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

Unchanging bipolarity of profit structure

Reviewing the overall performance of companies responding to the survey, the growth rate in sales amount was 98.2% (1.8% decrease from the previous year), and the average ordinary profit per employee was \690,000 (\767,000 for the fiscal year 1997). Based on this, both sales amount and profit showed a negative growth. The industry experienced a negative growth from the previous year for the first time since the survey started three years ago (FY1995). Although the rate of ordinary profit against sales amount was 3.2%, which was lower than 3.7% for the FY1997 survey, it was higher than the rates in the FY1995 and FY1996 surveys. It seems that various measures taken to secure profits led the industry to favorable results even as sluggish sales continue.

As for the sales growth rates over the last five years, the ratio of the number of companies−it has steadily decreased according to yearly surveys from FY1994 to FY1997− in which sales dropped from the previous year, hit as high as 48.3%. On the other hand, the ratio of printing companies that showed relatively high growth rates of 5.5% or more was 22.3%, a significant decrease from 38.3% in the previous year (Fig.1).

Reviewing the breakdown of profitability, the number of printing companies in which ordinary profit per employee was less than \250,000 was 28.3%, which is almost the same as the previous year (29.8%). The percentage of companies enjoying high profits of \1.25 million or more was 16.4%, slightly lower than the previous survey (18.7%), but not a significant drop. Consequently, the structure has not changed in which the shares of the intermediate groups (four groups of which ordinary profits were between \250,000 and \1,250,000) between the above two groups are lower (Fig.2).

Unexpectedly good achievement in business form printing sector

The performance of the surveyed companies were analyzed based on three indices; growth rate, profitability, and total evaluation.
When the scores are examined by business types, we can see that the highest total score including growth and profitability is achieved by the business form printing segment, followed by commercial printing (Table 1-1). The managements of these two segments are well balanced in terms of growth and profitability. As to business forms printing, there are a few mid-size printing companies (with 20 to 49 employees) that achieved significantly good results, mostly depending on business form printing jobs from other printers. The reasons why the business forms printing sector was so positive were; their performance boosted the total figures, and printers whose performances were extraordinarily poor were not included among the responding companies.

The performance of the publication-printing sector that showed fairly good results in the FY1996 survey, turned downward due to a negative growth rate in the FY1997 survey. The FY1998 survey also indicated a similar tendency. Although the score for trade shop growth was above average, the profitability score was poor, resulting in a low total score. After analysis of individual trade shops, it was found that the average wage per employee in this sector was relatively higher.

Expanding gap between Tokyo and the other regions

Reviewing trends by regions, we can see that the gap between Tokyo and the other regions has expanded wider (Table 1-2). The total scores for the Tokyo Metropolitan area and the other regions were 5.1 and 4.9, respectively, according to the previous survey, but the result of this survey indicated 5.3 and 4.9, respectively. The gap came from the fact that the pattern &profitability in Tokyo is higher, while that in the other regions is lower & has become more remarkable. In addition, this time the growth rate in Tokyo exceeded that in other regions, which had never happened before.

As for the business scale by number of employees, the total scores of enterprises with 19 employees or less, as well as 100 or more employees, showed high scores (Table 1-3). Both segments performed well-balanced business results, exceeding the average scores in terms of growth rate and profitability. On the other hand, the performance of the intermediate segments, particularly companies with 20 to 29 employees, was poor. The scores in the printing company sector with 50 to 99 employees showed great variance among them, while variance among companies with 300 or more employees was relatively small indicating a stable, high-level performance.

Publication printing companies and trade shops showing a big gap in scores

Table 2 shows the distribution of the top 40 companies (selected in terms of growth rate, profitability, and total score) and the segment (business types, regions, and the number of employees) in which they belong. Analyzing the total scores by business types, while one of three software servicing companies joins the top 40, the share of publication printing companies among the top companies was the highest, followed by trade shops. It is interesting to find that the rankings for the publication printing and trade shop sectors were so remarkable. Although the overall averages of the total scores in these sectors were not very good, looking at individual companies there were many that performed well. This means that the gap of achievement among companies in these sectors is larger than that in the other business sectors.

Looking at regional performances viewed by total score, 20 companies are located in Tokyo, with the remaining 20 companies in other regions. However, because the number of responding companies in Tokyo was 94 and the number of companies responding in other regions 177, 21.3% of the companies in Tokyo were within the top 40, while only 11.3% of the companies in the other regions were listed in the top 40. Thus, the ratio of companies with strong performances was much higher in Tokyo.

In terms of growth rate and profitability, the percentage of Tokyo printing companies ranked within the top is higher than in other regions as well. According to the results of this survey, the overall performance of printers in Tokyo, not limited to the companies in which business achievements were extraordinary good, had a tendency to exceed that of other regions. It seems that local printers experienced a difficult time during 1998.

Reviewing by scale, companies with 100 or more employees received the highest total score, but the difference from the other sectors is not very significant. What is remarkable was the fact that relatively higher profitability was found among the companies in which the number of employees was 49 or less, which follows the previous year's tendency.