IB Asssigment

7/25/2019 IB Asssigment

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1.0 INTRODUCTION

Kao International

Kao was established by Mr. Tomiro Nagase as Western sundry goods dealer Nagase

Shoten (Book shop) in 1!" Tokyo" #apan. Kao main businesses are $o%us on beauty %are"

human health %are" $abri% and home %are. &n additional" Kao 'roup has also operated their

%hemi%al business $or industry used.

Kao businesses are all oer the world" the business $o%uses are in sia" *urope" $ri%a"

North meri%a and +atin meri%a. &n sia the business are operate in #apan" ,hina" -ong Kong"

Taiwan" Thailand" Malaysia" Singapore and &ndonesia. Whereas the business $o%us in *urope and

$ri%a is in inland" /enmark" 0ussia" 'ermany" Netherlands" K" Belgium" ,2e%h 0epubli%"

ran%e" ustria" Swit2erland" &taly" Spain and South $ri%a. or business $o%us in North meri%a

and +atin meri%a is ,anada" S and Me3i%o.

Kao mission is to enhan%e the satis$a%tion and enri%hment o$ the lies o$ human being.

They are working to %losest the %onsumers and %ustomers in ea%h market" and earning the respe%t

and trust o$ all stakeholders. Kaos alues are diided into three parts whi%h is 4oki5

Mono2ukuri and &nnoation and integrity.

Kao Taiwan

&n 1678" Kaos business e3pands to Taiwan. &n 1677" Kao produ%ed the $irst shampoo

powder in their newly build $a%tory.

&n 1661" Kao (Taiwan) ,orporation was planning $or the modern business and logisti%s

system. By the $ollowing year" the %ompany %hanged to Kao (Taiwan) ,orporation" and they

started the implementation o$ %omputer network to modern business and logisti%s systems. &n

9::1 until 9::8" they bring in the *; system and S< system to their %ompany.

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Taiwan has e3perien%ed one o$ the worlds highest sustained e%onomi% growth rates oer the

past three de%ades and Taiwan is home to seeral international business ports" with the shortest

aerage $lying time to ma=or %ities. nd Taiwan also o$$ers %ompetitie adantages with its $ree

trade ports" 0>/ and %omprehensie pro%essing seri%es to attra%t the $oreign inestors.

(0etrieed $rom http?@@www.kao.%om@=p@en@%orpAimgs@%orpAin$o@report::A::.pd$)

Taiwan

Taiwan is lo%ated in *astern sia" o$$ the southeastern %oast o$ ,hina" at the western edge

o$ the South Korea and

known as one o$ theour sian Tigers.

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2.0 AREA OF INVESTIGATION

i.) Cultural Perspectie


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So" Kao (Taiwan) ,orporation hae to %onert their marketing message" produ%t details and

sometimes een brand name into ,hinese to rea%h the %onsumers e$$e%tiely. The

%ommuni%ation programs that Kao (Taiwan) ,orporation has deeloped are produ%ts in$ormation

on produ%ts label translated into ,hinese and also %reated a ,hinese o$$i%ial website

(www.kao.%om@tw@) su%h as below.

(c) AestheticsBased on the resear%h" Kao (Taiwan) ,orporation did not dealing any aestheti%s issues in

its operation at Taiwan.

(d) Education

There are oer one hundred institutions o$ higher learning" whi%h admit si3ty thousand

students a year. /iersi$ied and %hallenging edu%ational enironment has meant a highly skilled

and able work $or%e" gi$ted entrepreneurs" and say businesspeople $or the nation. *du%ation

a$$e%ts all aspe%ts o$ the %ulture $rom e%onomi% deelopment to %onsumer behaior. The litera%y

rate o$ a %ountry is a potent $or%e in e%onomi% deelopment and litera%y has a pro$ound e$$e%t on

marketing. or an e3ample" it is mu%h easier to %ommuni%ate with a literate market $or Kao

(Taiwan) ,orporation" be%ause the marketer has to depend on symbols and pi%tures to

adertising and %ommuni%ate with the %onsumers in Taiwan.

