Changes in the Industrial Structure Created by the Expanding “Digitally Connected World” and Survival Strategies for the Japanese Manufacturing Industry

Abstract

Lately, we find that the industrial world and media frequently use words, such as the “Internet of Things (IoT) ” and the “Fourth Industrial Revolution.” These are neither trendy words nor words for a transient boom, but these are closely associated with underlying industrial changes that are occurring in the world.

The first half of this paper provides an overview of the progress and spread of information and communication technology (ICT) that has expanded the “Digitally Connected World” rapidly and changed the structure of industry and business drastically all over the world.

Specifically, we discuss economic phenomena and technology trends related to the expansion and intensity of the “Digitally Connected World.” We cover key themes, including increased competition between different industries, faster commoditization, shift towards the service industry from a predominantly manufacturing industry, IoT, artificial intelligence (AI), sharing economy, virtual reality (VR), augmented reality (AR), and three-dimensional (3D) printer. We explain these concepts with a focus on the relationship between them.

In the second half of this paper, we analyze the challenges that Japanese manufacturing companies have to address to survive in response to changes in industrial structure and business environment created by the progress of the Fourth Industrial Revolution. We aim to highlight viewpoints to see the whole by transcending the border of each industry, redefinition of the industry, and promotion of collaboration. We also indicate that a culture that tolerates failures and encourage challenges will become important factors for companies.