Maria Paula Andrade Rivera

Camila Castro Tinajca

Diana Marcela Mendez Gonzalez
Jennifer Carolina Velandia Gutierrez
Felipe Velasco Porras

Shiseido Analysis

1. Do Silicon Valley and Route 128 function as diamond-based clusters? Why or why
not? What are their similarities and what are their differences?

silicon valley and route 128 are diamond based clusters because they have based there a
lot of companies that have the same product groups,​It also has a well-consolidated
structure in terms of infrastructure, strategies, government support and suppliers. ​Another
Examples of large clusters are the Swiss watch industry and the Hollywood film industry.

Michael Porter developed a diamond model for businesses to help them understand their
competitive position in global markets. He uses the concept of clusters of identical product
groups in which there is considerable competitive pressure. Businesses within clusters
usually stimulate each other to increase productivity, foster innovation and improve
business results. In addition, they have the advantage that they can move very well on the
international market and that they can maintain their presence and handle international
competition.

similarities

-strategic location close to educational institutions

-Production of goods and services

-Both regions had the advantage of hosting the headquarters of leading technology
companies

Differences

Silicon Valley Route 128

They wanted each of the workers to have They were looking for specialized and
autonomy in their work, creating more centralized personnel where each one did
 confidence in their workers and opening what they had to do, with little participation
the path of innovation and creativity among corporations, and a strong loyalty
towards the company

Social networks helped them to empower Little handling of social networks, thanks to
themselves, making the most of this its traditional structureLittle handling of
medium. social networks, thanks to its traditional
structure

Skilled workers could easily switch to They tried to avoid the outsourcing of
another company, which caused production processes, in order to protect
information to spread easily. their information as much as possible

Implementation of new technologies, Concentrated on the production of final

giving great value to innovation and products, with little importance to creativity
creativity, market adaptation. and technological changes

2. What caused the development, decline and resurgence of the two regions? What
is your understanding of the different explanations for the two regions?

Silicon Valley and Route 128 emerged from a historically unique confluence of regular
political, economic, and institutional circumstances. The origins of these seedbeds of
technology-based industry emerge in the Second World War, in the run-up to the Cold
War, and in the development of close links between federal funding sources, local
academic institutions, and local industry.

Despite their common origins, postwar military spending and university research, Silicon
Valley and Route 128 have responded differently to intensifying international competition.
Although Silicon Valley recovered quickly from the crisis of its major semiconductor
producers, Route 128 showed little sign of reversing a decline that began in the early
1980s. The growth of a new wave of startups and the renewed dynamism of Established
companies such as Intel and Hewlett-Packet allowed Silicon Valley to regain its former
vitality. Along Route 128, by contrast, startups were unable to make up for continued job
losses at the digital equipment corporation and other minicomputer companies. In the late
1980s, the creators of Route 128 ceded computer production in Silicon Valley.

The regions are examples of two industrial systems, the system based on regional
networks for silicon valley and the system based on independent companies for route 128,
for both there were no significant differences in the tax burden, However, Route 128 has
depended more historically on military spending than silicon valley and is therefore more
vulnerable to cuts in defense spending.
The difficulties of route 128 lie in the rigidity of its local industrial system, it thrived in a
stable environment of markets and technologies that changed slowly , its self-sufficient
structures limit its capacity to adapt, on the other hand the industrial system used in silicon
valley are well adapted to the conditions of uncertainty regarding the technology and the
market, manufacturers deepen their capabilities through specialisation while developing
close but not exclusive relationships with other specialists, the use of know-how and
information encourages the pursuit of various technical and market opportunities, therefore
the region was organized to innovate continuously.

3. How have Silicon Valley and Route 128 helped the establishment of startups?

Silicon Valley has an industrial system supported by a regional network that promotes
learning and adjustment among specialist producers of a complex of related technologies.
Dense social networks in the region and open labour markets encourage entrepreneurship
and experimentation. companies compete intensively, simultaneously learning from each
other about changes in markets and technologies, through informal communications and
collaborative practices. flexible team structures foster communication between company
divisions and with external suppliers and customers. Functional boundaries within
enterprises are permeable in a network-based system, as is the delimitation between
enterprises and between them and local institutions such as professional associations and
universities.

On Route 128 , as in the previous one, the third vertex of the technological triangle, formed
by universities and government, is the company itself, however, the companies on Route
128 are much more formal and hierarchical than the scientific and engineering companies
in Silicon Valley, have set up companies with similar production technology but with very
different social and economic management.

