Kao Corporation

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

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