Takena Komuten Company

DEUVE Charlotte

EL ROUSS Sandy

History of Takenaka Komuten Company• 1930 : Creation of the Takenaka Komuten Company by the

family. Large Japanese general contractor in design and construction in many field (office, commercial, public building, school etc.)

One of the top five construction firms in Japan • From 1950 to 1980 : gained a lot of domestically and

internationally contracts Won several awards thanks to high quality of constructionMain factor of the company : non-diversified

• 1990 : Worldwide decline in building construction provokes unsteady situationProposition from Atlas Engineering & Construction company to form a joint venture.

Overview

Overview

Atlas Engineering & Construction

• U.S construction partner in civil engineering• Propose an offer : to form a joint venture

company for the purpose international civil engineering and building construction

Main Actors

• Kenji Taniguichi : Managing Director in Takenaka Komuten Company

• Kazuo Takenaka : Chairman in Takenaka Komuten Company • Ruichi Takenaka : President in Takenaka Komuten Company• Tom Kameson : President in Atlas Engineering &

Construction Company

Overview

Tom Jameson Tries to convince

Kenji Taniguchi

Ruichi Takenaka

Background

It was clear that the old course of specialization was no longer as tenable as it had been. What direction Takenaka should pursue, though, was a matter of controversy within the company. The chairman of the board, Mr. Kazuo Takenaka, and his son, the president, Mr. Ruichi Takenaka resisted expanding the Takenaka firm into other areas of construction.

 

They had serious doubts as to whether Takenaka Komuten could actually compete with more established firms and feared that a move toward diversification would harm the reputation of excellence and dedication to building for which Tanaka was known. Most of the directors, however, felt that Takenaka Komuten should expand its civil engineering capacity which presently accounted for less than four percent of its total sales.

The Takenakas resisted this idea, however, feeling that it would drain too many resources away from the main business activity and possibly even affect Takenaka's reputation as a dedicated general contractor. After months of discussion, but with no resolution of the dilemma, the position of the directors was strengthened by a new development: An offer was received from a former U.S. construction partner, Atlas Engineering & Construction, to form a joint venture company for the purpose international civil engineering and building construction.

Existing Situation

Strengths

• Marketing/ Communication: Brand Image is good thanks to high quality and awards won

• Finance : Results are in growth in several fields

• Intercultural differences : Both companies have already worked together before

Weaknesses

• Communication: Fear brand

image change

• Intercultural differences :

Difference methods and

culture between Japan and

USA

• Finance : Decrease because

of worldwide construction.

Precarious Position

Exhibit 1 : Summary of Main Points in Jameson's Proposal to Takenaka Komuten

 Main Activities of the Joint Venture Company: To procure contracts interna tionally for projects involving both civil engineering and building con struction, e.g., the design and construction of transportation facilities, rural factories requiring road and rail extensions, urban and regional planning and development, harbor facilities. In addition, the joint ven ture company would engage in activities related to these projects, such as material procurement, construction design and engineering (both civil and building), structural engineering, and land-use planning.

Purpose of the Joint Venture: To consolidate civil engineering and building construction capabilities in one single corporation. The immediate advantages of such a consolidation are:Elimination of separate bid submission, thus reducing the cost factor involved in international feasibility study preparation.Assurance to the client of integrated design, engineering, construction, and quality control.Reduction in overall costs to the client.Placement of Takenaka Komuten and Atlas Engineering in a competitive position in relation to other consolidated engineering and construction firms.

Investment Capital: Subject to negotiation and eventual scope of business. Probable minimum investment is US$500,000 each.Equity: Equal participation; hence, equal equity.Distribution of Profit and Loss: Subject to negotiation and eventual structure of the company. On most projects, however, equal sharing is desirable. On some projects requiring additional resources provided by the respective parent companies, a percentage of invested capital, materials, and manpower resources will be returned to or borne by the parent company.Immediate Prospects for Joint Venture Bids:Singapore: Marina City apartments and roadsBrazil: Porto Alegre-Sâo Paulorail and terminal improvements

Exhibit 2 : Status of Projects Undertaken by Takenaka Komuten

Exhibit 3 : Ten Year Growth of Gross Sales Tanaka Komuten

Maturity

Exhibit 4 : Contracts Awarded to Takenaka Directly and through negociationExhibit 5 : Breakdown of the Types Of Cinstruction Undertaken by Takenaka

Exhibit 6 : Financial and Statistical Summary of Atlas Engineering of ConstructionExibit 7 : Breakdown of the Types of Construction Undertaken by Atlas

Exhibit 8 : Projects in Which Atlas Was the Sole Contractor

Statement Of Problem

The current problem for Takenak Komuten Company is the lack of experience and implication in civil engineering. The non-diversified character of the company is not sufficient anymore to maintain their position as one of the leaders.

Do the company should accept the joint Venture proposal from Atlas Engineering ?

Solution 1 : Status Quo

Advantages

• Takena Family will approve this solution

• Reputation and Image will stay the same

Desavantages

• The company is in a precarious situation

• The company will probably not grow anymore

• They can lost a lot of money because of non-diversification

Solution 2 : Takenaka Komuten and Atlas engineering construction form a Joint Venture

Advantages

• Simple collaboration because they have already worked together

• Open more opportunities and international sectors

• Get more client (international ones)

• There is still a separation between both companies

Desavantages

• It could change reputation and image of the brand

• Takenaka is not the only one who decide

• Incomes are split through the 2 companies

• Lose competitive advantage from competitors

• Big investment : 500 000$• Cultural difference

Solution 3 : Diversify the company by themselves

Advantages • Possibility to earn more

money • Obtain new contracts and

clients• Respect the tendency of

diversification

Desavantages

• Change in Brand Image

• Family disapprove this idea

• Cost money to form people and higher people who have knowledge

Solution 4 : Buy the company Atlas

Advantages• Keep an eye on all

projects• Entire power of decision• New Challenge• Increase their turnover• Avoid culture

differences

Desavantages• High investment :

cost a lot of money• Clients will be

confused• Takenaka Family

won’t agree

Solution 5 : Explore new international market

Advantages• Open new market• Get new clients and

contracts• Diversify into new

sectors• Obtain more profit

Desavantages• Costs a lot of money :

need expertise to explore new market (hire people or do formation)

• Adapt to cultural differences

Question : Do you think that forming a Joint Venture with an another company presents more positive points that negative ones ?