4. Can the ‘success formulas’ provided by Silicon Valley and Route 128 be adopted
as templates for other, would-be clusters?

The key to the exemplary industrialization process in Silicon Valley and Route 128 is
referable to the set of industrial policies and investment programs of the state government,
the formulation of policy frameworks, the projects for the creation of public infrastructure
and urban planning that contributed to create optimal conditions for the development of
emerging industrial sectors. This model is called ‘triple​ ​propeller’ which is the close
collaboration between academy, government and private industry.

to retort clusters like Silicon Valley or Route 128, combinations of multiple environmental
factors may be essential to creating an industrial cluster.
To be successful, governments must implement medium and long-term strategies focused
on the adoption of a new growth pattern based on industries with higher added value, all of
this orchestrated within the framework of comprehensive economic and social
development plans designed, coordinated and executed. collaboratively under the
direction of public agencies which promote innovation, entrepreneurship, facilitate the
financing of startups.

5 How did Shiseido finally become an insider in Paris? What factors had been
instrumental to its initial failure?

The company found it necessary to learn about the fragrance business in order to expand
its market, which is why it decided to enter the French market, in this way it would be able
to acquire the necessary experience in the fragrance market. This is why it established a
subsidiary in Paris, along with a plant in Gien and some high-end French salons, in this
way it managed to understand the French customer, its products had quality from a
manufacturing perspective, however it lacked openness To the cultural dimension of
fragrances, which was a crucial aspect, the company subsequently decided to establish
relationships with important figures such as renowned designers, celebrities and
journalists, as well as getting involved with the community. Its path to success was due to
Shiseido hiring local experts to manage various important positions along the value chain,
such as Serge Lutens and Chantal Roos, who created their brand, advertisements and
posters that created a mysterious image and artistic for the company, in addition to the
launch of its Opium perfume by Yves Saint Laurent, an expert in creative marketing and
fragrances, a French woman who was in charge of managing the subsidiary strategically,
finally the company hired few Japanese employees compared to the number of French
employees , this local hiring policy helped Shiseido become a true connoisseur of France
and made him competitive in the French market.

Its initial failure was due to the fact that although it had a partnership with the French
company Pierre Fabre SA to reduce risks, especially financial ones and gain knowledge
about fragrances, its plan to send Japanese expatriates to the operations center to gather
information and transmit it to the headquarters, was not effective, since they did not have
access to the social networks necessary to obtain a deep vision of the complex and tacit
knowledge aspects of the development and exploitation of local perfumes, that is why the
information collected was very superficial and it didn't really help product development in
Japan, so the company understood that he had to know the intricacies of perfume
development and that he had to become an expert in the French fragrance industry.

6 What does Shiseido’s experience imply for those companies not born in a cluster?

Shiseido has been a company that has had to go through many processes of changes,
changes in logistics, strategy, and even cultural adaptation, Shiseido over time has been
adapting more and more to the market, understanding the needs and tastes of the clients,
with a learning thanks to the various mistakes made.

We could conclude that the most important aspect for a company that was not born in a
cluster is to know its culture, and understand that nobody can adapt more to it than a
person born in the country we want to address, that it is of great importance to understand
the market, know its changes, its strategies, its customer segmentation, its prices and
many other aspects that are unique in each country, and in each culture, it is important to
be willing to change even if these changes contradict a little with the initial objectives

7 Which patterns of FSA development did you observe in the case?

The FAS developed patterns closely related to the Shiseido company since both sought to
generate an impact as in the market niche in which they sought to enter, generating a
deep analysis of the different essential factors such as the movement of the market in the
world of fragrances and in the case of FSA it looked for social, environmental and
technological factors. Both companies had the same approach despite providing different
services, as they sought to be innovative and competitive, generating a plus compared to
other companies, always focused on satisfying the customer. We can find this patterns:

Pattern I: An FSA not tied to a location is created at the base of operations and
subsequently disseminated across borders to subsidiaries as a mediate product or
international trade, incorporated into final products. As this indicates, Shiseido sought to
expand its borders towards Taiwan, the United States and Europe, counting on large
subsidiaries and also decided to establish operations in France to develop and sell
perfumes in France, established a subsidiary in Paris called BPI (Beauté Prestige
International) and a plant in Gien, investing its money and expanding its global
development.

