Kao’s Resources & Capabilities
The key resources of Kao Corporation, a leading branded and packaged goods company based in Japan but with global interests, include its “learning organisation” orientation, reputation as a creative company, production of high-quality goods, use of newer technologies to develop innovative and highly diversified products, horizontal management structure, and ownership of raw material sources. The company’s capabilities include technology know-how, capability in basic research, efficient marketing and information systems, and ability to produce and market innovative brands due to expansive network of wholesalers.
According to the case study, Kao has been able to achieve competitive advantage largely due to its capacity to integrate and facilitate these capabilities through learning. Additionally, the company has been able to achieve competitiveness by encouraging access to and sharing of information across all levels due to the management structure, investing in distinct creativity among employees, and an enhanced capacity to share ideas across R&D laboratories.
Sustainability of Kao’s Capabilities & Competitive Advantages
Kao’s capabilities and competitive advantages appear to be sustainable as the firm moves into new areas, in large part because of its focus on learning as a way of developing high quality, innovative products. Through sustained learning, the company has the capacity to add value to their product offerings rather than imitate its global competitors, not mentioning that its ownership of resources will serve as a competitive advantage in the development of high quality, reasonably priced products with the capacity to break even in the international arena.
Leveraging Organisational Capabilities
It is evident that Kao can indeed leverage its internal organisational capabilities to develop competitive advantage overseas by diffusing its learning capability and technological know-how to key international markets it intends to set base. Kao’s learning organisation’s model has been hugely successful in Japan. Thus the company can employ the same model to learn customer needs and preferences in the international arena with the view to developing new innovative products using its expansive technological expertise. Additionally, in cognisance of the fact that Kao has been successful in establishing internal processes (e.g., information sharing, open communication, senior management involvement) that have influenced its employees in Japan to develop organisation and product-specific competencies, the company can deploy financial resources to reinforce these processes in international contexts with the view to building its competitive advantage overseas.
Recommendations for Kao’s International Strategy
Owing to the failures that the company has experienced in using joint ventures to access international markets (e.g., the 1976 Kao and Colgate-Palmolive venture in the US), the company needs to adopt the acquisition strategy to operate fully-owned or partly-owned subsidiaries in these markets. Although Kao needs to continue with its product division strategy in these markets rather than organisation-specific strategy, it is recommended that the company retains the structure and human capacity of the acquired companies not only to benefit from their extensive market know-how and international experience but also to ensure it has the basis for accumulating international knowledge and expertise of Western markets and consumers through its well-entrenched organisation learning model.
It is also recommended for the company to adopt product positioning, pricing, and packaging policies that are intended for use in Western markets rather than trying to transfer Japanese policies into these markets, not mentioning that the company needs to develop more human resource assets to ensure that issues of cultural gap and linguistic difficulties are successfully dealt with.
Examples of Companies
Lastly, some examples of companies in the Middle East possessing similar learning capabilities include Microsoft Gulf, The One, Accenture Middle East, and SABIC. These companies have over the years performed well and are efficiently run, implying that the learning capability is a critical component in the attainment of an organisation’s competitive advantage.