Confidential Nov.2006 “Trends in Management Consulting in Japan” Masanaka Yokota Executive of CMC System Committee of Zen-Noh-Ren JMA Consultants Inc.

ConfidentialConfidential

Nov.2006

““Trends in Management Consulting in Japan”Trends in Management Consulting in Japan”

Masanaka Yokota　 Executive of CMC System Committee of Z

en-Noh-Ren

JMA Consultants Inc.　 Vice President　

2©2006©2006

INTRODUCTION

The All-Japan Federation of Management Organizations (Zen-Noh-Ren) was established in 1949 ．

Founding Charter;

1. Be trustworthy We shall adhere to the high ethical standards, and contribute to the public

welfare.

2. Enhance the process reliability We shall strive to develop sophisticated and effective technologies and also

engage in constant capability development.

3. Enhance reliability of results We shall provide a high-level of services.

3©2006©2006

1960～ 1970～ 1980～ 1990～ 2000～1950～1940～

<Japanese Economy Trends><Japanese Economy Trends>

<Management Innovation History><Management Innovation History>

Japanese Economy and Management Innovation

Wartime controlled economy

Postwar recovery period

High-growth period

Energy saving & lean management

Bubble economy

Heisei recession

Recovery period

Process management methodology

American style management method

Productivity improvement

Strategy & marketingMarket-based flexible manufacturing

Japanese style management

American style global management

4©2006©2006

Japanese Economic Trends (GDP and Real Economic Growth Rate)

GDP & Economic Growth Rate

0

100

200

300

400

500

600

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05Year

trillion JPY

- 4.0%

- 2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

GDP

Economic GrowthBubble Economy

Source: Japanese Statistics Bureau annual materials

5©2006©2006

Japanese Economy & Consulting after Bubble Economy

Extensive corporate restructuringExtensive corporate restructuring Reorganization of facilities and labor, selection andconcentration of business (business selling-off)

Defaulted debt clean-ups and banks integrationDefaulted debt clean-ups and banks integrationPublic fund for major banks and zero interest rates

Export boom supported up by global Export boom supported up by global economic growtheconomic growth

Positive growth cycle for individual consumptionsand facility investments

Risk

　　　 Higher price of row materials and lower price of finished products

　　　 Employment shortage

6©2006©2006

10.5 5.1

1.1 3.0

23.2 4.7

52.4

0.0 10.0 20.0 30.0 40.0 50.0 60.0 %Others

Events

Education & training

Management consulting

Management Consulting in Japan

1. Constitution of consulting firms

Source:

All-Japan Federation of Management Organizations,

“Study of current status in management consulting industry”,

March 20042. Constitution of consulting sales

8.6

4.3

0.9

4.3

60.3

21.6

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 %

Others

System

Accounting

Think- tank

Functional

Strategy

7©2006©2006

Critical Issues for Japanese Companies (2004 VS.2007)

Source: Japan Management Association, “Study of critical issues faced by companies”, December 2004

2004 2007

Financial characteristics or profitability 33.2

New business, products, and service 28.0

Restructuring of existing business 27.0

Customer satisfaction 24.7

Low cost management 23.6

Sales or share 23.1

Business/differentiation strategy 14.8

Quality and hand-down of technology 12.8

Corporate culture 12.7

Corporate social responsibility (CSR) 11.3

Business speed 10.4

1

2

3

4

5

6

7

8

9

10

11

Ne business, products, and service 36.2

Customer satisfaction 20.6

Business/differentiation strategy 19.1

Sales or share 16.6

Human resource development 16.2

Global management 13.3

Corporate governance 12.7

1

4

5

6

7

8

9

Corporate social responsibility (CSR) 25.22

%

Financial characteristics or profitability 22.3

Restructuring of existing business 12.5

Low cost management 12.2

3

10

11

%

8©2006©2006

Asia Pacific Management Consulting CAGA，’ 04－’ 06

Asia Pacific Management Consulting CAGA by Country

Japan & China Management Consulting CAGA by Service Line

Source: Kennedy Information; The Asia Pacific 　　　 Consulting Marketplace Report

CAGA: Compound Average Growth Rate

（％）Service line J pan ChinaIT 2.2 29.7Strategy 1.8 18.5HR 2.0 18.2Operations 2.0 15.1Total 2.1 24.6

0

5

10

15

20

25

30

China Thailand Malaysia Philippines Indonesia South Korea Taiwan Singapore Hong Kong J apan

（％）

9©2006©2006

New Economic Growth Strategy

Aims of the New Economic Growth Strategies

Source: Japanese Ministry of Economy, Trade and Industry, June 2006

New Growth under the Conditions of Population Decline• Strategic promotion of policies

Virtuous Cycle of Innovation and Demand

• Growth in Japan and Asia

• Domestic demand creation

Manufacturing and Service Industries forming the “Twin Motors” of Economic Growth

• Productivity improvement in service industry which covers 70% of the total GDP

Bright Future in Sight following Reforms• Social security system as society to continues to age

• Financial restructuring

10©2006©2006

New Economic Growth Strategy (Ministry of Economy, Trade and Industry, June 2006)

Five Areas for Cross Functional Innovation

Source, “New Economic Growth Strategy ”, June 2006

People

“HITO”

People

“HITO”

Goods

“MONO”

Goods

“MONO”

Technology

“WAZA”

Technology

“WAZA”

Money

“KANE”

Money

“KANE”

Knowledge

“CHIE”

Knowledge

“CHIE”

11©2006©2006

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