Thursday, December 9, 2010

No. 4: Find sources of business around you (December 10, 2010)

At the beginning of the Genroku period (1688-1703) in the Edo era, production and distribution of products grew active and various new types of merchants were born. Takatoshi Mitsui is most famous as the new type of merchant of this period. He opened a kimono store under the name of Echigoya that later developed to Mitsukoshi Department Store in Tokyo. He set up a policy to sell kimonos in cash at the fixed prices instead of selling on credit. Most kimono stores then sold kimonos on credit and set the prices higher to prepare for uncollectible receivables. Takatoki’s new business approach hit the heart of shoppers, surpassed his competitors, and laid the foundation for future growth of Echigoya.
The birth of new types of merchants was observed in areas other than Edo (Tokyo). Emon Motoya in Nagano Prefecture was one of such new types of merchants. He is the founder of the Motokyu group headquartered in Nagano Prefecture that has annual sales of over 30 billion yen now. He opened a store in the temple town before the Zenkoji temple in 1717 and started to sell salt, rice, and cotton. The temple was a kind of trading post between Niigata Prefecture and Edo, and old and established wholesalers were dominant there. Emon Motoya, however, was brave enough to compete with the existing powers. What characterizes him from other merchants was that he made business trips to production areas to purchase products that he identified qualities and thought promising in the market. He later purchased and distributed raw materials for foods as a wholesaler and made a fortune.
The store opened by Emon Motoya was burnt to the ground by the epicentral earthquake that attacked the Zenkoji temple and its surrounding area in 1874, but the business in food materials helped the store reconstruct itself. Later, it added charcoal, coal, and coke to its product line. The store was incorporated under the trade name of Motokyu in 1948. Motokyu started to distribute cement, and later handled ready mixed concrete in 1964. As the wholesale business grew harder because of retailer’s strong requests for price reduction, Motokyu decided to start retailing in 1983 with an investment from a nationwide household retailer chain. It subsequently expanded business by adding production and designing of construction materials and road pavement materials. A holding company was established to manage these diverse business operations in 2000.
The company grew even more energetic after 2000, and it branched out to the restaurant business and hot-spring business, and added a leading hotel to the list of the group companies. Look around you, and you can find numerous numbers of sources of business however stagnant economy is and however hard the competition is. You should not bind you with hoops. Possibilities are infinite.
Motokyu’s strategy to diversify business radically is somewhat reckless from the viewpoint of today’s business theory. However, you have to learn that the Motokyu group remains tough despite the diversification strategy inherently risky. As the company teaches you, it is important to use your ingenuity to the maximum and find a way how to survive and expand your business.

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