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Case Code: LDEN118
Case Length: 13 Pages 
Period: 2014-2016    
Pub Date: 2017
Teaching Note: Available
Price: Rs.500
Organization : Otsuka Kagu Ltd.
Industry : Retail; Furniture and Furnishings
Countries : Japan 
Themes: Family Business Management  
/Conflict Management
/Succession Planning
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

Conflicting Business Approaches of Two Generations: The Otsuka Family Showdown

 
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EXCERPTS

THE BUSINESS APPROACH OF KATSUHISA

 

OKL operated large-scale retail stores primarily in urban areas. Generally, newly married couples indulged in the purchase of new furniture. In 1993, Katsuhisa introduced the ‘membership system’ in his company. Under this system, when customers entered the showroom, they were required to fill in an information form and sign a membership form at the desk. An attendant was then assigned to each group of customers to escort them through the showroom. In the process of communicating with the customer, the attendant determined their needs. He/she then showed them items based on what they were looking for. If there was a disagreement among the customers over the purchase of a particular piece of furniture, the attendant resorted to consensus building, giving suggestions on the products based on his/her rich product knowledge. The attendants not only gave general information about the products but also detailed explanations on the specific items to be bought according to the customer’s need. The objective of the membership system was to sell the products at a reasonable price. ...

 
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SALES DECLINE AFTER 1990s

The interior retail market dropped to ¥3 trillion in 2011 from ¥4.5 trillion in 2001 . In earlier times, families bought huge wardrobes and standalone cabinets as there were no pantries or closets. But with many new homes having walk-in closets and built-in storage features, the possibility of investing huge amounts in furniture from the showroom was negated, said analysts.....
 

MUSHROOMING OF RIVALS

OKL lost its competitive edge over the years due to the mushrooming of a range of cheaper retailers like Mujirushi Ryohin (Muji), Nitori, and IKEA, and the introduction of the luxury brands such as Cassina, according to industry observers...
 

INTERNAL TRADING AT OTSUKA KAGU

In 2007, OKL was found guilty of insider trading and a fine of ¥30.44 million was levied on it for violating the Securities and Exchange Surveillance Commission rules. The violation pertained to the company listed on the Jasdaq market purchasing its own shares before it disclosed an important fact...

A CHANGE IN BUSINESS APPROACH

In March 2009, with an eye on revitalizing the company after its series of losses and winning back its customers, Katsuhisa appointed his daughter Kumiko as President of the company..

BOARDROOM BATTLE AND THE PUBLIC SPAT

The public battle started the very day Katsuhisa sacked Kumiko from the post of President. They both blamed each other for the decline in the performance, strategy, leadership style, and the corporate governance of the company..

WHO WINS?

On the deciding day March 27, 2015, at the general shareholders’ meeting of the company where around 200 shareholders were present, the two sides’ contrasting business strategies were presented..
 

EXHIBITS

Exhibit I:Key Financials of Otsuka Kagu Ltd. (2005-2014)
Exhibit II: Key Statistics Related to the OKL Stores (2005 – 2014)
Exhibit III: New Housing Starts in Japan (in Units)
Exhibit IV: Annual Trends in Number of Marriages in Japan (In Units)
Exhibit V: Sales of Major Home Furnishing Store Groups in the Japanese Market (FY 2011) (In ¥ Million)
Exhibit VI: The Forecast by Katsuhisa and Kumiko for 2017