Nakai Takeo’s total exit from petrochemicals (1988)

Not fighting on scale — letting the whole business go instead

What is essential about this decision is that it was not a response to financial distress but a recognition of a structural limit — that a latecomer cannot answer the economics of scale — carried all the way through to giving up the main business itself. Ever since it lost the Nissan combine as its backer, Nissan Chemical Industries had declined to fight the zaibatsu-descended chemical makers on size. Rather than keep investing in the commodity-resin world of petrochemicals, it spent eight years preparing the ground for withdrawal stage by stage and waited for the market to turn before completing the sales; the precision of the sequencing is what marks the judgement.

That this exit is remembered as a decision made “with body and soul” has to do with a procedure that extended to the choice of buyers and the transfer terms for employees. On the numbers alone, letting go of three core businesses and some $390.2M (¥50bn) of sales could look like plain shrinkage. But setting out the post-exit scenario — agrochemicals, pharmaceuticals, performance materials — first, winning the organisation’s consent, and only then executing, shows that rebuilding a business turns on agreement among people and inside the organisation as much as on finance. The niche, high-margin Nissan Chemical of today lies along the line this 1988 decision set.