My opinion this week(207):

Excellent firms and poor firms

There were two contrastive articles in the first page of Nikkei Newspaper
of Feb.26. The headline news was that Family Mart, a big convenience store
chain in Japan is going to close about 500 shops all over the country
due to their poor financial result of operation. The news was that Honda,
TDK and Advantest have been selected the best three "Excellent firms
in the year 2000". 

Not only Family Mart, but also many other convenient stores have been
reduced their sales in recent months. Total sales of convenience store
overcame those of Super Market once in recently. Such myth of growth
of convenient stores has been broken down in these days. 

The reason for it is obvious. There are too many stores to survive each
others. Family Mart is a chain that entered the market late. In Japan
we see many of such cases in various industries. Soon after any of such
big booms have gone, many businesses started reducing their business
sizes or withdrawing from the market. No surprise when we hear about
the case of Family Mart.

In contrast with the case of Family Mart, key words for those "Excellent
firms" are "profitability", "possibility for growth", "community oriented"
and "creativity and innovation". They always try to avoid to follow what
other firms do. They don't imitate  what other firms are doing. They
are not afraid to make mistakes to fulfill innovation. There is no 
diseases that is called as s disease of big business.  Honda and TDK
are really big business as a matter of fact. But they are always very
flexible and far from big business disease.

Why is Japanese economy is still in recession? There must be many
answer for that. But when it comes to the performance of business, answer
is very simple. Many Japanese business still cannot throw away the myth
of growth a decade ago. 

All business executives in Japan should now imitate the management
style of Honda, TDK and so on. That is the only way for them to
survive in the global market which become more and more competitive.

2000/3/3
Tadashi HAYASE

My opinion of this week(208):

Audit of Japan Inc.

  There are many firms the financial term of which end as of March 31.
 They are busy working on the closing of financial report. When the 
term is over, Accounting Audit firms start checking their financial 
reports and corporate auditors audit the validity of their audit 
reports. Provided that there are no problems on their financial 
statements, both audit functions report to shareholders meeting that
their management status is alright from financial points of view.

 Corporate auditors committee also check all other phase of management
of firms from legal and validity of management and report to shareholders
meeting in the same manner. Unless there were any very special problems,
their reports are kind of routine process. If there were some special 
problems on financial issues or any others pointed out and stated 
in their audit reports, all directors, especially of presidents of firms
are in trouble.

 When we look the current status of this country as Japan Inc., what will
happen ? What will happen if the same audit process is applied to this
corporation? There must be many special remarks and caution will be 
pointed out both by accounting audit firms and corporate auditor committees.
Many window dressing accounting will be pointed out by audit firms. Various
illegal phase of management process will be pointed out by auditors. 
Shareholders meeting will be in serious trouble then.

 In order to start correcting management of Japan Inc. the corporation
should start preparing some of those basic financial statement such as
balance sheet and profit & loss statement. Cash flow statement is also
very necessary.

 This necessity has been pointed out several times in the past and I
would like to repeat this again together with the necessity of introducing
the same kind of audit process to Japan Inc., in order to improve the
management of this country.

2001/3/10
Tadashi HAYASE

My opinion this week(209):

What an unreasonable process it is!

 "Prime Mister Mori finally expressed his intention to resign from the 
Premiereship."  Most newspaper reported that way in the morning of
Sunday last week. But the secretary of the Cabinet and leaders of LDP
denied the fact that Mr.Mori would resign from the position . Mr.Kamei
a chairman of policy making committee of LDP dinied the possibility of 
resignation of Mr.Mori. Such kind of explanation caused another distrust 
against politics by general public in Japan.

 If it is a resignation and if the resignation is a result of the pressure
from the party, what was the rejection of the nonconfidence vote at the 
diet two weeks ago? Leaders of LDP are worrying about the possibility that
the budget of next financial year will not be appoved by the end of this
term with the lack of political leadership. They also consider the 
importance of diplomatic schedule such as meeting with Presidents of two
big counrtries namely US and Russia during March. 

 Why do those leaders of the rulling party are particular about how it looks
in political world?  If the resignation of Mr. Mori is clear after the budget
is approved by the diet, why do they declare it? They should show all 
political schedule before and after the resignation to get cooporation 
also from oposition parties. Opposition parties will also corporate with 
them if those procedures and schedules are reasonable. 

 Needless to say, the most clear-cut process of the power transition is 
that Mr. Mori should resign immediately. All works including budget for
new year, diplomatic schedules and so forth are to be done by a new Cabinet
guided by a new Prime Minister. Nevertheless, why do they complicate the 
whole procedures? This is because each factions of LDP are starting up all
sort of rivalry within the party to select a new President of the party and
a new Prime Minister. 

