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Shiseido is the only company of Asian origin among the top five global players in the cosmetics industry. Started as a pharmacy back in 1872, the company is the world’s oldest cosmetics company. Shiseido’s early success is attributable to its unique blending of eastern aesthetics and western science in cosmetics. The use of centralized management system ensured consistency of brand reputation and product quality around the world. However, Shiseido’s business significantly underperformed in comparison to its competitors from 2008 to 2014. Sales stagnated, and profitability declined. The lack of strategic focus, inflexibility of localization effort, and insufficient investment in core strength are the key failure factors. Starting in 2014, with the appointment of Masahiko Uotani as the new CEO, Shiseido’s performance substantially recovered. Sales crossed JPY 1 trillion for the first time in 2017. The decentralization of power, building of success at home to leverage abroad, dual mission of targeted investment and cost-cutting, and adherence to the spirit of Japanese management principles are the key success factors. With opportunities in the Americas and EMEA (i.e. Europe, Middle East and Africa) markets, and with Shiseido’s focus on technology, the outlook remains bright. Key lessons for struggling Asian corporate giants from Western management methods include: seek the right leadership externally, not just internally; make upfront investment for later growth; and decentralize decision-making power where beneficial. An ideal management model for companies of all sizes can be built by mixing Western management methods with the spirit of Japanese management.
