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Management of Technology and Innovation in Japan

Management of Technology and Innovation in Japan

4 K. Sakakibara

4 K. Sakakibara and Y. Matsumoto point. In the personal computer business, Dell does not manufacture any devices and components and uses an outsourcing strategy for high appropriability. Michael Dell, the founder of Dell, envisioned a way to create value through innovative distribution and marketing rather than through manufacturing. He has succeeded in developing a business model that enables high appropriability in that business area. Characteristics of the Business Performance of Canon In the section that follows Canon Corporation of Japan is used as a best-practice case that exemplifies high appropriability among competitors. It is a highly successful company: the latest business performance as of December 2003 shows sales on a consolidated basis of Y319.8 billion, an operating profit of Y45.44 billion, and operating margin before tax of 14.2% and an after tax profitability of 5-8% which makes Canon one of the most profitable Japanese manufacturing firms. Canon has 3 major business groups. The first and central group is the camera product group. A successful diversification created the second competence, the business machine product group. The third area, the optical and other products group, aims for specialized market segments. As for the contribution to corporate performance, the business machine product group is the most significant contributor to the overall profitability of Canon. This group currently accounts for 70% of consolidated sales and 107% of profitability (the contribution to the overall profitability exceeds 100% because in 2003 the profitability of the optical and other products group was negative). Operating margins by business are camera 19.3%, business machine 21.4%, and optical and other -2.8%. Although all groups are major players in the respective markets, the high operating margin of the business machine product group is noteworthy. Why is the business machine product group so profitable? Both camera and business machine products hold significant world market shares, contributing to the high profitability. However, having great market share alone is insufficient to describe why the profitability of the business machine product group is higher than that of the others. What is unique to the business machine product group is that after-sales support and consumable supplies, besides the up front sales of products, are powerful sources of profit. It is a distinctive structure for profit making. The questions at hand are what the distinctive structure for profit making is, how Canon has been able to establish it, and whether or not any companies that manufacture the same product types automatically achieve high profitability. Profitability of the Business Machine Product Group Two representative products of the business machine product group include copying machines and inkjet printers. The domestic market share of copying machines

Designing the Product Architecture for High Appropriability: The Case of Canon 5 in terms of shipment unit shows Canon at 29.7%, Ricoh at 29.5%, and Fuji-Xerox at 22.0%. As the top 3 manufacturers hold over 80% of the market, it is clear that these three dominate the domestic market (Nikkei Sangyo Shinbun, August 13, 2003). As for the ink jet printer, the domestic market share is in an oligopoly situation controlled by Seiko Epson (50.8%) and Canon (41.7%) (Nikkei Sangyo Shinbun, July 29, 2003). If the operating margin trends of 4 representative manufacturers of business machines (Canon, Ricoh, Seiko Epson and Fuji Xerox) are compared in the latest 5 years, it shows that Canon has been the only company with a return on sales consistently higher than 10%. As the content of business machine operations in each company varies, it is not possible to precisely conduct a comparative analysis. Nonetheless, it is safe to conclude that Canon consistently demonstrates higher profitability than competitors. Cartridge Technology that Sustains Copier’s High Profitability In order to understand the uniquely high profitability of Canon’s business machine products group, it is helpful to take a look at the example of its small-size personal copier, which found family and personal uses. Canon developed the first-in-the-world personal copier PC-10 in 1982. The market loved the model, and it contributed greatly to the company’s growth. The distinctive feature of this small-scale personal copier is Canon’s home grown “cartridge technology.” The cartridge technology combined the central functions of the copier, packaging, image development device, charger, photoconductive drum, consumable toner, and cleaner functions into one cartridge. Then the all-in-one cartridge is replaced with toner’s expiration. The unique technology of Canon eliminated periodical inspections and toner refills, and enabled the development of the personal copier market for the first time in the world. As Canon’s advertisement stated, “simple-maintenance and support-free” became possible. Also, the technology made the product significantly more compact. The cartridge method was successfully transferred to laser-beam printer (LBP) product lines. Prior to the PC-10 the plain-paper copiers, or PPCs, were for business organizations only, and the countrywide network of after-sales service providers supported maintenance of the installed equipment. It was a norm that copiers came with maintenance services. Photoconductive drums needed to be replaced when they reached their expiration; toners needed to be replenished and disposed; charger’s wires tended to attract dust and therefore needed to be cleaned periodically; cleaners needed to be replaced; and so on. In other words, using PPCs necessitated periodical checks, maintenance, replacement of consumables, and timely repairs when needed. Those conditions were undesirable for family or personal uses. It was either unfeasible to establish such a network to support family and personal users or unprofitable to do so. With the cartridge technology Canon made it possi-

  • Page 1 and 2: Management of Technology and Innova
  • Page 3 and 4: Prof. Dr. Cornelius Herstatt Christ
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  • Page 17 and 18: Table of Contents Part I: Strategic
  • Page 19 and 20: List of Contributing Authors Yaichi
  • Page 21 and 22: List of Contributing Authors XXIII
  • Page 23: Designing the Product Architecture
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    56 K. Kusunoki existing performance

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    58 K. Kusunoki the LCD computer mon

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    60 K. Kusunoki In the home-use vide

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    62 K. Kusunoki systems with interna

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    64 K. Kusunoki visible dimensions e

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    66 K. Kusunoki Cocoon appears a goo

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    68 K. Kusunoki level system. To acq

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    70 K. Kusunoki music editing softwa

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    The Customer System and New Product

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    The Customer System and New Product

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    The Customer System and New Product

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    The Customer System and New Product

