Otsuka Kagu Ltd. (OKL) was established by Katsuhisa Otsuka (Katsuhisa) in 1969 and since then it was known for its luxury and super comfortable products. The founder introduced the unique membership system which became the reason of dispute between him and his daughter Kumiko Otsuka (Kumiko), in the new millennium. During the growth period of the economy in Japan the company generated handsome revenues and profits. But as soon as recession hit Japan, the disposable income of youth became unstable; they started looking for other cheaper and non-branded options. Their needs were catered by other small furniture retail chains which were in their growth phase like IKEA, Nitori Holdings Ltd, Muji. It led to huge losses for the company. Katsuhisa handed over the position of President to Kumiko in 2009. The daughter with her new strategies and business idea was able to turn the company into profit though gradually. She decided to discontinue the old membership business model and opened small and cheaper outlets to boost the sales. The father could not take the changes positively and he decided to expel the daughter from the post of president in July 2014. He restarted all the old practices at the stores and closed the small outlets which were opened by the daughter. In January 2015, the members of the board decided to reappoint the daughter as president since profits of OKL were going down. In the same meeting, Katsuhisa proposed the change of entire members of board in the next general shareholders meeting. In the meeting, both daughter and father presented their contrasting proposals to the shareholders. Kumiko prevailed but the problems for OKL were far from over.
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The case is structured to achieve the following teaching objectives:
Understand issues and challenges in family business management.
Understand the importance of adapting to a changing environment and the challenges for a family business in pursuing long-term growth.
Understand the leadership issues and challenges and conflict that might arise due to differences in the business approaches of two generations.
Understand the importance of succession planning in family businesses.
Family business management; Business environment of Family businesses; Pursuing long-term growth; Three Circle Model of the Family Business System; Conflict management in Family Businesses; Bell and Hart’s eight possible causes for the conflict; Generation gap; Family Business Succession Planning Model; Succession Planning; Succession Planning Model; Family council; Organizational Behavior;