Kongo Gumi: Lessons from the Legendary Family-Owned Business' Longevity and Ultimate Demise

Kongo Gumi: Lessons from the Legendary Family-Owned Business' Longevity and Ultimate Demise
Case Code: BSTR316
Case Length: 13 Pages
Period: 578-2007
Pub Date: 2009
Teaching Note: Not Available
Price: Rs.300
Organization: Kongo Gumi
Industry: Construction
Countries: Japan
Themes: Entry Strategy, Competitive Strategy, Differentiation
Kongo Gumi: Lessons from the Legendary Family-Owned Business' Longevity and Ultimate Demise
Abstract Case Intro 1 Case Intro 2 Excerpts

"If the family is in good shape, then the company picks up. If the company is in good shape, then the family picks up. So it's like two wheels going together."

-Masakazu Kongo, the 40th Kongo to lead Kongo Gumi (578-2006).

"The average span under each leader was thirty-five years. Even when there were no qualified male heirs, the company's leadership was passed on to sons-in-law who willingly took on the family name. And the leaders were not always males - the thirty-eighth leader was a female family member. But family name was not enough to qualify for leadership. The company was faithful to find the most qualified family member."

-Gerald R. Chester, president of Strategies@Work, LLC, in 2007.

"The circumstances of Kongo Gumi's demise also offer some lessons. Despite its incredible history, it was a set of ordinary circumstances that brought Kongo Gumi down at last."

-James Olan Hutcheson, founder and president of ReGENERATION Partners, in 2007.

Death at 1428 Years

In January 2006, the Osaka, Japan-based Kongo Gumi Co. (Kongo Gumi) was liquidated and it became a wholly-owned subsidiary of Takamatsu Construction Group Co Ltd. (Takamatsu). With this ended the astounding 1,428-year run of Kongo Gumi as a family-owned business. The business, spread across 39 generations, was believed to have been the world's oldest continuously operating family-owned business till then.

Kongo Gumi, which was run by the Kongo family and which was believed to have been operating continuously since 578 AD, had been engaged in the construction of Buddhist temples since its inception. In more recent times, it had diversified into general construction works as well. It was credited with constructing many of the religious buildings that beautify the Japanese landscape. Kongo Gumi's first project, the Shitennoji temple9 is still standing and by the early 2000s, the company had supervised its reconstruction seven times.

"Every time it burnt down, there was more work for us," quipped Toshimichi Sakamoto, head of the company's management and planning division. However, the company's ultimate demise, according to experts, was due to factors such as over extending its financial resources during an economic downturn and failure to effectively respond to social changes...

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