5 ms·

It reminds me of the "Sears could have been Amazon" post from 2007[1]. I don't know if it's selection bias, but asian companies seem to be ridiculously diverse

by pfranz 8y ago

It reminds me of the "Sears could have been Amazon" post from 2007[1]. I don't know if it's selection bias, but asian companies seem to be ridiculously diverse (Mitsubishi makes cars, elevators, air conditioners, and is a bank. Yamaha makes pianos, electronics, and motorcycles). US companies seem super focused on maximizing their core business. I'm sure they have different incentives that cause this. [1] https://www.metafilter.com/62394/The-Record-Industrys-Decline#1742245 https://www.metafilter.com/62394/The-Record-Industrys-Declin...

madeofpalk 8y ago
GE? From television stations to jet turbines for aeroplanes.
- pfranz 8y ago
  The US does have a handful of relatively old, diverse companies, but when traveling or reading into other countries it seems like diverse companies are either more user-facing or more common. It just seems common in the US to hear about once innovative companies over invest in their main business model and die off. Retail like Woolworths, Sears, and Toys R Us come to mind, but so does Flickr. Maybe that's preferable since older companies carry along cruft, but it's interesting to compare the two.
- joezydeco 8y ago
  GE also has a massive finance arm.
  - GFischer 8y ago
    Which is a requirement for these conglomerates. Both Keiretsus and Chaebols have banks. https://en.wikipedia.org/wiki/Keiretsu https://en.wikipedia.org/wiki/Keiretsu https://en.wikipedia.org/wiki/Chaebol https://en.wikipedia.org/wiki/Chaebol https://en.wikipedia.org/wiki/Zaibatsu https://en.wikipedia.org/wiki/Zaibatsu
deleted 8y ago
[deleted]
dsfyu404ed 8y ago
> I don't know if it's selection bias, but asian companies seem to be ridiculously diverse (Mitsubishi makes cars, elevators, air conditioners, and is a bank. Yamaha makes pianos, electronics, and motorcycles). US companies seem super focused on maximizing their core business. US companies tend to use wholly owned subsidiaries for stuff like that. The steering wheel in my 90s pickup has the United Technologies logo on the casting. That's almost a completely different industry (aerospace and civilian automotive doens't have a as much common supply chain as you'd think).
JacobDotVI 8y ago
The US has fluctuated between conglomerates being in vogue and not. GE being one of the last surviving conglomerates and on it's way out. You can chalk this up to a variety of reasons including: tax policy, activist shareholders, etc. Many of the Japanese companies you mention don't have the same pressures to break up. This article talks a bit about the conglomerate break-ups of the 70s, which includes a great graph showing the rise and fall of such: article: https://www.cbinsights.com/research/disrupting-management-consulting/ https://www.cbinsights.com/research/disrupting-management-co... graph: https://s3.amazonaws.com/cbi-research-portal-uploads/2018/05/07145033/Conglomerate-chart_0-1.png https://s3.amazonaws.com/cbi-research-portal-uploads/2018/05...
- avn2109 8y ago
  Traditionally, American conglomerates flourish in high-interest-rate environments, such that the money emitted by profitable verticals can be used to subsidize growing/unprofitable verticals, all beneath a single centralized authority which overtly acknowledges its legal and financial control of the subsidiaries. Conversely, when money is cheap, you can just incorporate all your verticals as freestanding entities (aka "startups"), often beneath a decentralized control structure (aka "cabal of venture capitalists who collude with one another") through which you maintain influence over them without incurring any of the unpleasant legal ramifications caused by explicitly linking the verticals together in the eyes of the law. You can do this latter decentralization thing since you're freed from the frequent need to move money between verticals, and can instead just pump money into them (if necessary) every year or two (aka "funding rounds"). However, I have no clue how Asia works.
  - Intermernet 8y ago
    Look up "Mitsubishi Group" on Wikipedia for some interesting insights into how "a decentralized control structure" works. I suspect that this sort of decentralisation is common not just in Japan, but throughout most large players in the global economy. The differences will mostly arise from how much the "home market" of any of these groups (cabals) will care for, or acknowledge antitrust practices. Other good examples are Unilever, Google, Apple, Freeport McMoran, Tata Group etc. Once you bring China into the equation it becomes more difficult to trace the global connections due to massive state ownership, but I'd be surprised if they didn’t have interests in many global conglomerates. This isn't really conspiracy theory, this is just how a global economy is evolving amidst multiple conflicting interests and regulatory bodies.
JohnJamesRambo 8y ago
That Sears story was fascinating, thanks for sharing it.
jandrese 8y ago
I thought it was because when Japanese companies go for financing the bank insists that they take their name. So you have tons of basically unrelated companies with the same name.
- mfoy_ 8y ago
  Source?
  - jandrese 8y ago
    I heard that third hand but it does seem to track reality. https://en.wikipedia.org/wiki/Keiretsu https://en.wikipedia.org/wiki/Keiretsu
mark-r 8y ago
Mitsubishi makes a very good example. I remember back in the '80s being struck by an issue of Consumer Reports that reviewed two different Mitsubishi products - one was a car, the other a can of tuna fish. American companies aren't diversified in the same way because investors realized that breaking up a conglomerate maximizes the stock prices - the underperforming parts put a damper on the stock.
- skrebbel 8y ago
  I think it's a rather bad example because all that the different Mitsubishi firms share is a name and a logo. They're four independent companies.
- hrktb 8y ago
  I am not verse enough in the legal matters yo have concrete examples, but I think Japanese style zaibatsu wouldn’t fly in the EU or US from regulatory perspectives. The main goal of having conglomerates is to modularize essential parts, in particular a financing branch that acts as a money pump through the whole group. So by definition the companies from the same group are defined legally as separate units while fixing deals between themselves and protecting the other companies’ turfs.
  - mark-r 8y ago
    Not sure about how the Japanese are structured so I can't comment about that. But large conglomerates aren't impossible in the US, GE is probably the best example.
    - njarboe 8y ago
      Or the fifth largest US company by market cap: Berkshire Hathaway.
      - Retric 8y ago
        The fact it's fifth probably has more to do with it. Conglomerates have the overhead of vast companies but gain minimal benefit from that overhead.
ekianjo 8y ago
> asian companies seem to be ridiculously diverse (Mitsubishi makes cars, elevators, air conditioners, and is a bank. Yamaha makes pianos, electronics, and motorcycles) This is because of political influence/leadership. Such companies would not have existed unless there was a political will to build large conglomerates like the zaibatsu in Japan (same thing in Korea with Samsung that does about everything). This is hardly free market at work. Besides, this is not what you think it is. Mitsubishi is actually composed of hundred of sub-group companies that have basically nothing to do with each other, and simply share a larger umbrella brand, but in effect act as semi-autonomous entities.
jacobush 8y ago
I am surprised that I don't see anyone peddling this idea: in markets which are corrupt or there is expectation of weak enforcement of contracts between different companies - the only viable option often is to acquire what you need under your own umbrella. This is an explanation I read somewhere for why conglomerates may have an advantage.

