Saturday, December 31, 2011

No. 17: Secret of the continued success of Yamato Transport (January 1, 2012)

Yamato Transport is the pioneer and all-time leader of the home delivery business in Japan with a share of 42.0%. When you look into Yamato’s activities, you will learn that constant and strenuous efforts alone to develop and expand the market allow a company to maintain the market leader position. Yamato started the home delivery service in 1976 and delivered 1.7 million packages in the same year, and it is supposedly to have delivered 1,400 million packages in 2011. 

After the March 11 disaster, Yamato established a system to save 10 yen from each package for a subsidy to purchase equipment and instruments necessary for fish processing in the devastated area. The company contributed more than 13 billion yen. Although it is clear that it will result in net loss in the current business year, it gave the highest priority to the reconstruction of the local industry. In another prefecture, it introduced an even faster delivery system in alliance with a local supermarket chain. An order the supermarket chain receives from a customer by 4:00 p.m. through its website is delivered to the customer the next day wherever he lives inside the prefecture. 

Yamato places the highest importance on listening to the opinions in the field. A total 55,000 deliverymen and staff members in the operation centers create ideas for new service under the company concept, “We not only deliver packages but also create customer satisfaction.” In another prefecture, Yamato established a system to receive malfunctioning home appliances, fix them, and return them to the customers in just three days in the fastest case. The company is developing repairmen to shorten the delivery time and reduce repair cost. This business now handles more than 10,000 home appliances per month.

Yamato is also energetically expanding the business overseas. Unlike western home delivery companies that entrust local partners with details of local operations, Yamato instills the Yamato way into the mindset of local people. A Chinese deliveryman cannot understand why he has to say “Thank you” to the recipient to whom he delivers a package. However, these kinds of people are now reportedly willing to say, “Thank you!” to the recipients.

The development of the home delivery business goes hand-in-hand with the development of information technology. Yamato never loosens it hold on applying IT to the business development. In Tokyo, it now can deliver an order to a customer inside Tokyo in just four hours in the fastest case thanks to its self-developed See-T Navi. The system enables a customer to take delivery of an order that he places midnight through TV mail-order program early next morning. The company is on the way to expand this system in other metropolitan areas.

The Yamato case tells us how important it is to make constant and strenuous efforts to segmentalize the market and create and develop customers in the well-established business domain.

Wednesday, December 28, 2011

No. 16: Magazine market is shrinking consistently (December 29, 2011)

The magazine market will supposedly decrease to less than 1,000 billion yen in 2011 for the first time in 27 years. The annual sales are estimated to decrease 6-7% from the previous year to 985 billion yen in 2011. Annual magazine sales increased continuously after 1951 when the statistics began to be released and peaked at 1,565 billion yen in 1997. Subsequently, however, sales decreased 13 years in a row mostly because of the spread of the Internet.

The number of titles decreased to 3,453 in 2010 after it peaked at 3,652 in 2006. About 160 titles including information magazines and fashion magazines will be suspended or discontinued in 2011. A leading book dealer told, “With the spread of smartphones, the means that people use to get information are undergoing a radical change.” Although the decreased sales can partly be attributable to the distribution channels damaged by the East Japan Great Earthquake in March, smartphones are surely replacing magazines as a means to collect information among consumers. Book sales are expected to remain almost the same at 820 billion yen in 2011, making the total market of magazines and books decrease 4% from the previous year to 1,805 billion yen.

Wednesday, December 21, 2011

No. 15: Fanuc doubles the production capacity of multijoint welding robots (December 22, 2011)

Fanuc started the operation of its new plant in Yamanashi Prefecture on December 20. With the new plant, the company doubled its production capacity of multijoint welding robots for vehicles production to 5,000 units per month. Thanks to the expansion, it can satisfy more than 40% of worldwide demand for multijoint welding robots. As a company policy, it does not plan to build a plant in a foreign country even in the current high yen period.

The president proudly proclaimed the ability of his company to overcome the current high yen period by enhancing the automation of production process. In fact, Fanuc has characteristically a higher in-house production ration than its competitors. The constant efforts to reduce production cost allow it to stay in Japan. The proximity between the R&D division and the production site is also a big factor because it increased the speed of product development. And the concentrated production also affects its results favorably. Fanuc recorded the highest consolidated net profit in its history for the half-year period between April and September 2011, besides maintaining the operating profit of higher than 40%.

Its rival, Yasukawa Electric, made an announcement to consider the production in China and other Asian countries as the first company to reveal the plan of overseas production. The world market of industrial robot is expected to increase 20% from about 140,000 units in 2011 to about 170,000 units because of the demand increase in China. As the market grows, the competition will intensify and the strategy on production site will become critical.        

Monday, December 19, 2011

No. 14: Who said opticians are only for myopic and hyperopic people? (December 20, 2011)

With the spread of the Internet, it is growing rather hard to quantify consumer behaviors precisely. Market research is no longer a mighty tool. Hunch and instinct are dangerous tools. However hard you may try to know in advance how much your product will be accepted by the market, no consumers can realize how wonderful your product is before they see and touch it.

