The Locational Structure of a Corporation and the Regional Structure of Finance : From a Case Study of a Dairy Products Company

Abstract

The purpose of this thesis was to elucidate the dynamic effect of the regional structure of finance to the locational structure of a corporation in growth. In Japan, the feature of the regional structure of finance has been the extreme concentration of head offices and/or major branch offices of large financial institutions, security companies, and the largest capital market of Japan in Tokyo. The author did a case study, and as a sample of the analysis, Snow Brand Milk Products Co., Ltd. (founded in 1925), Japan's largest dairy products company, was selected as a case study because of its abundant data concerning its financing. and location. The results of the empirical study are summarized as follows : Since the company's foundation until having established its management base in the Hokkaido area, the company's financing had depended on the local financial institutions. And its Finance Dept., with the rest of the company's headquarters, had been located in Sapporo, the largest city of Hokkaido, the northernmost of Japan's four main islands. But, as the company gradually expand edits operational space nationally, the volume of financial demand dramatically increased and its financing came to depend on large financial institutions based in Tokyo and finally the Finance Dept. was transferred to Tokyo. Its gradual transfer started in 1958, just before the company began its nationwide expansion, and took about two years to accomplish. Then, the transfer of the Finance Dept. caused a gradual transfer of the rest of the company's headquarters to Tokyo. The transfer of the Finance Dept. was planned responding to the regional shift of the distribution of fund suppliers. The processes of the regional shift of fund suppliers are different by methods of financing. As for the loans, loan suppliers' share gradually shifted from the company's own executives and/or local financial institutions in Hokkaido to larger financial institutions based in Tokyo. As for the company's capital, capital suppliers' share shifted from local farmers in Hokkaido to larger financial institutions based in Tokyo. As for the corporate bonds, larger financial institutions and/or security companies based in Tokyo were the main bond holders. As for subsidies, the main suppliers were the local and/or the central government. Responding to the regional shift of fund suppliers, the Finance Dept. gradually transferred, dividing itself spatially into two sections : the financial negotiation section and the financial planning section. At the time of its foundation, financial negotiations in Tokyo were held by sending one of the company's executives, but then as the financial demand grew, apart of the financial negotiation section was located in Tokyo. The rest of the financial negotiation section was located in Sapporo with the financial planning section. Then, just before the nationwide expansion of the company's operational space, the financial planning section and the rest of the financial negotiation section were transferred to Tokyo because it was necessary to have close contacts with the large financial institutions and capital market, which could supply huge volumes of funds necessary for the business expansion. The transfer of the finance planning section caused the transfer of all the rest of the company's functional departments such as the Planning Dept., the General Accounting Dept. and the Board of Directors to Tokyo. The financial negotiation section, for the exchange of specialized information through face-to-face contact with the financial institutions, could easily be spatially divided regarding the spatial distribution of these institutions. The financial planning section was very centralized and was difficult to be divided. And the need for the exchange of specialized information through face-to-face contact with other departments

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