Strategic Management Aspects of the KAO company

Table of Contents

Introduction

1. Task 1
a) Strategy Formation Process
b) Applying Main Features to Current Activities of the Company
c) Industry Factors Affecting Key Players

2. Task 2
a) KAO’s Learning Organization
b) Becoming a Learning Organization

3. Task 3
Analysis of Dr. Maruta’s Vision
Conclusion
References
Bibliography
Appendix

Introduction

The given report on the Japanese consumer products manufacturer Kao carries out a critical analysis and evaluation on its strategic development. Headquartered in Tokyo since 1887, Kao expanded to a global player and in its product portfolio, with a net income of 46,7bn Yen as mentioned in Euromonitor (2012). As stated by Kao (2012), the excellent figures result from the benefits of a learning organisation throughout the years. This report is going to investigate Kao’s strategy formation process, environmental effects’ shaping the industry, the process of implementing learning values as well as it is going to point out the feasibility and actuality of their current company vision.

Task 1

a) Strategy Formation Process

According to De Wit and Meyer (2004), there are two main strategic approaches that a company may take. Deliberate and emergent strategies differ from each other as shown in the following illustration:

illustration not visible in this excerpt

As is it hard to determine whether a company follows a strict plan or acts according to operational processes, more elements of the incrementalism perspective account at Kao. Thereby Kao follows the idea of strategic incrementalism as they do not act according to a figured out plan. Key values at Kao and features of strategy emergence according to De Wit and Meyer (2004) are the following:

- Opportunism: steady availability to grab unforeseen opportunities
- Flexibility: flexible options should always be available to commit
- Learning: learn by doing
- Entrepreneur: democratically collect ideas from bottom to upper management
- Support: understanding cultural and political coherences

A key important role in Kao’s strategy formation process is the maintaining of set principles which follow the companies’ vision as stated by Dr. Maruta, which can be diversified using activities to consider the strategy formation process:

“We aim to be the global group of companies that is closest to the consumers and customers in each market, earning the respect and trust of all stakeholders.”Kao Corporation (2012)

illustration not visible in this excerpt

Further objectives that are strictly followed by the employees of the Kao Corporation (2012) are the following one in the illustration.

Strategic Issue and Diagnosis Identification Activities

A flat organizational company structure enables the identification of problems and failures regardless of position, years worked for the company and responsibility spectrum, as the beginning of the strategy formation process. The precise arrangement of tables, chairs and office rooms enable informal “get to know each other’s” that contribute to the maintaining atmosphere. Information and dialogues are spread and held on face to face level thus solutions can be debated and worked out with more members involved as mentioned by De Wit and Meyer (2004)

Strategic Conception Activities

The “tataki-dai” principle declares that once a solution is shortly before completion at 80 percent, it is unfolded to all team members for criticism. The purpose of this principle is to gain productive new insights as well as to establish “zaowase”, a common sense on this matter. This circumstance is mentioned in the given case study, where an employee was working on a plan, which was revised by the top- management and later on published and pursued.

Strategy Realization Activities

As it is important to grab opportunities as described earlier, Kao’s implementation of the incrementalism perspective through ongoing collecting of opinions on issued brands such as Sofina, result in the need of shaping and developing existing plans according to demand. An aspect that arises from this circumstance is the fact that it is hard to set the beginning and ending of the formation process. Kao is therefore able to adapt the values and preferences of a learning organization and promote flexibility once fast market adaptations are required.

b) Applying Main Features to Current Activities of the Company

Kao’s business activities are based on the perspective of consumers and customers YokiMonozukuri, as portrayed at Kao (2012) and can be applied to the former aspects of the strategy formation process.

illustration not visible in this excerpt

Due to the fact that Kao defines itself as a learning organization, it reacted and acted accordingly to environmental changes over the past 20 years based on their essential guidelines. As mentioned in Kao’s sustainability report on Kao (2012), the given activities and commitment as a manufacturer are of highest importance in the strategy formation process. The “Kao management principles”, now known as the “Kao Way”, provide a framework consisting of a mission, vision, values and principles that combat uprising issues in long- and short-term business activities.

In general the "matrix management system" is used to profit from synergies and to promote co-working with other business units, especially in the R&D sector. Co-working provides cross-functional advantages when knowledge is being spread throughout various business activities as stated by Kao (2012).

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