P&g Japan

Executive Summary

This case examines P&G and whether or not they have the ability and means to make their SK-II product a global brand. In this case, we examine P&G’s need for a new global strategy and their ability to develop SK-II into a worldwide beauty product. Ultimately we will see that P&G needs to expand their hold in the Japanese market while becoming more familiar with the needs of potential markets.

Analysis

In recent years Paolo de Cesare was very successful at the head of the European and Japanese Max Factor divisions, but the idea of taking the SK-II that was so successful in the Japanese market global is very risky. Up until the 1980’s, P&G Japan was only a minor contributor to the P&G international growth. In 1985, Durk Jager found that the key reasons for the failure lied in the fact that they had not recognized the distinctive needs of the Japanese consumer. Over the next four years under his management changes were made to research, advertising and distribution that provided a 270% increase in sales, and Jager assumed the position of group vice president for Asia. However, in the 1990s the business could not keep up with the competitors in the Japanese market. Just as indicated in the article “Philips versus Matsushita,” the organization began to be more focused on the structure of the company than the strategy of the company and where it was going. Jager then developed Organization 2005, his strategy in the rapid development and roll out of new products globally, which also involved several management changes. Just as indicated in the article “Philips versus Matsushita,” the organization began to be more focused on the structure of the company than the strategy of the company and where it was going. One of the changes in O2005 was the promotion of Paolo de Cesare to head Max Factor Japan and was faced with the dilemma of whether or not the SK-II could break into the global skincare market.

Although the SK-II line was successful in Japan and neighboring Asian markets, such as Taiwan and Hong Kong, it is important to note that these are fairly small markets. There were three alternatives: break into mainland China with the SK-II line, bringing SK-II into the Western market, or expanding and developing the SK-II line in the Japanese market. The idea of breaking into China is attractive, but the fact that the premium price for the SK-II line in China was just not feasible. With SK-II’s four-step regime, it would cost the average Chinese woman more than one month’s salary for a three months supply of the SK-II products, which was not encouraging. In addition, the import duties of 35-40% meant that the SK-II line would have to be priced even higher than in existing markets, which was not likely to encourage sales.

The European