P&G and SK-II Essay

Paolo de Ces ar heads to japan to make a decision on one of P&Gs wholesome-nigh successful and fast evolution intersection points SK-II. SK-II was a high end product that had developed a strong sp atomic number 18-time activity among japanese women, who were increasingly conscious about skin c ar and impulsive to spend a signifi assholet amount of their income. Cesare must decide among deuce-ace options continue to direction on the Japanese trade, introduce the product in china, or introduce it in Europe. termination After careful regard and analysis, I would recommend that Cesare pursue a outline that prioritizes a focus on the Japanese securities industry and eventually transitions into chinaware.SK-II is a proven product in a market that is has yet to be fully tapped. With a penchant for numbers and analysis, Japans consumers are some of the most sophisticated easiest to target in the world. However, Chinas expected prestige-beauty surgical incision growth buttnot b e ignored. Intense rivalry from companies that brook already aline up camp in China is to be expected, but lens nucleus cultural similarities can be extracted from the success of SK-II in the Hong Kong and Taiwanese markets. A table with pros (+) and cons (-) is listed below for each countryCAGE Analysis of the DecisionA CAGE (cultural, administrative, geographic, and economic) analysis was performed to carry this decision. Cultural As out-of-the-way(prenominal) as cultural distance, staying in Japan poses the least(prenominal) amount of little terror as P&G would be staying in a market that they are familiar with and have set up a strong sympathy of consumer needs through massive amounts of market research. China has close ties to Hong Kong and Taiwan, which are countries where SK-II has also been established strongly, however, the European cosmetics market is still in an early childhood stage for P&G.Administrative P&G is a globular company with administrative support available in various regions. The filth in Japan is well established and makes distance visible for managers. P&Gs presence in European also well established and would not pose much administrative difficulties in picture up. China is still a sore market to P&G in terms of political/governmental systems and building administrative support would be difficult. Geographic Geographically, Europe is the closest to P&Gs headquarters in the US, however, a strong establishment of R&D facilities in Japan would arguably remove any worries about corporeal remoteness.Again, China is still a saucy market and has only recently accepted foreign retailers. Economic Japans economic climate is in stagnation, however, Japans target market for SK-II is strong as women are willing to spend up to $1,000 of their yearly income on the product. eyepatch the economic climate of European markets is strong, a high concentration of high-end cosmetics producers are already established and create high b argaining power among buyers. China is the most attractive in terms economy and the prestige-beauty segment is growing significantly faster than that of Japan and Europe.However, high economic trade cost do slightly off fixate Chinas potential. Based on the CAGE analysis, Japan is clearly the best choice as it appends the least distance for P&G. China is attractive as it can add advantage of the cultural similarities to the established markets in Hong Kong and Taiwan and provides the most chesty growth opportunity in terms of economic prowess. Adding Value lineup Analysis In order to establish a more big-shouldered analysis, an Adding Value Scorecard was used to evaluate Japan, China, and Europe.Adding Volume In terms of value creation and economies of scale, adding volume may really well dilute product costs when expanding into all ternion markets. Further information such(prenominal) as proximity to inputs and raw materials would provide a better posture of this perspect ive. Decreasing Costs In terms of decreasing costs, China would have the highest integration costs as P&G would have to set up a business in a completely new market. Japan and Europe are already well established. Differentiating Differentiating SK-II in Japan is one of the leading reasons for the products success.Consumers value the analysis of scientifically proven benefits that the product provides. Establishing this ideology in China will be difficult for P&G but the success of the product in Hong Kong and Taiwan may help alleviate the issue. European markets are change and have a high level of competition with various established products, and thus, differentiation in this market will be difficult. Improving industriousness Attractiveness De-escalating or escalating the degree of rivalry will be a crucial factor when deciding which market to prioritize.Focusing on Japan will further strengthen P&Gs bridgehead among competitors such as Shiseido, Lion, and Kao. Companies have already been in China for three years (at the time the case was written) and a quick entry for SK-II would harbor early entry benefits. European markets are too highly free- accedeprise(a) prioritizing this market may induce price wars. Normalizing Risk International trading operations can provide geographic risk reduction but can also create new sources of risk.While China will provide a new market to diversify P&Gs portfolio, it has still only recently opened its borders to foreign retailers. Strict governmental regulations and lack of transparency in economic predictability may actually increment risk. Europe and Japans economies, while slow in growth, are established and can be considered low risk. Generating and Upgrading Knowledge/Capabilities Utilizing Japans strong R&D foundation, SK-IIs proven success can help the product line as it expands to capture more market share.For Europe, P&G does not have the expertise to deal with the perfumeries in Germany and France, tw o of the largest markets in the region. Developing SK-II in China may very well provide additional research findings in a new and growing market. Based on the above Adding Value Scorecard analysis, P&G can capitalize on its competitive advantage and enter the Japanese market in full force. Further research and developments in Japan may possibly fuel a new strategy for entering the Chinese and European markets.