International Business

Question 4

Porter’s single diamond states that a global firm must have a competitive advantage based on the successful utilization for each component of its home country diamond. And it works for the successful triad economies U.S, EU and Japanese. Japanese skin care companies are competitive as evidenced by the strong market positions of Japanese firms like Shiseido. In short, Shiseido has structured its own sales strategy successfully based upon home country diamond.

Factor Conditions

According to the Shiseido annual report, the performance of the operating results demonstrates that the overseas sales ratio exceeded 50 percent in the year ended 2014. Shiseido can aims at generating stable operating cash flow and wide funding methods. The working capital, investments and loans, which they funded, needed for sustainable growth by subjoining cash on hand and operating cash flow with bank borrowings and loans. That’s why Shiseido make lot of money both domestic and international to finance the investment. In addition, the other factor such as labor capital, which Shiseido group includes high levels of employee motivation, specialized knowledge and skills, is also creating significant value for whole operating line.

Structure of Firms and Rivalry

Faced with global competition with other cosmetic industry, Shiseido seek more opportunities to increase productivity and operational efficiency. Shiseido operates mainly in the cosmetics department store and drug store channels, because Shiseido can provide high quality services and counseling in these places, which the company takes advantage of these local store can reflect customer feedback and purchasing data. Considerate at the competition in domestic business or overseas, Shiseido continue to create strong brand by launching new brand in the year ending 2015. Managers decide to select six brands or lines to renewing the values of Shiseido’s product.