Assign Kao

8/8/2019 Assign Kao

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SUMMARY OF CASE

In 1887 Tomiro Nagase opened a store in heart of Tokyo named KAO.

They sell soap and other pharmaceutical products.

In 1890 they introduce first product manufactured by them, Kao soap.

After they introduce other products like detergents, shampoos etc.

In 1964 Kao moved into Taiwan & Thailand to enter the market of Asia.

In current they have 550 products in 9 product lines.

They make continues growth and profit, also there stock price has soared despite

the overall decline of the Japanese stock market.

In 1998 decided to withdraw Floppy business because the growth is no longer in it because of so many players.

Kao reached at this position with living idea that “satisfying consumer will bringthe company success”.

Kao done all this with simple formula of providing excellent value and

outstanding performance.

Kao works on 5 basic principles based on Kao’s slogan and mission.

Product innovation is a key focus for Kao corp.

All departments are interlinked or connected with each other.

Market research is the core activity or key activity done by them.

Kao’s greatest strengths lies in its “Brand Power”.

Kao’s four brands were listed in the top 20 of the “Brand Power Ranking” done

by “Nikkei Research Institute of Industry and Markets”.

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MISSION, VISION, VALUES & PRINCIPLES

Mission is "to strive for the wholehearted satisfaction and enrichment of the

lives of people globally" through the Company's core domains of

cleanliness, beauty, health and chemicals.

VISIONThe vision of Kao Corporation is “To be closest to consumers or customers.”

VALUESKao Corporation accomplish the mission of the company by drawing

Creative and innovative strengths and integrity. Fully committed to the

mission, all members of Kao companies are working together as a single

corporate force to win the loyalty and trust of their customers.

PRINCIPLES

There are five basic Principles that Kao’s management uses as a guide in

devising business strategies in the industry. The principles are

Ensure Customer’s wholehearted satisfaction worldwide.

Sustain profitable growth and respond to the trust of stakeholders

Leverage the abilities of individuals into powerful corporate force

Encourage close harmony with the environment and the community

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The principles of Kao Corporation are based on the premise of Koa’s slogan

and mission statement and its focus on the customers.

KAO’S SLOGAN

Living by the idea that satisfying consumers will bring the company success

in the market. Kao has lived by a simple slogan, “Create Products of superior

quality that provide consumers with wholehearted satisfaction”.

PRODUCTS OF KAO CORPORATION

Kao is the largest household product manufacture in Japan and Boats over

550 different products worldwide, in 27 different countries. The Product

family includes

Personal care Products

Cosmetics

Laundry

Cleaning products

Hygiene Products

Bath additives

Food Products

Information technology

Chemical Products

PRODUCT QUALITY

In addition to building a strong brand, Kao aim to satisfy its consumers all

around the world. As we know, Kao is dependent on repeat purchase and by

satisfying its consumer, Kao stands to benefit from repeat purchase. A

satisfied consumer would tell 3 people about his/her bad experience. In line

with Kao’s globalization goals, Kao Corporation ensures that the quality of

Kao products all around the world is of similar standards. This is so that

consumer can rely on Kao's products anywhere around the world.

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BUSINESS PROCESS OF KAO CORPORATION

The Kao Way is shared by all Kao Group members as our corporate

philosophy. Based on The Kao Way, members of individual Kao

Group companies and divisions that operate on a global basis are

engaged in business activities aiming at Yoki-Monozukuri that will

really satisfy our customers and enable us to share our joy with them.

The Kao Corporation has following characteristics

Kao has world class information network.

It has 24 Hrs. services at any destination.

It has hot selling items on shelves faster

Kao keeps smaller inventories than competitors

Maximum flexibility

Brands Category Attack Laundry detergent

Emarl Laundry detergent for woolHumming Fabric softener Haiter BleachKeeping Laundry starchMagiclean Household cleaning detergentQuickle Floor cleaning kitsWhite Bar soapBioré Facial cleanser Biore U Body cleanser Cape Hair splayLiese Hair styling agentsClear Clean ToothpasteEcona Functional cooking oil

： :

No.1 Brands

Overall market

share

Of Kao inconsumer

Products category

26-28%(Data source: Kao)

62%

Total 50 consumersProducts brands

Sales generated fromNo.1 brands (FY2002)

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Strong Presence in Japanese Market

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Marketing

Production

Distribution

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Research and

Development

W.S.

