Kao Case

1. How does Kao go about formulating its strategy? What are the advantages and disadvantages of this process? Kao went about formulating its strategy through integrating and enhancing its capabilities -mastery of technologies, efficient marketing and information systems through learning. Distinct creativity became a policy objective in all areas of research, production & sales, supporting their determination to explore and develop their own fields of activity. The organization was run “as a flowing system” stimulating interaction and the spread of ideas in every direction and at every level. Kao’s global strategy was to develop local operations sensitive to each region’s characteristics and needs Advantages * Such a strategy made the company adept at inventing new markets, quickly entering emerging markets and shifting patterns of customer choice in established markets (e.g Sofina positioned itself as skin care instead of makeup) * Ability to obtain knowledge from all sources * More in touch with the consumer environment Disadvantages * Information leaks * Constant consultations may take a long time before the product can be launched. For example, Sofina took 17 years before the vision was translated into a product. * The entire business becomes more fragmented as local operations will increasingly differ from the main operations 2. How has Kao been able to build a learning organization? Since the beginning, Kao had set out to build a learning organization. This started with Tomiro Nagase reorganizing Kao’s production facilities, advertising and planning department on the basis of what he had learned. After Dr Maruta took over presidency, the organization was designed to run like a “flowing system” in a paperweight organization with a flat hierarchy- sharing of information horizontally instead of having it filtered vertically. This enabled the company to practice “biological self control”, allowing departments to help