Pattern II: An FSA is developed limited to the location in the base of operations and later
transformed into an FSA not linked to the location in the country of origin, again to allow
the diffusion of foreign operations and markets. This approach is based on the assumption
that competencies and capabilities are generally first developed in a home-based cluster
for the domestic market and only later become the source of competitive advantage
abroad due to the high productivity achieved. In the domestic diamond, likewise, the
Shiseido company began its operations in the Japanese market, developing its own
capabilities to later enter the foreign market.

Pattern IV: Location-linked FSAs are developed in each host country operation and their
exploitation is limited to the specific host country in question. According to this pattern,
each subsidiary of the company develops its own competencies and capacities, generally
confined to the country in which they are created. Therefore, Shiseido had to develop its
own competencies depending on the market it was in to adapt to the demands of the
consumers of each country and faced some difficulties to finally adapt to the new market.
Pattern V: Shiseido had a good use of its resources, together with its global market
initiatives they brought all its knowledge from its subsidiary to the central company and
thus expanded its knowledge and patented technology and other capabilities within the
company, expanding its capabilities. .

Pattern VII: Subsequent inter-dissemination or national exploitation of these FSAs

generally requires approval from the base of operations. To expand its operations, the
support of the parent company was needed to open its operations abroad, in addition to
obtaining the necessary knowledge to adapt to new markets and achieve success.

Pattern X: Location-linked FSAs are created by a network of multinational operations,

generally serving a single large national market, but are subsequently transformed into
other locations as the FSA exploits its potential regional or global revenue potential,
generally under the guidance from the base of operations. Likewise, Shiseido started in the
Japanese domestic market, moved to the foreign market and also focused its processes in
France in order to obtain and create new knowledge that will help it promote its project in
the perfume market, the parent company provided all the resources to spread this
knowledge to the global network of the same.

8 Drawing on the discussion of Porter’s single diamond framework versus the

double diamond framework, what suggestions would you give Shiseido to help it to
develop further its perfume business?

Shiseido has developed the perfume business very well since it increased part of the
double diamond structure, generating an exploration of the subject of perfumes in a
broader and deeper way, joining already positioned perfume companies and directly
entering the French market through through their first commercial establishment Shiseido
Europe TechnoCentre in order to know the movement of the French market against
fragrances and over time not only build on that if they did not become experts in the
French fragrance industry, I think that their Failure is in the implementation of the double
diamond framework because despite the fact that it is a competitive company in the
European and American market, the competition is increasing, it would generate more
innovation and that they personalize their brand more, since they have knowledge the
movement of the market, the innovation of the company is facilitated more so that it is
unique in that market.

Based on the five forces of porter

- In the bargaining power of customers, shinseido always sought to meet the demands of
its consumers, improving the sales and advertising channels and at the same time
increasing and improving the quality of the product with the knowledge they were acquiring

- Suppliers: Shinseido began entering France through alliances since it joined with an
already positioned company, to obtain knowledge and begin to be recognized in the
market, and also joined with more suppliers to increase its growing
- Threat of new incoming competitors: from a beginning, Shinseido was looking for an
entrance to the industry, overcoming different barriers and being increasingly stronger and
more attractive in the market, it became so innovative that the competitors that arrived
could not overcome it due to their lack knowledge on what the market wanted, since
shinseido had a deferential product and a unique brand

- Regarding the threat of new substitute products, shinseido could strengthen that part by
being attentive to developments in the sector and together with technology and innovation
generate a competitive impact on these new or substitute products

- The rivalry between the competitors in Shinseido has always been very relevant since it
entered a strong market in fragrances with a diversity of companies in the industry, but
over time Shinseido generated a good position in the industry and increased investment in
marketing, generating a balance between the competitiveness of other companies

Conclusion of the 5 forces of porter shinseido is strong in all since it implements a

very good management of the market and the product for the way in which they obtained
knowledge directly but for it to grow or be maintained it must be in constant movement in
innovation and publicity by means of unique technologies and products.

References

file:///C:/Users/pc/Downloads/Dialnet-RedesRegionalesYAdaptacionIndustrialEnSiliconVall
e-3871053.pdf

https://www.coam.org/media/Default%20Files/fundacion/biblioteca/revista-urbanismo/docs/
revista-urbanismo-n11-pag46-57.pdf

https://thepowermba.com/es/business/las-5-fuerzas-de-porter/