Introduction

Kao Corporation was founded in Japan since 1890 as Kao Soap Company with the prescient motto, Cleanliness is the foundation of a prosperous society. Its objectives then was to produce a high quality soap that was good as any imported brand, but at a more affordable price for the Japanese consumer, and this priciple had guilded the development of all Kaos product ever since. Between 1982 and 1985, Kao Corporation had successfully diversified into cosmetics, hygiene and floppy disks. Since then, Kao dominated most of its makerts in Japan. It was market leader in detergents and shampoo, and was vying for first place in disposable diapers and cosmetics. In 1990, Kao was ranked ninth by Nikkei Business in its list of excellent companies in Japan, and third in terms of coporate originality. However, sucess in small markets would not make Kao a Global player. As a result, since the mid-1985s, internationalization was viewed by the company as its next key strategy challenge. The aim of this research is to analyse strategic management of Kao during the period 1970 to 1990 while the company significant inceasing in both size and market, in order to see wherther company apply different perspectives, such as classical, evolutionary, and sysmatic perspective,... and how they use it to cope with both internal and external change.

Main analysis
1. Kaos Classical perspective: In classical perspective, the process of strategy management is conceived as a deliberate, predetermined, programmed movement between two well-defined points now and the future. There is the classical assumption from microeconomics of ceteris paribus (other things being equal). This is that while this route from now to the future is being traced, other things will remain static, and the sole determinant of success of the strategy is how well the initial analysis and design is carried out. Obviously, real strategic managers know that the enviroment does not remain static. They are also well aware that the ideal of perpect analysis and faultless implementation can not be attained, but classical strategists strive to believe that the sollution is to do what they have been doing better or more or harder, hence the proliferation of analytical tools in this perspective. Within this perspective, an organization might be able to determine where it is now, where it wants to be, and how to get there.
1.1. Industrial Competitive Forces Analysis (Porters 5 Forces)

Given the real difficulties of undertaking a comprehensive analysis of the organizations strengths and weaknesses in relation to an enormously complex enviroment, the focus of the classical perspective has settleed on the position of the organization in its competitive enviroment. One of the most extensive writers of this approach, Michael Porter, has moodleed the key features of the competitive enviroment (Porter,1980). It indicates in general the five competitives forces that are expected to have the strongest and most immediate effects on the strategic plans of an organization. The profitability of an industry is shaped by the interactions of these forces. Kao operate in Fast Moving Consumer Product industry where consumer would use products regularly. The product line of Fast Moving Consumer Products encompasses a wide range of products such as shampoo, body foam and facial wash. These products are classified as fast moving due to the nature of its usage and durability. Unlike products like television and radios which consumers would only buy once in a blue moon, Fast Moving Consumer Products are bought constantly from time to time by consumers. Major Players in the Industry as well as in global market are:

1) Proctor & Gamble, USA. 2) Johnson & Johnson, USA. 3) Kao Corporation, Japan. 4) Colgate Palmolive, USA. Intensity of Rivalry: The intensity of rivalry is high in the Fast Moving Consumer Product industry. This is due to several factors. First of all, there are many players in the industry. Apart from the major players, there are many local and regional competitors, which implement different strategies. In fact, many developed countrys market is saturated. As such competition is fierce, as they fight for the same slice of cake. Rivalry is further intensified by the fact that consumers can switch between brands easily and incurring virtually zero cost. This fact causes companies to constantly fight over the same consumers. Kao may use many different strategies to obtain competitive advantage ranging from product innovations to low prices. The strategy used would depend on the market position of the firm. Threat of Entry: The threat of Entry into the industry is quite high as new entrants would require a considerable amount of capital in order to set up a production plant and other administration cost. Moreover, the existing firms, especially the major players, which are multidomestic companies, have considerable cost advantage due to economies of scale. As such the new entrants would have a smaller profit margin. In addition, in order to produce good quality products, firms have to undertake Research & Development efforts. These factors make the industry less attractive to new entrants. Threat of Substitution: The threat of substitution is not very prominent in the industry. Although the switching cost of the consumer is very low, there is not many substitution. For instance, there is no real substitute for using shampoo to wash hair. Although today, soap has much been substituted by body shampoo, but the firms which used to produce soaps, also produces body shampoo now. Therefore it can be summarised that there is no real substitute for Fast Moving Consumer Products. Power of Suppliers: Much of the input required is in the form of chemical. Many of the major players in the industry vertically integrate backwards in order to reduce the power of suppliers. For instance, Kao Corporation has raw material bases in the Philippines and Malaysia. These places have ample supply of key raw material such as coconut and palm oil. The reduction of power of suppliers not only gives the firm lower cost which translate into higher profitability but also better control of the quality of its inputs. Power of Buyers: In the industry, the main buyers are the hypermarkets and other High Traffic outlets. Due to the purchasing power of hypermarkets, there is considerable power of buyer to dictate terms with manufacturers. While many of the major players have the resource to forward integrate but would find it uneconomical to open up a hypermarket just to sell its product to the consumer. However, with the development of the Internet, there lies a possibility for firms to reduce the Power of Buyers in this industry.

