Case Study Denso

Problem:

The major problem is that DENSO is primary depending on only one company, the car producer Toyota. Thus leads to a lot of other problems. Especially that DENSO does mostly business in only two regions and work just in one industry.

DENSO is an international supplier that serves four major markets, Japan (55%), North & South USA (20,8%), Europe (13,1) and Australia & Asia (10,3). How the percentages show it makes more then 75% of its revenue in Japan and the USA. Therefore another problem is that DENSO relies those two markets too much and rules out other possibilities in Europe and in Asia.

Furthermore DENSO has a huge potential not only to do business as an auto part supplier also outside the car industry. DENSO is very good in its production (e.g. air conditioner) and can so also operate in other business industries.

Alternatives:

The first alternative is that DENSO tries to become a really international company in the future. This means DENSO expand in the coming decade in China und Europe.

In addition the second alternative is that DENSO has a focus on R& D to create new products and technologies.

Evaluation of the Alternatives:

On the one hand the first alternative that DENSO should expand in Europe and in Asia is very good because in the future there will be require significant expansions in these parts of the world. In Europe Toyota was forced to work together with Peugeot because of DENSO is such a small supplier there. The Car industry in Asia is growing rapidly and DENSO has already loose market share to local suppliers.

On the other hand the second alternative that DENSO has, is a focus on R&D that makes also sense, because in a fast changing economy a company has to be innovative to survive. Nowadays one of DENSOґs major strengths is it production and production training. DENSO has very good labor relations in Japan. One the one hand employees performance is evaluated every six month what guarantee a high quality level on the other hand the Japanese employees are hired for life, they feel assured and therefore are very motivated. So, in the headquarter in Japan it would be the perfect location to start R&D for both, inside and outside the car industry. Due to the demand in Japan is flat so there is no future in generating growth.

Recommendation:

DENSO