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Toys R Us Essay

1342 words - 6 pages

Toys “R” Us Japan

Answer1: Is Japan a good market for Toys “R” Us?
CAGE Framework
* Lavish spending on children’s toys and clothes to compensate for constant pressure to excel in school
* Greater preference to personal attention and guaranteed repair rather than low prices
* But the younger generation owing to a greater international exposure realized that they were paying greater prices for many consumer goods compared to global standard
* Cultural shift from taking over parents small shops to experimenting with bolder ventures
* Principle of loyalty to manufacturers was strong in wholesaling and retailing
Figure1: with the falling birth rate ...view middle of the document...

Amended in 1982 making it more stringent.
Conclusion:Globalization is a state of mind and the major factor that could have prompted Toys “R” Us to enter Japan is “the urge to dominate.The decision to invest is not the result of a careful cost benefit analysis but rather a basic response to a market opportunity”. Toys “R” Us stock price witnessed a sharp rise every time the company planned a new global venture (Exhibit 3). Looking at the distribution of the company’s stores we see that in Taiwan, Malaysia, Singapore and Hong Kong the emphasis is more on the presence rather than on the number of stores (Exhibit 4). Hence going by the company’s DNA Japan is good for Toys “R” Us.

Answer2: Is Toys “R” Us good for Japan?
History of market performance: with 97 stores internationally accounting for 14% of the Chains total sales, Toys “R” Us has benefited foreign retailers as well as consumers in the territories it operates in. The consternation from competitors has almost always turned into warmer feelings as the industry has grown over the years.
Lower pricesand Greater Choice: (Exhibit 11) If discount stores were to open in Japan they could offer toys at 20% cheaper as compared to department stores, 15% as compared to ordinary retailers and around 10% compared to large supermarkets. Given the young Japanese consumers inclination towards cheaper consumer goods Toys “R” Us would be a welcome change
Removal of intermediaries from value chain improves efficiency and inventory turnover and has the ability to consolidate the market by removal of fragmented retailers and wholesalers. Also, the industry on the whole which is characterized by fragmentation will witness consolidation and move towards achievement of sufficient scale in both manufacturing and retailing
Employment: According to Exhibit 8, an average retail outlet in Japan employs 4.36 people. In 1991, the entry of Toys “R” Us would displace more people from jobs than the opportunities it would create. The displaced people also include old people above 60 for whom this is a safety net post retirement. Japanese economy was in a state of virtual full employment with qualified male graduates preferring local employers to foreign establishments. Yet it will give employment opportunities for Japanese women
Conclusion: The entry of Toys “R” Us would shake the traditional Japanese toy business, however the cracks appearing in the retail structure points towards the need for transformation in the Japanese market. Hence Toys “R” Us potentially is a good prospect for the Japanese markets.

Answer3 Has Toys “R” Us chosen the best entry strategy for the Japanese market? Has it chosen the right partner?
It has core competency in its industry and has been in the International Strategy for long time. So, next opportunity would be for a Transnational Strategy following the incremental strategy where it should be focusing upon. In order to have it the Integration and Responsiveness should be high....

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