Kyocera Case Study

B CASE ANALYSIS Kyocera skunk Preface fit to the foot nones on the initial page of this case pick out, it was written by Nancy Rothbard of the Harvard p bentage School for the purpose of discussion rather than for analyzing the handling of an administrative problem. The coiffure is generalized and it gives a broad spectrum of cultivation from which a student rat extract pieces relevant to his or her sphere of study for a special(prenominal) class. Since this case compend is for a class in Strategic damage Management, the main area of interest for this paper let be in the area of make up wariness.However, given the broad spectrum of information, the analysis is not limited only to cost management facts and issues, only if in any case includes information that that is relative to anformer(a)(prenominal) management topics. Rather than looking for a classify of existing administrative problems, the stress is strategic in nature and addresses issues that could be pro blems in the future based on the emplacement of the attach to at the time the case was written. The analysis includes information for the time item cover in the case study with a few references to Kyocera in the period of time after this case was written and up to the present.Introduction Kyocera alliance was founded in Japan in 1959 as the Kyoto Ceramic Comp both. , Ltd. by Dr. Kazuo Inamori and seven colleagues. With Dr. Inamori providing strategic direction, the company grew from a sm only niche foodstuff player to an transnational conglomerate in a relatively short period of time. in spite of appearance 30 years Kyocera was a world-class attraction in their gist cross appearance (electronics packaging) market. In addition, through mergers and creation of new business units Kyocera was adequate to successfully diversify into other areas of technical expertness.Seven product sort outs accounted for ninety-nine per centum of Kyocera Corporations sales of approximatel y $2. 7 billion in 1990. (The superfluous 1% of sales was simply labeled other in the case study documentation. ) The products are divided among 80 companies in incompatible geographical locations. The firm differentiated itself from competitors by providing world-class customer service. by and by establishing itself in a core product line and market, the firm was in a position to take the risk of entering additional markets, with additional products added to the mix.You f lower berthpot read also Thin Film Solar CellKyocera had a unique management dust based on work cells called amoebas and a just aboutwhat unique incarnate philosophy and culture based on Dr. Inamoris personal beliefs. The leaders of the company were really dedicated to the corporate philosophy and placed high value on making certainly all newcomers were indoctrinated and accepted the corporate culture as well. The management philosophy, global business parameters, diversified product lines, corporate cul ture, and continued growth all keep up their challenges for the company. Some of these challenges are in the area of cost.Close examination reveals that in that location are both strengths and weaknesses in the way these business traces are handled by Kyocera. incarnate Profile/Background Key Personnel Dr. Kazuo Inamori Founder and architect of the firms business strategy. Dr. Inamori was a powerful force in the development and growth of the good deal. Without his leadership the company would likely not wee-wee grown as fast or been as diversified as it became by its thirtieth (30th) year in existence. Seven unnamed colleagues of Dr. Inamori who founded the company with him. They provided upfront capital, labor, and personal sacrifice to get the company started and on square(a) 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 meetings. Kyoceras overlap throngs Kyoceras management referred to themselves as a hi-tech solutions provider. This was because of the companys focus on meeting the customers privations for specialise components.The list of products below is a testament to that high-tech solutions label. Electronic Components The electronic components product group provided discreet electronic components to industries that manufacture consumer electronics and to manufacturers who provided specialized products with demanding specifications to governments and industry. Chip capacitors, chip resistors, Hybrid ICs, and quartz oscillators. In addition, thermic print-heads were included indoors the electronics components group. Most of these items are low-price, high-volume products. Semiconductor Parts The semiconductor unit parts product group provided the substrates and components typically used in the to a greater exten t high-ticket(prenominal) integrated circuit packaging. These are used in expensive machinery that is used in industrial, military or other heavy craft applications where stringent specifications are desired. Electronic Equipment The Electronic Equipment group manufacture and distributed communication theory and I/T (information technology) equipment in the form of com sender peripherals, video conferencing systems, and retrospection for sale to manufacturers of computers and consumer electronics. Optical Instruments The Optical Instruments product group made single-lens automatic cameras, 8 mm video camcorders, and compact cameras. Consumer Related Products The Consumer Related Products group manufactured and s disused jewelry, cutting tools, solar cells, dental and orthopedic implants, and ceramic knives. Industrial Ceramics The Industrial Ceramics products group made pump and valve parts, semiconductor fabrications, fibreoptic and optical communications equipment, an d automotive parts. Ceramics Materials for Electronics The Ceramic Materials for Electronics product group manufactured very specialized components for electronic systems. Glass for color TVs, clearcutness resistors, and thermal print-heads. Also ceramic substrates for specialized IC components were a product in this group. Management ashes The management system at the Kyocera Corporation is very unique. Its uniqueness is a result of the management ignoring threadbare management bodily structure in other companies and developing a system to address problems that lead been witnessed at other companies. i. e. runaway corporate bureaucracy. ) there were some innate problems in the Kyocera management systems that manifested themselves as the company grew. (These are listed in the analysis section of this report. ) However, it is not likely that these problems would have deserve scrapping the whole corporate structure, but implementation of minor changes could help change posi tivity. The components of the management system are as follows Amoebas These components are profit centers with and number of 30 members.One official leader/motivator and very little or no other formal structure. The amoebas rated performance on a primer coat of hourly efficiency per month. This was calculate by dividing net profit sooner labor and taxes by the total labor hours. Hans These are smaller operative groups that are under the Amoebas and do not have responsibilities as a profit center. Upper Management describe Structure The upper management in each company or variableness would attend a series of meetings designed to update from the top down and provide status information from the bottom up. Company or Division Level Reporting Structure 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 trade union movements in their obedienceive organisations. Corporat e Philosophy/Culture Dr. Inamoris Beliefs The beliefs that are important in this analysis are the ones that were imported into the corporate philosophy and had the potential to affect the profitability or effectiveness of the company. For example, Dr.Inamoris belief that a person should never give up when pursuing answers to technical problems is certainly admirable. However, when a project becomes un bankable, it is some times wise to induct a purpose to cut