Retailer

Sales Customer

satisfaction

Customer

Dissatisfact

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RESEARCH AND DEVELOPMENT

Kao's Research & Development Division strives to develop innovative

products with the keyword "integration of diversity." Two research

functions, namely the Product Development Research Laboratories and

Fundamental Research Laboratories, cooperate and flexibly form a

research team in accordance with research subjects. Through such

matrix operations, expertise in each field can be cross-functionally

utilized in a dynamic and flexible fashion. This integration leads to the

development of Yoki-Monozukuri that achieves consumer satisfaction.

Domain of Research and Development Activities

Matrix Management of R&D Division

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MARKETING

Customer-focused Yoki-Monozukuri is the foundation of Kao’s marketing.We will explore customer needs, meet them with innovative technologies,and create new products. We will then correctly convey the benefits of newly-born products and propose the creation of selling spaces wherecustomers can easily select and buy the products. Individual divisions will

cooperate in working on these consistent activities and, consequently, weintend to propose new values that respond to the change of the times.

Role of Business Divisions

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PRODUCTION AND DISTRIBUTION

Production Centers have been established across eight production bases inJapan to formalize the production system which reinforces cooperativeoperations between each production base and Business Division. Taking

operations from the purchase of raw materials through to sales to retailersand consumers as a single process flow, efficient operations are promotedto keep proper stock by eliminating stock shortage and excess. Kaothoroughly pursues high quality and low costs and strives to swiftly respondto the rapidly changing market environment to realize Yoki-Monozukuri .

Kao's Supply Chain Management

SALES

Kao's unique sales system consistently enables detailed follow-up to

maintain reliable delivery of Kao's products to consumers nationwide inJapan. Utilizing the information and distribution network, and expertiserelated to effective product display at retailers and area marketing, theCompany fully exhibits its collective strengths. From consumers'perspectives and retailers' standpoints, the Company promotes solution-proposing sales activities to identify and solve retailers' issues incooperation with them.

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Sales System for Consumer Products

Supportive Sales Activities

Consumer Communications

Kao regards it as extremely important to take consumers’ “voices” seriously,reflect such “voices” in its corporate activities to facilitate the development andimprovement of its products, and to pursue “Yoki-Monozukuri” even morerigorously. To embody this concept, the Kao Consumer Communication Center functions to enable consumers to have direct contact with our company.

Roles of the Kao Consumer Communication Center

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“Accurate, Quick and Kind” Responses to InquiriesThe Kao Consumer Communication Center receives approximately 120,000inquiries a year (in 2005). While most of these inquiries (about 80%) are viaphone, recent years have seen an increase in e-mail inquiries. Informationfrom consumers ranges widely from feedback on our products, to inquiries

about how to use our products, to comments. The center provides “accurate,quick and kind” responses to these calls.

1. “Kao ECHO System” Supporting the Activities of the Kao Consumer Communication Center

2. Using Consumers' Voices to Promote “Yoki-Monozukuri”3. Providing Information and Consumer Interaction4. History of the Kao Consumer Division

TCR ACTIVITIES

We are implementing company-wide management innovation activities thatcreate value in an effort to achieve profitable growth. The first TCR activity,

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http://www.kao.co.jp/en/company/activities/consumer-communications_01.html












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which commenced in 1986 and was termed “Total Cost Reduction,” was aneffort to directly reduce costs. We then implemented the second TCRactivity, termed “Total Creative Revolution,” which reviewed our organizational operation and working procedures across-the-board so thatwe could display creativity. Since 2000, we have been engaged in the third

TCR (VCR) activity, termed “Value Creating Revolution,” as a managementinnovation activity to create value.

Competitive BRANDS

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Probably one of the greatest strength lies in its “brand Power”. According to

the Nikkei Research Institute of Industry and Markets brand power is

determined by a power ranking survey of consumers opinion This survey

takes a look that 170 leading brands in the Japanese market in 19 different

product categories and examines factors like brand recognition, perception

of the product’s quality, and feelings of loyalty to those brands.

According to this survey, Kao’s laundry in 1987, Attack had highest rating.

In addition to this, Kao had four brands that were listed in the top 20 of the

“Brand power ranking”. These products range from shampoos and

conditioners, dish washing detergents, sanitary napkins and cosmetics.

