keiretsu business group

keiretsu business group
keiretsu or keiretsu business group
Gen Mgt, Ops
a Japanese loose conglomerate company that promotes interdependencies between firms with interlocking interests in each other and is characterized by close internal control, policy coordination, and cohesiveness. Keiretsu business groups are alliances between firms that share close buyer-supplier relationships. The issue of interlocking shares by group affiliated companies to member companies of the group keeps ownership in friendly hands, helps prevent foreign takeovers, and aids a company’s long-term survival and growth. There are two sorts of keiretsu operation: horizontal keiretsu, in which member firms are involved in different industries: and vertical keiretsu, in which member firms in one industry form themselves into a hierarchy with a lead company. Vertical KBGs consist largely of manufacturing companies and their subcontractors. Some keiretsu are 350 years old, but most developed from the prewar zaibatsu. The Korean equivalent of the keiretsu is the chaebol, and a Mexican equivalent is the grupo.
Abbr. KBG

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