by pfranz 8y ago

madeofpalk 8y ago

GE? From television stations to jet turbines for aeroplanes.

pfranz 8y ago
The US does have a handful of relatively old, diverse companies, but when traveling or reading into other countries it seems like diverse companies are either more user-facing or more common. It just seems common in the US to hear about once innovative companies over invest in their main business model and die off. Retail like Woolworths, Sears, and Toys R Us come to mind, but so does Flickr. Maybe that's preferable since older companies carry along cruft, but it's interesting to compare the two.
joezydeco 8y ago
GE also has a massive finance arm.
- GFischer 8y ago
  Which is a requirement for these conglomerates. Both Keiretsus and Chaebols have banks. https://en.wikipedia.org/wiki/Keiretsu https://en.wikipedia.org/wiki/Keiretsu https://en.wikipedia.org/wiki/Chaebol https://en.wikipedia.org/wiki/Chaebol https://en.wikipedia.org/wiki/Zaibatsu https://en.wikipedia.org/wiki/Zaibatsu

deleted 8y ago

[deleted]

dsfyu404ed 8y ago

> I don't know if it's selection bias, but asian companies seem to be ridiculously diverse (Mitsubishi makes cars, elevators, air conditioners, and is a bank. Yamaha makes pianos, electronics, and motorcycles). US companies seem super focused on maximizing their core business. US companies tend to use wholly owned subsidiaries for stuff like that. The steering wheel in my 90s pickup has the United Technologies logo on the casting. That's almost a completely different industry (aerospace and civilian automotive doens't have a as much common supply chain as you'd think).

