1. Confidential Nov.2006 “Trends in Management Consulting in Japan” Masanaka Yokota Executive of CMC System Committee of Zen-Noh-Ren JMA Consultants Inc. Vice President

2. 1 INTRODUCTION The All-Japan Federation of Management Organizations (Zen-Noh-Ren) was established in 1949 ． Founding Charter; 1. Be trustworthy We shall adhere to the high ethical standards, and contribute to the public welfare. 2. Enhance the process reliability We shall strive to develop sophisticated and effective technologies and also engage in constant capability development. 3. Enhance reliability of results We shall provide a high-level of services.

3. 2 1960 ～ 1970 ～ 1980 ～ 1990 ～ 2000 ～ 1950 ～ 1940 ～ Japanese Economy and Management Innovation Wartime controlled economy Postwar recovery period High-growth period Energy saving & lean management Bubble economy Heisei recession Recovery period Process management methodology American style management method Productivity improvement Strategy & marketing Market-based flexible manufacturing Japanese style management American style global management

4. 3 Japanese Economic Trends (GDP and Real Economic Growth Rate) Bubble Economy Source: Japanese Statistics Bureau annual materials

5. 4 Japanese Economy & Consulting after Bubble Economy Extensive corporate restructuring Extensive corporate restructuring Reorganization of facilities and labor, selection and concentration of business (business selling-off) Defaulted debt clean-ups and banks integration Defaulted debt clean-ups and banks integration Public fund for major banks and zero interest rates Export boom supported up by global economic growth Export boom supported up by global economic growth Positive growth cycle for individual consumptions and facility investments Risk Higher price of row materials and lower price of finished products Employment shortage

6. 5 Management Consulting in Japan 1. Constitution of consulting firms Source: All-Japan Federation of Management Organizations, “Study of current status in management consulting industry”, March 2004 2. Constitution of consulting sales

7. 6 Critical Issues for Japanese Companies (2004 VS.2007) Source: Japan Management Association, “Study of critical issues faced by companies”, December 2004 20042007 Financial characteristics or profitability 33.2 New business, products, and service 28.0 Restructuring of existing business 27.0 Customer satisfaction 24.7 Low cost management 23.6 Sales or share 23.1 Business/differentiation strategy 14.8 Quality and hand-down of technology 12.8 Corporate culture 12.7 Corporate social responsibility (CSR) 11.3 Business speed 10.4 1 2 3 4 5 6 7 8 9 10 11 Ne business, products, and service 36.2 Customer satisfaction 20.6 Business/differentiation strategy 19.1 Sales or share 16.6 Human resource development 16.2 Global management 13.3 Corporate governance 12.7 1 4 5 6 7 8 9 Corporate social responsibility (CSR) 25.2 2 % Financial characteristics or profitability 22.3 Restructuring of existing business 12.5 Low cost management 12.2 3 10 11 %

8. 7 Asia Pacific Management Consulting CAGA ， ’04 － ’06 Asia Pacific Management Consulting CAGA by Country Japan & China Management Consulting CAGA by Service Line Source: Kennedy Information; The Asia Pacific Consulting Marketplace Report CAGA: Compound Average Growth Rate （％）

9. 8 New Economic Growth Strategy Aims of the New Economic Growth Strategies Source: Japanese Ministry of Economy, Trade and Industry, June 2006 New Growth under the Conditions of Population Decline Strategic promotion of policies Virtuous Cycle of Innovation and Demand Growth in Japan and Asia Domestic demand creation Manufacturing and Service Industries forming the “Twin Motors” of Economic Growth Productivity improvement in service industry which covers 70% of the total GDP Bright Future in Sight following Reforms Social security system as society to continues to age Financial restructuring

10. 9 New Economic Growth Strategy (Ministry of Economy, Trade and Industry, June 2006) Five Areas for Cross Functional Innovation Source, “New Economic Growth Strategy ”, June 2006 People “HITO” People “HITO” Goods “MONO” Goods “MONO” Technology “WAZA” Technology “WAZA” Money “KANE” Money “KANE” Knowledge “CHIE” Knowledge “CHIE”

11. 10 http://www.jmac.co.jp/ http://www.jmacglobal.com/