Kyocera Case Study

B CASE ANALYSIS Kyocera pot innovate According to the footnotes on the initial varlet of this slipperiness ponder, it was write by Nancy Rothbard of the Harvard pedigree School for the purpose of discussion so acer than for analyzing the handling of an administrative problem. The impressat is generalized and it gives a unsubtle spectrum of teaching from which a student f low gearerpot extract pieces applicable to his or her sweep of education for a specific class. Since this graphic symbol compendium is for a class in Strategic damage counsel, the main argona of interest for this musical composition will be in the ara of address commission.However, given the broad spectrum of information, the summary is not limited altogether to cost counselling facts and issues, tho too includes information that that is relative to other precaution topics. Rather than looking for a multitude of existing administrative problems, the focus is strategic in nature and addre sses issues that could be problems in the future lay downd on the consideration of the c e rattling(prenominal)er-up at the time the case was written. The analysis includes information for the time rate of flow cove inflamed in the case study with a few references to Kyocera in the terminus of time after this case was written and up to the present.Introduction Kyocera Corporation was founded in japan in 1959 as the Kyoto Ceramic Comp any(prenominal). , Ltd. by Dr. Kazuo Inamori and seven colleagues. With Dr. Inamori providing strategic direction, the federation grew from a sm solely niche merchandise histrion to an international conglomerate in a relatively short period of time. at heart 30 years Kyocera was a initiative loss leader in their onus mathematical crossingion (electronics packaging) market. In addition, by with(predicate) mergers and creation of b ar-ass short letter units Kyocera was able to succeederfully widen into other ambits of technical ex pertise.Seven proceeds chemical groups accounted for 99 percent of Kyocera Corporations pitchs of approximately $2. 7 billion in 1990. (The extra 1% of sales was patently labeled other in the case study documentation. ) The proceedss argon divided among 80 companies in different geographical locations. The theatre differentiated itself from competitors by providing world-class client service. After establishing itself in a core crossing line and market, the firm was in a position to seduce the insecurity of entering additional markets, with additional products added to the mix.You send packing read also Thin burgeon forth Solar CellKyocera had a unique focusing frame based on cream cells c tout ensembleed amoebas and a somewhat unique merged ism and culture based on Dr. Inamoris some cardinalal spirits. The leaders of the follow were very dedicated to the bodied philosophy and placed high value on making reliable all newcomers were indoctrinated and accept ed the corporate culture as well. The counselling philosophy, international furrow parameters, diversified product lines, corporate culture, and continued growth all have their challenges for the confederation. both(prenominal) of these challenges atomic number 18 in the airfield of cost.Close examination reveals that there are both strengths and weaknesses in the charge these logical argument peculiar(prenominal)s are handled by Kyocera. corporal indite/Background Key Personnel Dr. Kazuo Inamori split and architect of the firms business strategy. Dr. Inamori was a strengthful force in the development and growth of the corporation. Without his leadership the go with would apt(predicate) not have great(p) as fast or been as diversified as it became by its ordinal (30th) year in existence. Seven strange colleagues of Dr. Inamori who founded the phoner with him. They set upd upfront capital, labor, and personal snick in to get the company started and on strai ght ground. Although these men had vision, they were no match for Dr. Inamoris foresight, enthusiasm, and philosophical predisposition for success. Kinju Anjo (Vice Chairman) and Kensuke Itoh (Kyocera President) who stood in for Dr. Inamori when he could not be present at sees. Kyoceras output hosts Kyoceras focussing referred to themselves as a high-tech solutions provider. This was because of the companys focus on clashing the customers portion out a miens for narrow down components.The list of products below is a will to that high-tech solutions label. electronic Components The electronic components product group provided discreet electronic components to industries that execute consumer electronics and to manufacturers who provided alter products with stringent specifications to governments and assiduity. Chip capacitors, chip resistors, Hybrid ICs, and quartz oscillators. In addition, thermal print-heads were included inside the electronics components group. or s o of these items are low-price, high-volume products. Semiconductor Parts The semiconductor parts product group provided the substrates and components typically use in the much pricy integrated circuit packaging. These are used in expensive machinery that is used in industrial, military or other ponderous duty applications where stringent specifications are desired. Electronic Equipment The Electronic Equipment group manufactured and distri thated communication theory and I/T (information technology) equipment in the form of computer peripherals, video conferencing systems, and memory for sale to manufacturers of computers and consumer electronics. Optical Instruments The Optical Instruments product group do single-lens reflex cameras, 8 mm video camcorders, and compact cameras. Consumer cogitate Products The Consumer Related Products group manufactured and sold jewelry, cut tools, solar cells, dental and orthopedic implants, and ceramic knives. Industrial Ceramics The Industrial Ceramics products group made pump and valve parts, semiconductor fabrications, Fiber-optic and ocular communications equipment, and automotive parts. Ceramics Materials for Electronics The Ceramic Materials for Electronics product group manufactured very extraized components for electronic systems. Glass for color TVs, precision resistors, and thermal print-heads. as well as ceramic substrates for specialized IC components were a product in this group. Management System The caution system at the Kyocera Corporation is very unique. Its uniqueness is a sequel of the trouble ignoring standard precaution structure in other companies and developing a system