here is a new trend of major retailers forcing manufacturers t manufacture products, on the retailer’s behalf using the retailer’s brand. This is already happening in U.K. where Tesco, which is one of the major retail outlets throughout U.K. is forcing manufacturers like Coca-Cola to manufacture soft drinks using Tesco’s name instead of Coke. If Coca-Cola disagrees, then Tesco will not carry Coke in their stores. This will cause a drastic lost of market share. Should this happen to Kao, then Kao would be forced to create another competitor which would undercut Kao’s prices or virtually no existent demand growth in Japan. Intensifying Competition Competition in the Fast Moving Consumer Product industry is intensifying both domestically and internationally. Kao is facing fierce competition such as P&G and Johnson & Johnson. These competitors are fast to introduce new products into the market by undertaking heavy Research & Development efforts. Moreover, the number of competitors are increasing, brands such as Shokubutsu body shower by Lion Corporation are fighting for the same piece of cake that Kao is competing far. Country Risk As Kao Corporation expands its operation worldwide it faces the risk of the foreign government exercising unfavourable policies such as domestication or expropriation of assets. When this happens, the firm will stand to suffer huge losses. Iran once expropriated all U.S. assets in the country. As a result, U.S. firms lost millions of dollars. Forex Fluctuations Being a multidomestic company, Kao’s profits can be adversely affected by foreign exchange fluctuations. The Asian Crisis was a perfect example of this. Moreover, over the years the Yen has been strengthening. This makes Kao's products to be less competitive in the global market. Recommendation Internal Factor External Factor Strengths - Ability to discover consumer need - Superior Research & Development - Strong Sales Force -...
