P&G+Japan+Case


 * P&G Japan Case**

__** Case Analysis Template **__
Reading: Bartlett, C. A. (March 2004). P&G Japan: The SK-II globalization project. Boston: HBP.

Who: De Cesare, the president of Max Factor Japan, GLT member on the Beauty Care GBU, and the global franchise leader for SK-II

Immediate Issue: Is it time to expand SK-II as the global brand and exploit the opportunity in China and U.K.?

Basic Issue: European has already had the sophisticated multistep skin care theory and also the well-respected brands, such as Estee Lauder, Chanel, Dior, has already existed in the market. The cost of advertisements in Western market is too high to prohibition. It will reduce real brand awareness and heritage. Does China ready to accept the luxurious cosmetic products? Does Chinese accept the basic four-step regimen? How can SK-II keep alive and make benefit when the other global brand products have already existed, especially how to live together with the other well-respected Japanese cosmetic brand, such as Shiseido? Implementation of global market may cause organizational disruption and management distraction. More local cost adds into cosmetic sales, so that it will add the profit pressure. SK-II must differentiate itself from its competitors In order to break into the Chinese market, they must first understand the Chinese culture They need the organizational support from upper management before they proceed They must figure out how to create brand awareness as efficiently as possible but this could mean a significant cost to the company Protecting from knock off manufacturers

Urgency/Importance The global expansion is very important because it is a good way to increase the sales, especially for forming the global franchise. Besides, P&G has the long history and culture to set up the oversea divisions. But it is not very urgent because the cultural distance, administrative and political distance, geographic distance, and economic distance are still the problems, especially for the high competition industry.

Decision Criteria: -The cost is one of the criteria due to the setup fee and management fee for overseas division. The implementation of O2005 should be at least keeps breakeven. -The management team and knowledgeable expertise should be kept in the company in case of the management disruption and technology leak. -Management should also fully support the plan. -The SK-II cosmetic research should familiar with the different types of skin and finds the higher valuable countries to exploit. -The price of SK-II should be considered due to the political issue, such as cosmetic tariff. -The quality of SK-II is also considered because quality is very sensitive to the brand reputation. If there is a little bit of the quality, the franchise will decrease a lot, which is bad to the company.

Alternatives: 1. Open the market of China mainland, from the big cities, and innovate new SK-II products, which is best suitable for Chinese people. 2. Open the market of U.K, and set up the divisions much more around Asian communities and reduce the price of products. 3. Open the international “market” by e-commerce. They will make the advertisement through all over the countries from the first valuable rank and let customers know the brand. And customers will buy SK-II through the website and shipping. So the cost and price will be lower. 4. They will improve more mature quality SK-II products and increase the price at the current divisions, instead of expanding the global market.

Missing Information: What is current cosmetic market in China and how Chinese economic looks like in the future? This will let us know if Chinese can accept the luxurious multistep skin care regiment. Why choose UK to open the market to western countries instead of other countries? Assessment of Alternatives:

1. Open the market of China mainland, from the big cities, and innovate new SK-II products, which is best suitable for Chinese people. Pro -The customers who can afford luxurious cosmetic products are becoming more and more in the big cities. -It will be easy to create reputation about brand in the big city. -China is developing fast and the potential market should be large. Con -The big competition about luxurious cosmetic products market is drastic. SK needs to compete with other famous brand like Estee Lauder, Chanel, and Dior. -As a new product that just came into China market, it will be hard to get approve. -High tax payment will add extra cost of goods, and the price cannot be too high, so the profit will be less.

2. Open the market of U.K, and set up the divisions much more around Asian communities and reduce the price of products.Pro -Most of people in UK are rich people and willing to buy the luxurious cosmetic products. -Reduce the price of products will get more market and customers. -The market and culture in UK is easy to understand and familiar. Con -Reduce the price of products will lead to decrease profit -European has already had the sophisticated multistep skin care theory and also the well-respected brands, such as Estee Lauder, Chanel, Dior, has already existed in the market

3. Open the international “market” by e-commerce. They will make the advertisement through all over the countries from the first valuable rank and let customers know the brand. And customers will buy SK-II through the website and shipping. So the cost and price will be lower. Pro: -Low cost and high profit in the e-commerce -It will adapt to the trend of developing in the world. -The market will be unlimited in the world. Con: -There will be more safety concerns in the e-market. -It is hard to form high level brand without real store.

4. They will improve more mature quality SK-II products and increase the price at the current divisions, instead of expanding the global market. Pro: -The mature quality products will attract more eyeballs. -Low cost and easy to get higher position in the current divisions. -Low risk in the current divisions where company already had customers. Con: -The limit of current market will be decrease the potential bilities and other market will be hold by others -Company maybe missed a chance to expand the place where should be the blue ocean strategy -The more mature quality needs higher technology and this would be costly

Selection of Preferred Alternative: The first one should be better. Because the market in China is reviving and the customers will be huge as a result of huge population. More and more brands came into the market of China and wanted to get the big cake in the market. Assumptions: The comany can understand the culture of China easily and the brand of Sk is approved by customer. The economy of China will be better and better. The needs of cosmetic is high in China.

Action/Implementation Plan: 1. In the short time (1-3 month),Company should creates the innovation team and makes the department managers to be the committee advisory to monitor the process of the innovation. During this time, the innovation team needs to set up the detail schedule for the innovation. 2. The marketing manager will pay attention to the fasion of society and make surveys to know the satisfaction and needs of customers in China mainland, and the advertisment in China should be placed in the first position in order to get the approve from customer. 3. The design of the products should follow the fasion of society and update in time. Company need more avtivities like promotion to get market and compete with others. 4. In the long time (6-12 month) company should focus on the quality of product and make sure the mature products to keep the position in market.