Japan's Computer and Communications Industry: The Evolution of Industrial Giants and Global Competitiveness

By Martin Fransman | Go to book overview

Conclusions

This chapter has been concerned with the future of both NTT (the company) and the NTT Way. It has been shown that both are at a watershed in their history, facing the biggest changes they have ever confronted. In analysing the future of NTT and the NTT Way, particular attention has been paid to three 'winds of change', namely competition, globalization, and divestiture. The effects of these winds of change will now be summarized.

The most important structural change that NTT has undergone has stemmed from the introduction of facilities-based competition to the company from 1985. To date, competition has had only a limited impact on NTT, decreasing the company's profitability somewhat while decreasing only slightly its overall market share. However, in some market segments, such as the Tokyo- Nagoya-Osaka corridor, and in some services, such as mobile telephone communications, the NCCs have significantly eroded NTT's market share. Nevertheless, this has not deprived NTT of its Aaa credit rating, or affected its overall very satisfactory corporate performance compared with other Japanese companies.

In the longer run, however, it must be concluded that competition will increase substantially, partly from the existing NCCs and partly from new forms of competition that do not yet exist, such as international consortia of various kinds. This increased competition will create significant pressures which will change NTT's behaviour and even its form of organization. As a result, the NTT Way will also be transformed in important respects.

In general terms, increased competitive pressure will force NTT to become far more commercially oriented than it has hitherto been. Far more attention will therefore have to be paid to the competitiveness of the company's services and to the cost efficiency of its operations. New forms of organization will have to be developed to streamline decision-making, and to increase the focus, flexibility, and speed of response to market opportunities and threats.

While NTT has begun to feel the competitive winds of change, the culture and orientation of the company still largely reflect the pre-competitive era. Although I have been at pains to stress that during the pre-competitive era NTT was none the less an innovation-driven company and made many important innovations, the forces that created the need for innovation and the competences that were necessary to bring about this innovation were fundamentally different from the forces and competences that are now essential to deal with more competitive telecommunications markets.

More specifically, in the pre-competitive era innovation took the form of catching up, keeping up, and in a few cases overtaking the telecommunications carriers of other Western countries through NTT's own R&D and co-operative development with a group of competing supplying companies. Through this process, significant improvements were made to the Japanese telecommunications network and services. In the competitive era, however, new

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