Otsuka Kagu Ltd: Saving the Furniture Business

Founded in 1969 as a small company, Otsuka Kagu, Ltd. the largest furniture retailer in Japan and was listed on the Tokyo Stock Exchange in 1980. A membership program in 1993 succeeded in reviving the company’s sales at a time when that Japan was in recession. Years later, after sales began to decline and the founder was convicted of insider trading in 2008, the presidency was transferred to the founder’s daughter, who applied a more customer-centric model to the company. This move angered the founder, who removed his daughter from the company’s management. After a persistently poor performance, the company’s board of directors reinstated the founder’s daughter; She then launched an infamous public battle for control of the company. Despite the new green strategies, revenue continued to decline until the company reported its biggest loss at the end of 2017. In August 2018, the company posted a net loss of ¬ • 2.3 billion, with the company’s shares trading at its lowest level. Faced with financial difficulties, the company had to look both inward and outward to determine next steps.

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