because of low-priced share buying but because Japanese
companies are more productive (see Table I) and, equally
important, because Japanese-made goods are often of
uniform, higher quality than those of the competition.
The Japanese are world leaders at non-price competi-
tion. They have achieved the enviable position of being
able to sell at prices which are often higher than market
averages because of superior quality and performance. In
two recent examples — auto parts and semiconductors —
competitors have begun to realise that they have lost share
to Japan not because of price or unfair trade barriers, but
because of low reject rates. This situation, one which is
Table I. Productivity Rates of US
and Japanese Labour
Total Manufacturing
Food Products
Textiles
Pulp
Chemicals
Petrochemicals
Rubber Products
Ceramics
Iron and Steel
Nonferrous Metals
Electrical Equipment
Automobiles
(Japan = 100)
1958-59
282
268
424
219
289
- - -
208
272
200
284
202
388
1963
248
272
348
225
246
- - -
171
217
198
264
162
296
1972
121
229
170
164
139
87
95
101
98
166
87
144
1978
104
288
158
135
109
76
76
94
77
146
58
112
1979
98
287
164
- - -
104
- - -
- - -
- - -
- - -
- - -
54
- - -
Japan has long been known for its high rates of productivity growth. In
1979,
these growth rates finally achieved absolute levels which were
higher than those in the US. (Japanese rates of productivity are taken as
100.)
Source: Nihon
Keizai Shinbun (Japan Economic
News),
8
October
1980.
certain to be repeated time and again in the 1980s, runs
counter to the common wisdom of business: Japan is able
to produce superior goods at higher rates of productivity,
i.e. lower cost, than its most advanced competitors. In ad-
dition, the costs which Japanese companies incur for fixed
assets (land and capital), labour, energy and natural
resources are as high or higher than other industrialised na-
tions.
Somehow, Japan is able to do more with less.
The Japanese overseas study tours of the 1950s were not
immediately reciprocated by the more advanced in-
dustrialised nations — at the time, there was no need.
Beginning in the 1960s, developing nations in Asia and SE
Asia began looking at Japan as a possible model for late
starters. But today it is time for the industrialised nations
of the West to start looking at the Japanese system. Japan
is more than a non-Western country which has imported
Western modes of manufacturing and uses them well. It is
a nation which has developed systems of modern manufac-
turing which are often unique and better. These systems
cannot be ignored; the necessity to know Japan stems not
only from the need to know the competition but also from
our own need in the US for role models in our current at-
tempts to revamp our industrial system.
Late in the game, study groups of Western industrialists,
scholars and government officials are finally beginning to
* William Mahon is a Managing Consultant with General Electric Co's
Marketing Consulting Services.
≠ Richard E. Dyck is North Pacific Sales Manager.
8 INDUSTRIAL MANAGEMENT + DATA SYSTEMS
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