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Accenture discusses how, faced with increasing global competition, the high-tech industry in Japan will have to carry out far-reaching changes to regain its former glory
The competitive landscape of the Japanese high-tech market has been redrawn by aggressive global players and changing consumer behavior, particularly in fast-growth emerging economies. To remain relevant, Japan’s high tech industry must reinvent itself quickly to cut costs, harness group synergies and build on core strengths to unlock new value opportunities.
Aligning operating models and capabilities to a competitive essence better suited to the demands of a crowded market will be key to achieving high performance. Actions will be needed in three broad areas:
Japanese high-technology players must also draw up plans to harness synergies and reduce inefficiencies across the organization. But becoming leaner and fitter is not enough. Only by operating smarter than the competition will these companies restore investor confidence in the future.
Learn more about Accenture’s research for the Electronics and High-Tech Industry
It has been a difficult decade for the Japanese high-tech industry. Japanese high-tech companies have been buffeted by Chinese and South Korean competitors, which have made major inroads into emerging economies with mass-market products. Japanese companies have also been slow to define consumer experience, leaving the field open to global competitors.
A study by Accenture Research has found there has been an erosion of investor confidence in the future of the Japanese high-tech industry. The analysis of 55 companies from six regions showed long-term investor confidence in Japanese high tech was at its lowest when measured against high-tech sectors in the United States, South Korea, Western Europe, China and Taiwan.
But now there is evidence of a growing sense of renewal. Some Japanese high-tech companies are investing profits from existing traditional businesses into new business areas by taking advantage of unique core technologies.
Japanese high-tech companies can hasten growth by building on core strengths that help differentiate them from global competitors. These strengths include:
Robust supply chains that can be made more flexible, agile and responsive to local needs.
A well-educated and stable workforce with a long-term commitment to their employers.
Access to affordable capital that can be used to rebuild for the future.
A tech-savvy and price-conscious domestic high-tech market that serves as a springboard for innovative global expansion.
Japan’s high-tech companies will also need to align their operating and business strategies—and accompanying capabilities—to spur growth and energize their market presence. To achieve this, they must strengthen the three elements of competitive essence:
Market focus and position: Japan’s high-tech companies can use core strengths to quickly expand into adjacent products and services in:
They must also widen their world view, especially in developing economies where consumer behavior varies widely from that on home turf.
Distinctive capabilities: Japanese high tech will need to revisit its ability to go beyond process excellence. Playing a critical role here will be:
Innovation: Moving from in-house innovation to more distributed models that drive down costs and create a more customer-centric product development process.
Consumer experience: Tightly integrating software and hardware to create market differentiation.
Cost cutting: Carefully defining the right production bases, restructuring headcount and relocating or outsourcing headquarter operations.
Performance anatomy: To “out-execute” the competition, the three key areas of transformation are:
Based on Accenture’s understanding of the challenges faced by Japanese high tech, we believe these companies first need to “shrink to grow.” Of course, each player will need an individual strategy based on its core strengths and the value opportunities it wants to unlock. But we see Japan’s high-tech companies in four possible scenarios:
Accenture believes that as the operational excellence of Japanese manufacturing is high, it will be easier for Japanese high tech to move from rightsizing domestically to conducting “heart surgery” at scale by implementing deep cost restructuring and leveraging group synergies. This will lead to a “shrink” phase.
After realigning their operations and businesses to competitive essence, Japanese companies can then make the transition to becoming global solutions providers through product portfolio, innovation and talent globalization.
April 16, 2013
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