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http://www.kao.com/tw/http://www.kao.com/tw/


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(e) Manners and customs

Based on the resear%h" Kao (Taiwan) ,orporation did not dealing any manners and

%ustoms issues in its operation at Taiwan.

(f) Values and attitudes

Kao (Taiwan) ,orporation o$ten %ondu%t %omprehensie sureys to understand lo%al

%onsumersli$estyles" %ustoms" produ%t usage and attitudes in order to deelop produ%t that

meet lo%al needs. or an e3ample" Kao (Taiwan) ,orporation $ound that Taiwanese like %lean

and %olour$ul things. Thus" Kao (Taiwan) ,orporation deeloped a produ%t with the %on%ept o$

%olour with brightening %lean su%h as below.

(g) Social Structure

Based on the resear%h" Taiwanese is a %olle%tie and group5oriented. The good o$ the

group %ome $irst be$ore their sel$ interests. So" Kao (Taiwan) ,orporation keep en%ouraging this

so%ial stru%ture to be pra%ti%e in the organi2ation by proiding so%ial training and team building

programs to their employees.

(0etrieed $rom http?@@www.eery%ulture.%om@[email protected])

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ii.) P!litical Perspectie

Taiwans goernment type is multiparty demo%ra%y. &t is a system in whi%h three or

more politi%al parties hae the %apa%ity to gain %ontrol o$ goernment separately or %oalition and

Taiwan is based on %iil law system. The ma=or politi%al parties are Kuomintang (KMT or

Nationalist


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The resulted o$ 9:: legislatie ele%tions and presidential ele%tions hae a ma=or positie

impa%t on both the islands politi%al stability and e%onomi% attra%tions. /omesti% politi%al risks

hae $allen sharply be%ause the KMTs large ma=ority in the legislature has put it a stronger

position to pass and implement legislation more e$$i%iently. %%ording to MB ,ountry 0isk

0eport" the most re%ently ele%ted president o$ Taiwan Ma 4ing #eou has pursued a %loser

relationship with ,hina. urthermore" the goernment has priati2ed and deregulated mu%h o$

e%onomi% ties with ,hina whi%h would greatly improe Taiwans e%onomi% prospe%ts. Thus" it

will bring a positie impa%t to K %orporations. (0etrieed $rom

http?@@wwwC.ambest.%om@ratings@%r@[email protected]$)

Taiwan $ollows the ,iil +aw system and the legal system had deeloped steadily in

Taiwan. /emo%rati2ation was essential leading to rapid and dramati% improements in the legal

system in Taiwan. But" demo%rati2ation did not resole all o$ the tensions and problems in the

legal system or in goernan%e. s in all %ountries" the legal system remains a work in progress"

with rule o$ law an en%ouraging ideal to be struggled $or i$ always imper$e%tly reali2ed.

Taiwan prohibits or restri%ts $oreign inestment in %ertain se%tors su%h as agri%ultural produ%tion"

%hemi%al manu$a%turing" bus transportation" publi% utilities" and postal seri%es. bout 1H o$

manu$a%turing industries and DH o$ seri%es industries hae limits on $oreign ownership in

Taiwan and Kao ,orporation deelops its %onsumer produ%ts business whi%h inoles in

manu$a%turing industries. %%ording to TaiwanFs inan%ial Superisory ,ommission" Taiwan has

remoed all restri%tions on $oreign ownership whi%h was bene$it to those $oreign inestment

%ompanies su%h as Kao ,orporation. (0etrieed $rom

http?@@www.businessweek.%om@globalbi2@%ontent@o%t9::@gb9::1:1DACD677.htm)

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iii.) Ec!"!#ical Perspectie

Taiwan has a demo%ra%y with a mi3ed e%onomy whi%h posses a dynami% %apitalist"

e3port5drien e%onomy. Through de%ade o$ hard work on e%onomi% management" Taiwan has

trans$ormed itsel$ $rom an underdeeloped" agri%ultural island to an e%onomi% power that is a

leading produ%er o$ high5te%hnology goods. &n =ust D: years" Taiwan had a%hieed rapid

e%onomi% growth" %hara%teri2ed by stable pri%es and eEuitable distribution o$ in%ome. &ts rapid

industrial adan%ement has earned the island re%ognition as one o$ the our Tiger

e%onomies o$ sia whi%h %lassi$y as emerging markets.

