Benesse Corporation

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Benesse Corporation

3-7-17 Minamigata
Okayama
Japan
Telephone: +81 086 225 1100
Fax: +81 086 227 6112
Web site: http://www.benesse.co.jp

Public Company
Incorporated: 1955 as Fukutake Publishing Co. Ltd.
Employees: 8,081
Sales: $2.73 billion (2004)
Stock Exchanges: Osaka Tokyo
Ticker Symbol: 9783
NAIC: 611699 All Other Miscellaneous Schools and Instruction; 511130 Book Publishers; 541990 All Other Professional, Scientific and Technical Services; 611513 Apprenticeship Training

Benesse Corporation is Japan's leading provider of private educational support services, senior care services, translation and interpretation services, and, through subsidiary Berlitz International, the world's largest provider of foreign language instruction. Education support remains the group's largest area of operation, accounting for approximately two-thirds of the group's annual sales. Benesse provides correspondence and in-class course programs for all ages—starting at six months old and extending through high school and university entrance exam preparations. The company is also Japan's leading provider of translation and interpretation services, through subsidiary Simul International. Benesse also provides call center services through Telemarketing Japan, Inc. The company's control of Berlitz International gives it operations in more than 50 countries worldwide; in the mid-2000s, Benesse has been focusing Berlitz's expansion on Asia and Europe. Japan's declining birth rate, coupled with the rise in the proportion of senior citizens in the country has prompted Benesse to develop a new line of business, providing senior citizen care services, through subsidiary Benesse Style Care Co. The company operates more than 90 senior care facilities in Japan. Listed on the Osaka and Tokyo Stock Exchanges, Benesse Corporation posted sales of $2.73 billion in 2004. Soichiro Fukutake, son of the company's founder, serves as chairman of the board. Masayoshi Morimoto is Benesse Corporation's CEO.

Correspondence Origins in the 1950

Tetsuhiko Fukutake began his professional career as a schoolteacher, before launching his own printing business in the early 1950s. When that company failed, however, Fukutake was forced to find a new career. By then, the Japanese economy had begun its entry into an extended boom that saw the country emerge as the world's second largest industrial and financial market. A major factor in the national effort to achieve technological and industrial superiority was the high level of commitment to education. Fukutake recognized an opportunity for combining his former career as a teacher and his experience in printing and in 1955 founded his own publishing company, Fukutake Shoten, in Okayama.

Fukutake launched its first series of educational books and other study materials that year, targeting especially the junior high school segment. By the early 1960s, the company had extended its range to include the nation's high school students as well. The company enjoyed strong success with the launch of its Kansai Simulated Exams in 1962. The company later rolled out that service on a national scale in 1973, changing the program's name to Shinken Simulated Exams.

Fukutake efforts were buoyed by the steadily intensifying competition among Japanese students for the relatively few university openings, especially among the country's top universities. Educational support services soon came under demand, presenting Fukutake with new expansion opportunities. The company developed its own correspondence course programs. The first of these was launched in 1969, geared toward the high school student market. In 1972, the company added a program targeting the junior high market as well. The following year, both were rebranded, as Shinkenzemi.

Pressure on Japanese students continued to build through the 1970s. The competition among students soon extended into the elementary school level, as a population boom made future university spots rarer still. Fukutake responded to this development by launching an extension of the Shinkenzemi program, with courses designed specifically for elementary school children, in 1980.

The company responded to the youth market in other ways. In 1977, Fukutake established a new publishing division and began publishing a variety of support materials for the junior high and senior high markets. The company's extension into the elementary school segment also led the publishing division to develop specific products for that market, including the 1985 launch of a new series of dictionaries, with a Japanese dictionary and a Kanji-character dictionary specifically for the elementary grades. Tetsuhiko Fukutake died in 1986, and son Soichiro took over as the company's head.

By the late 1980s, the pressure on Japanese children to perform had become so intense that Fukutake was able to extend its Shinkenzemi concept to the preschool segment. The company continued to develop the concept, launching a new course for toddlers aged two to three in 1994. By the mid-2000s, the company had extended the Shinkenzemi program to include children as young as six months old.

New Corporate Identity in the 1990s

Japan's changing demographics, however, had by then forced the company to redefine itself. By the late 1980s, it had become clear that the country's birthrate had entered a period of serious decline; at the same time, the population in general was growing older, as people now lived longer than ever before. The drop in birthrate represented a clear challenge to Fukutake's core youth market.

In 1990, therefore, the company adopted a new philosophy, called "Benesse"—derived from the Latin "bene" and "esse," or "living well." The company now set out to expand its range of operations into other age segments, extending its educational services from a focus on scholastic achievement to a wider target of lifestyle enhancement. The change in philosophy led to a change in the company's name, to Benesse Corporation, in 1995. In that year, as well, Benesse went public, listing its shares on the Osaka and Hiroshima Stock Exchanges.

By then, Benesse had begun putting its new corporate identity into action. Language instruction and interpretation services appeared to be a natural market for the group's extension. In 1990, the company purchased a 20 percent stake in the Japanese branch of the United States' Berlitz International. That company, founded in Rhode Island in 1878, had grown to become the world's leading language education group, targeting especially the U.S. and European markets. By the late 1980s, Berlitz had come under the control of Maxwell Communications, which launched Berlitz as a public company in 1989.

The death of Robert Maxwell and the collapse of Maxwell Communications in 1991 provided Fukutake the opportunity to take control of Berlitz International itself. By 1993, Fukutake had acquired fully two-thirds of Berlitz's stock. The company then began reorienting Berlitz's focus, targeting the high-growth Asian region, where the learning of foreign languages in general, and English in particular, was experiencing a boom in demand.

