P&G Japan, Case Study Example

The uniquely Japanese managerial style has spawned countless books and academic papers, and has even been made the theme of a least one popular movie (1986’s Gung Ho). Yet there is another side. International corporations bring their own managerial styles to the nations they do business with. That culture can be as decisive as the culture of its host country.

SK-II was a highly successful, if obscure, skin-care cream in Japan, and the property of Max Factor when that company was purchased by P&G in 1991. P&G had a regional organizational structure that granted great autonomy and made each regional manager responsible for growing profits. Its guiding principle was to tailor products to meet each national demand, but to create each national subsidiary with organizational structures, policies, and practices as identical to P&G’s home office as possible (Bartlett, 2004). This is clear enough from the fact that the top-ranking executive of P&G Japan at the time was not Japanese. So the corporate governance, customs, and values under consideration here are that of P&G Japan, P&G America and P&G Europe, not that of a strictly Japanese company versus the world. But even an entity like P&G can’t build all local aspects from scratch. P&G Japan dealt with native Japanese distribution channels, competitors, and, of course, customers, all steeped in Japanese ways. The outcome for SK-II was successful. Which management style was decisive?

The impact of contrasting cultures can be seen in the marketing of SK-II to the world. From that perspective, it was a doubtful endeavor. The key decision took place as P&G was revamping its own organizational structure in a top-down plan called Organization 2005, which called for cutting thousands of jobs and shaking P&G out of its conservatism. The problem was that this approach, well in line with American and European cultures, was radically out of sync with the Japan’s. Illustrating that problem, SK-II’s predecessor, Max Factor Blue, had done poorly in Japan because its marketers ignored the preference among Japanese women for in-store beauty consultants as opposed to self-service. And still earlier, P&G had lost nearly all of its disposable-diaper market share after initially dominating it.

All three P&Gs knew that the respective customs and values of the Japanese market and the American and European markets was indeed a vital factor. Japanese women had long embraced SK-II’s multi-step facial cleansing routine that took almost three minutes longer than the one most Western women followed. P&G decided to stay out of Europe, but this decision didn’t spring from P&G’s European management style. It had to do with research. Data talked.

P&G initially stumbled badly in Japan, but it recovered and went on to succeed with SK?II and another product that had been invented in Japan but outside the company (Swiffer), and also with the American-made Febreze. This point may be essential on the question of Japanese business style: how important is it in the making of international marketing decisions? Like Febreze, Max Factor Blue had been developed outside of Japan. The former succeeded hugely in Japan while the latter failed there (Noorbakhsh, 2008). Swiffer went from Japan to hit it big in America. The critical element wasn’t differing national or corporate managerial styles. It was the products. Beauty creams are as much about advertising and apparent perception as anything, and of course must be tailored to a specific customer-base, like SK-II’s in Japan. But an improved duster is an improved mousetrap. People come to it. Where style and an advertised qualitative improvement is the product, then management precedes that product and controls its creation. That’s SK-II. Where substance is the product, then negotiation is about who owns the product, and who wants to own it. Money talks. That’s Swiffer. But of course there are products that seem to lie between the two. That would be Febreze, smelling like a rose at both ends. I suggest that appointing a native-born Japanese national to the top leadership of P&G Japan would have prevented the earlier product failures, and would prevent more in the future.

References

Bartlett, C. (2004). Harvard Business School. P&G Japan: The SK-II Globalization Project. Boston, MA: Harvard Business Publishing.

Noorbakhsh, S. (2008). JapanInc. Marketing 101. Retrieved from http://www.japaninc.com/ mgz_july_2008_marketing101