Profile P&G japan

Organization 2005

Blue print for global growth :1. New product Development as the key of

P & G future growth2. Increasing the budget for R & D from

marketing Expense3. Closing 10 plans and loss 15000

worldwide workforce

organizational changeChanging on culture

P&G culture from slow, conformist and risk averse to stretch, innovation and speed.

organizational changeChanging on Process

Performance based component of compensation increased from tradisional range of 20 – 80 %

Extended the reach of stock option to virtually all employees

Integrated business planning proess reviewed and approved together

organizational changeChanging on Structure

shifted from Primary profit responsibility 4 Regional organization to & GBU

Increasing efficiency by :Standardizing manufacturing processSimplifying brand portfolioCoordinating marketing activities

Eliminate bureaucracy and increase accountability

Committee responsibility were transferred to individuals

P&G saw three alternatives for SK-II product:

1. To diversify into new products as an extension to the success of its product in home Japanese market.

2. To penetrate the vast Chinese market. 3. To introduce the product to highly

competitive European market.

Industry Enviroment AnalysisFive porter’s model

• SK-II has already a strong position in this market, good brand awareness, high profit, high quality

• Japanese beauty market has a high capacity /low cost production

• Innovative BIS system

Benefit

• Brand growth rate had slowed over the past years

• Customers are very demanding and unpredictable

Risk

SK II Global brand in opportunity in japan

SK II global brand to penetrate in chinese market• Chinese prestige-beauty

segment is growing fast (30-40%)

• Huge markeBenef

it

• Lower profit margin• Customer might not be ready for SK-II

six-step regimen• Existence of counterfeit prestige

products• Such expansion does not suits O2005

strategy (might not agreed by GLT)

Risk

SK II global brand entry European Market

• Large & sophisticated beauty concious customerbenefit

s

• Such expansion does not suits O2005 strategy (might not agreed by GLT)

• High losses would occur during start-up period (pressure on SK-II budget)

• Only UK market perspective• No brand awareness• Large variety of establish brands

Risk

Recomendation

Japan: SK-II has a good position on massive Japanese market and

the most attention should be paid to it. The brand slowed growth rate could be overcome with the more attention on developing of new innovative products and well-coordinated marketing.

Mainland China: SK-II should be expanded at least to the main cities-

Beijing, Shanghai and Guangzhou where the wealthy Chinese consumers have the highest concentration. Moreover, SK-II is successfully presented Japanese counselor model in Taiwan and Hong Kong and there is a little doubt that this model will not applied to above mentioned mainland cities.

Recomendation

The UK (European) The UK expansion is the least likely to be approved by

the GLT. To get consumers loyalty SK-II would need to make massive expenses on advertising and adapting to the European distribution model.

Definitely believe that SK-II has the capacity to go global.

The O2005 program would strengthen its organizational structure.

Finally, SK-II is recommended to concentrate on the core Japanese market and expand to Mainland China market. This strategy will perfectly suit the P&G and will lower the SK-II risks by expanding distribution to a new market