Weird Letter, page-71

I am seeing something called Vertical Keiretsu............Japanese conglomorate way. I am also seeing pointers where Elon Musk is attempting to set up this type of organizational enterprise/system. The talk of Tesla and mining leads me to think this way

some info on Keiretsu

The names of the six biggest keiretsu are: Mitsubishi, Sumitomo, Mitsui, Fuyo, Sanwa, and Daiichi-Kangin. According to Shimotani (1995:54) a keiretsu can be defined as “the close, long- term business relationships established by large corporations with select groups of smaller firms, and they are linked through investment and the exchange of personnel”.

The most common way of classification a keiretsu which occurred in the literature is horizontal keiretsu and vertical keiretsu.

Vertical keiretsu

A vertical keiretsu is formed by one very large company (assembler) and hundreds or thousands of small companies (suppliers). The vertical keiretsu usually occurred in automotive industry in Japan. A good example would be a large company like Toyota. The vertical keiretsu is also common in the electronics, although many other fields have its own vertical keiretsu, including advertising, publishing, broadcasting, and other non-manufacturing businesses (Miyashita and Russel, 1994: 12).

It is important that the shape of the vertical keiretsu is a pyramid. In the case of an automotive manufacturer, a few tiers of suppliers are involved: the first tier of companies supplies the car assembler, the second tier works for the first tier, the third tier for the second, and the process is continued downward (Yoshihara, 1994: 156). In other words at the top of the pyramid there is the most important company (assembler) and at the bottom there are hundreds or thousands of companies (suppliers). It is common that the smallest companies at the bottom of the pyramid do not even know that they work for the world famous assembler. On the other hand the parent company has no idea how far down its pyramid extends. It can see only two or three pyramid’s level down.

Google Keiretsu for more if you want...............just some Thursday light reading.............now where did I stash that panadol