The Language Teacher
06 - 2003
Conducting Corporate Research on a Language School
Robert P. Lohmann
Chiba University
This article represents John McLaughlin's final effort as editor of our Working Papers column. He writes: "With this paper, I officially step down from my position as editor of this occasional column on employment-related matters over the past two years. I am pleased finally to see an article on the private language school sector and am sure that the new editor, Debito Arudou (né David Aldwinckle) will continue to expand the range of issues addressed in this column."
The corporate language sector is a huge industry in Japan and many teachers may not be aware of the kinds of information publicly available in English and Japanese about their schools. In this article, I would like to report on efforts I undertook on behalf of a Tokyo union to uncover financial information about Berlitz International and its owner, the Benesse Corporation, in order to engage more effectively in collective bargaining. After giving some background information on these companies, I will explain how I located financial information on them, a process which may be of use to others teaching for corporate language schools.
In the case of Berlitz, much information is available to shareholders. In the course of a century, Berlitz grew from a small private U.S. company to a subsidiary of a major international corporation based in Japan. Berlitz International is the descendant of the company established by Maximilian Berlitz in Providence, RI, USA, in 1878. The enterprise enjoyed considerable success in propagating the Direct Method of language instruction over the following decades. The company underwent changes in ownership, to Macmillan, Inc., in 1966, and subsequent purchase by Maxwell Communications in 1988. The company started trading shares on the New York Stock Exchange in 1989, a practice which ended with the achievement of 100% ownership by the Benesse Corporation in 2001. Class action suits brought by shareholders challenging the share price offered in the transaction complicated the process. The settlement resulted in an increase from the initial offer of $12.00 to $16.50 (Crandon Capital Partners v. Fukutake, 2001).
The year 1993 marked the beginning of the acquisition of Berlitz International, by Benesse, through a merger with a U.S. subsidiary in which it acquired 71.6% of the common stock of Berlitz International (Berlitz, 1997). The Benesse Corporation started out as a small publishing company. From its origins in Okayama, Japan, Benesse has acquired subsidiaries in correspondence instruction, real estate management, personnel services, telemarketing, elderly care, truck transport, and warehouse storage (Benesse Corporation, 2003). Benesse was listed as the 517th largest company in Asia in 1999 ("Asia's Largest," 2001) and the President, Mr. Soichiro Fukutake, was listed as the 445th richest person in the world ("World's Richest," 2002). Berlitz International alone operates in 60 different countries and one can find information about Benesse in the business media. An independent source of figures for Benesse is the Wright Investors' Service, an American consultancy firm that offers information for investors on thousands of companies after a simple registration procedure. Although Benesse and Berlitz are international in reach, reports on Nova Corporation, another publicly traded language instruction company with operations largely limited to Japan, are also available (see Wright Investors' Service, 2002).
Both the Benesse Corporation and Berlitz have received attention in the domestic and overseas English media. In The Daily Yomiuri ("Firm Fined," 1998) was a report of a failure to declare about ¥600 million in taxable income by Benesse Corporation for a three-year period ending in March 1997. Benesse was found liable for payments of ¥300 million, plus a fine. A Benesse spokesperson referred to the review of tax reports as a "difference of opinions." In a vein similar to the action in the Daily Yomiuri report above, the 1996 Berlitz Annual Report (1997, p. 27) records the issue of a deficiency notice relating to the 1989, 1990, 1992, and 1993 federal tax returns. According to this report, although the action could have resulted in additional tax payments of approximately $9.3 million, the 1998 Report (Berlitz, 1999, p. 24) reported a final settlement of only $2.1 million plus interest.
Numerous magazine and newspaper articles are available from paid electronic news services. One is an electronic magazine subscription service, eLibrary at ask.elibrary.com/index.asp. The service offers access to a list of mostly American mainstream periodicals. The New York Times offers a paid archive service (summaries of articles are available at no charge) which also provided information about Berlitz. This site offered a January 27, 1996 report ("New Fraud Charges," 1996) of charges against a Maxwell heir for improperly putting up Berlitz stock as collateral for loans. Financial data regarding Berlitz is available through its Annual Reports. Berlitz data such as Total Language Instruction Sales, Lesson Volume, and Average Revenue Per Lesson (ARPL) show the scale of worldwide operations. The ARPL figures for 1995 (Berlitz, 1996, p. 17), for 1996 (Berlitz, 1997, p. 22) and for 1999 (Berlitz, 2000, p. 22) show Japan's to be the highest in the world. Although figures are not always broken down by country, they offer the alternative to accepting without question figures and characterizations furnished by management negotiators in Japan, and as check or parry to managers' claims of poverty.
We can see, even from this informal survey, an impressive array of financial and other information of varying usefulness. While financial figures can be instrumental in informing the stance of a labor negotiator, labor law (Labour laws, 1995), the company's code of corporate conduct (Berlitz, 1993), and clauses in a contract can be more immediately and strictly applied in actual bargaining. Nevertheless, teachers need to know more about the financial practices of schools in the corporate sector. For our unions, the next important step forward is to lessen dependency on English language sources and to examine in greater depth print and web materials in Japanese.
References
Asia's largest companies 1999. (2001). [Electronic Version]. Asiaweek. Retrieved June 25, 2002, from www.asiaweek.com/asiaweek/features/asiaweek1000/content/list/501-520.html.
Benesse Corporation. (2003). Corporate information. Retrieved January 14, 2003, from www.benesse.co.jp/IR/english/profile/02.htm.
Berlitz International, Inc. (1993). Code of corporate conduct. Princeton, NJ: Author.
Berlitz International, Inc. (1996). 1995 annual report. Princeton, NJ: Author.
Berlitz International, Inc. (1997). 1996 annual report. Princeton, NJ: Author.
Berlitz International, Inc. (1999). 1998 annual report. Princeton, NJ: Author.
Berlitz International, Inc. (2000). 1999 annual report. Princeton, NJ: Author.
Crandon Capital Partners v. Soichiro Fukutake, Index No. 6000007/01 (Sup. Ct. N.Y., N.Y. Co. 2001).
Firm fined for falsifying tax returns. (1998, December 3). The Daily Yomiuri, p. 2.
Labour laws of Japan 1995. (1995). Tokyo: The Institute of Labour Administration.
New fraud charges to be filed against one of Maxwell's sons. (1996, January 27). New York Times. Retrieved January 14, 2003, from query.nytimes.com/search/advanced.
The world's richest people 2002. (2002, March 18). [Electronic version]. Forbes Magazine. Retrieved January 13, 2003, from www.forbes.com/static_html/bill/2002/print/alpha.html.
Wright Investors' Service. (2002). Corporate Information.com. Retrieved January 14, 2003, from Wright Investors' Service Web site: www.corporateinformation.com/home.asp.
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