Saturday, November 5, 2011

No. 8: Staying in Japan to protect the state-of-the-art technology: Zebra and Fanuc (November 2, 2011)

Founded in 1897, Zebra has been specializing in writing materials. Although overseas production accounts for about 40%, the company produces its main products in Japan. Since ballpoint pens are sold at the retailer at 100 yen each on average, they can be produced at a cost about one third in China than in Japan. Nonetheless, it decided to invest 10 billion yen over the next five years to renovate its plant in Japan. The competitive edge is the pen tip that allows for uniform and smooth writing. It examines finished products to a precision of one thousandth of a millimeter and abandons all the daily productions should one of them be found beyond this precision standard. The company believes that continuous efforts to keep the product quality contribute to improving the brand equity.

Fanuc is another example to place the highest importance on the domestic production. This company builds almost all its finished products in Japan, though it sells 80% of its products in foreign countries. Its monthly robot production will increase to 5,000 units that is twice the production of its western competitors soon. The company is in a position that producing in one plant contributes to reducing production cost and increasing competitive edge. The company is in the middle of installing production equipment in the new plant scheduled to start operations coming December. It expects to increase the consolidated profits 25% over the previous year to 150 billion yen this year, achieving the record high in its history. It increased sales to about 450 billion yen in about 40 years after the foundation, and plans to increase sales to 1,000 billion yen over the next three years.

These two companies show how important it is for a company to locate its strengths and keep asking what value it can offer to customers. This approach remains the best approach to increase the brand equity in the long run even in the days of high yen.

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