Posted: March 18th, 2023
Kao Corporation is one of Japan’s leading manufacturers of household products, beauty products, computer storage discs, and more. Founded in 1890, the Kao Soap Company was first established to produce high quality soap. Fifty years later, the company diversified into laundry detergent, and then soon after expanded their product line to include dishwashing and household detergents (Ghoshal & Butler, 2004).
Over the next four decades, Kao was able to build upon their knowledge of technologies in fat and oil science, as well as surface and polymer science. They expanded their product lines to include cosmetics, hygiene products and floppy discs (Ghoshal & Butler, 2004). This vertically integrated company has quickly gained market share in many of its endeavors in the East; however, expansion in the West has been a long and tedious process. The future of Kao will depend on the company’s continued ability to learn, their ability to remain flexible and adapt strategies efficiently and effectively, and their perseverance in completing their international expansion goals.
Kao’s Strategic Agenda:
Kao has had phenomenal success in their efforts in the Japanese and South East Asian markets. They have been able to dominate most of the markets in Japan. It is the market leader in detergents, shampoo, disposable diapers, and cosmetics, with the exception of lipsticks, in Japan.
Yet, although Kao is active in 50 countries, it truly has not capitalized on these foreign markets, other than the neighboring countries of South East Asia. “In 1988, only 10% of its total sales was derived from overseas business, and 70% of this international volume was earned in SE Asia” (Ghoshal & Butler, 2004, p. 732). This is the most fundamental challenge that lies in Kao’s way, how to take their successful Eastern approach and apply it so that it is effective in Western markets.
Kao’s Competitive Position:
Kao’s competitive position in the Eastern market is strong. They have been able to successfully and consistently gain market share from their competitors, in multiple industries. Kao has been able to take an evolutionary approach to strategy, as would be defined by Whittington. They are constantly evolving, understanding that what was appropriate for yesterday may be ineffective and inefficient today.
Kao’s strong competitive position, in this region of the world, has been facilitated by their ability to address the paradox of logic vs. creativity. They are very analytical about how they develop new products and enter new markets, ensuring that each product will be well received, using logic to help them guide their positioning. Yet, Kao also relies on creativity to make those ‘leaps of faith’ necessary, such as entering the cosmetics industry to truly be innovative in the marketplace. They now need to expand this ability to meet the very different needs of globalization vs. localization.
SWOT Analysis of Kao allows further insight into their current positioning.
Kao has several internal strengths that has, and will continue to, serve it well. First, is their commitment to learning. This commitment to not simply accepting that they have a sound strategy in place, or stable product line with significant market share, is an attitude that fosters innovation and will continually provide a competitive advantage for Kao, despite industry imitators.
Second, is Kao’s commitment to customer service. Not only is Kao committed to developing the finest products that meet their customer’s needs, but they are continually redesigning these products to fine tune their product lineup and the features of their products. In addition, their customers are not simply the end users of their products, but the retailers who carry their products. By helping the retailers determine what products to carry, where and how to display them, and ensuring that their needs are met, they help the retailer be more successful, which leads to increased success at Kao.
Kao’s primary weakness lies in their lack of experience in the international marketplace. This has hurt them, more than once, in doing business outside of Japan. In addition, their lack of human resources is certain to become a significant weakness, especially as the company continues to expand.
There are many opportunities for Kao both abroad and at home. Most considerably is the opportunity to make a strong market presence in the Western worlds, especially in the United States. In addition, new product development, especially in high growth markets such as anti-aging products, both in Japan and overseas is an opportunity that would certainly be an attractive option, for Kao.
The primary threat for Kao comes from its competitors and their possible ability to become more competitive in the South East Asian marketplace. This could considerably hurt their revenues. Also, certain products, such as Kao’s floppy discs could become obsolete with advancements in technology.
PESTEL analysis sheds further light on Kao’s positioning. Political factors are noteworthy as tumultuous political trade relations could affect Kao’s ability to operate, or operate profitably, in certain markets. Economic factors are important as well. If consumers have reduced discretionary income, they will look for more value for their money, and may discontinue purchases of unnecessary items, such as cosmetics.
