3. Situation Analysis – Key points:
Despite the ban, SK-II in its current form poses
“low to no danger” to consumers.
Although chromium and neodymium are found in
trace amounts, this is similar to products made by
competitors.
4. Situation Analysis – Key points:
The cause of the crisis can be traced to a
downturn in Sino-Japanese political relations.
5. Situation Analysis – Key points:
Chinese state media had previously claimed that
P&G were importing sub-standard products from
Japan into China. (2005)
China had also issued warnings of “tainted foods”
suspected of coming from Japan. (Aug. 2006)
6. Situation Analysis – Key points:
Procter & Gamble is a U.S. Company and was the
only company targeted.
Workaround of W.T.O. agreements using “Green
Barriers”.
8. Situation Analysis – Key points:
As SK-II was tested and found safe in Hong Kong
and Singapore, this is proof that the cause of the
crisis is political.
9. Situation Analysis – Key points:
P&G's first mistake was to deny a fact already
proven by China’s State General Administration of
Quality Supervision, Inspection and Quarantine
(AQSIQ).
10. Situation Analysis – Key points:
P&G's second mistake was poor customer
relations:
Inconsistent application of the return policy
The “King Clause”
Public confusion regarding the safety of SK-II products
11. Situation Analysis – Key points:
In our opinion, P&G should have taken a financial
hit on SK-II with a more straightforward return
policy in order to protect their greater interests in
China.
12. A Course of Action for SK-II:
Rebuild Trust with AQSIQ:
Open door policy with Chinese government
Show plant in Japan (transparency)
P&G need government sanction (natural
ingredients)
13. A Course of Action for SK-II:
Rebuild Customer relations:
Bad publicity and public interaction
Reformulation
Carina Lau
Special offers and trial samples
14. A Course of Action for SK-II:
Rebuild employee relations:
Bonuses
Gifts of new product (promotion)
Training to deal with customers
15. Should P&G withdraw SK-II?
SK-II products are safe.
Trace amounts of chromium and neodymium are found in
many other products on the market (sometimes in
amounts much higher than in SK-II).
Political bias means that SK-II was not the real issue.
16. Should P&G withdraw SK-II?
Focus on re-establishing product.
Continued co-operation with government.
Show commitment to Chinese people.
17. Damage to P&G:
P&G employ over 6,000 people in China, 98% Chinese.
SK-II is only one of P&G's many brands.
Each brand will be viewed separately by consumers.
Chinese people generally demonstrate no brand loyalty.
18. Conclusion:
Our three-pronged approach will be noted
favourably within the market and should
result in minimal share price loss.
Existing customers should also be
satisfied and continue to support the
company.