Taiwan has a%hieed rapid e%onomi% growth through a pro%ess o$ industriali2ation

andwesterni2ationwhi%h has resulted in a ma=or %hange in its so%ial %ulture and e%onomi%

stru%tures. The so%ial trend toward westerni2ation led to a more indiidualisti% and

goals and resultsorientation $or Taiwan employees. TaiwanFs e%onomy is dependent mostly

on its industries. -oweer" natural resour%es and agri%ulture too play a ma=or role as most o$

these %ommodities are either e3ported as raw materials or they are pro%essed and e3ported. This

heay dependen%e on e3ports makes the e%onomy ulnerable to downturns in world demand. &n

9::6" TaiwanFs '/< $ell by 9.DH" due primarily to a 9:H year5on5year de%line in e3ports.

Sin%e the global $inan%ial %risis starting in 9::" Taiwans e%onomy slumped into

re%ession and su$$ered more seerely than other regional %ountries. s a result" the Taiwan

goernment $a%es a reenue short$all largely attributable to $ailing %orporate pro$its and all5time

high in unemployment rate whi%h risen $rom 8.189H in 9:: to 7.8H in 9::6.

Taiwans e%onomi% deelopment has been so $ast5pa%ed that it %an no longer %ompete

as a low5wage manu$a%turing %enter. ,onseEuently" Taiwanese businesses more re%ently hae

$o%used on high5alue5added industries su%h as ele%troni%s and automotie produ%ts. &n 9::6"

Taiwans goernment is %ontinually %reated more businesses" in order to proide more

employment and to strengthen its position against the global e%onomi% %risis. TaiwanFs $urther

deelopments depend on its su%%ess to trans$orm the nation into a seri%e5oriented and high

te%hnology e%onomy.

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/ue to o%%urren%e o$ e%onomi% %risis" Kao (Taiwan) ,orporation was strongly hit by the

global re%ession. Kao was unwilling to inest signi$i%ant sums on new produ%t deelopment"

marketing" and distribution a%tiities as a result o$ the un%ertain e%onomies %limate. There$ore"

Kao laun%hed new imported produ%ts during 9:: instead o$ taking the risk asso%iated with

deeloping and introdu%ing new produ%ts. &n 9::6" the global e%onomy is gradually re%oering.

But" Kao (Taiwan) ,orporation was still slowdown in the business per$orman%e. Thus" Kao

(Taiwan) ,orporation %on%entrated on sales pri%e ad=ustments" %ost redu%tion a%tiities" %utba%ks

in its e3penditures" and also strengthens its business by strengthening its %ore brands.

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i.) I"ter"ati!"al Tra$e a"$ F!rei%" Direct I"est#e"t &FDI) i" Tai'a"

Theories of international trade alied in Taiwan

Taiwan takes adantage in labor5intensie te%hnology to the island as %omparatie

adantage theory. Taiwan has limited land and natural resour%es" but there was high population

whi%h appro3imately 9C"99!"CC6 and well edu%ation among the %iti2ens. *$$i%ien%y o$ resour%e

utili2ation leads to more produ%tiity. (0etrieed $rom

http?@@www.trueknowledge.%om@E@whatAisAtheApopulationAo$AtaiwanAinA9:1:)

&n the 167:s" $oreign inestment in Taiwan helped introdu%e modern" labor5intensie

te%hnology to the island" and Taiwan be%ame a ma=or e3porter o$ labor5intensie produ%ts. &n the

16:s" $o%us shi$ted toward in%reasingly sophisti%ated" %apital5intensie and te%hnology5

intensie produ%ts $or e3port and toward deeloping the seri%e se%tor whi%h e3port te%hnology5

intensie produ%ts to low5wage host %ountries su%h as ,hina. Taiwan in the long run should

spe%iali2e in the business in whi%h they en=oy %omparatie adantage and e3port the produ%t

while it will import other produ%ts in whi%h other %ountries hae %omparatie adantage" i$ $ree

trade is allowed. (0etrieed $rom http?@@www.traeldo%s.%om@tw@e%onomy.htm)

International trade attern of Taiwan

The international trade pattern in Taiwan more based on *3port due to Taiwan posses an

e3port5drien e%onomy.

