March 11th 2020
Case study of Japanese Facsimile Industry in 1990
First of all a S.W.O.T analysis of the Japanese Facsimile industry will give us a clear view on how this
industry was dominant and its incontestable leadership and the treats it faced or shall face.
Strengths:
o Facsimile is a major mean of communication in Japan, that created incentives to innovation
o Japanese firms invested aggressively and early in new technologies
o They targeted the mid sizes corporate customers, which is numerous and flexible, and somehow
neglected by U.S firms
o They are also very quick to adopt the new G3 and G4 standards to capture and change the market
o Major U.S. being late in the tech race, eventually sourcing fax machines from Japanese firms or exit
the market
o The Incontestable Japanese Leadership In staying on top of the giants Japanese firms created
smaller machines to capture the small business and personal market.
o They also invest heavily in technology and R&D such as automations and new models to gain a
edge over competitors
o They manufacture their own important parts such as microprocessors and also ensure quality
o Japanese firms established clusters of specialized producers to further enhance their
competitiveness.
o By producing in countries with cheaper labor, they could sell their products a lower price.
Weakness:
o The existence of various distribution channels created some conflicts in the local industry.
o Heavy regulations or government intervention (NTT) to any particular economic sector in
most cases can slow the local industry.
o Local industry competing with each other
Opportunities:
Missed opportunities of other countries have been beneficial to the Japanese industry.
o In the US, there was a notable lack of interest in facsimile technology in favor of the telex and
telegraph, this was further compounded by the creation of the courier an fast mail services.
o In countries other than Japan, Incompatible Machines from different manufacturers could not
communicate with each others.
o The US neglected smaller sized customers which allow the Japanese to take over the very
potential market
o European PTTs were reluctant to push facsimile technology
o Allowing foreign firms to battle in the domestic market. This way can make local market reaches
international standard, local firms to develop.
Threats:
o Protectionist measures had closed the French market to imports, including for importing
facsimiles.
o In 1990 many European nations still imposed regulations on facsimiles
o Some of Korean electronics firms may become threat to Japanese facsimile industry in the near
future, as Samsung
o Chinese low price electronic equipment, including telecommunication equipment, also can be
pointed out as threat to Japanese market leadership in facsimile
o Competition within the local Japanese firms ( Japanese firm fighting each other’s bad for the local
economy but a good sign for the customer)
o Pitney Bowes: Major supplier of business equipment in US but purchase facsimile machine from
Japanese firm and repack to large firm in US. Thomson CSF : Only significant facsimile
manufacturer in Europe but expensive
On the other hand Analysis using Porter’s Diamond Model shows how Japanese companies became world
leader in this industry.
I. Factor input conditions:
o Specialized suppliers had grown up to serve the Japan Facsimile firms;
o Most Japanese Facsimile firms employ mass production assembly method that ensure
economic of scale and declining manufacturing costs.
o Automated part selection and flexible assembly lines resulted in rapid and inexpensive
changeovers for the major manufacturers, as well as to keep up with local regulations
and rapidly changing product lines.
o Some of Japanese facsimile firms hired electronic engineers to developing new data
compression techniques and improved facsimile components.
II. Related and Supporting Industries:
o The existence of various distribution channels: direct sales, office equipment dealers,
communication equipment dealers, computer dealers and others.
o The availability of domestic supporting component industries, such as scanners, printer
heads, semiconductors.
III. Demand Conditions:
o Cultural, most Japanese prefer handwriting in business and official documents, since it is
considered as polite and considerate in social relationship.
o Other international markets smaller sized customers which allow the Japanese to take
over the very potential market
o Strong domestic and international demand for facsimile.
IV. Context for Firm Strategy and Rivalry
o Japan firms through NEC (1928), Toshiba (1930), Matsushita (1940) were among
companies that initiated the first generation of facsimile, the tradition of facsimile
industry in Japan has been in market place for almost 100 years.
o Japanese firms were successful in making new generation of facsimile (sub minute
digital facsimile machine) with digital technology and able to scanning, processing and
sending one page of document in less than a minute;
o Japanese firms were quick to adopt new standards(G3, G4)
o Support from financial industry to provide low-interest loan to reduce production costs
and to shorten transmission time.
V. Government roles
o When NTT applied Type Approval Certification (TAC): all facsimile companies seek for
this TAC since it reflects compliance to quality standard; otherwise products that are not
certified cannot be sold in particular [Link] also functions as soft-protection to
national products. Imported products that fail from certification are not allowed to
enter national market
o Japanese Government in 1970 enacted facsimile document as legal standing, which
means facsimile-produced documents may be treated as official documents.
o The application of type approvals policy, although in short period of time held down
facsimile demand, but in long term, such policy will act as non-tariff entry barrier, as
well as incentive for domestic market to be more competitive.
Using the SWOT analysis and the Diamond model we can have a clearer picture on how the Japanese
firms dominated this industry and the short sight of International players gave room for the Japanese to
both expand their local and international dominance.
Thank you,
Tarek Assaf
