Case 5 : Tanaka Komuten Company Ltd

Vincent PasquereauTony Seng

Overview of the situation

Documents● Dialogue between Tom Jameson, Kenji Taniguchi and Ruichi

Tanaka● Exhibit 1 : Summary of Main Points in Jameson's Proposal to

Tanaka Komuten● Exhibit 2 : Status of Projects Undertaken by Tanaka Komuten● Exhibit 3 : Ten-Year Growth Summary of Tanaka Komuten's

Gross Sales● Exhibit 4 : Contracts Awarded to Tanaka Directly and Through

Negociation● Exhibit 5 : Breakdown of the Types of Construction

Undertaken by Tanaka● Exhibit 6 : Financial and Statistical Summary of Atlas

Engineering & Construction● Exhibit 7 : Breakdown of the Types of Construction

Undertaken by Atlas● Exhibit 8 : Projects in Which Atlas Was the Sole Contractor

OrganizationTanaka Komuten (Osaka, Japan) Atlas Engineering & Construction

(U.S.)

Kazuo Tanaka(Chairman)

Ruichi Tanaka(President)

Kenji Taniguchi(Managing Director)

Tom Jameson(President)

Try to convince

Current Situation

Communication Intercultural Ethics Management

Strenghts

The firm shows to its

clients that it works in a

single sector

A major part of the

direction is Japenese

∅

Tanaka Komuten is a family-owned company so it

is Tanaka family who takes the important decisions

Weaknesses

If crisis appears, the company is

more vulnerable

∅ ∅Subjectivity of the decisions

and no discussion between

managers and employees

Evolution of the company

% No Negociatio

n

% Negociatio

n

1989 75.7 24.3

1990 72.6 27.4

1989 1990

Offices 22.7 20.3 Stores 13.1 6.4 Hotels 4.8 7.5

Theaters 0.5 0.6 Factories 12.2 14.1 Housing 13.4 14.6 Schools 9.6 10.6

Hospitals 5.6 3.6 Gov’t buildings 1.6 1.4

Transport facilities 2.3 2.2 Other 14.2 18.7

Ten Year Growth of Gross SalesTanaka Komuten

1,5

1,6

1,7

1,8

1,9

2

2,1

2,2

2,3

2,4

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991

Year

bill

ions

of U

S $

What is the problem ?

Should Tanaka Komuten form a « joint venture » with Atlas Engineering &

Construction even if it could sacrifice its reputation ?

Option 1 : Tanaka Komuten stays independent and doesn’t change its

activities• Advantages :

Tanaka’s family wish and choice

Success and reputation based on the non-diversified character of the company

• Drawbacks :

The firm may decline as it did since the beginning of the 1990s

The company undergoes the worldwide decline in building construction without being able to react

Option 2 : Tanaka Komuten stays independent but develops its activities

• Advantages :

The firm stays independent as the Tanaka family wants

The firm diversifies sectors and can survive if there is a problem in the building construction sector

• Drawbacks :

It would cost many resources

We can’t know if it will help the firm or not

Option 3 : Tanaka Komuten forms a joint venture with Atlas Engineering &

Construction• Advantages :

Invest little money

Possibility of diversifying sectors

Immediate prospects

A lot of opportunity and revenue internationally

• Drawbacks :

Tanaka Komuten loses a part of its independence

This may confuse some customers who are not informed

This may affect the image of Tanaka if Atlas does not have the same quality of construction

Option 4 : Tanaka Komuten and Atlas Engineering & Construction make a fusion

to form a bigger company • Advantages :

Become bigger, so more able to avoid a crisis, an economic problem

The Tanaka Family keeps some control on the firm

• Drawbacks :

Need to invest a lot of money and time to create the new company

This may confuse some customers who are not informed

Our recommendationWe recommend the option 3 :

Win-Win solution : Both firms will have advantages Tanaka can have more contracts internationally Atlas can use the good image of Tanaka Low investment, reducing costs

To avoid problems, you just must : Establish a common level of quality Make some public relation work to inform

Questions

?