s eases the entrance of firms somewhat. Threat of Substitution The threat of substitution is not very prominent in the Fast Moving Consumer Product industry. Although the switching cost of the consumer is very low, there is not many substitution for Fast Moving Consumer Products. Take for instance, there is no real substitute for using shampoo to wash hair. Although today, soap has much been substituted by body shampoo, but the firms which used to produce soaps, also produces body shampoo now. Therefore it can be summarised that there is no real substitute for Fast Moving Consumer Products. Power of Suppliers Much of the input required by Fast Moving Consumer Product industry is in the form of chemical. Many of the major players in the industry vertically integrate backwards in order to reduce the power of suppliers. For instance Kao Corporation has raw material bases in the Philippines and Malaysia. These places have ample supply of key raw material such as coconut and palm oil. The reduction of power of suppliers not only gives the firm lower cost which translate into higher profitability but also better control of the quality of its inputs Power of Buyers In the Fast Moving Consumer Product industry, the main buyers are the hypermarkets and other High Traffic outlets. Due to the purchasing power of hypermarkets, there is considerable power of buyer to dictate terms with manufacturers. While many of the major players have the resource to forward integrate but would find it uneconomical to open up a hypermarket just to sell its product to the consumer. However, with the development of the Internet, there lies a possibility for firms to reduce the Power of Buyers in this industry. Kao Corporation Company Background Corporate Name Address Foundation Capital Kao Corporation 14-10, Kayabocho 1-chome, Nihonbashi, Chuo-ku TOKYO 103-8210, JAPAN June 1887, TOKYO, JAPAN 78.0 billion yen (as of March 1998) (approx. US$590 million) Mr Tomiro Naga...
