Regarding the Navy....it's a question of how you define "best". As the war proved, U-boats were not enough to wrest control of the ocean from your adversaries. Although the U-boats were very successful commerce raiders, they never outright defeated the RN surface fleet. Japan had a very modern navy that was superior in quantity and quality. Both sides produced fine ships, but the Japanese had more of them, and superiority in the one category that truly mattered: aircraft carriers.
As far as Yamato vs. Bismarck...here's the tail of the tape:
Main Battery:
Yamato 9X18.1inch, range 4.2 km, Bismarck: 8x15inch range 3.6km. Advantage: Yamato
Armor belt: Yamato: 16inch, Bismarck: 13 inch. Advantage: Yamato
Speed: Yamato 27 knots, Bismarck 30 knots. Advantage Bismarck
One crucial aspect was fire control, since in general, whichever ship got the first hit would win the engagement. Neither ship had the accurate radar guided fire control. Based on operations it's hard to tell which ship was the better shot, but I would say Yamato would have the edge since her optics and radar were slightly better and accurate at longer ranges.
Fortunes of war aside, Bismarck really doesn't have much of a chance against Yamato, especially since her 15inch shells would do little against a 16 inch armor belt, while Yamato's shells would tear through the Bismarck like it was tin foil.
Yamato gets the first hit, devastating Bismarck with one shot. After that it's pretty much over.