 We people of Japan sincerely hope that they should stop selecting such an 
important man as Prime Minister through the deal in the backroom. Transperant
process is all what is necessary to select a new leader for this country.

2001/3/17
Tadashi HAYASE

My opinion this week(210):

Shadow Cabinet

 In the article of Asahi Newspaper of March 19th, they formulated
to show a virtual cabinet members that were selected to revive
Japanese economy and society. Who are the best virtual Prime Minister
and other ministers of the cabinet.

 According to the article, they selected Akio Morita to Prime Minister,
Jack Welch to Minister of General Affairs, Konishiki to Minister of
Foreign Affairs t, Toshio Dokou to Minister of Finance , Tadashi Yanai
to Minister of Economy and Industry, Carlos Ghosn to  Minister Traffic
Greenspan to Minister of Money Market, etc. This is stronger by
five or even ten times than the current or the next cabinet whoever
a new Prime Minister may be.

 This is only a virtual cabinet, of course. We  don't need to argue 
about how each members of the cabinet are suitable for each positions.
The common key words for each members are leadership, foresight,
innovation, international and execution.  

 One significant point for this cabinet, there are so many foreigners
including Welch, Ghosn, Greenspan and Konishiki. Unfortunately, there
are few candidates who have such endowment as mentioned above as a 
cabinet members in the current political and financial circles. The
situation is very serious if we see the fact none of politicians are
elected to this virtual cabinet from the current political world.

 When it comes to foreign candidates, there are many others who are
to be elected as cabinet members. They are, for example, M. Thatcher,
M. Golbachev, Kim Dae-Jung , etc. I personally like to recommend 
Mrs. M. Thatcher as a Prime Minister rather than Mr. Morita.

 We must admit the fact that some foreign executives such as Carlos
Ghosn , who have made Nissan Motor profitable in only one term, are so
capable in their management capacity. We regret to see that fact but
must admit that it is quite necessary to revitalize Japan Inc. 

 Although we should have no big expectation for that, we want to see
some of those innovative ideas will be introduced when next Prime
Minister create a new cabinet in near future.

2001/3/24
Tadashi HAYASE

My opinion this week(211):

Aki Earthquake

At 3 PM of March 24, I was about to go out for some business. A strong
tremor started. A bookshelf in my living room shook so much that it
 would almost fall down. I held it with both hands while earthquake 
lasted for a minute or so. 

I switched on NHK TV when the shake was over. They were broadcasting
Sumo at that time, but switched to an emergent news immediately. 
The earthquake registered an intensity of 4 in Takamatu according 
to the news. I knew the fact that the earthquake level at Takamatu was
bigger than the last Hanshin Earthquake in 1997. I was quite impressed 
with how NHK reported exactly each levels all around Cyugoku and Shikoku
area.

The focus of the earthquake is estimated to have been about 60 km below
the seabed south of the city of Hiroshima in the Seto Inland Sea . My
concern at that time was that there were any serious accidents happened
at railway transportation. My wife was coming back from Osaka taking 
Shinkansen from Osaka to Okayama just around that time. I was relived to
know that no serious railway accidents were reported in the news . Then I
got out.

The effects of earthquake was much larger in scale than the first reporting.
Two men died and 138 people injured. About 5,300 households were damaged 
or destroyed. Some lifeline including water supply stopped at some cities. 

The damage of the earthquake would have been much bigger in scale if that 
happened in such countries as India or El Salvador. The damage was not so
big in Japan because some of those infrastructure of disaster prevention
including lifeline are maintained good and public buildings and individual
houses are strong enough to stand for such strong earthquake. 

Nevertheless, it is expected some much stronger earthquakes will hit any
parts of the  country in future. It is absolutely necessary to prepare for
those by establishing firmer infrastructure of life line and constructing
stronger public buildings and individual houses. A proverb says :" Forewarned
is forearmed."

The Government is now reviewing various public works that had been conducted
in the past. It is natural that they should abolish many of those inefficient
and unnecessary projects. But many more new projects that will strengthen 
infrastructure of lifeline to prevent from earthquake are very necessary.
Many of those vulnerable public buildings and individual houses are to be 
reconstructed preparing for bigger earthquakes. 

There is no doubt that many of such public works will also help developing
economy which is very weak at the moment. No parties including oppositions
will disagree to proceed such kind of public works from now on. 

2001/3/31
Tadashi HAYASE