to address problems that have been witnessed at other companies. i. e. runa expression corporate bureaucratism. ) on that point were some inherent problems in the Kyocera watchfulness systems that manifested themselves as the company grew. (These are listed in the analysis section of this extend. ) However, it is not likely that these problems would have merited scrapping the strong corporate structure, but implementation of minor changes could boost ease up better gatherability. The components of the management system are as follows Amoebas These components are pull in centers with and bonnie of 30 members.One official leader/ motivator and very little or no other formal structure. The amoebas rated performance on a basis of hourly talent per month. This was calculate by dividing net pro give way before labor and taxes by the lend labor hours. Hans These are smaller works groups that are under the Amoebas and do not have responsibilities as a pro last center. Upper Management Reporting complex body part The upper management in severally company or division would witness a series of meetings designed to modify from the top down and provide lieu information from the bottom up. Company or Division Level Reporting organize The very top managers from each company or division would go to Kyoto or later Tokyo to update the headquarters aim management personnel on the status of jut outs in their honourive system of ruless. somatic Philosophy/Culture Dr. Inamoris Beliefs The beliefs that are valuable in this analysis are the ones that were imported into the corporate philosophy and had the say-so to affect the profitability or effectiveness of the company. For example, Dr.Inamoris belief that a person should never give up when move answers to technical problems is certainly admirable. However, when a project scrams unprofitable, it is sometimes wise to feed a finale to cut the losses. Wisdom is the discern to k outrighting when to give up. Dr. Inamoris belief in Respect for the Divine and have it away People serves as a motivational backdrop to the culture at Kyocera and has financial aided to make the company a success. (There is much more to cover on Inamoris work on and it will be covered in the sections to follow. Centralized Management Kyoceras management system was very centralized in 1990 and the company was out growth the usefulness of such a system. With 80 companies and countless divisions, the old way of management meetings for describe purposes was becoming sterile and unmanageable. Problem Resolution Problem dissolvent for transfer pricing and other issues was handled through the management system. No final decisions were oblige on any cheek, but the organizations were anticipate to negotiated and solve problems among themselves.The problem was escalated up the drawstring of command until it reached Inamori himself. The information presented above and additional information in the the case study itself provide king-sized background for a person to analyze the strengths and weaknesses of the corporation. Using this information one tidy sum do an analysis and make recommendations for improvement. Important Characteristics of the Kyocera Corporation The characteristics of the Kyocera Corporation listed below are important to the analysis of possible issues facing the company now and in the future. Continuous Growth As Kyocera continues to grow issues will surface that are a result of the size and complexity of the corporation. The entire organization will no longer be able to report progress in management meeting the alike way it has been buste for the ut about 60 or so years. The insurance coverage matrix will need to be re-vamped to allow more responsibility at the division or company management level with ultimate office for quarterly profits at that level as well. Also, be and transfer pricing issues need to be handled as a group between organizations.Too much self-direction can be as detrimental to the organization as too little. A labyrinthine sense of power and decision making inescapably to be tempered with a aggroup approach to making each company or division as profitable as possible. Diversification One characteristic that is a result of Dr. Inamoris risk taking philosophy is the diversification in the product line. The products are high-tech fair to middling to be a good fit in the company, but different complete that the different divisions and companies that make up Kyocera applyt end up competing against one another in a way that is detrimental to the company as a whole. Kyocera is an International Corporation Cost is a good reason why this is an important characteristic of the company. Being international allows Kyocera to take advantage of labor savings associated with manufacturing in some countries, while selling products in countries that will bring in the to the highest degree profit. Being international also gives Kyocera get at to markets in differing countries without as many diffusion headaches as other manufacturers. Minimization of unified Bureaucracy Kyocera focuses on minimizing bureaucracy.This eliminates cost associated with red and gives the Amoebas the flexibility to manufacture a t the last cost. measure System The measurement system is good in some prize and bad in others. Production physical objects are set internally by the same group that is attempting to make its goal a reality. This is a concern due to the escape of normalisation and potential for poor targeting. neer Give Up Mentality Dr. Inamoris never give up philosophy is both a strength and a weakness.It is good for sharpening the focus of work groups, but at the same time could encourage unwise decision-making. Strategic Cost Concerns early on in its existence, Kyocera was focused on keeping sales, general, and administrative expenses below industry standards. However, the management inform practice and philosophy, as well as lack of normalization of costing methods within divisions or companies whitethorn work against the company in the area of cost. Retraining costs with the shop break-up of Amoebas is a concern. Purchasing parts at market prices on the slack market that are als o made by Kyocera-owned companies is a problem. The cost of monthly describe meetings is minor, but may be a growing expense across the board (for all divisions and companies) as the organization grows. Kyoceras inborn Strengths Quality of Leadership Kyocera had strong leader in Dr. Inamori. His philosophical outlook and decision making abilities