Case 5 –

Takenaka Komuten

Company LtdJulien NogueiraLuca Rosi

Introduction

Who are us and why are we here ?

Why do we made you come today ?

Are you ready ?

Overview

2 Companies

1 joint venture

An economic study

Takenaka Komuten, Osaka

-Kazuo Takenaka, Chairman

-Ruichi Takenaka, President-Kenji Taniguchi, Managing

director

Atlas Engineering & Constuction , United

States

Tom Jameson, President

Takenaka Komuten

A company based on a family

A company non-diversified

Need a new beginning

Exhibit 3: Ten-Year Growth Summary of Takenaka Komuten's Gross Sales (in billions of US$)

Exhibit 5: Breakdown of the Types of Construction

Exhibit 4: Contracts Awarded to Takenaka Directly and Through Negotiation

  % No Negotiation

%Negotiation

1989

75.7 24.3

1990

72.6 27.4

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 $

  1989 1990

Offices 22.7 20.3Stores 13.1 6.4Hotels 4.8 7.5

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

Hospitals 5.6 3.6Gov’t buildings 1.6 1.4

Transport facilities

2.3 2.2

Other 14.2 18.7

Atlas Engineering & Construction

A company specialized in civil engineering

A complementary company with yours

Very good experience and reputation

Exhibit 6: Financial and Statistical Summary of Atlas Engineering & Construction (in millions of US$ except per share information)

Exhibit 7: Breakdown of the Types of Construction Undertaken by Atlas (percentages by sales)

Exhibit 8: Projects in Which Atlas Was the Sole Contractor (Percentages)

  1987 1988 1989 1990 1991

ConsolidatedWorldwide Sales

 742

 754

 1,05

1

 1,27

4

 1,88

9Earnings after tax 24 28 38 44 45

Earnings per share 2.17 2.50 3.30 3.37 3.40Overseas sales 298 301 337 371 378

Percent of total sales 40.2 39.9 32.1 29.1 20.0

  1989 1990

Dams 13.7 11.8Bridges 23.5 26.4

Highways 4.0 5.4Energy plants 8.7 6.2

Runways 25.6 28.7Harbor facilities 7.4 9.3

Offshore platforms 5.7 6.1Other 11.4 6.1

1985

1986 1987 1988 1989 1990 1991

21.5

23.1 28.4 26.5 25.9 23.2 22.8

Joint venture

What is exactly a joint venture ?

Strenghts Weaknesses

- Diversification - More attractivity- Have new clients- Be more known- Earn more money in

global

- Share profits- One project will bring less

money- Communication - Management- Need time to be effective

DialogueJameson (Atlas) is talking to Taniguchi and Takenaka in Osaka

Atlas wants a joint venture with you“I think it should be fairly clear that a joint venture […]is a definite advantage for both of us.” “And with our collective experience and reputation, I really think we can turn this joint venture into a very profitable partnership.”

Takenaka is affraid to lost clients“Will our existing clients see it that way, or will they feel that Takenaka Komuten has gone the way of all major contractors?”

But Atlas will only make a joint venture in Japan with you

“Also, since we will not do any joint venture work in Japan, your domestic clients will not be at all affected”

Exhibit 1 : Jameson’s Proposal

AvantagesDisavantages

- Reducing the cost- Transparence to the client- A lot of diversifed project- Win competivity- 2 huge immediate prospects

- Yours clients can be confused- Investment Capital : US$ 500

000- Distribution of profit and loss- Work with the US culture

Statement of problem

Do Takenaka Komuten should accept the joint venture proposal from Atlas ?

Is there a real impact of the joint venture on the image of Takenaka Komuten ?

How can we develop Takenaka Komuten ?

Option 1 : Do not accept Don’t accept this offer and stay like you

are actually

-Takenaka family will be happy

-Reputation stays the same

- The company will not grow

- Possible lost of money

Option 2 : Accept it Accept this joint venture exactly like Jameson

propose it

-Company more known

-Diversify sectors

-Earn more money

-Easier for clients

-Big investissment ($500 000)

-Confused clients if they aren’t informed

-Affects Takenaka reputation

Option 3 : Accept it with negociation You can accept the offer but this time

profits are share 70%-30% for Takenaka

-Earn a lot of money

-Immediate prospects

-The company is diversify

-Easier for clients

- Confort the clients or the reputation will be affect

- Investissment but easily pay back

Option 4 : Diversify the company by yourselves

Don’t accept this deal but start developping other activities for Takenaka Komuten

- Possibly earn a lot of money

- Very good diversification

- New clients, new reputation

- Takenaka family will not be happy

- The reputation will never be the same

Option 5 : Buy Atlas Don’t accept the offer of joint venture

but buy Atlas Engineering & Construction

- A fresh start

- A lot of new projects

- A good challenge

- Takenaka family will definitively not be happy

- Clients will be confused

- Money needed

Let’s summarize

Option 1 : Stay like this, don’t take the offer Option 2 : Accept Jameson’s proposal (50-50%

profits) Option 3 : Accept Jameson’s proposal (70-30%

profits) Option 4 : Don’t accept the offer, re-invent the

company Option 5 : Don’t accept the offer, buy Atlas

Any questions ?