As regards Sharp's management crisis, two (2) factors have been mainly pointed out. The first factor is that they (the company) thought rather little of the importance of sales of panels manufactured at Sakai Plant to other assembly manufactures. The other factor is that they transformed Sakai Plant into a type of an industrial complex and invested in the Plant to a fault. In the meantime, their strategies of expanding capital investment themselves, like their sixth, eighth, or tenth-generation investment, including that in Kameyama First and Second Plants, have not been generally viewed so much as a problem.
The author opines, however, that the cause of the management crisis of a company as large as Sharp may be found in the capital investment strategy itself, besides the aspect of rather poor management of Sakai Plant. Based on such problem consciousness, the paper conducted verification of the expansive capital investment strategy that Sharp had been pursuing.
As a result, it was found that while the scale of the capital investment in Kameyama First Plant was by and large conforming to the then market environment and its production capacity was considered to be appropriate, the scale of the investment in, and thus, the realized production capacity of Kameyama Second Plant and that of Sakai Plant was judged to be quite excessive, particularly in light of the market volume for the targeted size-segments of liquid crystal panels. And even for cases where the segment for smaller sizes is included in the consideration, the possibility of excessive capacity could not be wiped out, when taking into account Sharp's disadvantageous situation in terms of production costs for their panels against those made in Korea and in Taiwan. After all, Sharp's expansive, anticipatory capital investment strategy is considered to have become another cause for their today's management crisis.
Furthermore, Sharp's such capital investment strategy was thought to be related to their product-oriented-type management philosophy. That is to say, a management philosophy assuming that excellent product will generate demand resulted in forming Sharp's capital investment strategy where the capital investment for each generation should precede that by other companies. However, due to production engineering features and in order to appeal larger screen sizes of liquid crystal panels to consumers, the focus of the capital investment had to be placed on the increase in quantity. Consequently, a situation where excessive production capacity occurred seems to have been created.