P&G JAPAN: THE SK-II GLOBALIZATION PROJECT Harvard Case Solution & Analysis

P&G JAPAN: THE SK-II GLOBALIZATION PROJECT Case Solution

Environment:

            The Porter’s five forces model suggests that the international business level strategies are grounded within the one or more of these home country factors. Based on the analysis of P&G through the Porter’s model, the structure, demand conditions, rivalry and the strategies of the firm seem to be highly significant for the international level strategy of P&G. The SK-II beauty product has proved to be successful in Japan and if Paolo considers the options for global expansion then we also need to analyze the environment for all these options. Currently, the competitors, distribution channels and the customers are different in Japan than those in Europe or China. The threat of new entrants in Japan is low due to high sophisticated users of beauty products and world’s leading per capita consumers. The access of the Japanese distribution system is a strong barrier. Competitive rivalry is strong and low switching costs make this competition more intense. The threat of substitute products is also higher in Japan due to high innovation capacity of Lion and Kao which are P&Gs competitors. Moreover, the bargaining power of suppliers is moderate. The Chinese market is opposite to Japanese market where threat of new entrances is high, competition is low, bargaining power of suppliers and buyers is also low with high threat if substitution. Finally, there are some similarities in the European market and Japanese market such as low supplier power and low threat of new entrances but power of buyers, competition and threat of substitutes is high.

Business Model:

            The success of P&G in Japan has been in large due to its business model which is much similar to its international business model. Overall, the business model of P&G is based on its ability to develop new innovative products and then the ability of the marketing teams to market those products. When the redesigning of the P&Gs organizational strategy had been initiated by Jaguar by expanding from 4 RBUs to 7 GBUs, the objective was to reduce the cost for each unit produced and enhance the best product production. Along with this, the business model of the company was based on ensuring that the introduction or transferability of a specific brand into new markets matched the competitors, distribution channels, consumers and the culture. The development of the new and innovative products is considered as the key to future growth of the company.P&G Japan The SK-II Globalization Project Case Solution

Performance:

            The performance of P&G has been good since the inception of the company, however, lately the performance of the company has been declining. The sluggish 2% annual volume growth of the company and the loss of the global market share for P&G were serious concerns for the management of the company. The main contributing factors for this low performance were risk averse, conformist and slow organizational culture. The employees were wasting half of their total time on non value added activities. The strong performance of P&G had started to erode in early 1990s and this had began as a result of the bubble economy burst of Japan in 1991. Between 1992 and 1996, the sales of the company had declined to 3% from 20%. Furthermore, the entry of the company into new beauty product category had also worsened the performance of the company. The new self selection strategy led to a decline in the sales of 15% in the Japanese cosmetics business with losses of about $ 1 million per week. Later, the penetration in Japan SK-II market revived the performance of the company and 02005 had been planned.........

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