ictable. Kao Corporation should look into appropriate diversification plans, which could be related or totally unrelated to Kao’s core competencies. It is always a god idea not to put all your eggs in one basket. Moreover, Kao has the capital to achieve this in stages. ST Strategies In the fast evolving world today, many threats can be obstacle in Kao’s struggle to achieve ultimate success. First of all, in order to overcome the threat of powerful buyers, which can dictate unfavourable terms with Kao, Kao can capitalise on the exciting capabilities of the Internet. By using E-commerce, Kao can remove the need for retailers and as such reduce the threat of powerful buyers. Another threat is intensifying competition. Increase competition means lower profitability. With more competitors fighting for the same piece of cake, Kao has to device ways of staying ahead of the pack. One of these is to use Kao’s superior Research & Development capabilities to develop new products before the competitors do. In addition, Kao should strive to lower its cost in order to increase its profitability. Through the use of Economic Value Added and Total Cost Reduction program, Kao can effectively lower its cost. However, this might not be sufficient. Kao has large capital and large capitals need proper management in order to obtain maximum profit for the company. At the same time lower cost and prices can help maintain the competitiveness of Kao’s products although the Yen continues to rise against the US dollar. WT Strategies While the weaknesses of Kao Corporation may not be on that is very serious, it can be significantly amplified with threats from the external environment. Fluctuating Forex can cause severe losses due to heavy reliance on raw material imports by Kao foreign subsidiaries. In order t counter this setback, Kao has to engage into financial hedging activities. Through the use of forward contracts and put/call options, ...
