Case Study Description of Kikkoman Corp.: Consumer Focused Innovation
In May 2003, the president and CEO of Kikkoman Corp. sat in his Tokyo office weighing various options for strengthening the company's long-term growth. Kikkoman was the world's largest producer of soy sauce, largely due to its pioneering role since the 1950s as the leading promoter of the product, particularly in non-Asian markets. But times had changed. The domestic Japanese market was saturated, competition had increased, and Kikkoman needed to think of innovative ways to increase revenue.
Swot Analysis of "Kikkoman Corp.: Consumer Focused Innovation" written by Rohit Deshpande, Hal Hogan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kikkoman Soy facing as an external strategic factors. Some of the topics covered in Kikkoman Corp.: Consumer Focused Innovation case study are - Strategic Management Strategies, Innovation, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Kikkoman Corp.: Consumer Focused Innovation casestudy better are - – increasing energy prices, technology disruption, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, etc
Introduction to SWOT Analysis of Kikkoman Corp.: Consumer Focused Innovation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kikkoman Corp.: Consumer Focused Innovation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kikkoman Soy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kikkoman Soy operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Kikkoman Corp.: Consumer Focused Innovation can be done for the following purposes –
1. Strategic planning using facts provided in Kikkoman Corp.: Consumer Focused Innovation case study
2. Improving business portfolio management of Kikkoman Soy
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kikkoman Soy
Strengths Kikkoman Corp.: Consumer Focused Innovation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kikkoman Soy in Kikkoman Corp.: Consumer Focused Innovation Harvard Business Review case study are -
Ability to recruit top talent
– Kikkoman Soy is one of the leading recruiters in the industry. Managers in the Kikkoman Corp.: Consumer Focused Innovation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Kikkoman Soy is present in almost all the verticals within the industry. This has provided firm in Kikkoman Corp.: Consumer Focused Innovation case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Kikkoman Soy are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Kikkoman Soy is one of the most innovative firm in sector. Manager in Kikkoman Corp.: Consumer Focused Innovation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Kikkoman Soy in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Kikkoman Soy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kikkoman Soy has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Kikkoman Soy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kikkoman Soy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Kikkoman Soy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kikkoman Soy has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Highly skilled collaborators
– Kikkoman Soy has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Kikkoman Corp.: Consumer Focused Innovation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Kikkoman Soy is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Kikkoman Soy is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Kikkoman Soy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kikkoman Corp.: Consumer Focused Innovation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Kikkoman Soy has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Kikkoman Corp.: Consumer Focused Innovation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kikkoman Corp.: Consumer Focused Innovation are -
High operating costs
– Compare to the competitors, firm in the HBR case study Kikkoman Corp.: Consumer Focused Innovation has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kikkoman Soy 's lucrative customers.
High cash cycle compare to competitors
Kikkoman Soy has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Kikkoman Soy is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Kikkoman Soy needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kikkoman Soy to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Kikkoman Soy, firm in the HBR case study Kikkoman Corp.: Consumer Focused Innovation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Kikkoman Corp.: Consumer Focused Innovation, in the dynamic environment Kikkoman Soy has struggled to respond to the nimble upstart competition. Kikkoman Soy has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Kikkoman Corp.: Consumer Focused Innovation HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Kikkoman Soy has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Kikkoman Soy has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Kikkoman Corp.: Consumer Focused Innovation, it seems that the employees of Kikkoman Soy don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Kikkoman Corp.: Consumer Focused Innovation, is just above the industry average. Kikkoman Soy needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Rohit Deshpande, Hal Hogan suggests that, Kikkoman Soy is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Kikkoman Soy supply chain. Even after few cautionary changes mentioned in the HBR case study - Kikkoman Corp.: Consumer Focused Innovation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kikkoman Soy vulnerable to further global disruptions in South East Asia.
Opportunities Kikkoman Corp.: Consumer Focused Innovation | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Kikkoman Corp.: Consumer Focused Innovation are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kikkoman Soy to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kikkoman Soy in the consumer business. Now Kikkoman Soy can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Kikkoman Soy can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kikkoman Corp.: Consumer Focused Innovation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kikkoman Soy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kikkoman Soy can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Kikkoman Soy can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kikkoman Soy can use these opportunities to build new business models that can help the communities that Kikkoman Soy operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kikkoman Soy to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Kikkoman Soy to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kikkoman Soy can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Kikkoman Soy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Kikkoman Soy can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Loyalty marketing
– Kikkoman Soy has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Kikkoman Soy can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Kikkoman Soy to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Kikkoman Corp.: Consumer Focused Innovation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kikkoman Corp.: Consumer Focused Innovation are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Kikkoman Soy will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Kikkoman Soy high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kikkoman Soy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Kikkoman Soy
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Kikkoman Soy.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Kikkoman Corp.: Consumer Focused Innovation, Kikkoman Soy may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Technology acceleration in Forth Industrial Revolution
– Kikkoman Soy has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Kikkoman Soy needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Kikkoman Soy is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kikkoman Soy can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Kikkoman Corp.: Consumer Focused Innovation .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Kikkoman Soy business can come under increasing regulations regarding data privacy, data security, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Kikkoman Soy needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Kikkoman Soy in the Sales & Marketing sector and impact the bottomline of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Environmental challenges
– Kikkoman Soy needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Kikkoman Soy can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Kikkoman Corp.: Consumer Focused Innovation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Kikkoman Corp.: Consumer Focused Innovation needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Kikkoman Corp.: Consumer Focused Innovation is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Kikkoman Corp.: Consumer Focused Innovation is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Kikkoman Corp.: Consumer Focused Innovation is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Kikkoman Soy needs to make to build a sustainable competitive advantage.