Formation of large enterprises that started from the end of the 19th century

It was between the late 19th century and the early 20th century that modern business enterprises, generally defined as large enterprises, began to emerge in the United States. The modern business enterprise has many businesses and multiple functions and is managed by a managerial hierarchy that is developed within its internal organization.

In short, it is a business model in which management resources are integrated to efficiently diversify its business, thereby getting more customers, sales, and profits. This allowed business enterprises to grow significantly.

Behind the significant growth lies the fact that Europe and the United States surpassed the rest of the world in manufacturing 100 years ago. In other words, Japan and other countries around the world were unable to produce large quantities of quality products at the same level as ones made by enterprises of the United States and European countries.

This phenomenon allowed the United States to secure its own huge market without being challenged by enterprises from other countries, while increasing exports as well.

After the war, however, other countries were enhancing their technological and economic capabilities. In particular, Japan, which increasingly exceled in manufacturing, was able to produce better products than those made in the United States and European countries and began to sweep through the world in the 1980s.

Furthermore, enterprises in Asia, South America, and other countries were also developing, leading to the situation where products of the same level could be produced anywhere in the world. This was unprecedented in human history and can be said to have led to be a completely new situation.

The strategies for business growth that lasted for 100 years had worked until around the time Japanese companies swept through the world.

However, the new situation, in which products produced anywhere in the world are homogenized to some extent, has made it difficult for enterprises to grow based on the said strategies.

For example, in order to get more customers, they are inevitably caught in price competition.

At the end of the 20th century, however, when ICT began to develop dramatically, another new situation emerged. Enterprises that came to be called “platform providers” appeared.

Diversification strategy to lock in customers

Although the term “platform” itself has been around for a long time, in the ICT world, it refers to a foundation on which different individuals and organizations come together to share common goals and resources.

For example, the platform is a place on the Internet where those who want to sell things or send out information and content and those who want to buy and share them come together, and each of them connects with various people according to their own purposes. Platform providers offer such a space.

I think many of you now have experiences of enjoying shopping, music, movies, and videos on the Internet.

If you had to discover what you want among the vast number of stores or the content on the Internet in these experiences, it would be a daunting task. The platform makes the discovery easier.

In other words, it seems that the Internet allows consumers to visit department stores, shopping malls, or movie theaters in the real world across the globe, which is very convenient for them.

As consumers begin to recognize the convenience, they focus on the convenience of the platform and value it, rather than the differences in the quality of the product details.

On the other hand, platform providers can set their own rules and systems for the platforms they offer. By doing so, they are able to attract more consumers and lock them in as customers.

This means that platform providers employ a strategy that makes it difficult for consumers once they are connected to the platform to get out of the lifestyle model built by the convenience of the platform.

Business diversification is an important strategy for this purpose.

For example, platform providers that offer online shopping have started services offering movies or music, while manufacturers of smartphones have developed their own platforms and offered their own services on their smartphones.

Thus, modern business enterprises of 100 years ago managed to advance the diversification of their businesses efficiently by consolidating their management resources, whereas platform providers nowadays manufacture products or create content, but they do not have to focus on that. Instead, they connect with businesses that have abilities to do that, thereby adding uniqueness and value to their platforms.

While this diversification of services improves convenience for consumers, it also makes it impossible for some consumers to leave the platform when they need some services but have no need for others.

For example, those who use image-sharing services end up remaining as customers of that platform even if they do not use SNS messaging services. That is, the platform provider locks in the customers.

Furthermore, now IT giants, called Big Tech, are using this strategy not only to lock in customers and make a profit from customers and companies that connect with their platforms, but also to turn various kinds of accumulated information that was previously regarded as being less valuable into big data, which is utilized for developing their businesses.

Their growth strategy can be said to be a neo-modern growth strategy when compared with that of modern business enterprises of 100 years ago.

It is we, as consumers, who drive the novel growth of enterprises

Since the beginning of the 21st century, modern business enterprises that once rose to the height of their prosperity have declined in the United States, and neo-modern enterprises called GAFAM (i.e. Google, Apple, Facebook, Amazon, and Microsoft) or Big Tech have grown rapidly.

On the other hand, modern business enterprises still remain as large enterprises in Japan. However, if they continue as they are, it will be difficult for them to grow further. Some Japanese large enterprises, therefore, are moving toward a neo-modern strategy.

On the other hand, however, the EU and other nations are increasingly imposing restrictions on these neo-modern strategies, which include digital taxation and strengthening of personal information protection.

It is expected that Japan will follow such a trend. That could mean that the neo-modern strategies of the current GAFAM will reach their peak.

Just as GAFAM grew rapidly with an unconventional strategy when the former large enterprises began to reach a dead end, some enterprises might grow rapidly with an idea that GAFAM currently does not have.

For example, given the homogenization of products around the world, I think that to focus on manufacturing and create unique products that cannot be found anywhere else is one idea.

Kaki no Tane is a very familiar example of this. Many manufacturers produce Kaki no Tane, one type of Japanese rice cracker, but the products of each manufacturer have a slightly different taste. However, the popularity varies greatly depending on this slight difference in taste.

The most popular one in Japan is actually popular all over the world as well and is now boosting its sales in India and other countries.

I believe that this kind of manufacturing, which can only be produced in Japan with characteristics unique to Japan, will also serve as a hint for businesses to improve growth.

I think it will become important for us as consumers to pay attention to differences in products and services.

For example, some enterprises emphasize strengthening of security and protection of personal information in their smartphone operating systems, and publicly announce their implementation.

Of course, some people may value convenience more than protection of personal information. However, the important thing is to make your own choices based on not only the current situation but also various other viewpoints.

For instance, the adoption of IT in society will continue to progress, which should make our lives more convenient and comfortable.

Meanwhile, a digital society always faces the risk of information leakage. It is important to take measures against a risk instead of downplaying it.

We cannot be sure that what is good now will remain good after 10 or 20 years pass. Conversely, what is good now may backfire 10 years from now.

Therefore, it is important that we develop our own ability for choice. In addition, enterprises will consider products and services they offer based on such ability and behavior of consumers.

In this sense, it is we, as consumers, who hold the key to the future growth of enterprises.

* The information contained herein is current as of December 2021.
* The contents of articles on are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

Information noted in the articles and videos, such as positions and affiliations, are current at the time of production.