JacobDotVI 8y ago

The US has fluctuated between conglomerates being in vogue and not. GE being one of the last surviving conglomerates and on it's way out. You can chalk this up to a variety of reasons including: tax policy, activist shareholders, etc. Many of the Japanese companies you mention don't have the same pressures to break up. This article talks a bit about the conglomerate break-ups of the 70s, which includes a great graph showing the rise and fall of such: article: https://www.cbinsights.com/research/disrupting-management-consulting/ https://www.cbinsights.com/research/disrupting-management-co... graph: https://s3.amazonaws.com/cbi-research-portal-uploads/2018/05/07145033/Conglomerate-chart_0-1.png https://s3.amazonaws.com/cbi-research-portal-uploads/2018/05...

avn2109 8y ago
Traditionally, American conglomerates flourish in high-interest-rate environments, such that the money emitted by profitable verticals can be used to subsidize growing/unprofitable verticals, all beneath a single centralized authority which overtly acknowledges its legal and financial control of the subsidiaries. Conversely, when money is cheap, you can just incorporate all your verticals as freestanding entities (aka "startups"), often beneath a decentralized control structure (aka "cabal of venture capitalists who collude with one another") through which you maintain influence over them without incurring any of the unpleasant legal ramifications caused by explicitly linking the verticals together in the eyes of the law. You can do this latter decentralization thing since you're freed from the frequent need to move money between verticals, and can instead just pump money into them (if necessary) every year or two (aka "funding rounds"). However, I have no clue how Asia works.
- Intermernet 8y ago
  Look up "Mitsubishi Group" on Wikipedia for some interesting insights into how "a decentralized control structure" works. I suspect that this sort of decentralisation is common not just in Japan, but throughout most large players in the global economy. The differences will mostly arise from how much the "home market" of any of these groups (cabals) will care for, or acknowledge antitrust practices. Other good examples are Unilever, Google, Apple, Freeport McMoran, Tata Group etc. Once you bring China into the equation it becomes more difficult to trace the global connections due to massive state ownership, but I'd be surprised if they didn’t have interests in many global conglomerates. This isn't really conspiracy theory, this is just how a global economy is evolving amidst multiple conflicting interests and regulatory bodies.

JohnJamesRambo 8y ago

That Sears story was fascinating, thanks for sharing it.

jandrese 8y ago

I thought it was because when Japanese companies go for financing the bank insists that they take their name. So you have tons of basically unrelated companies with the same name.

mfoy_ 8y ago
Source?
- jandrese 8y ago
  I heard that third hand but it does seem to track reality. https://en.wikipedia.org/wiki/Keiretsu https://en.wikipedia.org/wiki/Keiretsu

mark-r 8y ago

Mitsubishi makes a very good example. I remember back in the '80s being struck by an issue of Consumer Reports that reviewed two different Mitsubishi products - one was a car, the other a can of tuna fish. American companies aren't diversified in the same way because investors realized that breaking up a conglomerate maximizes the stock prices - the underperforming parts put a damper on the stock.

skrebbel 8y ago
I think it's a rather bad example because all that the different Mitsubishi firms share is a name and a logo. They're four independent companies.
hrktb 8y ago
I am not verse enough in the legal matters yo have concrete examples, but I think Japanese style zaibatsu wouldn’t fly in the EU or US from regulatory perspectives. The main goal of having conglomerates is to modularize essential parts, in particular a financing branch that acts as a money pump through the whole group. So by definition the companies from the same group are defined legally as separate units while fixing deals between themselves and protecting the other companies’ turfs.
- mark-r 8y ago
  Not sure about how the Japanese are structured so I can't comment about that. But large conglomerates aren't impossible in the US, GE is probably the best example.
  - njarboe 8y ago
    Or the fifth largest US company by market cap: Berkshire Hathaway.
    - Retric 8y ago
      The fact it's fifth probably has more to do with it. Conglomerates have the overhead of vast companies but gain minimal benefit from that overhead.

ekianjo 8y ago

> asian companies seem to be ridiculously diverse (Mitsubishi makes cars, elevators, air conditioners, and is a bank. Yamaha makes pianos, electronics, and motorcycles) This is because of political influence/leadership. Such companies would not have existed unless there was a political will to build large conglomerates like the zaibatsu in Japan (same thing in Korea with Samsung that does about everything). This is hardly free market at work. Besides, this is not what you think it is. Mitsubishi is actually composed of hundred of sub-group companies that have basically nothing to do with each other, and simply share a larger umbrella brand, but in effect act as semi-autonomous entities.

jacobush 8y ago

I am surprised that I don't see anyone peddling this idea: in markets which are corrupt or there is expectation of weak enforcement of contracts between different companies - the only viable option often is to acquire what you need under your own umbrella. This is an explanation I read somewhere for why conglomerates may have an advantage.