Kikkoman Corporation in the Mid1990's: Market Maturity, Diversification and Globalization
Problem: Kikkoman Corporation has been growing for seventeen generations. The key market for corporation is Japan and it is very saturated and mature. The future challenge for company is to lower dependence from domestic market and diversify worldwide.
Symptoms:
- Market in Japan is mature and declining
- Company's US factories is the most effective outside the Japan
- US market grows approx 10% annually
- Asian foods are becoming more and more popular in the US food market
Alternatives:
1. Company's market could be expanded by producing other oriental food products
PROS:
+ Very high potential market & unlimited growth
+ New customer groups and market
CONS:
- Strong competition
- High investments
2. Company's market could be expanded by opening new regions worldwide and reach new customers
PROS:
+ Very high potential market
+ Focus on things what company knows the best
+ Less dependence from domestic market
CONS:
- Influence of the local culture
- Resistant to Asian foods at all in some regions
3. Diversify vertically by opening retail Asian food stores and restaurants carrying Kikkoman brand
PROS:
+ New challenge and new experience
+ Gain from strong Kikkoman brand image in Japan and certain regions of US
CONS:
- High uncertainty and risk
- High cultural differences
- No experience in retail market
Recommendations: Soy sauce market is very mature in Japan and company should use hold-and-maintain strategy, but in the same time they could start open retail stores for market extension. Company could sell products under their brands and for wider product range could buy products from external companies and sell under Kikkoman brand. By choosing third alternative company can start open new retail Asian food stores and restaurants under strong Kikkoman brand name.
Worldwide Kikkoman should make stronger its positions in soy sauce market, because demand is growing
Symptoms:
- Market in Japan is mature and declining
- Company's US factories is the most effective outside the Japan
- US market grows approx 10% annually
- Asian foods are becoming more and more popular in the US food market
Alternatives:
1. Company's market could be expanded by producing other oriental food products
PROS:
+ Very high potential market & unlimited growth
+ New customer groups and market
CONS:
- Strong competition
- High investments
2. Company's market could be expanded by opening new regions worldwide and reach new customers
PROS:
+ Very high potential market
+ Focus on things what company knows the best
+ Less dependence from domestic market
CONS:
- Influence of the local culture
- Resistant to Asian foods at all in some regions
3. Diversify vertically by opening retail Asian food stores and restaurants carrying Kikkoman brand
PROS:
+ New challenge and new experience
+ Gain from strong Kikkoman brand image in Japan and certain regions of US
CONS:
- High uncertainty and risk
- High cultural differences
- No experience in retail market
Recommendations: Soy sauce market is very mature in Japan and company should use hold-and-maintain strategy, but in the same time they could start open retail stores for market extension. Company could sell products under their brands and for wider product range could buy products from external companies and sell under Kikkoman brand. By choosing third alternative company can start open new retail Asian food stores and restaurants under strong Kikkoman brand name.
Worldwide Kikkoman should make stronger its positions in soy sauce market, because demand is growing