Dynastic Control of Suzuki Motor

The case study is about the Japanese carmaker Suzuki. The 100-year company was founded at the peak of Japan’s silk-production industry in the early 20th century. Michio Suzuki (1887-1982), a gifted inventor, started tinkering with weaving looms and in 1920 founded the Suzuki Loom Manufacturing Company in the coastal village of Hamamatsu. The case is an example of dynastic control – where the family control its strategic direction but own an insignificant number of shares – as well as an illustration of the role played by adult adoption in family businesses in Japan. When adopted son-in-law Osamu Suzuki retired in 2021 and his son took over as chairman, it was the first time the top job had gone to a natural heir since 1957, when the founder retired. The narrative follows the transformation of the small car company into a global player via a partnership strategy. Osamu was able to expand sales in North America following a tie-up with GM in 1981 (that lasted until 2008). Even more significant was his decision to enter the Indian car market in partnership with Maruti, a poorly performing state-owned carmaker, which would ultimately make Maruti Suzuki the biggest brand in India.

Instructors can teach the case from various angles. For a family business course, it can illustrate the unique role of adult adoption in Japan, a widely accepted practice that in many cases ensures the longevity of a family-owned business. For an entrepreneurship course, it shows how a small family business competing in a market dominated by giants can survive by focusing on continuous innovation in engineering in their niche, and by forming partnerships with larger firms to pay for the technology required. For a course on family governance, it provides an example of dynastic control, whereby the founding family members own almost no shares yet continue to exercise near total management control over the strategic direction of the firm.