P&G Japan: The SK-II Globalization Project Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction & Problem Identification

The CEO, Paolo de Cesare of the P & Gmade SK-II, a fast-growing, highly profitable skin care product developed in Japan. He achieved this growth through the familiar Max Factor portfolio.Currently, the Managing Directors of the P &G are analyzing that whether they should try to integrate their SK-II beauty brand into new global markets or not and also analyzing the associated risks and benefits of the global strategy.

Key Strategic Issues

SK-II takes more than 10 years in order to attain significant growth in Japan therefore its growth rate is very slow and it is expected that it could also be low in a new country as compared to Japan because the women of Japan are more sophisticated and conscious about their skin care.

P&G is passing through the process of re-structuring and change management, therefore during the restructuring and the process of cultural change, expansion policy could create serious problems for P & G.

SK-II is a very expensive product and it costs more than 100 dollars.In addition to this, the Cloth which is used for Massage costs $50 dollars where the same quality of foaming cloth offered by Olay costs only 7 dollars.

SK-II foaming massage requires six or more steps to be applied while the Olay foaming massage requires only one step. Therefore, it is expected that it could face resistance from the women of those countries who pay less time on skin treatment.

Firm, Strategy, Structure & Rivalry

A lot of research and development and series of strategies make SK-II the most profitable product of the & G. P & G is a USA based company whose headquarter is in USA and after getting significant success and market share in Japan,it made its global appearance and existing global structure could help the SK-II in becoming the need of the other countries.

There are numbers of competitors found in USA and also in Japan, therefore getting competitive advantage in the presence large competitors helps the organization to compete more efficiently in other countries also. Maintaining the competitive advantage is always an important issue after getting competitive edge and the management of the company maintains it brilliantly by introducing the continuous change culture into the organization, which could also help in becoming global organization.

Why Go into the Foreign Markets

Expansion is proves to be an easy and fast source of the getting growth along with the certain constraints like resources and capabilities. Going into the foreign markets could provide the first mover advantage to the organization, and national competitive advantage of that country in which expansion is planned.

It can provide a greater stream of revenues and could also provide the low cost structure of the wage rate in that country is low as compared to the home country. Every country has its own national advantages, therefore by moving into a country where cosmetics and skin care product industry is well established and its customers are more sophisticated,it can provide the culture of innovation to the organization.

Modes of entry

P & G is currently facing the problem of the increase in budget of R&D, therefore the expansion through wholly owned can increase the pressure on P&G regarding budget cost. There are many methods of expansion, which involve low cost structure but in current scenario franchising and licensing could be a suitable mode of entry because under franchising policy, there will be low pressure being exerted, less risk involved in this strategy and due to the worldwide brand recognition and current strategic moves it is expected that it would be able to get high licensing and franchising fee, which can also help in further expansion.

Speed of Entry

The current restructuring and change cultural techniques followed by P&G are aggressive strategy which involves the high growth. However,the suggested speed of entry into the new market is neither aggressive nor conservative, it should be moderate which should be sufficient to acquire minimum level of growth and should be capable to control the risks associated with the expansion policy.

Criteria for choosing Market

First of all, the detail market analysis should be conducted of the country in which expansion is planned and the potential benefits, associated risks, extent of competition.,bargaining power of buyers, bargaining power of suppliers and threat of substitutes should be identified regarding that market..................

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