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Notes: Two main governance systems are discussed in the case. One is insider system (Japan) and other is outsider system (US). In outsider system the control rights and cash flow rights are linked together. US believe on free trade and several outside investors. Shareholders has supreme power. On the other hand Japan follows insider system which is also referred as keiretsu. The groupings of suppliers, dealers, insurers within the same keiretsu had remove competition. And at the same time they all were shareholders of the company. The central Bank and other financial institutions have close relationship with corporations.

Notes: Koito manufacturing was a big supplier who provides lighting equipments to Toyota and Nissan. koito supplies were restricted within the same keiretsu. This was the example of inside corporate governance system. The groupings of suppliers, dealers, insurers within the same keiretsu had remove price competition and make monopoly in the Japanese markets. There was no scope for foreign and outside suppliers to invest in such circumstances.

Notes: In Japanese keiretsu system had no scope of foreign investors. Main financial institutions and major banks had close relationship with corporates. And at same time they were key shareholders of corporations in japan. Like in the given case corporations and financial institutions with which Toyota had business dealings owned 87.7% of its share and individual shareholders held only 9.3% of Toyota's common stock.

Notes: The fact that he bought shares from Watanabe at an undisclosed price and also refused to share details regarding how the shares were financed,, it is safe to assume that T. Boone Pickens, like Watanabe, wanted to greenmail Toyota and Koito so that they buyback the shares from him at a price than what he paid to acquire those shares.

Notes: This denial of representation by Koitos board is a depiction of a custom which was referred to by Takao Matsuuura, President of Koito, who said that it is not a norm in Japan that the major shareholder is entitled to representation on the board.

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