P&G Global Expansion
Introduction of the case:
De Cesare, president of Max Factor Japan and GLT member on the Beauty Care GBU, is to present an analysis of SK-II’s potential to become a truly global brand. There are 3 alternatives for SK-II’s global strategy: To build on the brand’s success in Japan, tap into China, or expand SK-II into Western Europe.
If P&G chooses to focus on Japan, it is possible that they might achieve national brand recognition. However, to become a truly global brand, it is necessary that SK-II enters new markets. Yet, we must bear in mind that there are significant risks in P&G’s first-ever proposal to expand a Japanese brand into foreign markets. These risks are magnified by the vast differences in consumers, distribution channels, competitors, and the political, social and economical systems across borders. Furthermore, P&G’s global organization was currently undergoing a major restructuring program, O2005, which might deter SK-II’s plans.
This paper seeks to discuss the merits of Japan as a lucrative market for SK-II and weigh the benefits of entry vis-à-vis the risks and related costs. In light of obstacles and limited growth, this paper will also examine the prospect of SK-II to develop into a major global brand by tapping into foreign markets. We will discuss the China and Western Europe market separately, and evaluate our plans accordingly. Lastly, we will conclude by showing how our plans would be implemented and integrated in P&G’s newly reorganized global operations.
Background of P&G Japan
P&G‘s entry and expansion into Japan started off rough. Up to the mid-1980s, P&G Japan had been a minor contributor to P&G’s international growth. In 1984, twelve years after entering the Japanese market, P&G’s board reviewed the accumulated losses of $200 million, the ongoing negative operating margins of 75%, and the eroding sales base-decreasing from ¥44 billion in 1979 to ¥26 billion in 1984. With this negative outlook,
De Cesare, president of Max Factor Japan and GLT member on the Beauty Care GBU, is to present an analysis of SK-II’s potential to become a truly global brand. There are 3 alternatives for SK-II’s global strategy: To build on the brand’s success in Japan, tap into China, or expand SK-II into Western Europe.
If P&G chooses to focus on Japan, it is possible that they might achieve national brand recognition. However, to become a truly global brand, it is necessary that SK-II enters new markets. Yet, we must bear in mind that there are significant risks in P&G’s first-ever proposal to expand a Japanese brand into foreign markets. These risks are magnified by the vast differences in consumers, distribution channels, competitors, and the political, social and economical systems across borders. Furthermore, P&G’s global organization was currently undergoing a major restructuring program, O2005, which might deter SK-II’s plans.
This paper seeks to discuss the merits of Japan as a lucrative market for SK-II and weigh the benefits of entry vis-à-vis the risks and related costs. In light of obstacles and limited growth, this paper will also examine the prospect of SK-II to develop into a major global brand by tapping into foreign markets. We will discuss the China and Western Europe market separately, and evaluate our plans accordingly. Lastly, we will conclude by showing how our plans would be implemented and integrated in P&G’s newly reorganized global operations.
Background of P&G Japan
P&G‘s entry and expansion into Japan started off rough. Up to the mid-1980s, P&G Japan had been a minor contributor to P&G’s international growth. In 1984, twelve years after entering the Japanese market, P&G’s board reviewed the accumulated losses of $200 million, the ongoing negative operating margins of 75%, and the eroding sales base-decreasing from ¥44 billion in 1979 to ¥26 billion in 1984. With this negative outlook,