P&G Japan SK-II Case Study
Up to 1984, P&G’s Japanese operation was a failure due to the following reasons: 1. P&G did not take the time to determine the local needs based on the culture and common practices amongst the Japanese people. The product development was based on Western markets and it was assumed that it would streamline itself to other areas of the world. An example cited in this case study was the use of tap water for laundry washes without implementing a range of temperatures. The P&G detergent “Cheer” did not do well as it was based on different temperatures. 2. Stagnation in innovation is a failure for almost any business. With technology always moving forward at a fast rate, it is imperative for all retail products to constantly put forth effort in research and development. R&D is one of P&G’s strong points, yet the mismanagement of the division led to complacency in the development work. Due to the lack of improvements and the time lost, it allowed other competitors to release superior products quickly and efficiently. This ultimately led to a significant decrease in market share for P&G. 3. The Japanese distribution system is complex and difficult to assimilate to. P&G did not research and strategize to form new efforts in distributing the products efficiently and take advantage of the benefits of the distribution system commonly used. Instead of fixing the problem, P&G turned towards reduced pricing which drove the distributors away and caused sales to drop.
There were two major changes that P&G implemented to improve its operations to increase its profitability. Firstly, P&G increased R&D budget and secondly, they restructured with a plan called Organization 2005. Organization 2005 dealt with corporate cultural changes in becoming less risk averse and more efficient/productive with use of time. They encouraged innovation and creative high risk...
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