Japan’s Car market conundrum

In class, we discussed the idea that productivity is a measurement derived from how much outputs are produced over how many inputs are put into the production. Knowing how important production is, I decided to compare the math with the practice of making cars.

An article in the Economist discusses how large Japanese automobile manufacturers such as Nissan, Toyota, and Honda make money by large productivity. The article reports that many car makers believe that a firm must churn out at least 6 million cars in order to make money. This makes sense, as more production eventually becomes cheaper due to economies of scale.

However, the main purpose of the article was examining how market followers, such as Mazda, Mitsubishi, Suzuki, and Subaru are making a profit without the mass production. Being smaller firms, they do not have the means to compete on volume, as is the norm with the market leaders. To further emphasize their desire for independence, many car markers have thumbed their nose at merging with their larger competitors, instead focusing on exporting their cars to the US, and capitalizing on cheap labor from places such as India. So, through a mixture of tax breaks and the focus on improving efficient consumption of oil, smaller car manufacturers have been able to cling to their independence.

However, there are problems on the horizon. It is apparent that many of the large car manufacturers are focusing on new fuel mediums. This is due primarily to the effect oil pollution has on the environment. Pro-environmental pressures are making noise about continued development of oil-powered cars. In addition to these pressures, government officials add further strain by passing stiff taxes on the purchase of oil. It is known that the development of cleaner fuel will result in more jobs, but it also puts the smaller car manufacturers at a disadvantage.

In this market, it can safely be assumed that the market followers should have merged with the leaders. In this case, productivity is, indeed, an important component. In the current situation, these car manufacturers enjoy freedom from the sway of the big three. However, in the long run, the tax breaks and oil efficiency will be phased out, and once more, productivity will be the primary dominant measurement of success.

However, falling oil prices may stave off environmental watchdogs and provide a saving grace for the smaller companies, allowing them time to transition from oil to another fuel source. Also aiding these smaller companies is Japan’s history of supporting failing businesses. But it is uncertain whether or not this will be enough to prop up the smaller companies, as Japan has just exited a deflationary period, resulting in a weakened currency and a more expensive bailout bill .

Given all of this, what do you think that the followers should do to protect their business? Do you think that gas prices will afford enough protection? Will Japan continue their history of bailing out failing companies now that they have weaker currency?

“Lots of Oomph; Japanese Carmakers.” Economist 25 Oct. 2014: 68. Print.

“Replacing Oil: Alternative Fuels and Technology.” Replacing Oil: Alternative Fuels and Technology. Web. 10 Nov. 2014.

Which Japanese company should I analyze for quality management, Atlas Copco or Mr. Sparkle?

Even though I am a big Simpsons fan, I will have to choose Atlas Copco. I will analyze an Atlas Copco’s Japanese division’s emphasis on quality, which in turn is related to how the factory addresses prevention cost.

My primary source for this post is this two and a half minute video, entitled “A career at Atlas Copco: Quality Control engineer.” The interviewee’s name is Shinpei Muto and he works in an Atlas Copco surface drilling factory in Japan.

A career at Atlas Copco: Quality Control engineer

As the 34 second mark shows, Atlas Copco’s first priority is customer satisfaction. Furthermore, at the 39 second mark, the mission of this factory “is to provide world-class safety and top quality, as well as an environmentally friendly product and service” (AtlasCopcoGroup). One way the factory addresses customer satisfaction, and thus their mission, is through quality control. As the quality control engineer, Mr. Muto’s duties include inspecting the “incoming parts[,] as well as the final check on the product before shipping” (AtlasCopcoGroup).

Mr. Muto’s job is important because in order for the customer to be satisfied, the customer must receive a fully functioning, Atlas Copco drill. The customers presumably have high expectations as they are expecting a top quality drill equipped with world class safety. As our book’s pages 190-191 discusses, quality improves reputation and reduces the risk of product liability. At the bare minimum, Atlas Copco wants to maintain its reputation as a world class company. At the 1:16 mark, Mr. Muto raises the concern that a product with a loose bolt could be a serious problem. The serious problem is of course costly litigation that will most likely involve the international courts. Mr. Muto wants to prevent this because product liability lawsuits will hurt the Atlas Copco image, as well as cost him his job.

At 1:38, we learn that Atlas Copco provides the opportunity for employees to take 40 hours of training per year. From this fact, I assume Atlas Copco as a whole does this and not solely Mr. Muto’s factory. By offering training, Atlas Copco is addressing one of the four major categories of costs that are associated with quality; prevention cost. Prevention costs are costs that are “associated with reducing the potential for defective parts or services” (Heizer and Render 192). By offering training, Atlas Copco is reducing the likelihood for defective parts, and thus live up to their mission.


How can you compare Atlas Copco’s emphasis on quality with that of your job?

Does your workplace account for any of the four major categories of costs associated with quality? (Prevention costs, appraisal costs, internal failure, and external costs).


Works Cited

AtlasCopcoGroup. “A Career at Atlas Copco: Quality Control Engineer.” YouTube. YouTube, 02 May 2012. Web. 31 Oct. 2012. <http://www.youtube.com/watch?v=kDp2SDhzMmQ>.

Heizer, Jay H., and Barry Render. “Managing Quality.” Principles of Operations Management. 8th ed. Boston: Pearson Education, 2011. 207. Print.