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Definition: Keiretsu

Keiretsu is a Japanese term referring to an alliance of companies with related business interests and optionally, shareholdings. It can be an informal business group or network like that of manufacturers, suppliers, distributors, investors, etc. working together. Keiretsu maintained control over Japanese economy for the second half of twentieth century.

Keiretsu helped the businesses by maintaining long-term, stable partnerships. This helped the businesses in focusing on the core problems but suffered from the problems of inadaptability. The businesses could not change quickly enough to respond to economic changes, technological advancements and cultural changes. Since keiretsu were involved in all the steps of economic chain, each company benefited from insulation from share market volatility and merger activities. Keiretsu is still a common practice in the Japanese automobile industry.


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