Conflicting Business Approaches of Two Generations: The Otsuka Family Showdown
| 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 |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
At the general shareholders' meeting of Japan’s renowned and oldest furniture retail chain, Otsuka Kagu Ltd. (OKL), on March 27, 2015, there was a sense of anticipation and anxiety. The assembly hall was crowded with nearly 200 shareholders turning up for the meeting – almost ten times more than the previous year. Everyone was waiting to know the fate of the company. A series of news reports about OKL in the local newspaper and in the media in recent times had left the shareholders uneasy. The meeting was all set for a face-off between the 71-year-old Katsuhisa Otsuka (Katsuhisa), Founder and Chairman of OKL, and his 47-year-old daughter and President of the company, Kumiko Otsuka (Kumiko). The shareholders had assembled to decide who should be given control of the troubled company and to select new board members. At the meeting, the father accused his daughter of ousting him as president while the daughter claimed that the exclusion of her father from the board was for better governance.
OKL, established by Katsuhisa in 1969, was known for its luxury and comfortable products. The founder introduced a unique membership system for its clients, little knowing that it would one day became the reason for the dispute with his daughter. During the growth period of the economy in Japan, the company generated handsome revenues and profits. But as soon as recession hit the country, disposable incomes among the youth became unstable. The youngsters started looking around for cheaper and non-branded options where furniture was concerned and turned to other furniture retail chains which were in their growth phase like IKEA, Nitori Holdings Ltd., and Mujirushi Ryohin (Muji), to fulfil their needs. This resulted in OKL incurring huge losses, which were further amplified by a case of insider trading in the company in 2007. Katsuhisa handed over the position of President to his daughter Kumiko in 2009, while he remained the Chairman of OKL...
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