Strategic Management
Topic:
PEST ANALYSIS OF JAPAN.

Submitted To: Sir Faiez H. Sayel
Submitted By: Ali Ahmad Majoka 006 Ifrah Javaid 045 Muhammad Habibullah 084 Nayab Ameen 115 Sharjeel Arslan 139 Zahid Yousaf 166 Qaiser Abbas 175
Section:
MBA-13C COMSATS Institute of Information Technology, Lahore

PEST Analysis of Japan:
Political analysis:
• Political System:
Japan is a democratic country, but it is a very different kind of democracy to that prevailing in most of Europe in countries like France and Germany. The main reason for this is the dominant position of one party – the Liberal Democratic Party – which held power almost unbroken for more than 50 years.
• The Diet
Japan is a parliamentary kingdom governed by a Prime Minister and his cabinet. The parliament is called the Diet and is composed of the upper House of Councilors and the lower House of Representatives. The House of Representatives can be dissolved anytime by the Prime Minister. The lower house holds most of the decision power. The party which achieves a majority in the lower house can nominate the Prime Minister (usually the party president).
• Political parties
The Liberal Democratic Party (LDP) is the only stable party of the last 4 decades. It has been in power since its foundation in 1958, keeping an undisrupted majority in parliament.
At the moment, the second most popular party is the newly founded Democratic Party of Japan (DPJ). It defeated the LDP by a single seat at the last Upper House election in 2004.
The Komeitō or "Clean Government Party" (CGP) is currently the third major party, but only account for 5 to 10% of the seats. It is the political branch of the controversial postwar Buddhists. Other parties include: the Japanese Communist Party, which stay with a constant 3 to 5% of the seats at the Diet; the Japanese Socialist Party has almost completely disintegrated after internal dissensions; the Liberal Party and the Social Democratic Party.
• The Judicial System
The Supreme Court is the highest court in the land. The Chief Justice is appointed by the Emperor following selection by the Cabinet. Fourteen other judges are selected and appointed by the Cabinet.
Every 10 years, a justice's tenure has to be confirmed by referendum. In practice, the justices are almost always reselected and are allowed to serve until the age of 70.
• Election system
The legal age for voting is 20, while the minimum age to stand for election is 25 for the lower house and 30 for the upper house.
There are 252 Councillors elected for 6 years and 480 Representatives elected for 4 years.
Japanese laws prohibit candidates to make written propaganda during the electoral periods - which means that also Internet campaigns are not allowed. As a result, politicians have to resort to shouting in loudspeakers in little vans while driving around their electoral constituencies.
Economic Analysis
In the decades following World War II, Japan implemented stringent tariffs and policies to encourage the people to save their income. With more money in banks, loans and credit became easier to obtain, and with Japan running large trade surpluses, the yen appreciated against foreign currencies. This allowed local companies to invest in capital resources much more easily than their competitors overseas, which reduced the price of Japanese-made goods and widened the trade surplus further. And, with the yen appreciating, financial assets became very profitable.
With Japan's economy driven by its high rates of reinvestment, this crash hit particularly hard. Investments were increasingly directed out of the country, and Japanese manufacturing firms lost some degree of their technological edge. As Japanese products became less competitive overseas, some people argue that the low consumption rate began to bear on the economy.
Japan is the 3rd biggest economy in the world, and the gaming market in Japan is extremely biggest due to its popularity. However, due to the recent earthquake, Japan’s economy has temporarily taken a turn for the worse. Also, expenditure on entertainment has decreased while expenditure on essential supplies such as food has increased. It may be a while before Japan returns to it’s original state and has a demand for video games again.

Closer economic analysis of Japan reveals that there are certain significant areas such as social services and education that have not been accorded much importance when allotting financial aid in times of monetary crisis.

