The ultimate aim of both manufacturing and service sector is to increase productivity by simplifying system and improving organisational potential by using contemporary techniques such as Kaizen. Kaizen is a business philosophy whose goal is to improve productivity, efficiency, quality, and to achieve business excellence. Kaizen methods are internationally acknowledged as methods of continuous improvements. Many companies in the world use Kaizen as a way of improving performances within the company. The emphasis of this master thesis lies on the Kaizen and the possibilities of its use within two Croatian companies, one of which comes from the manufacturing (Same Deutz-Fahr Žetelice d.o.o.), whereas the other belongs to service sector (dm-drogerie markt d.o.o.). The study is conducted using the questionnaire method. The analysis of the results show the rate of application of Kaizen method and its approaches to competitiveness in the market. The objectives of this master thesis are to theoretically define contemporary approaches to improving business processes with the emphasis on Kaizen and to display the possibilities of applying Kaizen in practice. The study has shown the rate of application of Kaizen method and its approaches to competitiveness in the market, which indicates the possibilities of application of Kaizen philosophy in two Croatian companies.