Management Strategy Reflecting Severely the Business Climate
Outline of Management Capability Research in the Printing Industry for FY1998
< Part two >

A sound foundation is necessary

In this survey, we reviewed the relationship between business performance, and management strategies and tactics. The results of the two previous surveys indicated that for two consecutive years, aggressive measures were necessary for maintaining positive performance and further progress. However, this year's survey showed a reverse in results.

The following Tables list questions showing the typical characteristics of the survey results among the questionnaire given (Tables 3 to 12). Among the questions where 20 or more companies responded ("Others " were excluded), the questions answered the most, options that achieved the highest scores, and options of which scores were lower were selected. Then, each item for strategies and tactics together with companies' achievements were listed in a simple manner, and comments were given underneath the Tables.

According to the previous survey results, we found measures that actually contributed to business performance were such items as: "To expand printing related businesses" to the question of "Present Management Goals"; and " To strengthen marketing activities, and to flexibly respond to changing conditions " to the question of "Marketing Strategies." On the other hand, the achievements of companies that took a rather protective attitude were not very good in general. Such protective policies were implied by answers such as:"To try to enhance productivity within the framework of present business operations" to the question of "Present Management Goals "; or "To ensure trust from existing clients " to the question of "Marketing Strategies." However, as a result of the survey this time, scores for the company group that answered, "To try to enhance productivity within the framework of present business operations " and "To ensure trust from existing clients ", as indicated in Tables 3and 7 respectively, gained high scores.

With regard to the question of " How to Strengthen the Company's Structure " (Table 4), companies that selected "To strengthen products and technical development capabilities " obtained the highest scores for three consecutive years up to the 1997 survey, but scores for companies that selected the same answer in this survey turned out slightly below average. However, this should not be interpreted that aggressive policies do not result in good achievement. In last year's survey, the companies answering "To diversify types of products handled " to the question of "Present Management Goal " (Table 3), and "We are handling a variety of products " as to "The Company's Sales Point " (Table 5) achieved high scores. Also, the performance of companies that answered, "To expand business territories " as to the question about " Points to Introduce New Equipment " (Table 10) were fairly good. As we have seen in the last few years, strengthening of production equipment has led to favorable results in business. This is verified by the high scores of companies that selected "To strengthen production equipment " to the question of "How to Strengthen the Company's Structure " (Table 4) or "To introduce new equipment " to the question of "Methods for Enhancement and Upgrade of Products."

Judging from the above results, we can say that nowadays a policy to strengthen the company's current foundation leads to an improvement in performance rather than taking aggressive measures for advanced investment such as expansion of printing-related businesses or development of new products and technology. As for capital investment, it appears that measures that generate immediate effects should be taken.

Measures to respond to changes in economic conditions

The answer "To promote internal manufacturing " to the question of "Measures to Reduce Manufacturing Costs " (Table 9) was selected the most as in the previous year's survey. In last year's survey, companies that marked "To promote internal manufacturing " achieved higher scores. But this year, their results were about average. It is considered that the economic situation in Japan since last year does not ensure profits by only promoting internal production. Furthermore, scores for companies that selected "To screen, integrate, and utilize subcontractors " was the lowest. This does not mean that such a policy itself resulted in the deterioration of their growth rates, but, on the contrary, they could not help but reduce the number of subcontractors because their sales amount dropped.
In relation to the question "Financial Measures Taken in the Past Three Years, "(Table 12) scores for companies that marked "Reduction of labor cost " decreased. The answer chosen the most to this question was "Reduction of procurement from outside, " which indicates the prolonged sluggish situation in sales. Although the companies that marked "Reduction of procurement from outside " achieved above average scores as last year, some of the companies could not ensure profits only by following this policy, and have been obliged to even reduce fixed cost as well. The reason why the scores, particularly profitability scores, for companies that picked "Reduction of labor cost " were so poor appears not to be a result from the policy taken. However, they had to select it reflecting their business results.

The above results of this survey reflect the severe situation in the printing industry, which again plunged into negative growth.

Difficulty in developing human resources

In relation to responses on companies' strategies and tactics, items concerning training of personnel and enhancement of their capabilities were adopted in various ways. However, the conclusion of last year's report that "achievement of companies in which fostering of personnel is emphasized does not lead to good business results " still remains the same. For example, the total scores for companies that marked "To strengthen the development of human resources " as to the question " How to Strengthen the Company's Structure "(Table 4) as well as companies that answered, "To develop production personnel capabilities "to the question "Measures to Strengthen Sales Points " (Table 6) were below average. Moreover, the scores for companies that marked "To try to enhance individual sales personnel marketing capabilities "to the question of "Strategies to Ensure Orders " (Table 8), as well as the scores for companies that answered "To try to enhance the knowledge and techniques of employees " to the question "Methods for Enhancement and Upgrade of Products "(Table 11) were relatively lower. This trend was also seen in the survey conducted last year.

In the midst of a trend in which chances for equipment or facilities themselves to create additional value are becoming smaller, it is inevitable that investment in human resources reflects the achievement of enterprises. However, as indicated in the previous report, some issues also exist within the method of fostering human resources and development of abilities.

In light of the technical phase, human resources required for the future are not DTP operators, but personnel who consider their optimum systems, and can renew and operate the systems without making any unnecessary investment. In a technical environment where new technology becomes obsolete within two years or so, selection of relevant information by screening daily news is important for preparing a report on his/her own company's systems at least once every six months. Therefore, it is highly necessary to carry out measures to develop such abilities that are applicable for this purpose. It would not be sufficient for them to study only at seminars that are held several times a year.

It was found in the financial analysis conducted this time, that in many printing companies the productivity of their sales force had deteriorated. In this severe marketplace environment, it is difficult to expect any remarkable achievement no matter how much sales personnel may work. In addition, when small lot jobs with short delivery times increase, more time must be spent and more meticulous procedures are required in handling such jobs. In order to cultivate new marketplaces, well-considered strategies and tactics will be necessary. When a company decides to adopt a proposal type sales strategy, unless its sales personnel have deep and broad experiences on digitization, they will not be able to persuade their clients, because such clients may be more knowledgeable.

Looking only figures, there seems to be a surplus of sales personnel. However, in actuality, at the work place there are too many things to do. In this situation, we cannot expect constant growth in future, and drastic renovation will be necessary. In other words, some measures must be taken including reviewing the deployment of sales staff members and restructuring, and establishment of new training programs and systems based on them.
With regard to personnel, a strong relationship can be seen between a company's achievement and the average age of employees, including the sales and manufacturing departments. The younger the average age, the better profits can be expected. There is a tendency that has been steady in the last few years, where the performance of companies in which the average age of management is in the 40s is generally better.