TaiwanFs two ma=or e3ports were ele%tri%al ma%hinery and me%hani%al applian%es. The gradual

upturn in TaiwanFs e3ports o$ these produ%ts was due to the global re%oery in high5te%h

industries su%h as ele%troni%s and tele%ommuni%ations. The ma=or imports o$ Taiwan were

ele%tri%al ma%hinery and parts. The primary ob=e%tie o$ the Taiwan /eelopment


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!atterns of "#I in Taiwan

oreign dire%t inestment may be %lassi$ied as &nward or utward. &nward /& is a

typi%al $orm o$ inestment o$ $oreign %apital o%%urs in lo%al resour%es. &nward /& may $a%e

restri%tions $rom $a%tors like restraint on ownership and disparity in the per$orman%e standard.

utward /& is also re$erred to as dire%t inestment abroadwhi%h is the lo%al %apital being

inested in some $oreign resour%e.

The patterns o$ /& in Taiwan in%luding 'reen$ield inestment" =oint enture" %ontra%tual

=oint enture" eEuity =oint entures" mergers" a%Euisitions" and et%. 'reen $ield inestment is

re$ers to dire%t inestment in new $a%ilities or the e3pansion o$ e3isting $a%ilities. 'reen$ield

inestments are the primary target o$ a host nations promotional e$$orts be%ause it %an %reate

new produ%tion %apa%ity and =obs" te%hnology trans$er" and %an lead to linkages to the global

marketpla%e.

#oint enture is a strategi% allian%e or %ontra%tual agreement=oining together two or more

%ompanies$or the purpose o$ e3e%utinga parti%ularbusinessundertakingand all parties agree to

sharein thepro$itsand losseso$ the business. or the ,ontra%tual #oint ;enture" $oreign partner

proides te%hnology and the Taiwan entrepreneur proides land" labors" materials and et%.

Besides that" *Euity #oint ;entures is the $oreign partner is sharing o$ pro$its" losses and risks in

limited liability.

Mergers and a%Euisitions is re$ers to trans$ers o$ e3isting assets $rom lo%al $irms to

$oreign $irms takes pla%e. The primary type o$ /& whi%h is ,ross5border mergers o%%urs when

the assets and operation o$ $irms $rom di$$erent %ountries are %ombined to establish a new legal

entity. ,ross5border a%Euisitions o%%ur when the %ontrol o$ assets and operations is trans$erred

$rom a lo%al to a $oreign %ompany" with the lo%al %ompany be%oming an a$$iliate o$ the $oreign

%ompany" but a%Euisitions proide no long term bene$its to the lo%al e%onomy. (0etrieed $rom

http?@@www.moeai%.go.tw@systemAe3ternal@%tlrIlangJ1>idJC1)

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http://www.businessdictionary.com/definition/agreement.htmlhttp://www.investorwords.com/3610/party.htmlhttp://www.investorwords.com/3610/party.htmlhttp://www.businessdictionary.com/definition/executing.htmlhttp://www.investorwords.com/623/business.htmlhttp://www.businessdictionary.com/definition/undertaking.htmlhttp://www.investorwords.com/4525/share.htmlhttp://www.investorwords.com/4525/share.htmlhttp://www.investorwords.com/3880/profit.htmlhttp://www.investorwords.com/2896/loss.htmlhttp://www.businessdictionary.com/definition/agreement.htmlhttp://www.investorwords.com/3610/party.htmlhttp://www.businessdictionary.com/definition/executing.htmlhttp://www.investorwords.com/623/business.htmlhttp://www.businessdictionary.com/definition/undertaking.htmlhttp://www.investorwords.com/4525/share.htmlhttp://www.investorwords.com/3880/profit.htmlhttp://www.investorwords.com/2896/loss.html


