Our project report "Improvement of management capability of Japanese companies' overseas business" for METI (Japanese Ministry of Economy, Trade and Industry) has been released to the public. The following is a summary of the survey.
1. Background and purpose of this study
Amidst the coronavirus crisis from early 2020 onward, Japanese companies' overseas subsidiaries have been placed in an even more difficult situation, and the impact has been particularly pronounced for small and medium-sized companies with limited management resources.
In such a business environment, it is important for the Japanese government to enhance the competitiveness of overseas subsidiaries by improving their management capabilities and making them more flexible and resilient to crises, and to expand overseas business from a medium to long-term perspective. Therefore, it is necessary for the public and private sectors to seize these changes in the business environment as an opportunity rather than a crisis, and support the expansion of overseas business by companies with taking the initiative.
The purpose of this survey is to help improve the management capabilities of small and medium-sized enterprises (SMEs) in the future by widely disseminating the case studies, and to clarify the actual situation of support needs so that the public and private sectors can improve systems and expand support measures to encourage the expansion of overseas business.
2. Survey outline
In this survey, we focused on the "overseas subsidiaries" of small and midsize companies, targeting the Asian region (especially Southeast Asia) where Japanese companies have a relatively large presence.
(1) Small and medium-sized enterprises (SMEs) working to improve management capabilities through business restructuring
(2) Small and medium-sized enterprises (SMEs) working to become more flexible and resilient to crises
(3) Private support institutions supporting SMEs
3. Survey results (excerpts)
Compared to domestic business, overseas business is limited in terms of the company's own management resources. In this regard, if a company alone were to accumulate knowledge of each country's market, human and geographical connections, and build a value chain from scratch, it would consume an enormous amount of time and money.
In other words, it is extremely difficult for small and midsize companies to supplement all the management resources necessary for their growth strategies in their overseas operations by themselves. Therefore, when promoting overseas business with a sense of speed, it is important to clarify the functions that the company should have after identifying its objectives and issues, and to consider how to acquire the missing management resources. The methods of introducing management resources and the purposes of their utilization in this survey can be summarized as follows.
(1) Introduction of external management resources through business restructuring
(2) Foster and strengthen internal management resources such as human resources
(3) Strengthen business activities by introducing facilities, etc.
(4) Maintain and stabilize management resources by strengthening business continuity
Among these methods, business restructuring/reformation is effective in maximizing the company's own management resources, and in addition to this, further benefits are expected from combined efforts to develop and strengthen internal management resources.
Therefore, as post-acquisition management integration (PMI) and business management are generally emphasized, a policy system and support system that supports comprehensive efforts that include not only structural changes to the organization through business restructuring but also further investment in management resources for the growth of overseas businesses is necessary.
4. Proposal | Establishing a comprehensive overseas business support system
What I would like to propose is the establishment of a support system specifically for overseas business.
The current system is based on the objectives of each legal system, with each system having its own specific methods focusing on organizational structure and business activities.
In addition, taxation systems, subsidy systems (supply chain diversification subsidies, Monozukuri subsidy for global development, IT introduction subsidies, etc.), and overseas human resource development support programs are provided separately, while some of them require legal recognition, making it difficult for small and medium-sized companies to access them. Therefore, this study proposes the "Overseas Business Management Enhancement Plan".
Focusing on the objective of improving the management capabilities of small and medium-sized enterprises (SMEs) in their overseas operations, it will construct a system that enumerates the methods of introducing management resources. By providing a holistic packaged support system that integrates various support systems that have been provided separately for initiatives that meet the objective of improving the management capabilities of small and medium-sized enterprises (SMEs) in their overseas operations, it will make it easier for SMEs to access support systems and improve convenience, and it will also have a synergistic effect on improving management capabilities. We believe that this will have a synergistic effect on improving management capabilities.
The full report is here (Japanese language only).