Japan economic analysis reveals that this country is in throes of recession as a result of decrease of its exports. When global financial crisis broke out in 2008 in United States of America because of downturn of subprime mortgage market Japan had not been affected as such because of its comparative lack of exposure but afterwards global financial crunch caught up with it when exports scenario became well nigh redundant.
Deflation from the 1990s to present
Deflation in Japan started in the early 1990s. On March 19, 2001, the Bank of Japan and the Japanese government tried to eliminate deflation in the economy by reducing interest rates (part of their 'quantitative easing' policy). Despite having interest rates down near zero for a long period of time, this strategy did not succeed. Once the near-zero interest rates failed to stop deflation, some economists, such as Paul Krugman, and some Japanese politicians spoke of deliberately causing (or at least creating the fear of) inflation. In July 2006, the zero-rate policy was ended. In 2008, the Japanese Central Bank still has the lowest interest rates in the economy.
Systemic reasons for deflation in Japan can be said to include:
• Fallen asset prices. There was a large price bubble in both equities and real estate in Japan in the 1980s (peaking in late 1989).
• Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, many loans went unpaid. The banks could try to collect on the collateral (land), but due to reduced real estate values, this would not pay off the loan.
• Fear of insolvent banks: Japanese people are afraid that banks will collapse so they prefer to buy gold or (United States or Japanese) Treasury bonds instead of saving their money in a bank account. People also save by owning real estate.
The Japanese are also hard workers, a fact that has contributed to economic growth. On this they surpass even Americans are traditionally assumed to be the world’s most industrious nations. Sun spent after the 1987 report by the Japanese Ministry of Labour, an average worker in a Japanese work 2168 hours per year at work than the U.S. average of 1949 hours over. The willingness to work hard and extra hours has helped set the high performance.
The Economist has suggested that improvements to bankruptcy law, land transfer law, and tax laws will aid Japan's economy. In October 2009 the Japanese government announced plans to increase tobacco and green taxes while reducing rates for small and medium sized companies.
Social Analysis:
• In Japan Sociological structure depends upon following:-:
– Cultural aspects, health consciousness, population growth rate, age distribution,
– Organizational culture, attitudes to work, management style, staff attitudes
– Education, occupations, earning capacity, living standards
– Ethical issues, diversity, immigration/emigration, ethnic/religious factors
– Media views, law changes affecting social factors, trends, advertisements, publicity
– Demographics: age, gender, race, family size
People and Society, Social Structure in Japan
A largely homogeneous society, Japan does not exhibit the deep ethnic, religious, and class divisions that characterize many countries. The gaps between rich and poor are not as glaring in Japan as they are in many countries, and a remarkable 90 percent or more of Japanese people consider themselves middle class
However, some significant social differences do exist in Japan, as evidenced by the discrimination in employment, education, and marriage faced by the country’s Korean minority and by its burakumin. Burakumin means “hamlet people,” a name that refers to the segregated villages these people lived in during Japan’s feudal era. Burakumin are identical from Japanese racially or culturally, and today they generally interact with the rest of the population.
Despite the shift toward individual empowerment, Japanese society remains significantly group-oriented compared to societies in the West. Japanese children learn group awareness at an early age within the family, the basic group of society. Membership in groups expands with age to include the individual’s class in school, neighborhood, extra curricular clubs during senior high school and college, and, upon entering adulthood, the workplace. All along, the individual is taught to be dedicated to the group,
Most groups are structured hierarchically. Individual members have a designated rank within the group and responsibilities based on their position. Seniority has traditionally been the main qualification for higher rank, and socialization of young people in Japan emphasizes respect and deference to one’s seniors. Japanese language
The Japanese language is spoken mainly in Japan but also in some Japanese emigrant communities around the world. Japanese is written with a combination of three scripts: hiragana, derived from the Chinese cursive script, katakana, derived as a shorthand from Chinese characters, and kanji, imported from China. The Latin alphabet, rōmaji, is also often used in modern Japanese, especially for company names and logos, advertising, and when inputting Japanese into a computer. The Hindu-Arabic numerals are generally used for numbers, but traditional Sino-Japanese numerals are also common. Japanese painting
Painting has been an art in Japan for a very long time: the brush is a traditional writing tool, and the extension of that to its use as an artist's tool was probably natural
Dresses:
Traditional Japanese clothing distinguishes Japan from all other countries around the world. The Japanese word kimono means "something one wears" and they are the traditional garments of Japan.
Formal kimonos are typically worn in several layers, with number of layers, visibility of layers, sleeve length, and choice of pattern dictated by social status, season, and the occasion for which the kimono is worn. Because of the mass availability, most Japanese people wear western style clothing in their everyday life, and kimonos are mostly worn for festivals, and special events. As a result, most young women in Japan are not able to put the kimono on themselves. Many older women offer classes to teach these young women how to don the traditional clothing.
Happi is another type of traditional clothing, but it is not famous worldwide like the kimono. A happi (or happy coat) is a straight sleeved coat that is typically imprinted with the family crest, and was a common coat for firefighters to wear.
Japan also has very distinct footwear. Tabi, an ankle high sock, is often worn with the kimono. Tabi are designed to be worn with geta a type of thonged footwear. Geta are sandals mounted on wooden blocks held to the foot by a piece of fabric that slides between the toes. Geta are worn both by men and women with the kimono
Sports
Baseball, football, and other popular western Sports were imported to Japan in the Meiji period. These sports are commonly practiced in schools along with traditional martial arts.
Baseball is the most popular sport in Japan. Football is becoming more popular after J league (Japan professional soccer league) was established in 1991.In addition, There are many semi-professional organizations which are sponsored by private companies. For example , volleyball, basketball, rugby union, table tennis, and so on. The motorsport of drifting was also invented in Japan.
National character Cultural map of the world according to the World Values Survey, describing Japan as highest in the world in "Rational-Secular Values".

Technology Analysis: Technology began to increase due to Japan’s commitment to export-oriented, that the world would offer high-quality of goods. This progress began with the production of textiles, and noteworthy at this point Japanese goods for low added value and a perception of poor quality. This perception disappeared after the war when Japanese companies that have a reputation for low incidence of defects, ease of use , installation of advanced technology and reasonable prices won, “an incredible variety of consumer and industrial products churned.

In particular, the introduction of advanced research and advanced technologies from Japan one of the leading manufacturers of Hi-tech products and consumer products including all kinds of electronic devices and electronic components such as semiconductors. Recently Japan has been a pioneer in the production of digital products and today’s best sellers like “Flat-panel TVs, cell phones, digital cameras and DVDs.”
Japanese goods, which are based on advanced technologies to the nation on high added value included in their products and to sell goods in a variety of markets, despite high labor costs become another reason why Japan is one of the leading companies in the industrialized world was the traditionally high savings rate in the nation.
Thus, in 1987 according to data from the Bank of Japan internationally comparative statistics, 1989, the Japanese savings rate of 15.1% compared to the U.S. by only 6.6%. Private savings creates a flow of funds to finance start-ups, the Japanese capitalists were able to transform business projects. Most analysts would agree with “private savings, the banks and other financial institutions to lend again expanding companies, are extremely important for economic growth.”