Socio-cultural factors, as Kao has already learned are noteworthy, as each culture has unique habits that require customization of product lines. Technological factors have already played a role in Kao’s success, as they are able to use their technological knowledge to develop the most innovative products.
Environmental factors will need to be considered as well, especially in the operation of their chemical and manufacturing plants, as society becomes more eco-friendly. And, legal facets will need to be considered, especially as each country has its own unique requirements and restrictions.
Michael Porter’s Five Forces Analysis:
Using Michael Porter’s Five Forces, one can better understand some of the pressures on Kao. There is intense rivalry among competitors in their industries. Organizations such as Proctor & Gamble and Unilever are constantly vying for Kao’s market share.
There is also significant threat of substitutes. Consumers can turn to major competitors and there is also a trend to look towards more natural products. For this reason, end users do have a certain amount of bargaining power in the industry. However, as Kao is so vertically integrated, the bargaining power of suppliers is limited. And, barriers to entry, for new competition, on the scale of Kao’s operations, are high and not a major force.
Michael Porter’s Generic Strategies:
Kao uses a generic strategy of differentiation, according to Michael Porter’s Generic Strategies. They take a unique selling position, as their competitive advantage. This includes the best quality products at reasonable pricing. This is industry wide, as they do not focus on niche market development.
Michael Porter’s Value Chain:
In order to better understand the activities of Kao that lead to a competitive advantage, one can begin with analyzing the facets of the generic value chain. Inbound logistics is the first facet to be analyzed. Kao’s inventory control system is of particular use in creating competitive advantage, as it allows for specific, on-the-fly information that helps adjust production numbers on a daily basis. This same technology facilitates outbound logistics as well.
The company’s operations are also a source of advantage. Kao’s unique organizational structure, including assisting other facilities when challenges arise is key to this source. Marketing and sales are also superior at Kao, with careful market testing before the full release of a product, such as with the Sofina line of cosmetics. And, their superior customer service, for both end users and retailers, add to their arsenal of competitive advantages.
According to the Boston Consulting Group, there are four types of classifications when it comes to how to allocate resources to business units: cash cows, stars, question marks, and dogs. For Kao, business units that are currently established in Japan, such as their detergent, cosmetics, hygiene, and floppy disc units, are cash cows and require little investment to generate revenue. Instead, these revenues may be invested in their question mark business units, which include their international expansion of these same industries into the Western economies.
Using the Ansoff Matrix one can see the alternative corporate growth strategies Kao may consider. Kao is seeking market development into Western markets with existing products. They are also seeking diversification into these new markets with new products that fit the unique needs of these consumers.
Recommendations on what the Organization should do to Improve its Competitive Position:
To improve its competitive position, Kao should continue to pursue expansion into Western markets. To do this, they may decide to expand by acquisition, as they have with the Jergens company. However, the Kao’s unique way of doing business could give it a powerful advantage in the Western world. As such, they should utilize their acquisitions, such as Jergens, to learn as much as possible about the cultures in the Western world and develop products specific for these markets, as well as include the Eastern products that will fit well with these consumers.
As Mr. Kuroyanagi noted, Kao has set the stage for this expansion. They simply need to gather the human resources necessary to facilitate the expansion and make the move (Ghoshal & Butler, 2004).
Implications of Successful Implementation of These Recommendations:
Successful implementation of these recommendations will lead to exponential growth for Kao. It is easily anticipated that by using their innovative strategies to market penetration and product development, Kao could become the leader in their industry, surpassing Proctor & Gamble and Unilever. This could lead to global domination and the ability to then enter into new complimentary industries to further their growth.
In the end, Kao has an incredible opportunity in front of it, and they are well positioned to take advantage of this opportunity. Their innovative and unique organizational structure, which allows information and ideas to flow freely, has proven itself to be successful. If Kao continues their history of innovation and dedication, and acquires the needed human capital to facilitate international expansion, they are destined to become global leaders in their industry.
Ghoshal, S. & Butler, C. 2004, “KAO Corporation,” in Strategy: Process, content, context, International Thomson Business Press, London, pp. 721-737.
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
Place an order in 3 easy steps. Takes less than 5 mins.