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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 $or Kao
(Taiwan) ,orporation" be%ause the marketer has to depend on symbols and pi%tures to
adertising and %ommuni%ate with the %onsumers in Taiwan.
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http://www.kao.com/tw/http://www.kao.com/tw/7/25/2019 IB Asssigment
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(e) Manners and customs
Based on the resear%h" Kao (Taiwan) ,orporation did not dealing any manners and
%ustoms issues in its operation at Taiwan.
(f) Values and attitudes
Kao (Taiwan) ,orporation o$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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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."
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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