Case Study on Toys R US Japan - Essay Example

?Case Study on Toys “R” US Japan Introduction Background of the case The fate of Toys “R” US Japan is encompassed by issues such as leadership, understanding cultural diversity and implementing effective communication across varying cultures. Toys “R” US is a market leader in its industry particularly in the United States. Due to this advantage, its potential to expand can be possible across other economies with varying cultural backgrounds. Toys “R” US eventually made its way in Europe. Amidst contradiction from the start among local counterparts, Toys “R” US was able to grow and continue to exist in the marketplace in Europe. Its expansion was not achieved overnight. It was able to experience challenges in times that it attempted to carry its strategic formula that it was able to successfully apply in the US retailing industry. In the US, its understanding about the market with customers who are after of the value they can get was able to inspire its discount formula. This made its fortune in the US retailing industry that it also envisioned to be achievable in other foreign markets. Toys “R” US evaluated the toy market in Japan and the result was promising. In 1991, Japan had higher spending for toys. In fact, it was the world’s second largest market for toys for that year (Spar, 1999). The case is pointing it out that the good opportunity for toy market in Japan may be due to small number of children within a family and a higher demand for excellence in the academe. Children in Japan are encouraged to be excellent in the academe and a way to motivate them would be to reward them with toys. Furthermore, parents can afford to provide more toys for their children. A less number of children in a family in Japan proved to be an important factor why parents can eventually provide for their children’s needs for almost everything. Objective of the case In this paper, the proponent analyzes how Toys “R” US managed their initial entry in Japan. Various topics are included such as leadership, cultural diversity, and effective communication across cultures. Some of Hofstede's beliefs of Japanese versus American culture are included in the analysis. Market evaluation Toys “R” US is an organization marked with excellent leadership in its industry. The company was willing to expand and go global. It started in Europe but eventually moved its way to Asia. If finally tried its chances in Japan and created a market evaluation in there at first. One important assessment it made was the interrelation between Japanese culture and its market. According to Hofstede the American culture emphasizes competition while Japanese culture emphasizes cooperation and harmony (Rainey, 1999). In reality Toys “R” US having the foundation of an American culture is always aiming to reach its competitive advantage. This is the very reason why it was able to evaluate the Japanese market in great detail. Along the way, it finally saw the importance of understanding precisely the prevailing Japanese retailing industry. Japan culture is known for collectivism while the United States is recognized for its individualism (Rainey, 1999). Toys “R” US finally was able to understand how the traditional retailing in Japan worked compared with the modern retailing strategies in the United States. Marked with certain level of competition and individualism, the Toys “R” US could hardly enter the Japanese retailing industry which was highly fragmented and ran by long-standing relationships among manufacturers, wholesalers and retailers (Spar, 1999). As stated in the case, Toys “R” US never took instantly its plunge into Japan’s retailing industry. It was able to familiarize the ongoing market trend in the retailing industry within the Japanese market. Toys “R” US was able to emphasize the value of understanding how it would market its product offerings and make it fit in the Japanese marketplace. Even though it was marked with full enthusiasm to enter into Japan’s market, Toys “R” US in the first place had given greater plans for what strategic move it would employ in the Japanese retailing industry. One significant move it made was a critical evaluation of the Japanese culture and the prevailing cultural trend and practice in Japan’s retailing industry. Cultural evaluation From the stand point of Japan’s market and its cultural identity, the foreign organizations including those from the United States can hardly penetrate the Japanese marketplace due to how the Japanese entrepreneurs protect the national interest of everyone. There was a strong principle of loyalty among the manufacturers, retailers and wholesalers. In particular, this mark of harmony, cooperation and collectivism resulted to having small stores protected by law and vibrant dominant authority to decide whether foreign investors should penetrate in the Japanese market (Spar, 1999). The American tradition in business in 1991 was clearly different from the prevailing trend in the Japanese tradition. This was marked with cultural diversity and a great deal of difference which was able to separate Japan from the western world of conducting business. The issue stated in the case was more than just about the basic understanding of the Japanese market. There was an essence of understanding cultural orientation of the Japanese tradition in business. While the United States was trying to gain competitive advantage through competition and individualistic approach, the Japanese tradition was marked with having a single group that worked together for the benefit of each member. One particular example was the ability of Japanese small store owners to group themselves and explore possibility to hinder in as much as possible those foreign big stores from operating in Japan (Spar, 1999). Strategy One of the most impressive strategies implemented by Toys “R” US into Japan was to tie up with foreign investors that remarkably made their ways successfully into the Japanese market. One concrete example was the tie up between McDonalds Japan and Toys “R” US (Spar, 1999). This strategy was meaningful considering that Toys “R” US significantly has many things to learn about it. One of the most important understandings would be how to enter successfully into the Japanese market without receiving any protest and unfavorable response from the Japanese competitors and consumers. Since the Japanese retailing industry was substantially protected by law, another important strategy employed by Toys “R” US just to make its way into the Japanese market was to appeal before the court and present its entire business plan (Spar, 1999). The said move seemed to be risky considering that small store owners can still have the authority to delay Toys “R” US from conducting its business just as what they constantly did with other foreign investors. However, considering that the Japanese economy was promising, Toys “R” US was very hopeful in its plan to create some innovation on the traditional business setting of Japan’s retailing industry. In line with this, Toys “R” US was still aggressive to apply its long-standing formula in conducting into the Japanese market. After all, there was a great importance on how everything about its strategy should be executed. Executions If there is such an effective way how McDonalds successfully penetrated in Japan it would be due to a very effective communication process. From the start, McDonalds deliberately trying to win the Japanese market and it eventually did through a spoke person who had the ability to understand both Japanese and American culture, language and business process. McDonalds was significantly trying to create a need for its product offerings through the right information from a highly remarkable communication process. Boone & Kurtz (2006) were correct when they emphasize that modern marketing techniques involve creation of needs for certain product and service offerings. In the same way, Toys “R” US was heading its way into this basic step (Spar, 1999). Toys “R” US would not only entice the Japanese market with its renowned formula and business model, but through an effective communication process just as what McDonalds did prior to its effective market penetration. The ability of the Japanese market to be open for possibilities eventually enhanced the understanding of Japanese consumers to go try for what Toys “R” US was trying to communicate with them. As a result, there was hope for Toys “R” US in Japan’s retailing industry. Outcomes Toys “R” US was somehow successful in its attempt to find its way into the Japanese market. Its goal to acquire space for its stores was granted although it was also made possible under the new existing policies about foreign investment in Japan. Although Toys “R” US just came with the right timing into the Japanese market, its initiative to better understand some important aspects about Japan’s retailing industry was remarkable and significantly related with the positive outcome it obtained. The strategic moves and executions made by Toys “R” US were due to its thorough market evaluation, cultural assessment and a meaningful communication process it initiated into the Japanese retailing industry. These indicated its ability or potential as a successful market leader in its industry. Conclusion In conclusion, the entrepreneurial skills of Toys “R” US proved to be applicable in every culture with highly defined policies for every business. In other words, Toys “R” US eventually got what it takes to become the market leader in its industry. Varying cultures and other important issues on the other hand can be remarkably settled through the right communication process and approach. However, all of these could work together for good if there is a clear strategic approach which eventually what Toys “R” US did in its case of expansion into Japan’s retailing industry. References Boone, L. E., & Kurtz, D. L. (2006). Contemporary Marketing (12th ed.). Ohio: Thomson/Southwestern. Rainey, C. J. (1999). Global Thinking Global Logistics. Pennsylvania: DIANE Publishing. Spar, D. (1999). Toys “R” US. Harvard: Harvard Business School. Read More