Strategic management in the Japanese context: the East Japan Railway Company (JR East) 1987–2002

Abstract

Abstract This paper reviews the operation of the Japanese Railway (JR) Companies since the dissolution and privatization of the Japanese National Railways in 1987 and evaluates the changes in the strategic management approach of the JR Companies in the ensuing period. It focuses on JR East, which operates the largest passenger network in Japan and examines both the changes in the company's operating environment since privatization and its strategic management policy in relation to these developments. The key strategic and business environment issues identified in the paper are primarily government regulation of railway operations, social change — particularly in terms of the demographic profile — and a changing competitive environment. The reaction of the company's management to these events may be summarized as little discernible change in the strategic management approach in the first 10 years after privatization, for two principal reasons. During that period Japanese companies continued to observe the strategic targets of revenue growth and market share (rather than profitability) and there continued to be acceptance that the Japanese railway companies were obliged, for social reasons, to run unprofitable services, the closure of which would have boosted the company's profitability. It appears, however, that the company's strategy over the past five years has become clarified and simplified, with a greater emphasis on profitability targets and shareholder value. Copyright © 2003 John Wiley & Sons, Ltd.