The Models in Crisis

1
The Models in Crisis

• Professor Stephen Blank
• HEC, Summer 1999
• Sessions 5ab
• Friday Saturday, June 4-5
• 600-845pm 900am-12 noon

2
The impact of the global economic crisis

• From competitive models to American triumphalism
• What happened to Asia Inc? Is the German model
  bankrupt?
• Is the Anglo-American model the wave of the
  future?

3
The Rhine Model Changes in the Environment

• The impact of German unification
• The impact of rising unemployment and excess
  capacity
• The emergence of a welfare society
• The erosion of consensus
• Consensus politics becomes veto politics
• Demographics An aging population

4
The increasing vulnerability of the Rhine model

• Heightened international competition
• Focus on cost competition
• Globalization and the launch of the euro
• The erosion of the national system
• Rigidities prevail
• The example of US success (and wealth)

5
Changes in German corporate strategy

• Confronting rigidities
• Restructuring downsizing
• Mergers
• Growing importance of equity finance Tap global
  capital markets
• Export production to lower cost areas
• Changes in patterns of exec remuneration

6
Changes in German industrial relations?

• Scrap the Social Pact! The collapse of
  consensus?
• Cuts in real wages
• More flexibility in wage negotiations and on the
  factory floor
• Efforts to save the system
• New efforts at Tripartism (Election of left
  government of Gerhard Schroder)
• Greater role for Works Councils

7
Can the Rhine Model survive?

• Downward spiral of rising fiscal deficits and
  rising unemployment?
• Social changes The end of the social welfare
  state?
• Income disparities?
• Regional disparities?

8
The Japanese model at risk

• The weaknesses of the Japanese model
• Incentive? Rigidity? Lack of originality?
• Lack of leadership?
• Over investment excessive competition?
• Employment patterns?
• Cost?
• The impact of changes in the global economy

9
Japans financial political systems

• The weaknesses of the Japanese financial system
• Holes in the financial system Bubbles Collapse
  of demand
• Environmental problems
• The weakness of Japans political system
• Firms internalize social/political functions
• An aging society

10
Assessing the Japanese model today

• Does it work?
• What can we learn from it?
• Will it continue?

11
Social partnership or market competition?Converg
ence across systems?