set the tone for success at the company.This type of leadership cannot be taught, but is inherent in an individual. technical Expertise The companys technical expertise is due to their focus on individuality and specialization. This suspensors the company in the area of new product development. Diversified Product Line The products are high-tech decorous to be a good fit in the company, but different enough that the different divisions and companies that make up Kyocera dont end up competing against one another in a way that is detrimental to the company as a whole.Reputation Kyoceras reputation for quality and get the subscriber li ne done will help them retain earned market share. tenaciousness Tenacious competitors in business invariably fair better than those who give up easily. The spirit of tenacity at Kyocera earns them the respect of their customers Working Environment Positive Attitudes The corroborative environment at Kyocera helps retain expertise with employee retention and it fosters a non-threatening creative environment. self-reliance The autonomy of the Amoebas fosters creativity and lack of bureaucracy costs.International Status Being international allows Kyocera to take advantage of labor savings associated with manufacturing in some countries, while selling products in countries that will bring in the most profit. Being international also gives Kyocera nark to markets in differing countries without as many distribution headaches as other manufacturers. Areas of Weakness Some Elements of the Corporate Structure Centralized Management The corporation is getting too large to maintain the c urrent management reporting structure.The complexity will slow decision-making and be expensive. Autonomy Retraining costs with the frequent break-up of Amoebas is a concern. Product Overlap among Companies or Divisions continualness in product lines is costly due to the insistent support structures. Measurement System Top-down setting of goals for Amoebas would be more appropriate. This would ensure some standardization among expectations placed on workers. Transfer-pricing Kyocera to Kyocera pricing should be lower than open market-prices.This would help sis organizations be more competitive. Additional depth psychology Threats from New Competitors Kyocera will have to be conscious of new competitors at all times in the high-tech marketplace. apiece division or company in the corporation must be aware of who the players are in their market. It would hard for any one niche player to bugger off threat to Kyocera as a whole since they are very diversified. Rivalry among compe titors Kyocera must be careful to make sure this does not take place within its own corporate umbrella.There is no prompt rivalry of foreign competitors that is obvious in this case. Substitute Products Kyocera does a good job of battling this by taking on tasks that cypher else wants or has the tenacity to tackle. Suppliers Power In many cases this firm is their own supplier. It is underprivileged that sister divisions or companies do not work closer together and become a powerhouse together. Buyer or Customer Power Ditto the comments above. Also the buyers from outside have their purchasing power/threat to Kyocera limited by Kyoceras diversification.Value Creation Inbound and outbound logistics are strengths in Kyocera due to their international presence. They provide their own marketing channel through salaried sales professionals and have the product base to support using outside channels when possible. Advertising, pricing, etc. are handled by the individual divisions and c ompanies. Service activities fall in the other column that makes up 1% of sales on the product organization list. This column does provide value to the customers and the company to the tune of $27 million. genuine and incoming OpportunitiesRe-alignment of the reporting structure By re-aligning the reporting structure Kyocera can save cost and improve communications in the corporation. sophisticated changes in the Macroenvironment New opportunities to be counterbalance in the area of communications are coming available with the internet, cable, and wireless communications areas. Transfer-pricing changes Kyocera to Kyocera pricing should be lower than open market-prices. This would help sister organizations be more competitive. Expense Reduction Administrative costs could be reduced by realigning the reporting structure.Product Overlap among Companies or Divisions By corporate trust operations for overlapping product lines Kyocera can save support costs. Potential Threats Current High-Tech changes in the Macroenvironment Technological change does not stand still. New communications products and technologies make old ones obsolete each day. Corporate Growth Communications and repetitive costs may become issues. Repetitive organizations as a result of mergers and acquisitions should be analyzed and handled appropriately. This may mean dismantlement some organizations to save money.Action Items to be considered switch the Management Reporting Structure The management reporting structure change could improve communications and help reduce administrative expenses Combine Support Operations for diverse Companies in the Same Product Group Repetitive support structures cost money. By combining support operations expenses could be reduced. Establish new corporate transfer-pricing guidelines. Corporate Guidelines for transfer-pricing could help make some of the business units more competitive.Reduce the autonomy of the Amoebas Amoebas do not need to be doing their own costing and profit or drudgery target setting. Recommendations Establish new corporate transfer-pricing guidelines base on sound judgement and principles pore on competitiveness and provide special pricing to sister business units to help make them more competitive. Focus on cost reduction in the administrative expense area Implement conference calling, eliminate as much change of location as possible, and combine support operations for multiple units to produce cost savings.Reduce the autonomy of the Amoebas The amoeba level is too low on the management structure to make decisions on production targets and profitability. Move costing up to a higher level and allow input on production and profit targets from the amoebas, but put accountability at the next level of management up. Bibliography Kyocera Corporation, Nancy Rothbard, Harvard Business School, Publishing Division. 1991. Document 9-491-078,. Revisioned July 1993.