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Reasons for "#I to occur in Taiwan

oreign dire%t inestment (/&) plays an e3traordinary and growing role in global

business. &t %an proide a $irm with new markets and marketing %hannels" %heaper produ%tion

$a%ilities" a%%ess to new te%hnology" produ%ts" skills and $inan%ing. or a host %ountry or the

$oreign $irm whi%h re%eies the inestment" it %an proide a sour%e o$ new te%hnologies" %apital"

pro%esses" produ%ts" organi2ational te%hnologies and management skills" and as su%h %an proide

a strong impetus to e%onomi% deelopment. The primary ob=e%tie o$ Taiwans stan%e towards

/& was initially to attra%t e3port5oriented inestment based upon the %ompetitieness o$ its

highly edu%ated and produ%tie labor $or%e. More re%ently" this ob=e%tie has been modi$ied to

$o%us on attra%ting /& in in%reasingly te%hnology5intensie areas and to en%ourage or promote

domesti% te%hnologi%al spill5oer.

'ien the %omple3ity o$ the global e%onomy" there is numerous $a%tors may in$luen%e a

%ompanys de%ision to undertake /&. The $a%tors a$$e%ting the /& de%ision are supply

$a%tors" demand $a%tors" and politi%al $a%tors. The supply $a%tors su%h as produ%tion %osts"

logisti%s" aailability o$ natural resour%es" and a%%ess to key te%hnology. ,ompany also may

engage in /& to e3pand the market $or their produ%ts. The demand $a%tors that en%ourage /&

in%lude %ustomer a%%ess" marketing adantages" %ustomer mobility" and e3ploitation o$

%ompetitie adantages.


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T$es of "#I used b$ Kao in Taiwan

oreign dire%t inestment may be %lassi$ied as &nward or utward. &nward /& is a

typi%al $orm o$ inestment o$ $oreign %apital o%%urs in lo%al resour%es. &nward /& may $a%e

restri%tions $rom $a%tors like restraint on ownership and disparity in the per$orman%e standard.

utward /& is also re$erred to as dire%t inestment abroadwhi%h is the lo%al %apital being

inested in some $oreign resour%e. Kao is %onsidered as &nward /& to Taiwan.

Based on the %ompany history and pro$ile" Kao e3pend their business to Taiwan

through =oint entures with Taiwanese in 1678 and name the %ompany as Kao Taiwan. &n

1677" Kao build a new %hemi%al industry plant whi%h name as Kao ,hemi%als and it is

%onsidered as dire%t inestment in Taiwan. &n 1661" Kao (Taiwan) ,orporation was

established with to the %ombination o$ Kao Taiwan and Kao ,hemi%als.

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(.0 RECOENDATION

$ter we hae gone deeply about Taiwan %ulture" now" we hae suggested on %ertain

aspe%ts o$ doing business in Taiwan. Sin%e Taiwanese is tend to be more %olle%tiism and group5

oriented" Kao (Taiwan) ,orporation should en%ourage this %ultural to be pra%ti%e in the

organi2ation su%h as proide so%ial training and team building programs in order to build team

work and %reate harmonious between the employees. By this" Kao (Taiwan) ,orporation %an

in%rease e$$i%ien%y in its produ%tion and relationship among the organi2ations.

/ue to Kao is original $rom #apan" Kao (Taiwan) ,orporation should proide #apanese

language edu%ation training to its employees in order to help employees to know other %ountry

language. Kao (Taiwan) ,orporation should proide edu%ation in *nglish to the employees as

*nglish has be%ome in%reasingly important worldwide. The ability to %ommuni%ate more

languages" espe%ially *nglish may be%ome %ompetitie adantages $or Kao (Taiwan)

,orporation.

Kao (Taiwan) ,orporation should deelop its own innoatie produ%t based on adoption

on ea%h Taiwan %ulture" improe e3isting produ%t whi%h more suit Taiwanese" and enhan%e the

%ompany brand name by doing more adertising or promotion programs to %ompete with the

other potential %ompetitors.

