Reference no: EM133089468

Kawanishi Holdings Basic Information

Type of Business: Wholesaler of medical equipment

Listed or Unlisted: Listed

Established in: 1967

Capital: ¥700million

Employees: 1,300

Sales: ¥97billion

Tomomasa MAESHIMA, chairman of the board, founded the company in 1967 and developed it to a listed one.

Kawanishi Holdings has a governance structure consisting of three layers. They are the board of directors, the management planning meeting and the meeting of executive officers. The meeting of executive officers is responsible of business operations. This company features the division of roles between the board of directors and the management planning meeting.

Maeshima attends the board meeting but the representative director chairs it. Outside board members and advisors also participate in it. These outside board members and advisors are ex-directors of banks and economists. They express their opinions and ideas from third party's perspectives. They are mostly frank and acid. They ask these kinds of questions and opinions even to the founder. The Diet has been discussing a law to make the appointment of external board members obligatory, but they have already adopted the outside board member system, realizing their significance.

He said as follows about why the company launched the outside director system:

"Business people are inclined to be narrow-minded. We have marketed medical equipment in the domestic market, but keen completion will be waiting for us in the international market. The business people tend to focus on what they have done so far. They wouldn't challenge. The global market is completely different from what we are used to. It is outside people that provide us with human networks, know-how and first-hand information."

Meanwhile, the chairman leads the business planning meeting. Executive directors participate in it as well as the chairperson and the president. It takes place one or twice a week and talks about general topics about business planning and strategy, and risk control. This meeting is not endorsed by the Act of Commerce. They need to attain approval at the board meeting if necessary, depending on the item on the agenda. You can find a procedure for a sound governance system. Even if the founder makes a mistake, it will be stopped by the built-in system.

The medical industry is in the midst of keen competition. There is a lot of pressure to cut down on medical expenses from the government. Hospital management is more and more difficult. Reorganization is going on in the medical industry. Under these situations, you need to make prompt and timely decisions. It is all right that the strong leadership of the founder has supported its development. He thinks at the same time that you cannot develop your company only by relying on your subjective judgements. As to this point, he said as follows:

"A manager needs a sense of leadership, but it is crucial to think that such leadership is provided by employees and stakeholders. It is not a good idea to think you are president because you are capable and talented. Top management has to say something harsh. At the same time, you are careful about how employees and stakeholders feel about it."

Kawanishi is very enthusiastic about mesenat activities, such as periodic publications of public relation brochure and financial aid for medical research. The reason why a wholesaler is involved in volunteer activities is, according to Mr. Maejima, as follows:

"Company management needs philosophy. Company performance is important, but you shouldn't be performance-oriented. The best performer would be the leader of the company if you stuck to only performance. Top management should pursue something cultural and for the benefit of others, not only sticking to benefits. Our publication looks like something unnecessary but will strengthen a long-term brand power, prompting the development of the company. This can lead to obtaining credibility from stakeholders."

Question 1: What is the structure of Kawanishi's governance? Explain the relationships between the layers of governance.

Question 2: Explain the correlations between the CSR activities and the branding power of the company.