1.2. SWOT analysis

In the classical perspective, the foundation for successul strategy is the clear understanding of Strength Weaknesses - Intergrated learning capability. - Multiple levelled distribution channels - Ability to discover consumers needs - Reliance on Imports - Superior Research & Development - Relatively high leverage - Strong Sales Force - Effective Profit Management - Wide Product Lines - Large Capital - High Liquidity Opportunities Threats - Population Growth in Developing - Increase Power of Buyer Countries - Intensifying Competition - Changing Age Structure - Forex Fluctuations - E-commerce development

where the firm is now, its current position in its enviroment encapsulating its strength and weaknesses, fully recognizing the oppoturnities and threats that face it. The processes that are use to discover this current position are analytical, and the most enduring techniques to have come from the classical perspective is the SWOT analysis.

Figure 1. Kaos SWOT analysis

- Emerging Markets - Globalization The SWOT can be used in guiding strategy formulation. It demonstrates that stregths and opportunities should be matched, while threats and weaknesses should be converted into opportunities and strength respectively whenever possible. ST - E-commerce - Superior Products - Lower Cost/Price - Vertical Integrate SO - Expansion - New Product - Hedging - Acquisition/Mergers - Strategic Alliance - Divest/Turnaround WO - E-commerce venture - Vertical Integration - Diversification Figure 2. Kaos strategies formulated using SWOT analysis. For example, Kaos management may forcus on development of strategies which will convert threats into opportunities which can be machted by existing strengths. As for the intensifying competition, Kao can try to merger or acquire a competitive firm. The acquired firm should be one that creates value for Kao Corporation. This would be especially beneficial if the acquired firm has a competitive advantage over Kao Corporation. Besides, with huge amount of capital and high liquidity, Kao may decide to implement this strategy without much concerning about capital consuming. Another alternative is to form strategic alliances with competitor for a mutual benefit. The idea is "if you cant beat them, join them." Strategic alliances can also be used to reduce the threat of buyers. By forming alliances with major retailers, Kao and retailers can stand to benefit from better understanding of each others needs and difficulties. Then together find a productive solution to the problem.
1.3. Criticisms of the classical perspective.

WT

Ralph Stacey, in the first edition of his book Strategic Management and Organisational Dynamics (1993), points out classical strategy ignores some real-life observations of what actually does happen:

Organisational shifts in direction come from self- organising and self-regulating behaviour as well as management intention. Irrational decision-making and political activity are always part of the decisionmaking processes. Reality needs to be negotiated within powerful and complex interrelationships. Strategy can be best determined by looking backwards, emerges from creative interaction with the enviroment and complex organization learning processes over time.

Organization are seen to somehow survive and thrive in a world where stability and instability are entwined and the future is inherently unpredictable. They must, therefore, be acting in a way to ensure that survival, in spite of any classical strategy formulation they may have undertaken. Stacey concludes that, in reality ...Analysis loses its primacy...long term planning becomes impossible. Visions become illutions. Statistical relationships become doubtful...Concencus and strong cultures become dangerous. Contraditions, conflict, and learning become essential. (Stacey 1993). The disadvatages of classical perspectives raise questions about how can Kao survive, but not by using classical approach to strategic management mainly. Base on Staceys agument, it is suggested that there are two more perspectives for Kao coporation. They are evolutionary perspective and systematic perspective.