Based on the resear%h" we $ound that Kao (Taiwan) ,orporation still imports the some o$

the material $or produ%tion in Taiwan. This may in%rease the %ost o$ produ%tion and also in%rease

the selling pri%e. s a solution" Kao (Taiwan) ,orporation %an try to adopt the lo%al material in

produ%e new produ%tion i$ there is aailable. Thus" the selling pri%e will be more a%%eptable $or

the %onsumers.

&t is important to keep intera%t with %onsumers besides =ust o$$er better produ%ts or

promotion" ,ustomer 0elationship Management is ery important to maintain a %ustomer loyaltyto ensure them to hae a pre$eren%e towards Kaos produ%t rather than other %ompetitor

produ%t. or e3ample" Kao %an %ome out with a ,ampaign or ,ontest whi%h %an make

%onsumers to parti%ipate in is able to enhan%e the %ompany image and %reates an indelible

memory to %ustomers.

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The general inestment enironment in whi%h en%ompasses arious %onsiderations su%h

as the politi%al stability" ma%roe%onomi% enironment" and attitudes o$ Taiwan towards $oreign

%ompanies parti%ipation. So" Taiwan goernment should en%ourage the parti%ipation o$ the

priate se%tor and in%rease the implementation o$ priati2ation programs to %reate more

opportunities $or doing business in Taiwan.

+astly" Taiwan goernment should %ontinue work hard to in%rease their relationship with

,hina in order to %ontinue working towards a%hieing a stable ma%roe%onomi% enironment.

With better understanding on the politi%al risk" Kao (Taiwan) ,orporation is able to minimi2ing

the risk while doing business in Taiwan. %%ording to the aboe" Kao ,orporation must e3amine

ea%h o$ the politi%al risk and able to redu%e the risk taken or see the opportunities arise $rom

those risks.

*.0 CONC+USION

Based on our assignment" we understand that di$$erent %ountries hae di$$erent %ultures.

Thus" %ompanies should learn how to better adapt into the $oreign %ountrys %ulture and

understanding new %ultures. s Kao is original $rom #apan" the business e3pansion to Taiwan in

1678 is di$$i%ult be%ause o$ the di$$erent ma%ro $a%tors o$ %ountries" this is likely to be the reason

that Kao adapted =oint enture with Taiwanese to enter Taiwan market beside $inan%ial problem.

$ter a $ew de%ades sin%e Kao had enter to Taiwan market till now" Kao has su%%ess$ully

penetrate throughout the Taiwan Market and be%ome one o$ the $amous brand amongst Taiwan

Market.

s a %on%lusion" it is important $or a multinational %ompany to analyses a %ountry

ba%kground be$ore enter to the market as di$$erent %ountries hae di$$erent in term o$ %ulture"

poli%ies and e%onomi%al issues and those important measurement should taken into

%onsideration. Mutually5bene$i%ial e%onomi% %ooperation between %ountries and %ompanies will

proide an een better $uture to the world e%onomy.

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Re,ere"ces-

dler" N. (1661). International Dimensions of Organizational Behavior" 9nd ed."


17/17

Meen" W. (166D).The inter%ultural alues Euestionnaire.Issues an" Observations" ;ol. 1D"

No. 1" pp. 1:511.

%opulation of aiwan& (9:1:" #uly). 0etrieed #uly 1:" $rom

http?@@www.trueknowledge.%om@E@whatAisAtheApopulationAo$AtaiwanAinA9:1:

aiwan #conomic (9:1:). 0etrieed #uly 1" 9:1:" $rom

http?@@www.traeldo%s.%om@tw@e%onomy.htm

aiwan removes foreign ownership restrictions. (9::" %tober 1D). Bloomberg Business Week.

0etrieed #uly 16" 9:1:" $rom

http?@@www.businessweek.%om@globalbi2@%ontent@o%t9::@gb9::1:1DACD677.htm

aiwans history an" culture (n.d.). 0etrieed #uly 1" 9:1: $rom

http?@@www.eery%ulture.%om@[email protected]

aiwan overview 'ocation an" size (n.d.). 0etrieed #une C:" 9:1:" $rom

http?@@www.nationsen%y%lopedia.%om@e%onomies@sia5and5the5

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