BUS109 Individual case---P&G Japan
Is it a global brand? Does it have the potential? Overall I think SK-II had the potential to be a global brand even though it had many thinks needed to work on. It is always hard to manage a multi-national company because countries are so different. However, fortunately SK-II was supported by a larger global company: P&G. SK-II did not have to hire outside international corporate experts since P&G had already developed an experienced and professional team to deal with issues concerning globalization. Beside human resources, P&G can also provided funding, dealing with financial issues. Also, SK-II is a good brand that was worth a try for international expansion. Innovation is the core of SK-II. Innovation was recognized by SK-II as the key factor to beat its strong competition in Japan. Japanese women spend more time and money on skin care and make up products. They usually expected special features and were willing to pay a premium price for it. While Japanese customers had distinctive needs, Japanese competitor actually understood the culture so that they became very innovative and very strong. It took some time for SK-II to realize the problem but when they did, they put a lot of effort and money into its R&D. SK-II came up with the great idea that they combined the habit of European and Japanese women’s facial washing habits to create a facial cleaning product that had all the features needed by both types of customers. As a result, customer’s facial washing habits were changed. SK-II’s success in Japan leads to another competitiveness for global market. The organizations were build in Japan by SK-II could provide as a base for other global market with financial, management and technology support. Its brand awareness also helped SK-II to be recognized and accepted by consumers sooner.
China or Europe? I think China would be a better choice. “China is widely predicted to become the second-largest market in the world,” said Ram. “The prestige beauty segment is growing at 30 to 40% a year, and virtually every major competitor in that space is already here.” Compared to the mature Europe market, China provided more opportunities and it was more profitable because the industry was in the stage of growth in life cycle. Also, since it was close to Japan then there would be less cost on transportations and quicker responses from management in Japan. As it was pointed in the article that, China had a very heavy duties and it would raise the price above the retail. But it would be still profitable. And price would not hurt that much since we were targeting at the rich people concentrated in big cities. As research showed, that was a huge market and being the first mover could be very important. In addition, I do not think it impact Olay badly since in China Olay is commonly recognized to be for older people, so SK-II could target at young people. European market was already mature and the competition was very intense. The whole industry had passed growth phrase and was likely to cline if there was no major innovative technology breakthrough. Even though SK-II is an innovative company but it was not enough since what was needed was a change of era. With the new product developed in Japan, SK-II might gain some market share in Europe but it could be more successful in China.
Structure?
The older matrix structure is an impediment to entrepreneurship and flexibility. This structure was too slow. It required too much time to make a decision. Later on, the new structure cut people off, and increases the accountability of each person. It is more efficient than the older structure.