APU Case study Kaihara Co. , Ltd. l -From a family business to the world leading company in Denim manufacturing- Prepared by Masanori Namba Takeshi Fujimoto Introduction Kaihara Corporation started as indigo Kasur’ weaving manufacturing in 1877 and the establishment of the corporation was completed in the year 1893. The head office of the corporation is located in Fukuyama City of Hiroshima Prefecture. The corporation is a long-established business with years of experiences, now employing around 450 people in the company and 650 people in total in the company group.
Kaihara holds a total of approximately 80% share in blue Jeans domestically and 70% of total export of Denim2 from Japan. The net sale of year 2012 is of 124 hundred million Yen. In terms of sales, the ratio of export is crossing over 30% of the total amount of production. The company also got the world’ recognition for being the top class manufacturer in Denim s production. The target market of Kaihara, is a premium fashion for Jeans and casual fashion, the customers of Kaihara are Levis, Edwin, GAP, UNIQLO (Fast Retailing Co. , seven Jeans, Hugo Boss, and Pierre Cardin, etc. One characteristic in Kaihara business is, instead moving the production process abroad like other textile businesses, the choice of having built its 4 production plants domestically in Hiroshima Prefecture, with consistent Jeans material supply for production (spinning, dying, weaving, finishing), as well as consistent sales and marketing. Kaihara was awarded the 7th ” Porter Prize”in 2007.
Porter Prize is managed by Michael Porter, Professor, Harvard University and Hitotsubashi University, and it is awarded to the excellent management. Prepared in 2005, revised in 2006 and 2013 2 Denim: serge Denim means a tabric that resembled in Nimes area, France (Miwa integrated Jeans factory of Kaihara built in 2008, state-of-the-art worldwide) This case study will focus on the global vision of management of Kaihara, while the company holds manufacturing base only domestically in Japan, particularly in Hiroshima area.
This case describes strategic viewpoints necessary for Japanese companies hereafter focusing on Management of Technology and Marketing aspects. This case refers to how a family business has been grown to the world competitive company in Denim area through developing the core technology, creating domestic nd global market with managing innovation, marketing strategy and corporate positioning strategy. Manufacturing Process of Jeans In this case study, manufacturing process of Jeans is simply shown in the four processes below. Raw material: cotton) (Packed-up cotton) (Spinning process in Kaihara) (Rope dyeing process in other company) 3 (Weaving process in Kaihara) (Dyeing process in Kaihara) (Finished product of Kaihara) History of Kasur’ industry and the brief history of Kaihara Indigo Kasuri weaving industry is the traditional industry in Bingo (old name of Hiroshima Prefecture) which was high popularity in Japanese society until 1960s. The technique of Kasur’ is to bundle the threads and dye the parts which want to be colored with indigo. As the result a thread has the colored part and the remaining white part. This thread is used as weft and also warp.
They produce design patterns on the cloth through the weave gradation method what is called Kasure (blurred). Later on, the word transtormed into Kasur’. 4 (Kasur’ Kimono) (Kasur’ cloth) (Spinning for Kasur’: Replication of spinning used during the Edo Period in Bingo district) 5 (Weaving of Kasur’: same type used during Edo Era) The Kasur’ industry was originated during the Edo Period (The Centralized Feudalism [Tokugawa shogunate: 1603”1867]). Ashidagawa River, in Yoshida District (today, part of Fukuyama City, Hiroshima Prefecture), was appointed by the Tokugawa male cousin to be the center of indigo plantation.
Then, at the first stage, indigo dyeing and weaving was a side activity done by women at the farmer’s offseason time. Later on, it became a side business in the society of the district after the middle of Edo Period. After 1820s Kasuri weaving product from Bingo (Hiroshima) gained high popularity in Japan, since the sales network of Kasur’ expanded to every part of the country. And in order to fulfill the market demand, the business then managed in more professional way with division of works and labors, mechanization in weaving process, and other improvements.
At the early stage of indigo plantation, Mr. Suke-Saburo, forefather of Kaihara and the founder of the family business, learned the coloring technique with indigo and started a business related to indigo coloring in the district. Thus Kaihara Corporation originated from a side business in farming. In 1877 Mr. SukeJiro Kaihara, the father of Mr. Isaburo Kaihara, decided Kasur’ weaving manufacturing as their livelihood, as the increase in production of indigo in the area. In 1893, Mr. Isaburo Kaihara established the company under the brand ” Marusu”0apanese Hiragana letter inside of circle below).
At the time of establishment, Kaihara first produced goods for cloth wrapper and Japanese 6 bed (futon), and then developed into the materials for working clothes and kimono. Later on, the company enjoyed a business expansion until the early 1960s. In 1960, 3. 3 million packs of indigo products were shipped, and the company production comprised about s t the count rytotal prod uction Prosperity early days Since the establishment of Kaihara Corporation, the company has been focusing itself on high quality product with grasping the market trends and consumers needs, which always were reflected to the development of its products.
To attain this purpose Kaihara tests carefully the quality of raw cotton, as a matter of cause, impurities in raw cotton are cleared away in the front-end of dyeing, and then it is dyed with careful attention. From the quality testing of the yarns till the process dyeing, all the impurities are removed before dyeing. Especially only water from the local wells is used for the whole dying process. Furthermore, compared to other companies the company pays more attention on its bleaching process. The material is bleached s till the core to increase its hardness, and the dyeing frequency is done for many times in order to have dense color result.
The processing technique is also evaluated to be of high quality. In the daily management, it is needlessly to say that the direct customers are the most important in a business. From the stand point of Kaihara, both the customers and the final consumers are important. In daily business, if the ustomer enterprise does not buy Kaihara’ s products, then there will be no sales and the purchasing chance of final consumers. In order to reach the consumers, association with the customers is important. Therefore, accepting and compromising with the direct customer enterprises demand is the general tendency for many enterprises.
However, if the commodities pass to the market are not purchased by the final consumers then things are not going to work well. There will be no incoming order from the direct customers. This creates a kind of fear towards the company existence. Therefore, Kaihara diverge the customers into two kinds. Following the flow, the efforts and tenacity became the force to make the foundation of competition predominance for Kaihara. The company developed the products responding to the needs of customers and have been developed to achieve the requirement of customer’ need. For example, in terms of quality, unlike other companies, which directly use the yarns after purchasing from spinning company, the yarns used by Kaihara is going into several detailed procedures, like disposal stage before refining, bleaching, and purifying process before being proceed into Kasur’ and going into dying stage. In addition, the company targeted the indigo Kasuri weaving market for women from 15 to 25 years. For that, the splashed pattern yarn was dyed with various color combinations like red, 7 yellow, green, etc. And up-to-date design was prepared in the direction of youngsters taste.