Strategic Flexibility in Exploiting Economies of Scope on 70-30 Principle: A Case Study of Japanese Electronics Industry

Abstract

The tripod consisting of the USA, EU, and Japan has advanced to the matured market economy from the growing market economy. In the growing market economy, the economies of scale prevail. In contrast, in the matured market economy, consumers are interested in acquiring goods and services to fit their particular needs, demanding a variety of products and services in small quantities. Accordingly, the advantage of the economies of scale tends to diminish. In order to overcome this difficulty, the authors claim that the 70–30 principle becomes extremely important, where products and services for separate segmented submarkets are designed 70 % in common with the remaining 30 % for customization. The purpose of this chapter is to identify the emerging trend of the 70–30 principle in Japan and to examine its effectiveness for strategic flexibility and business agility.