Brand Power Ranking

RANK BRAND NAME PRODUCT

CATEGORY

POINTS COMPANY

NAME1 Attack Laundry

detergent

83 Kao

Corporation

2 Kleenex Tissue Paper 78.3 CRECAI

Corporation

3 Cup noodle Instant cup

noodles

75 Nissin food

Products co.

ltd

4 Whisper Sanitary

napkin

73.2 Procter &

Gamble far east, Inc

5 Asahi Super Dry Beer 69.6 Asahi

Breweries ltd

6 Pabron Cold

medicine

68.6 Taisho

Pharmaceutical

co. ltd

7 Handy cam Video

camera

67.2 Sony

corporation

8 Meiji Milk

Chocolate

Chocolate 67 Meiji Setha

Keisha Ltd

9 Merit Shampoo-

conditioner

66.9 Kao

Corporation

10 Kinin Ichiban

Shibori

Beer 66.8 Kirin Brewery

com ltd

11 Lulu Cold

Medicine

65.7 Sankyo co. ltd

12 Family fresh Dishwashing 65.2 Kao

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detergent Corporation

13 Laurier Sanitary

Napkin

65.2 Kao

Corporation

14 Kirin larger beer Beer 64.4 Kirin Brewery

com ltd15 Georgia Canned

Coffee

64.3 Coca Cola ltd

16 Aisaigo Washing

Medicine

63.8 Matsushita

Electrical

Indus Co. Ltd

17 Kirigamine Air

Conditioner

63.2 Mitsubishi

Electric

Corporation

18 Sofina Cosmetics 63.2 Kao

Corporation19 Scottie Tissue Paper 62.4 CRECAI

Corporation

20 Elleair Tissue Paper 61.8 Daio Paper

corporation

The other competitors like McKesson in Health Care Products

BUYER-SELLER RELATIONSHIP

Buyer-seller relationship is dyadic interaction- at both firm and individual

level [power-dependence-cooperation-expectation-closeness]-interaction is a

series of short-term social interaction that are influenced by long-term

business processes that binds the firms together.

Buyers-sellers developed trust & friendship over time supported by good

quality so products & services-firms strive to create these relationships-

acceleration here creates a stressful environment-performance expectations

have increased making successful RM more difficult-became strategic as

firms needed to achieve goals-the range remained unexplored in the long-

term.

Buyers are developing single-source suppliers with view to increase quality-

reduce inventory-develop JIT-decrease time to market –the intensity of

which can’t be accomplished with multiple sources.

In Kao Corporation they communicate with their buyers through Echo

System. They focus on group interviews, calls, and letters to measure

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customer satisfaction which is faster than M.R. Survey. This gives results in

2 weeks after the product launch. Also sales are measured. This gives you

the idea about the buyers and the effectiveness of the products on the buyers

and then changes the product as per the need of the buyer.

FOURTEEN RELATIONSHIP VARIABLES

• Commitment

• Trust

• Cooperation

• Mutual goals

• Interdependence/power imbalance

• Performance satisfaction

• Comparison level of alternative

• Adaptation

• Non-retrievable investments• Shared technology

• Summative constructs

• Structural bonds Social bonds

• Situational factors

RECOMMENDATION

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There are many Big Emerging markets, particular in the Asian region,

which are developing countries Kao can expand its operations into

these markets.

Kao has the capital and with its well-established brand name, thecompany should be able to successfully penetrate these untapped

markets.

As we know one of Kao’s major weaknesses is the many levels in the

distribution channel. This can be overcome through the use of the

Internet and its E-commerce capabilities. E-commerce will link Kao

directly to the consumers and this in turn will make it possible for Kao

to reduce its logistic cost, as there would be no more middlemen cost.

Kao Corporation should look into appropriate diversification plans,which could be related or totally unrelated to Kao’s core

competencies.

As for the intensifying competition, Kao can try to merger or acquire a

competitive firm. The acquired firm should be one that creates value

for Kao Corporation. This would

As for the intensifying competition, Kao can try to merger or acquire a

competitive firm. The acquired firm should be one that creates valuefor Kao Corporation.

Strategic alliances can also be used to reduce the threat of buyers. By

forming alliances with major retailers, Kao and retailers can stand to

benefit from better understanding of each other’s needs and

difficulties. Then together find a productive solution to the problem.

As for the operation side of Kao Corporation, it has yet to implement

Just in Time stocking system

Product standardization should be adopted. Standardization of

products can give the company more economies of scale.

BIBLOGRAPHY

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• Website of Kao Corporation Ltd, Japan

• Notes of Prof. Pherwani

• Website of slash document BETA

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