P&G Japan: The SK-II Globalization Project
Proctor and Gamble is a leading innovative company that manufactures personal care, household cleaning, laundry detergents, prescription drugs and disposable napkins products. In 1948, P&G made its first approach towards global expansion by creating an overseas division. By 1980, P&G had operations involved in 27 countries; however Walter Linge, the first Vice President of overseas operations had noticed problems with the company’s focus. Linge understood that the Company must change its products for consumer preferences. He also understood the limitations by P&G’s labs and increasing manufacturing costs. In 1986, P&G advanced to seven divisions in the United States which were further broken into 26 product categories. Each category had its own product development, product supply and sales and marketing capabilities.
In 1984, P&G’s CEO Ed Artzt convinced the board that Japan was strategically important and that the organization had learned from its struggles. Artzt appointed Durk Jager as the new GM to run this initiative in Japan. By implementing a program called Ichidai Hiyaku, he was able to analyze the causes of P&G’s failures in Japan. He first observed that the company was not recognizing the distinctive culture of Japanese consumers specifically and were also not acknowledging the innovative capabilities of their competitors. Jager persuaded P&G to increase their research and development team from 60 people so they could be up to par with its competitors. Following these efforts, more changes were to come in P&G’s Japan market research, advertising and distribution, resulting in a 270% increases in sales and 62% reduction in unit production costs.
In the early 1990s, however, P&G Japan’s strong performance began eroding. The problems began when Japan’s “bubble economy”