Kongo Gumi: Lessons from the Legendary Family-Owned Business' Longevity and Ultimate Demise
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Case Details:
Case Code : BSTR316
Case Length : 13 Pages
Period : 578-2007
Pub Date : 2009
Teaching Note :Not Available
Organization : Kongo Gumi
Industry : Construction
Countries : Japan
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
Lessons from its Demise
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Experts felt that Kongo Gumi's demise too held many valuable lessons for family-owned businesses. Factors such as difficult market conditions marked by an ailing Japanese economy, social changes, and the company's failure to hedge against these external factors led to its eventual demise, they said...
Failure to Recognize and Respond to Market Trends
Though the company had been facing a relatively difficult business environment since the early 1900s, after World War II, funding for temple construction became more difficult to come by...
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Chasing a Fad
Experts felt that Kongo Gumi's strategy of investing in real estate in the 1980s too had played a key role in its demise. As prices of land shot up in Japan in the 1980s, Masakazu borrowed heavily to invest in land and diversified into construction of condominiums, hospitals, and hotels...
Other Issues
Some experts felt that Kongo Gumi might not have got its succession plan right the last time around, with Masakazu failing to effectively respond to changing market trends. Also he had been instrumental in borrowing heavy amounts to finance the land deals in the 1980s.
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Epilogue
As of early 2009, Kongo Gumi operated as a wholly-owned subsidiary of Takamatsu and the new management had brought it back into profits. The company had reported a profit of ¥20 million in its first year of operation under the new management...
Exhibits
Exhibit I: Kongo Gumi - A Timeline
Exhibit II: A List of the Top 10 Oldest Long-lived Family Owned
Businesses
Exhibit III: Motto, Principles and Management Ethic of Kongo Gumi
Exhibit IV: An Updated List of Top 10 Oldest Long-lived Family Owned
Businesses
Exhibit V: An Updated List of Japan's Top 10 Oldest Long-lived Family
Owned Businesses |
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