Global Marketing: Shiseido - Essay Example

Shiseido Company, Ltd: Facing Global Competition Shiseido, the forth world leader in cosmetics industry, was founded in 1981, and from the very beginning it was globally oriented. Today, Shiseido operates in many countries building a strong competitive policy worldwide. Its products include: cosmetics, toiletries, and professional. The main feature is that the company produce non-Shiseido brands in order to meet customers' diversifying values.An examination of how strategy is formed gives useful insights into the nature of strategy itself.

SWOT helps to analyze the position of a firm at a particular moment in time. The strength of Shiseido is that it's goods obtained a very competitive position on the global market. The brand has a hard core of loyal supporters. It develops lines of products to satisfy the needs of wide audience using voluntary chain stores and "Partner 21" point-of-sale (POS) terminals. Shiseido has maintained high-speed growth through continuous optimization of is product mix and constant technological innovation.

The Asian market (as a part of global market) shows the highest rate of economic growth around the world. The opportunities of Shiseido include: high potential to growth and profitability of the company; promotion to other divisions; increased revenue from success in China market, continue a global expansion and penetration into European markets and America; development of retailing activities in Asian market. There is no high threat to entry for the cosmetic segment because the big companies have a huge marketing advantage as well as established customer confidence in their product.

In this very case it is very difficult to enter this highly competitive segment, which becomes the opportunity for Shiseido, as the company operates on the market for a long time. The main threat for Shiseido is raising costs wages and transfer fees (bank interest charges, policing equipment), authority refusing planning permissions, a high competition, and low market share. The weaknesses of the company are high competition among world leaders and low level of personal consumption in Japan.

Inappropriate structure of Head office and management team prevents company from new strategies implementing, and fast development of new product lines. The creation of new products requires a lot of capital to finance a cosmetic researches and time.For Shiseido it is not difficult to clarify its customers based on age, because the rage of products proposed to clients covers all ages, and available for different social groups. Nevertheless, the company is oriented: " to concentrate on launching highfunction products in the anti-aging segment, as well as new lines targeted at customers in their twenties, or "Generation Y.

" (Annual report, 2004, p.20). Some products of anti-aging line like "Elixir" is developed against dull and dry, and the new line "Beauty Voltage", targeted at women in their twenties. The main feature of Shiseido is two different purchasing patterns to satisfy the customers: the lines of "self-selection" and selection through counseling. Its closest market competitors are L'Oreal and Lancme. To maintain its competency against global competition Shiseido employs competitive rivalry on both a price and a non-price basis.

Non-price competition takes form of branding, advertising, promotion, and additional services to customers and product innovation. In relation to minor competitors, Shiseido provides comparable buyer value but perform the activities more efficiently so as to attain a cost advantage, or perform the activities in a unique way which raises the value to the consumer and thus allows them to command a premium price - the concept of differentiation. Globally, Shiseido has many competitors, and only a new direct-marketing strategy help the company to raise its revenue.

Shiseido has step-by-step strategic plan to develop the global leadership, and obtain a strong market position. The global strategy include: "rejuvenating of voluntary chain stores and become more responsive to structured retailers, accelerating globalization and consolidate expansion into the Chinese market, manifestation of comprehensive strengths through frameworks and systems conducive to composite value creation, reinforcement of operating foundation to achieve a more robust earnings base" (Annual report, 2004, p. 2-3). Shiseido is seeking to maximize its 'global reach', in the belief that offering a global service will be in the strongest competitive position.

It is evident that strategy includes the determination of the basic long-term goals concerns the conceptualization of coherent and attainable strategic objectives. References1. Johnson, G., Scholes, K. Exploring Corporate Strategy. Hemel Hempstead: Prentice Hall, 1998.2. Shiseido Annual Report 2004. March 31, 2004. Available at: http://www.shiseido.co.jp/e/e0406anu/img/anu00001.pdf3. Shiseido Web site. http://www.shiseido.co.jp/com/4. Sterman, J. D., Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwin McGraw-Hill, New York, 2000.