Meanwhile, the company had begun to explore other areas of expansion. Magazine publishing became a natural extension of the group's publishing operations and led to the launch of titles such as Tamago Club and Hiyoko Club in 1993. The company, which had traditionally provided correspondence courses, now began investing in a new range of on-site operations. In 1994, for example, the company opened its first daycare center, called La Petite Academy, and later rebranded as Benesse Childcare Center.

The company also began investing in on-site career training, targeting specifically the growing demand for in-home nursing services (known as home helpers). In 1995, the company launched its first Home Helper training course. In that year, as well, Benesse began offering its own Home Help services program.

This led the company to extend its operations once again, into the management of senior care facilities. The first of these, Benesse Home Clara, opened in Okayama in 1997. The Clara chain grew into a national network of facilities, with more than 30 in operation by the mid-2000s. Benesse began developing other senior care facility brands, targeting different segments and price points, including the Madoka and Granny & Granda formats. In 2003, the company added a fourth brand, Aria, which featured on-site medical care as well as its own nursing capacity. In addition, in 2000, the company extended its senior services with the launch of nursing care subsidiary Benesse Care Corporation. In that year, too, Benesse added its listing to the Tokyo Stock Exchange.

Shifting Focus in the New Century

By the early 2000s, the company's educational services wing, while still the largest part of the group's operations, accounting for some two-thirds of the company's sales, appeared to have peaked. Although the division's revenues had continued to climb through the 1990s, into the mid-2000s, the division began to decline. Demographics played a dual role in the shift in the group's core market. The declining birthrate in Japan also meant that competition for entry into the country's universities was not nearly as fierce as before. Indeed, by 2009, all students wishing to enter university were expected to be assured of a place. As a result, children's motivation to study had begun to decline, which in turn placed pressure on Benesse's revenues.

Company Perspectives:

Bringing the Benesse philosophy to a wider world. The Benesse Group integrates expertise from different areas to extend the reach of the Benesse vision. The companies involved are all leaders in their respective fields. The businesses in the Benesse group share the common outlook that underpins Benesse, while at the same time holding distinctive traits that have helped them rise to the top of their industries.

Benesse continued, therefore, in its effort to diversify its base of operations. The company made a number of strategic acquisitions, such as its 1998 purchase of Simul International Inc., the leading provider of translation and interpreter services in Japan. That company had been founded in 1965 and had first captured the attention of the national market when it provided live televised interpreter services for the 1969 Apollo 11 moonwalk. Following its acquisition by Benesse, Simul began its own diversification drive. In 2000, for example, Simul began offering temporary job placement services. This was followed by the launch of permanent job placement services in 2001. Simul also opened its own training academies, including a new school opened in Yokohama in 2004.

Benesse acquired 100 percent control of Berlitz International in 2001. Following that purchase, Berlitz stepped up its effort to shift its focus of operations from the United States and Japan to more dynamic markets, including Europe and, especially, Asia.

With the approach of the middle 2000s, Benesse began to develop an interest in expanding its own operations into the international market. As such, the company launched a subsidiary in Hong Kong in 2004. The new operation began sourcing products, including toys, tools, and other supplements for use in Benesse's Japanese operations. Yet a major purpose of the new subsidiary was to begin preparations for a later entry by Benesse into the Chinese educational support market. Similarly, Benesse established a subsidiary in South Korea in 2004, as well. Benesse hoped to reproduce its success in Japan on an international scale for the new century.

Principal Subsidiaries

AVIVA Co., Ltd.; Benesse Hong Kong Co., Ltd.; Benesse Korea Co.; Benesse Style Care Co., Ltd.; Berlitz International; Berlitz Japan Ltd.; Learn Co. Ltd.; Shinken-AD Co., Ltd.; Telemarketing Japan, Inc.

Principal Competitors

Kumon Institute of Education Company Ltd.; Eikoh Inc.; Ichishin Company Ltd.; Nagase Brothers Inc.; WAO Corporation; Jeugia Corporation; Wish Us Corporation; Shuei Yobiko Company Ltd.

Key Dates:

1955:: Tetsuhiko Fukutake, a former schoolteacher and printer, launches Fukutake Shoten in order to publish educational materials for junior high school students.
1962:: Fukutake begins publishing Kansai Simulated Exams, for high school students.
1969:: The company launches the first correspondence courses for high school students.
1973:: The correspondence products are rebranded as Shinkenzemi.
1977:: The new Publishing Division is launched.
1980:: The company extends the Shinkenzemi format to the elementary school market.
1986:: Tetsuhiko Fukutake dies and his son Soichiro Fukutake takes over as head of the company.
1988:: The Shinkenzemi format is extended to the preschool market.
1990:: Declining demographics in Japan lead to the launch of the new "Benesse" (Living Well) corporate philosophy, repositioning the company as a provider of services to a wider array of markets.
1993:: The company acquires two-thirds control of Berlitz International.
1994:: The Shinkenzemi format is extended to the toddler (two- to three-year-old) market.
1995:: The company changes its name to Benesse Corporation and goes public; the first Benesse child-care center is launched; "home-helper" training program and services are launched.
1997:: The company opens its first senior care facility, Benesse Home Clara, in Okayama.
2000:: The company lists stock on the Tokyo Stock Exchange; the new subsidiary Benesse Care Corporation is launched.
2001:: The company acquires 100 percent control of Berlitz International.