[Bankruptcy] Declining Marriage Numbers Due to Declining Birthrate and COVID

News Highlights

A housing construction and renovation company based in Okayama and Kagawa has begun preparations to file for bankruptcy protection, citing the slump in its bridal business due to the declining birthrate and the COVID-19 pandemic. According to Teikoku Databank, the company also operated a bridal business, but declining marriage numbers impacted its performance, leading to a downturn. The housing-related business may also have been affected by the pandemic. This situation highlights the importance of business diversification and the difficulty of responding to changes in the external environment.

Perspective from MA Medical Editorial Department

While this is not a direct case of a medical institution’s bankruptcy, it illustrates the significant impact of rapid changes in the business environment on community-based companies. It is particularly noteworthy that the bridal business, an industry hit first by the pandemic, has put pressure on the management of a seemingly unrelated business, housing. Many medical institutions have also experienced temporary sharp declines in revenue from certain sources, such as health check-up services and cosmetic procedures, due to the pandemic. When a company has multiple business portfolios, like this housing construction and renovation firm, insufficient synergy or risk diversification can cause one struggling business to destabilize the entire operation. This suggests the importance for medical institution managers to view their own revenue structure from multiple perspectives, build a business foundation resilient to external environmental changes, or consider early withdrawal from underperforming businesses and business restructuring through M&A.

Points Highlighted by This News

• A compound risk where the slump in a non-directly impacted business (bridal) due to the pandemic pressured the management of another business (housing).
• The possibility that structural changes in the regional economy (declining birthrate) can affect businesses with seemingly little connection.
• The vulnerability of a business portfolio exposed to rapid changes in the external environment.
• The necessity of risk diversification strategies for businesses highly dependent on the regional economy.

Practical Questions Arising from This News

• To what extent, specifically, did the slump in the bridal business pressure the management of the housing business?
• What kind of risk management was in place as the company pursued business diversification?
• What measures were taken in response to structural changes in the regional economy (declining birthrate)?

If You Feel “Should I Consult Too?”

Is there a risk that your institution’s revenue sources could be unexpectedly affected by rapid changes in the external environment, such as the COVID-19 pandemic? Furthermore, how might structural changes in the regional economy (declining birthrate, aging population, etc.) affect your institution’s management in the future? If you have even vague concerns about these points, it may be time to consult with an expert and specifically consider your institution’s business continuity and future options.

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