P&G Global Expansion

4949 Words Sep 7th, 2011 20 Pages
Introduction of the case:
De Cesare, president of Max Factor Japan and GLT member on the Beauty Care GBU, is to present an analysis of SK-II’s potential to become a truly global brand. There are 3 alternatives for SK-II’s global strategy: To build on the brand’s success in Japan, tap into China, or expand SK-II into Western Europe.
If P&G chooses to focus on Japan, it is possible that they might achieve national brand recognition. However, to become a truly global brand, it is necessary that SK-II enters new markets. Yet, we must bear in mind that there are significant risks in P&G’s first-ever proposal to expand a Japanese brand into foreign markets. These risks are magnified by the vast differences in consumers, distribution
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It would be possible to anticipate or predict trends in various markets by having a global view. For instance, if Japanese consumers decrease their demand for one of P&G’s products, it can anticipate that other countries with similar culture may follow this trend. This would also allow P&G to launch new products quickly without the hindrance of autonomous national subsidiaries. Moreover, global business unit would be able to maintain product margins across country boundaries. Having a strong global control of its products, P&G would be able to use similar marketing campaigns in countries within a geographic region thus reducing marketing costs. Financial Ratios for P&G | Column1 | Current ratio | 1.07 | Net working Capital | 597,000,000 | Total Debt Ratio | 0.63 | Cash Coverage Rate | 13.67 | Total Assets Turnover | 1.19 | Profit Margin | 0.099 | Return on Assets | 0.117 | Return on Equity | 0.312 |
Table 2: Financial Ratios of P&G in Year 1999
As seen in Table 2, P&G is doing very well overall. It is relatively able to meet short term debt obligations. It has quite a substantial amount of net working capital which allows development (in Japan) and expansion (into China and/or Europe) of its business. It is also unlikely that the company will face problems with debt load as its financial leverage is not high. With its cash coverage ratio being very high, it is fairly safe if P&G chooses to increase its

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