Otsuka Kagu, a well-known furniture store in Japan, made news recently because of an ugly family feud between the founding father and his daughter. Mr. Otsuka started the store in 1969 and built it into one of Japan’s leading furniture retailers, now a publicly traded company. Mr. Otsuka’s business model focused on high-end customers using a membership system, large showrooms, customer advisors, and strong relationships with a wide range of suppliers. This strategy worked until the 2008 worldwide financial crisis, when the company started experiencing losses as customers sought out lower-priced rivals like IKEA. As a result, Mr. Otsuka put his daughter in charge as president of the company. Ms. Otsuka cut prices, renovated stores, and created a line of lower-priced walk-in stores, bringing the company back to profitability. Although customers apparently approved of Ms. Otsuka’s actions, her father and many employees did not. So Mr. Otsuka fired his daughter and reverted to the company’s original strategy. Mr. Otsuka even went so far as to call his daughter a “bad child” and label her marketing actions “terrorism.” When the company’s profitability once again suffered, shareholders voted to bring back Ms. Otsuka as president of the company. Do you think Mr. Otsuka’s demands to continue focusing on high-end customers are reasonable?
Otsuka Kagu, a well-known furniture store in Japan, made news recently because of an ugly family feud between the founding father and his daughter. Mr. Otsuka started the store in 1969 and built it into one of Japan’s leading furniture retailers, now a publicly traded company. Mr. Otsuka’s business model focused on high-end customers using a membership system, large showrooms, customer advisors, and strong relationships with a wide range of suppliers. This strategy worked until the 2008 worldwide financial crisis, when the company started experiencing losses as customers sought out lower-priced rivals like IKEA. As a result, Mr. Otsuka put his daughter in charge as president of the company. Ms. Otsuka cut prices, renovated stores, and created a line of lower-priced walk-in stores, bringing the company back to profitability. Although customers apparently approved of Ms. Otsuka’s actions, her father and many employees did not. So Mr. Otsuka fired his daughter and reverted to the company’s original strategy. Mr. Otsuka even went so far as to call his daughter a “bad child” and label her marketing actions “terrorism.” When the company’s profitability once again suffered, shareholders voted to bring back Ms. Otsuka as president of the company. Do you think Mr. Otsuka’s demands to continue focusing on high-end customers are reasonable?
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