Slow sales growth and underperforming stock price present new Kikkoman president Yuzaburo Mogi challenges as Kikkoman faces the end of the 1990s and the twenty-first century. The company, headed by 17 generations of the Mogi family and held 50% of US soy sauce market and 30% of the world market , faces a mature market and slipping market share in Japan for its soy sauce, as well as challenges for its diversified product line in the 94 other countries in which the company distributes.
- Objectives
- To succeed financially and increase value of Kikkoman’s shareholders
- To achieve Kikkoman vision, mission and strategies
- To satisfy Kikkoman’s shareholders and customers
- To know how Kikkoman can sustain its ability to change and adapt to international environments
- Statement of the Problem
Kikkoman Corporation has been growing for seventeen generations. The key market for corporation is Japan and it is very saturated and mature. The future challenge for company is to lower dependence from domestic market and diversify worldwide.
- Areas of Consideration
Corporate-level: Kikkoman Focused on globalization keeping hold of the Japanese market with high assimilation and long term commitment
In Japan: Rivalry is intensive because mature market, Entry barrier is very low (commodity market; technology use is minimal, low capital needed, easy to establish production), Bargaining power of buyers is high (many brands with diversification and price variance, switching cost is low), Bargaining power of suppliers is low (materials are commodity and easy to supply), Complements power is high (cuisine culture).
In US/Europe: Rivalry is moderate, because of consolidated market, Entry barriers are low (commodity market; technology use is minimal, low capital needed, easy to establish production), Bargaining power of buyers is high (switching cost is low, despite of the Asians consumers are early adopters), Bargaining power of suppliers is low (materials are commodity and easy to supply) .
- Alternative Courses of Action
- Company’s market could be expanded by producing other oriental food products.
PROS:
+very high potential market & unlimited growth.
+new customer groups and market.
CONS:
-Strong competition
-High investments
- Company’s market could be expanded by opening new regions worldwide and reach new customers.
PROS:
+Very high potential market
+focus on things what company knows the best
+less dependence from domestic market
CONS:
-Influence of the local culture
-Resistant to Asian foods at all in some regions
- Diversify vertically by opening retail asian food stores and restaurants carrying Kikkoman brand.
PROS:
+New challenge and new experience
+Gain from strong Kikkoman brand image in Japan and certain regions of US.
CONS:
-High uncertainty and risk
-High cultural differences
-No experience in retail market
- SWOT analysis:
Strength
Brand name, management skills, long history, know-how, large market share, hardworking culture, good relation with community, R & D, advertising, Highest productivity in the industry
Weakness
Longer production process compared to technology based competitors, Production process more expensive, more cerebration needed; decreased efficiency
Opportunity
- Growing markets in USA and EU
- Economic growth in USA
- Increasing popularity of Orient cuisine
- New emerging markets in Asia
Threats
- Ongoing changes in taste preferences and dietary needs; highly sensitive to price
- Competitors pressure at the retail level in Japan
- Aggressive introduction of private brands
- Country risk in foreign markets
- Low entry barriers
- Slowdown in Japanese economy
- New automated chemical technology
Evaluate SWOT analysis: Ongoing chages in taste create an opportunity to diffrentiate (product lines) and high sensitivity of demand to price will create a chance to differentiate product price. Keeping low cost at least in some products is an effective way to guard against external threats. And slowdown in Japanese economy makes an opportunity for Kikkoman to look for overseas markets to grow rapidly.
- Recommendations
Soy sause market is very mature in Japan and company should use hold-and maintain strategy, but in the same time they could start open retail stores for market extension. Company could sell products under their brands and for wider product range could buy products from external companies and sell under Kikkoman brand. By choosing third alternative company can start open new retail Asian food stores and restaurants under strong Kikkoman brand name.
Worldwide Kikkoman should make stronger its positions in soy sauce market, because demand is growing rapidly.