the losses. erudition is the key to knowing when to give up. Dr. Inamoris belief in detect for the Divine and Love People serves as a motivational setting to the culture at Kyocera and has helped to make the company a success. (There is much more to cover on Inamoris influence and it will be cover in the sections to follow. Centralized Management Kyoceras management system was very centralized in 1990 and the company was outgrowing the usefulness of such a system. With 80 companies and countless divisions, the old way of management meetings for coverage purposes was becoming fruitless and unmanageable. Problem Resolution Problem resolution for transfer pricing and other issues was handled through the management system. No final decisions were forced on any organization, but the organizations were expected to negotiated and solve problems among themselves.The problem was escalated up the chain of ascendance until it reached Inamori himself. The information presented above and additional information in the the case study itself provide enough background for a person to analyze the strengths and weaknesses of the corporation. employ this information one ordure do an analysis and make recommendations for improvement. of the essence(predicate) Characteristics of the Kyocera Corporation The characteristics of the Kyocera Corporation listed below are important to the analysis of attainable issues facing the company now and in the future. Continuous Growth As Kyocera continues to grow issues wi ll 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 comparable way it has been tangle withe for the last 60 or so years. The report matrix will need to be re-vamped to allow more province at the division or company management take aim with last accountability for quarterly profits at that level as well. Also, costing and transfer pricing issues need to be handled as a police squad between organizations.Too much autonomy can be as perverting to the organization as too little. A balance of power and decision making needs to be tempered with a team apostrophize to making each company or division as profitable as possible. Diversification One characteristic that is a result of Dr. Inamoris risk winning philosophy is the diversification in the product line. The products are high-tech enough to be a good fit in the company, but different enough that the differen t 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. 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 expediency 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 access to markets in differing countries without as many another(prenominal) distribution headaches as other manufacturers. Minimization of Corporate bureaucracy Kyocera focuses on minimizing bureaucracy.This eliminates cost associated with red and gives the Amoebas the flexibility to manufacture at the lowest cost. Measurement System The measurement system is good in some respects and bad in others. Production cans are set internally by the same group that is attempting to make its goal a reality. This is a concern due to the lack of calibration and potential for poor targeting. never 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 foolish decision-making. Strategic Cost Concerns Early in its existence, Kyocera was focused on keeping sales, general, and administrative expenses below industry standards. However, the management reporting design and philosophy, as well as lack of standardization of costing methods within divisions or companies may work against the company in the area of cost. prepare be with the frequent break-up of Amoebas is a concern. Purchasing parts at market prices on the open market that are also made by Kyocera-owned companies is a problem. The cost of monthly reporting meetings is minor, but may be a growing expense across the board (for all divisions and companies) as the organization grows. Kyoceras In herent Strengths Quality of Leadership Kyocera had strong leader in Dr. Inamori. His philosophical outlook and decision making abilities set the purport 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 helps the company in the area of new product development. Diversified Product Line The products are high-tech enough 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 shade and getting the job done will help them save clear market share. Tenacity Tenacious competitors in business always blank better than those who give up easily. The spirit of tenacity at Kyocera earns them the respect of their customers Working Env ironment Positive Attitudes The positive environment at Kyocera helps retain expertise with employee retention and it fosters a non-threatening creative environment. Autonomy 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 access 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 current management reporting structure.The complexity will slow decision-making and be costly. Autonomy Retraining costs with the frequent break-up of Amoebas is a concern. Product intersection point among Companies or Divisions Repetitiveness in produc t lines is costly due to the repetitive body forth 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 infant organizations be more competitive. Additional Analysis Threats from New Competitors Kyocera will have to be aware of new competitors at all times in the high-tech marketplace. Each division or company in the corporation must be aware of who the players are in their market. It would toughened for any one niche player to become threat to Kyocera as a whole since they are very diversified. Rivalry among competitors Kyocera must be careful to make sure this does not take place within its own corporate umbrella.There is no immediate rivalry of outside competitors that is explicit in this case. Substitute Products Kyocera does a good job of battling this by ta king on tasks that nobody else wants or has the tenacity to tackle. Suppliers Power In many cases this firm is their own supplier. It is unfortunate that sister divisions or companies do not work closer together and become a powerhouse together. emptor or Customer Power Ditto the comments above. Also the buyers from outside have their purchasing power/threat to Kyocera limited by Kyoceras diversification.Value population 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, and so on are handled by the individual divisions and companies. 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. period and Future OpportunitiesRe-align ment of the reporting structure By re-aligning the reporting structure Kyocera can save cost and improve communications in the corporation. High-Tech changes in the Macroenvironment New opportunities to be first 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 combining trading operations for overlapping product lines Kyocera can save support costs. Potential Threats Current High-Tech changes in the Macroenvironment expert change does not stand still. New communications products and technologies make old ones obsolete every day. Corporate Growth Communications and repetitive costs may become issues. Repetitive organizations as a r esult of mergers and acquisitions should be analyzed and handled appropriately. This may mean dismantling some organizations to save money.Action Items to be considered Change the Management Reporting Structure The management reporting structure change could improve communications and help reduce administrative expenses flux Support Operations for Different 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 production target setting. Recommendations Establish new corporate transfer-pricing guidelines base on sound idea and principles Focus on competitiveness and provide special pricing to sister business units to help make them more competitive. F ocus on cost reduction in the administrative expense area Implement convention calling, eliminate as much travel 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, publish Division. 1991. Document 9-491-078,. Revisioned July 1993.