Similarities and differences between japan's keiretsu and south Essay

Similarities and differences between japans keiretsu and south koreas chaebol - Essay ExampleThese enterprises were established by the Meiji government in the late nineteenth century, as a way to urge japans industrialization. Therefore, the main reason for the formation of these business enterprises was to respond to failures in the market. Companies owned by these zaibatsus were vertic anyy organized and owned by families and some eons, holding companies. According to Rosati (1993), trading companies and banks were the most powerful industries among the zaibatsu. This is because they controlled the distribution of goods and operations among the zaibatsus. The zaibatsu were abolished at the end of the Second World War by the Allied business sector Forces, when their shares were allocated to the Japanese public, in order to promote competition and equality. Rosati points out that during this period, however, the private sector had little funding capacity, and corporations among the mselves unable to raise the capital they needed (1993, p. 85). It was during this time that the practice of raising funds through loans from banks was embraced. Due to the low prices of shares and accumulation of capital in the private sector, corporations were exposed to acquisitions. This was further compounded by the incident that the stock owning capacity of banks was limited by the 1947 Antimonopoly Act (Rosati, 1993). Consequently, corporations had to invest somewhat equal amounts of capital among themselves to create stability among shareholders although there was no sensible exchange of the money. In the 1960s, Japan joined the Organization for Economic Cooperation and Development (OECD) and this led to a relaxation of capital transaction policies by the government. Since the owners of the corporations feared being taken over by foreign investors, they conducted cross ownership that brought back the links that had existed among zaibatsu groups prior to the Second World Wa r and this led to the formation of Keiretsu groups. Keiretsu groups were very prodigious in rejuvenating the providence of Japan after the Second World War. Small industries in Japan were able to develop, despite the fact that Japans economy was detached for the world markets and highly monitored. Examples of keiretsus include Mitsui and Mitsubishi. South Koreas Chaebols Origins and Features Chaebols were established by the Japanese colonial rule in Korea during the 1920s and 1930s. In fact, Koreas Chaebols were form in a similar way to the Japanese keiretsus. The main reason for the establishment of Chaebols was so that Japan could benefit from Koreas economic development. The establishment of chaebols began when Japan set up privately owned businesses in Korea, but strictly controlled business procedures, license applications, and credit. Japanese rule in Korea eventually came to an end, and this gave the Koreans freedom to adjust the business procedures and processes of the Cha ebols. Dubois (2004) points out that the effort was coordinated by president Park Chung Hee, the president of South Korea from 1961 until his assassination in 1976 (p. 42). Under the invention of chaebols, conglomerates usually controlled by a family were formed under a sole holding company. Each company held another companys shares and through this, they were all interlinked. The chaebols however had no financial institutions and this required financial support from the government, since South Koreas banks are joined together and controlled by the government.