2. Evolutionary perspective:

In the evolutionary perpective, the firm is seen as an organism dependent upon its enviroment; a living creature, which relates to other businesses in the same ways that organisms relate to those of the same species, and to those who might be predator or prey. Strategy, in this perspective, should be limited to making sure that the organiation match closely as possible the essential chracterisrics of the niche that the population inhabits, and that, within the population. Evolutionary perspective directed Kaos 5 priciples as well as companys recipe for development of any new product: Each product must be useful to society. It must use innovative technology. It must offer customer value. We must be confident we really understand the market and the consumers. And, finally, each new product must be compatible with the trade. Because Kao and their competitors kept following the industry or sector recipe for survival; thus, strategy is very similar for all members of the population. For example, Kao Corporation uses the differentiation strategy to fend off its competitors. Kao is always improving its existing product through Research & Development in order to provide value for the consumers along with to introduce new products into the market. Take for instance, in order to fight fierce competitors such as P&G in the hair care market, Kao introduced Lavenus which is a new hair

care line. However, there are competitors like P&G and Johnson & Johnson who also employ similar differentiation strategy. In addition, same as Kao Corporation, Johnson & Johnson also emphasise on product reliability to gain the trust of the consumers.

2.1. Kaos voluntarist approach to strategy.

During 1970s, with the idea was to produce a new, high quality cosmetic that gave real value at a reasonable price, Kao was considered as a voluntarist in Japanese market. There was a strong perception in the Japanese cosmetic industry that the more expensive the product, the better it was. This view challenged by Dr Maruta, whose travels has taught him that good skin care products sold in United States or Europe were not as outrageously expensive. Yet in Japan, even with companies like Kao supplying high quality raw materials at a low price, the end product was stil beyond the reach of ordinary women at 10,000-20,000. Dr Maruta also saw that though cosmetics prices were rising sharply, little was being spent on improving the products themselves, and that customers were paying for an expensive image. Kao, he knew, had the capacity of supply high quality raw materials at low cost, a basic research capability and technological strength. It confirmed the feasibility to use these assets to develop a new, high quality, reasonable priced product, in keeping with Kaos principles. Follow volutarist framework for strategic thinking, Kao was sucessful with Sofina. The high quality, innovative skin care- product that finally emeged in 1982 allowed Kao to enter new market and overtake well-established competitors. By 1990, Sofina had become the highest selling brand of cosmetics in Japan for most items except lipsticks. Besides, the sucess of Sofina is also come from the support of classical aproach. During development of product, Kaos intelligence collectors was sent out to expolore and map the new market enviroment. Information on products, pricing, positioning, the competition was collected, PESTEL, SWOT analysis, Five competitive forces, Value chain analysis,...were carried out, and above all, the customers, was analyzed and digested by the Sofina marketing and R&D teams, and by Kaos top management.
2.2. Kaos going international and strategic alliance.

Since the mid-1980, despite of success in Japan and SE Asia market, Kao had been giving its attention to the problem of how to break into the international markets beyond the region. To do this, Kao focused on building strategic alliance with similar organizations who was also their competitors in the classical perspective. Under evolutionary perspective, business is not all about war, sometimes its about making friends who we can rely on. Moreover, co-opearation may be risk-reducing and opportunity-enhancing of developing strategy in an enviroment that is essentially unpredictable and uncontrollable.

To enter US market, Kao had embarked on two joint ventures with Colgate-Palmolive. Under strategic alliance, Colgate-Palmolive was to provide the marketing expertise and distribution infrastruture, Kao would contribute the technical expertise to produce a high quality product for the top end of the United States market. After considerable of exchange of personnel and technology, a new shampoo was specially develop by Kao for US consumer. Despite the fact that tests in three major United States cities, showed poor market share potential, the product launch went ahead. The forecasts turned out to be correct, and the product was dropped after 10 months due to Colgate-Palmolives reluctance to continue. The alliance was dissolved in 1985. A Kaos manager explained the failure in strategic management: First, the product was not targeted to the proper consumer group. Secondly, because the lack of understanding about cultural behaviors and the ineffective communication with Kaos stakeholders, it is essentially very difficult to penetrate a market like US shampoo market. Finally, the way two firms decided on strategy was totally different. Kao constantly adjusted their strategy flexibly while their partner never started without a concrete and fixed strategy. Despite of this failure, Kao had learned some valuable lessons about US business methods, Western lifestyles and, most of all about the limitations of using joint ventures as a means of breaking into the US market. However, it is important for Kao to understand how company can best develop strategies for international and global business. Thus, there is one more perspective that company can rely on to be successful in its competitive enviroment.
3. Sysmatic perspective:

As mentioned above, the failure of Kao in their strategic management raised the question about how can Kao develop its international and global strategies successfully along with overcome the culture gap and difficulties. It is suggested that Kao should follow systematic perspective because in this perspective, international strategic manager will have better understanding about cultural dimension in building productive relationships with customers, suppliers, and other stakeholders The strategic manager will know, for example, how societies and cultures differ from each other, what are cultural behaviors of their stakeholders by process of continuous communication with them. From that, they can create approriate strategies and manage it effectively to overcome culture gap and difficulties. . The Systemic Approach of International strategic management Whittington (2001) defined the Systemic approach towards strategy as relativistic, the methods and results of strategic is linked to the cultures and powers of the social systems the organization is in. This approach believes that organizations should have the capacity to plan and act effectively within and according to their environments, and that the rationales behind strategy are connected to the sociological context (Orcullo, p.16). There are multiple dimensions to the sociological context, defined by Hofstede (1993) as Power Distance, Individualism vs. Collectivism, Masculinity vs. Femininity and Uncertainty Avoidance.

In countries with long-term orientation, Kao can establish a cost advantage relationship by using volume (long-term) in exchange for lower costs. For example, by signing a purchase agreement worth 3 years of contract, Kaos suppliers will agrees to supply materials at a much lower price compared to markets prevailing prices, or, by appointing specific vendors/retailers as Kaos sole distributors which enables these retailers to specialize on marketing Kaos products. In the area of international work force management, Hofstedes cultural dimension framework helps Kao in deciding the different human resource policies to be applied in different countries with different cultures. The Japanese culture for example, is relatively collectivist (Hofstede, 2009), and using a democratic management style through group decision making, is more effective as empowering to motivate employees will work in such a cultural setting (Tan, p.78). As for a more individualistic culture, such as in countries like France and Germany (Hofstede, 2009), emphasizing on organization loyalty may not work as the individualist culture looks toward career advancement, personal performance recognition and job mobility (Vance & Paik, p.42). And on the subject of power distances, countries like Malaysia, Thailand and Philippines which have high power distance (Hofstede, 2009) may prefer a greater centralization of authority, group decision making implemented in these cultures may be perceived as management not having the competencies to decide for themselves. Most low level employees would also find it uncomfortable or inappropriate if CEOs or high level executives attempt to socialize with them in a business setting (Vance & Paik, p.41). The uncertainty avoidance dimension can affect Kaos market positioning strategy. In a high uncertainty avoidance culture such as Singapore (Hofstede, 2009), brand credibility holds the utmost importance in the minds of consumers in product selection as they have lower perceived risks (MacInnis, Park & Priester, p.238). In these cultures, Kao will have to establish a conservative brand image one that builds upon its credibility (Hunter & Tan, p.208) This type of culture also requires strong customer service and customer oriented organization structures. Customer service departments should be positioned as experts with exceptional professionalism in their conduct and information that the customer seek must be attended to immediately (Singh & Pereira, p.99).

Conclusion
From Kao Coporation case study, it is said that ther are many different approaches to strategic management, in theory and pratice. Even in the same situation, different managers will behave differently, and certainly within any organization there will be many viewpoints present. However, it is important for Kao Coporation to be able to adopt more than one view point or one perspective on different situation. For example, the success of Sofina brand in Japan and SE Asia market due to the combination of classical and evolutionary approach. Then, in Global level, especially in US and Euro market, Kao see that people and organization are small within the evironment, and have limited oppotunities to manipulate it according to their plans; therefore, looing around and ahead for areas where productive relationship can be made is part of the work of the strategist under sysmatic perspective.

Recommendation
During 1970 to 1990, Kao was a medium sized company grown large. It lacked international experience, had fewer human resource assets especially in top management and, compare to competitors like P&G an Unilever, had far less accumulated international knowledge and experience of Western markets and consumers. It is suggested that Kao Coporation can not rely on classical perspective mainly. There are also other approach methods to help Kao achieve their objectives. They should recognize that every organization has to take place in a wider society. The harmony among people, products and world-wide operation is the most important phylosophy to keep in mind. In Evolutionary perpective, Kao attempted to follow industrys recipe and to be much more innovative by the development of Sofina in Japan market and their first strategic alliance in global level. Due to strategic alliances failure, Kaos management had learned some valuable lessons in global market. It was time for them to focus on building the productive relationships with stakeholders outside its national boundaries under sysmatic perspective. Moreover, Kao managers should develop broader and more international outlook because companys global strategic management is conducted in a community of managers from all over the world, and its sucess depends on clear communication and understanding between them. On the other hand, international strategic management means making close business connections across national boundaries, in which better knowledge of the worldview of the managers would be very helful.

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