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Kao Corporation

Essay by   •  August 28, 2010  •  Essay  •  9,549 Words (39 Pages)  •  4,969 Views

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Executive Summary

In this project, I have chosen the Fast Moving Consumer Product industry as the topic of study. First of all we will take a brief look at how the industry started in the late 19th century as soap making companies and slowly evolving into some of the most successful multidomestic company of today. Following we will have insight on the industry's prominent characteristics and highlight some of the major players. We will also get an idea of the attractiveness of the industry through the use of Porter's 5 forces industrial analysis.

Included in this project is an in-depth review of Kao Corporation, Japan. Kao Corporation is one of the major players in the industry. Here we will take a look at how the Japanese based company employs strategies to reduce cost and at the same time differentiate its product from its competitors to gain competitive advantage. We will also examine some of the key financial ratios to aid us in identifying some of the company's strength and weaknesses. Then a SWOT analysis is carried out on the company. From the SWOT analysis we can formulate suitable strategies in order to improve the performance of the company. By closely examining the company's internal environment to better understand the company's capabilities and limitations and then analysing the changes in the external environment that could affect the company favourably or adversely, appropriate strategies can be formed in order to ensure high performance of the company. Then finally we will look at other possible recommendation, which I believe would help improve the company's performance in the competitive fast moving consumer products industry.

Fast Moving Consumer Product Industrial Brief

Fast Moving Consumer Product are products that consumer would use regularly. The product line of Fast Moving Consumer Products encompasses a wide range of products such as shampoo, body foam and facial wash. These products are classified as fast moving due to the nature of its usage and durability. While shampoos are non-perishables, the consumer would eventually finish utilizing it and would require to purchase another bottle of shampoo. Therefore, unlike products like television and radios which consumers would only buy once in a blue moon, Fast Moving Consumer Products are bought constantly from time to time by consumers.

The Fast Moving Consumer Product Industry has evolving since the 19th century. Many of the major players today started of as a soap making company. Colgate Palmolive began in 1806 as soap maker in New York City. Later in 1837, William Proctor and James Gamble, formed Proctor and Gamble which better known as P&G. P&G at that time was only a candle and soap producing company based in Cincinnati, USA. Back then, there were not much innovation in the products. Soap was soap, everybody used the same soap but today due to the vast advancement in technology and the ever-changing consumer needs. Today, companies like P&G no longer just produce soaps. It has expanded its product lines into shampoo, body foam and many others.

The industry underwent much evolution, not only in terms of product innovations but also production methods. As technology advanced, the trends in manufacturing changed as well. In the 1910, the trend of manufacturing moved towards mass production. This is to enable the lowering of cost and the enlargement of market reach. Mass production is still being practiced. Some time in the 1950s, manufacturing began to under take a more lean approach. This is whereby products were given more emphasis and were made possible through research and development. Quality improvement was facilitated by technological advancements. By implementing Just in Time systems, greater cost efficiency were attainable.

As time progressed on, companies found that their respective domestic markets were becoming saturated and that many Big Emerging Markets were spawning across the globe. These New Big Emerging Markets opened many doors of opportunity for companies to go global. As such begin the trend of globalizations. Bodies such as World Trade Organization and GATT, which pushed for free trade on a global basis, further facilitated these trends. As such began the trend of globalization. Today, companies likes P&G Kao Corporation and Johnson & Johnson have operations around the world. Their operation could range from Foreign Direct Investments to Joint Ventures.

Now, the world has just moved into the 21st century and the Fast Moving Consumer Product Industry is fast changing. With the advent of the Internet and the rapid growth of e-commerce, companies are able to capitalize on this new frontier. E-commerce is able to reach the consumers without the presence of middlemen. This reducing both price and cost.

Industry's Dominant Traits

In order to have a better idea of the Fast Moving Consumer Products industry, we will take a look at several prominent traits in the industry.

Market Size

The target market of the Fast Moving Consumer Products is very wide. The products are used by almost every one of all ages regardless of gender. Due to the large market size this tends to attract new competitors. This would cause the intensity of competition to increase.

Major Players in the Industry

1) Proctor & Gamble, USA.

2) Johnson & Johnson, USA.

3) Kao Corporation, Japan.

4) Colgate Palmolive, USA.

Scope of Competitive Rivalry

The major players in the industry basically competes on a global scale. Thus these companies have production plants all over the globe. Plants are usually set up to serve regional markets. However, there are many other minor players who only concentrate their marketing efforts in specific region or country. Brands such as Follow Me which was incorporated in Malaysia, concentrates its marketing efforts mainly in the South East Asian region.

Nature of Demand in the Industry

Due t the nature of the product, the consumer would practice the Habitual Buying Behaviour. This is because the product is because the product is in inexpensive and there is low involvement on the part of the consumer.

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