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    The Customer System and New Product

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    The Customer System and New Product

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    Part II: Process Aspects

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    88 S. J. Harryson An important sugg

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    90 S. J. Harryson Introducing a Kno

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    92 S. J. Harryson Their data also s

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    94 S. J. Harryson view of transacti

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    96 S. J. Harryson but never produce

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    98 S. J. Harryson Know-Who in Produ

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    100 S. J. Harryson Leveraging Intra

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    102 S. J. Harryson naka stated that

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    104 S. J. Harryson protect Canon’

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    106 S. J. Harryson Consequently, a

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    108 S. J. Harryson References Abegg

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    110 S. J. Harryson Johansson U and

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    Fig. 3. Japanese creativity with lo

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    The Domestic Shaping of Japanese In

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    The Domestic Shaping of Japanese In

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    144 M. Yasumoto and T. Fujimoto low

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    146 M. Yasumoto and T. Fujimoto in

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    148 M. Yasumoto and T. Fujimoto sup

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    150 M. Yasumoto and T. Fujimoto Mea

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    152 M. Yasumoto and T. Fujimoto com

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    154 M. Yasumoto and T. Fujimoto Jap

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    156 M. Yasumoto and T. Fujimoto The

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    158 M. Yasumoto and T. Fujimoto As

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    160 M. Yasumoto and T. Fujimoto The

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    162 M. Yasumoto and T. Fujimoto The

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    164 M. Yasumoto and T. Fujimoto Bru

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    “Fuzzy Front End” Practices in

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    Number of companies 250 200 150 100

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    “Fuzzy Front End” Practices in

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    “Fuzzy Front End” Practices in

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    N=551 “Fuzzy Front End” Practic

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    “Fuzzy Front End” Practices in

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    “Fuzzy Front End” Practices in

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    “Fuzzy Front End” Practices in

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    “Fuzzy Front End” Practices in

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    186 R. Haak The Toyota production s

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    188 R. Haak (1988, p. 3) pointed ou

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    190 R. Haak Essentially, the key fa

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    192 R. Haak movement of materials n

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    194 R. Haak ent from traditional me

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    196 R. Haak Total Quality Control (

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    198 R. Haak or shared with other co

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    200 R. Haak Görgens J (1994) Just

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    202 R. Haak Ohno T (1988) Toyota Pr

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    Part III: Organizational Aspects

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    208 K. Nobeoka Firms such as Toyota

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    210 K. Nobeoka to share technology

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    212 K. Nobeoka launched an initiati

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    214 K. Nobeoka only 23 departments

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    216 K. Nobeoka product introduction

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    218 K. Nobeoka 1993. Rather the cha

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    220 K. Nobeoka Second, Toyota also

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    222 K. Nobeoka and it was not often

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    224 K. Nobeoka The hierarchical chi

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    226 K. Nobeoka tion. Engineers can

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    228 K. Nobeoka believes that five d

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    230 K. Nobeoka Discussion and Concl

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    232 K. Nobeoka essential to support

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    234 K. Nobeoka Markides C and Willi

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    236 D. Ge and T. Fujimoto ownership

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    238 D. Ge and T. Fujimoto shares th

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    240 D. Ge and T. Fujimoto Table 1.

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    242 D. Ge and T. Fujimoto Based on

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    244 D. Ge and T. Fujimoto Discussio

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    246 D. Ge and T. Fujimoto sourcing

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    248 D. Ge and T. Fujimoto Nishiguch

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    250 C. Herstatt, C. Stockstrom, and

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    252 C. Herstatt, C. Stockstrom, and

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    254 C. Herstatt, C. Stockstrom, and

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    256 C. Herstatt, C. Stockstrom, and

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    258 C. Herstatt, C. Stockstrom, and

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    260 C. Herstatt, C. Stockstrom, and

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    262 C. Herstatt, C. Stockstrom, and

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    264 C. Herstatt, C. Stockstrom, and

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    Part IV: Cultural Aspects

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    270 C. Nakata and S. Im have not be

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    272 C. Nakata and S. Im ucts, such

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    274 C. Nakata and S. Im customers a

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    276 C. Nakata and S. Im New Product

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    278 C. Nakata and S. Im Measures We

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    280 C. Nakata and S. Im analysis in

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    282 C. Nakata and S. Im Managerial

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    284 C. Nakata and S. Im derstanding

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    286 C. Nakata and S. Im Fukuyama F

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    3.94 To adapt products to local req

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    Differences in the Internationaliza

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    Differences in the Internationaliza

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    Acknowledgment Differences in the I

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    Global Innovation and Knowledge Flo

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    330 C. Herstatt, B. Verworn, and A.

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    332 C. Herstatt, B. Verworn, and A.

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    334 C. Herstatt, B. Verworn, and A.

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    336 C. Herstatt, B. Verworn, and A.

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    338 C. Herstatt, B. Verworn, and A.

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    340 C. Herstatt, B. Verworn, and A.

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    342 C. Herstatt, B. Verworn, and A.

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    344 C. Herstatt, B. Verworn, and A.

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    346 C. Herstatt, B. Verworn, and A.

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    348 C. Herstatt, B. Verworn, and A.

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    350 C. Herstatt, B. Verworn, and A.

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    352 C. Herstatt, B. Verworn, and A.

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    Objectives of IP management To cont

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    Technology Planning Function From P

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    From Practice: IP Management in Jap

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    From Practice: IP Management in Jap

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    MoT: From Academia to Management Pr

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    Index 3G 148 f., 152 5 S process 19

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    Japanese consumers 125, 129, 135 Ja

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