Sk-ii global brand

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9-303-003
REV: MARCH 3, 2004

CHRISTOPHER A. BARTLETT

P&G Japan: The SK-II Globalization Project
In November 1999, Paolo de Cesare was preparing for a meeting with the Global Leadership Team (GLT) of P&G’s Beauty Care Global Business Unit (GBU) to present his analysis of whether SK-II, a prestige skin care line from Japan, should become a global P&G brand. As president of Max Factor Japan,the hub of P&G’s fast-growing cosmetics business in Asia, and previous head of its European skin care business, de Cesare had considerable credibility with the GLT. Yet, as he readily acknowledged, there were significant risks in his proposal to expand SK-II into China and Europe. Chairing the GLT meeting was Alan (“A. G.”) Lafley, head of P&G’s Beauty Care GBU, to which de Cesare reported. Inthe end, it was his organization—and his budget—that would support such a global expansion. Although he had been an early champion of SK-II in Japan, Lafley would need strong evidence to support P&G’s first-ever proposal to expand a Japanese brand worldwide. After all, SK-II’s success had been achieved in a culture where the consumers, distribution channels, and competitors were vastly differentfrom those in most other countries. Another constraint facing de Cesare was that P&G’s global organization was in the midst of the bold but disruptive Organization 2005 restructuring program. As GBUs took over profit responsibility historically held by P&G’s country-based organizations, management was still trying to negotiate their new working relationships. In this context, de Cesare, Lafley, andother GLT members struggled to answer some key questions: Did SK-II have the potential to develop into a major global brand? If so, which markets were the most important to enter now? And how should this be implemented in P&G’s newly reorganized global operations?

P&G's Internationalization: Engine of Growth
De Cesare’s expansion plans for a Japanese product was just the latest step in aprocess of internationalization that had begun three-quarters of a century earlier. But it was the creation of the Overseas Division in 1948 that drove three decades of rapid expansion. Growing first in Europe, then Latin America and Asia, by 1980 P&G’s operations in 27 overseas countries accounted for over 25% of its $11 billion worldwide sales. (Exhibit 1 summarizes P&G’s international expansion.)Local Adaptiveness Meets Cross-Market Integration
Throughout its early expansion, the company adhered to a set of principles set down by Walter Lingle, the first vice president of overseas operations. “We must tailor our products to meet
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Professor Christopher A. Bartlett preparedthis case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Certain data have been disguised, but key relationships have been retained. Copyright © 2003 President and Fellows of Harvard College. To order copies or request permission to reproducematerials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

303-003

P&GJapan: The SK-II Globalization Project

consumer demands in each nation,” he said. “But we must create local country subsidiaries whose structure, policies, and practices are as exact a replica of the U.S. Procter & Gamble organization as it is possible to create.” Under the Lingle principles, the company soon built a portfolio of selfsufficient subsidiaries run by country general managers...
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