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BUSM4696 POLITICAL ECONOMY OF INTERNATIONAL BUSINESS
COVER SHEET
Term Semester A 2021 Title of Assignment Research on the International Dimensions of Business Names and student IDs of all students Nguyen Le Huyen Linh – S Location SGS Campus Class Group SG-G Lecturer Dr. Trung Nguyen Quang Word Count (Main content without list of references, cover page, etc.) IMPORTANT NOTICE: All students listed on this page declare that they have read and agree to the statement of authorship on the next page.
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I. INTRODUCTION:
Shiseido is well-known as one of the four largest cosmetic brands worldwide and the oldest one remains until now whose headquarter is based in Tokyo, Japan. Arinobu Fukuhara
- the father of Shiseido – founded it as the first Western-style pharmacy in Ginza in 1872. Nevertheless, after 150 years, this brand transformed into a famous global beauty giant which specialized in diverse segments, mainly Domestic Cosmetics and Global Cosmetics. Currently, Shiseido is operating in 120 countries all over the world under many different brands such as Dolce&Gabbana, NARS (international brands) or Elixir, Anessa (national brands). At the end of the fiscal year 2020, Shiseido generated over 920 billion yen in net sales which is 18.6% lower than that of 2019 (1,131 billion yen) due to the effects of COVID-19. This paper will present the insight of Shiseido’s business in many different aspects in order to clarify how this corporation creates values and strengthen their market power to remain as a top cosmetic brand globally. II. SHISEIDO HISTORICAL CONTEXT: Shiseido was originally established as a Western-style pharmacy in 1872 and became the first business which has separated clinic and pharmacy in Japan (The Derm Review, 2021). The brand name “Shiseido” came from the Chinese Confucian classic Yi Jing which means “ all things come from Mother Earth ” (資生堂 Shiseido Co., 2013). The business then successfully spread reputation for its technology and high-quality products as well as serving royal and upper-class clients. In 1916, Shiseido reoriented from pharmaceutical business to cosmetics and opened the design department together with the products testing room. Accordingly, many beauty products have been released afterwards such as the Seven colours Face Powder and the Cold Cream. Shiseido took their first step in internationalization by exporting a cosmetic product called Rose Cosmetics to countries in the Southeast Asia in 1931. A few decades later, Shiseido began to expand their business around the world and enter the global market by opening stores and factories in European and American countries. As soon as they determined their position on the global market, Shiseido gradually diversified in business segments. Up to now, the segmentation of Shiseido includes: cosmetics, personal care
products, over-the-counter drugs, medical drugs, barber, toiletries, beauty products, beauty food, cosmetic raw materials as well as the food and beverage business (Reuters, 2021). From 2012 to now, Shiseido has managed to develop an internet-based business model which allows international customers to have a clearer view about the products and the brand’s transparency (Shiseido n.d). III. SHISEIDO INTERNATIONAL DIMENSIONS:
1. Headquarters and location of production: Figure 1 : Shiseido’s locations in the world map (Craft, 2021). From the map above, Shiseido appears to be quite sparse in the world map as their offices are located mostly in Asian countries. In total, Shiseido has 20 offices globally including 7 innovation centers, 12 production sites and a headquarter in Chuo City, Japan (Shiseido, n.d). Based on the division of Shiseido’s location of production, we can see that they have leveraged the resources of each sites to adapt their products with local consumers. For instance, Shiseido built up their innovation centers in countries like China, Singapore, USA and France as these countries has the most modern technology development in the world. Thus, the intellectual resources in these countries seem to conduct significant results to the company development strategy. Whereas, Shiseido placed their production sites in countries like Vietnam or China where labour resources are considered to be huge and cheap. 2. Workforce: After investigating through Shiseido’s sustainability reports from years ago until present, it is obvious that this corporation has conducted and made various changes to policies in order to protect their employees’ rights as well as creating a beneficial working environment. Hence, Shiseido especially cares about the working condition of female
Shiseido are focusing on investing in 3 main segments of their business which are prestige (accounts for 46% total sales), cosmetics (accounts for 30 % total sales) and fragrance (accounts for 10% total sales) (Shiseido Annual Report, 2019). IV. CHALLENGES WHEN CONDUCTING INTERNATIONAL BUSINESS: According to Shiseido, the risks that they are currently facing when conducting international business are categorized into 4 types, including: business strategy risks, core business risks, operational risks and other risks (Figure 2). Nevertheless, there are 5 main risks that the business needs to put a lot of efforts to handle which are Geopolitical Risks, Innovation, Changes in Consumer Values, Environment Society and Culture (ESC) Unique to Shiseido and Information Security. Figure 2 : Shiseido’s risk 2020 (Shiseido 2020). V. CONCLUSION: This report has demonstrated Shiseido’s historical context, its international dimensions and the main risks when conducting international business. Thus, to clarify how internationalization helped Shiseido achieve their current position on global market as well as stay competitive by leveraging resources and labour. Although there are still some challenges remain, I believe Shiseido will overcome those and become more and more success in the global market. VI. REFERENCES:
- Craft, n.d, “Shiseido headquarters and office locations”, Craft, viewed 12 April 2021, <https://craft.co/shiseido/locations >
- Lu, Q 2020, “ Asian Cosmetics in Global Market: A Comparative Study of Internationalization of Japanese, Korean, and Chinese Companies ”, thesis.
- Reuters, 2021, “Shiseido Company, Limited”, Reuters, viewed 11 April 2021, <https://www.reuters.com/companies/4911.T > 4. Shiseido Company, Limited 2021, “Consolidated Settlement of Accounts for the Fiscal Year Ended December 31, 2020” , Shiseido Company Limited, 9th^ February 2021, viewed 9 April 2021, <https://corp.shiseido.com/en/ir/pdf/ir20210209_765.pdf >
- 資 生 堂 Shiseido Co., Ltd. 2013. “To create a beauty and wellness ｜ SHISEIDO” , Youtube, 資 生 堂 Shiseido Co., Ltd., 22th^ July 2013, viewed 9 April 2021, <https://www.youtube.com/watch?v=qE4TUxk5O-4 >
- Shiseido n.d, “History”, Shiseido, viewed 11 April 2021, <https://corp.shiseido.com/en/company/history/index.html >
- Shiseido, 2013, “Shiseido CSR”, Shiseido, viewed 12 April 2021, <https://corp.shiseido.com/en/sustainability/pdf/pdf2013/backnumber2013e_all.pdf >
- Shiseido, 2019, “Shiseido Groupʼs Sustainability”, Shiseido, viewed 12 April 2021, <https://corp.shiseido.com/en/sustainability/pdf/pdf2019/backnumber2019e_all.pdf >
- The Derm Review, 2021, “Shiseido Review”, The Derm Review, 22 February 2021, viewed 10 April 2021, <https://thedermreview.com/shiseido-reviews/ >
