Abstract

The case is about the Osaka, Japan-based construction company Kongo Gumi Co. (Kongo Gumi), which was regarded as the world's oldest continuously operating family-owned business till the end of 2005. In January 2006, the company was liquidated and became a wholly-owned subsidiary of Takamatsu Construction Group Co Ltd. Kongo Gumi, which was run by the Kongo family and was believed to have been operating continuously since 578, 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. However, factors such as over-extending its financial resources during the economic downturn and failure to effectively respond to social changes led to the company's ultimate demise, according to experts. Experts felt that family-owned businesses could learn a lot from the business practices followed by Kongo Gumi. In particular, its value-based management and succession planning practices interested the experts. The factors that led to its downfall too provided some vital lessons to family-owned businesses, they felt.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the issues and challenges in running a family-owned business.
• Analyze the reasons for Kongo Gumi's longevity and downfall as a family-owned business.
• Understand the importance of managing family dynamics and succession issues in family-owned businesses.
• Appreciate the importance of value based management and the importance of recognizing and responding to market trends.

Keywords

Family-owned business, Family dynamics, Generational dynamics, Succession principles, Succession planning, Value-based management, Motto, Principle, Management ethic, Management style, Leadership, Technology, Computer-aided design, Diversification, Business environment, Social changes, Construction, Financial, Economic downturn