JINS, an optician chain that focuses on low-priced eyewear, doubled its sales over the level in two years ago to about 15 billion yen. Given the fact that the current eyewear market shrank 30% from the peak, the results of this optician chain are rather striking. The president asked himself, “Is an optician for only myopic and hyperopic people?” He launched eyewear that blocks off blue light coming from the PC monitor supposed to deteriorate the function of the retina. He further prepared several kinds of unmagnified eyewear depending on playing scene for golfers. More than 10% of the visitors of this optician chain are neither myopic nor hyperopic.

He asked himself again, “Why does the price of eyewear depend on magnification, even though the price of shirts does not vary with body size?” In this optician chain, the price of eyewear does not vary with magnification. It varies only with the lens quality. These ideas let the chain grow business rapidly. For your information, the president is neither myopic nor hyperopic. Headquarters of this chain does not hold a regular meeting. Staff members get together and hold a meeting whenever they come across an interesting idea and discuss what they should do to create something new.

Consumers are naturally capricious. For example, McDonald's launched a hearty hamburger named Quarter Ponder despite the current health-conscious trend. It sells fast, while the hamburger it launched following the Korean boom did not sell as fast as the company predicted beforehand. What is important now seems to be an organization and company climate to create something new that surprises consumers.

Saturday, December 17, 2011

No. 13: Material producers are expanding production capacity hastily to cope with growing demand for lithium-ion battery (December 18, 2011)

Toda Kogyo and Mitsui Engineering and Shipbuilding will jointly build a plant to produce newly developed a cathode material with an investment of about 5 billion yen. The new plant will be built inside the Chiba plant of Mitsui Engineering and Shipbuilding. It will start operations between January and March 2013 with an annual production capacity of 2,100 tons. The newly developed cathode material is lithium phosphate. It does not need the addition of rare metals, and it has a 10 times longer life than the existing cathode materials.

Asahi Glass will start production of cathode materials in China starting April 2012. It will invest about 1,000 million yen to acquire a local company in Jiangsu of China through its subsidiary. The Chinese company is building a plant in Wuxi for the production of lithium cobalt oxide. Asahi Glass has two plants in Japan, and the plant in China will be its first plant abroad. Because Asahi’s customers are rushing to the Chinese market, Asahi decided to branch out into China. Asahi’s production capacity will be double with the plant in China.

Ube Kosan established a joint venture company with Dow Chemical in Michigan in December for the production and marketing of electrolyte. It will build a plant with an annual production capacity of 5,000 tons that will start operations late 2012. Ube plans to build a joint venture company in China and Europe. Ube is world’s largest producer of electrolyte for lithium-ion batteries 20% share in the world market.
Japanese companies have strong presence with technological excellence in the lithium-ion battery material business. In the cathode material business, the market leader is Nichia Corp. that is followed by Toda Kogyo and Asahi Glass. Ube and Mitsubishi Chemical have strong presence in the electrolyte market. Hitachi Chemical and JFE Chemical are the two names in the negative-electrode material market, while Asahi Chemical and Ube are strongly active in the separator business.

According to the survey conducted by a public research firm, the world lithium-ion battery market will grow 3.6 times over the level in 2011 to about 4,110 billion yen in 2020. In particular, demand for in-vehicle lithium-ion battery is estimated to grow 40 times in the same period due to the spread of electric vehicles ad hybrid cars. Because the in-vehicle lithium-ion battery requires a high degree of dependability and durability, collaborative research and development is supposed to spread quite rapidly.

Tuesday, December 13, 2011

No. 12: Three factors to increase current profits than planned in the current turbulent times (December 14, 2011)

According to the survey conducted by Nihon Keizai Shimbun, more than half of the listed companies that will close the current account year on March 31, 2012 are expected to increase the current profits than planned. Japan has a total of 1,692 listed companies that close the account on March 31 every year, and 936 companies, or about 55% of the 1,962 companies, are expected to improve the current profits and 171 companies, or about 10%, are expected to achieve the highest current profits.

The factors that allow the 936 companies to achieve such favorable results can be divided into three categories. One is the strong domestic demand. The companies classified in this category include Softbank that is a mobile phone carrier, Yamada Denki that is the leading volume retailer of electric products, and Bookoff that is a secondhand bookseller chain, and Kameda Seika that is a famous Japanese snack maker. The second category contains companies that successfully developed markets in newly industrialized countries. They include Fanuc that is a robot maker, Uni-charm that is Japan’s leading napkin maker, Marubeni that is one of Japan’s general trading companies, and JGC that is an engineering company. The third category contains such companies as Toray, Kuraray, and Nidec, all of which are enjoying a big market share in the respective markets in Japan.

In summary, the three factors are the ability to develop the domestic market, the ability to cultivate foreign markets, and the ability to increase the share with excellent technology. In short, the efforts to focus on the fundamentals seem to have worked well.