Global Marketing Management, PEST Analysis of Japan - Case Study Example

Global Marketing Management Introduction When venturing into a new market, it is advisable that companies such as Pizza Haven to carry out an analysis of the market using the Porter’s Five Forces, SWOT analsys, and/or the PEST analysis. It is not easy to know or understand people’s preferences and likings in another country without first studying their tastes and choices. In some cases, companies thrill or flourish when they perform the necessary analytical surveys before venturing into a market (Doole and Robin 54). For instance, when Coca Cola and Jeans Wear found it necessary to venture into the Japanese market, they first employed situational analysis measures, which established that Japanese people accepted Coca Cola products and felt flamboyant when wearing jeans manufactured by the Jeans Wear company (Dibb and Lyndon 35). This paper will seek to write a report evaluating the entry of Pizza Haven Company into the Japanese market and analyze the marketing environment of Japan by examining the PEST analysis, Porter’s Five Forces, and SWOT analysis. PEST analysis of Japan Political analysis Politically, Japan is today experiencing a state of political stability and to some level; one can say that the country is actually “abstaining from political violence”. Japan has a Monarchy form of governance. A monarchy is a form of governance where the monarch leads the country within the confines of the existing un-codified, blended, or written constitution (Sandhusen 40). In all cases, investors from overseas countries consider the aspect of political stability very much before opening their businesses. Since the Pizza Haven Company is willing to invest in Japan, it can choose to locate its premises in certain parts of the country where political stability is highest. In Japan, some provinces where political turmoil tends to hit first result to mass destruction (Buckley 33). By use of questionnaires, researchers established that, this country is indeed politically stable as there have been no cases of coup or high risks incurred due to political instability (Chapman 101) A new businessperson seeking to invest in an overseas country should consider investing in Japan. This is so because, this country has political freedom, officials uphold the rule of law well, and there are just a few bureaucracy cases. The country’s constitution guarantees investors general respect and offers a systemic platform for upholding the willpower of law making it ideal for Pizza Haven Company to invest in Japan (Gillespie and Hubert 58). This entails that, it is not easy to lose investments through either bureaucracy or corruption. Inception of such a stable system of governance is specifically suitable for overseas investors. In recent years, Japan has witnessed the emergency of independent court system in which this system acts as a bulwark against political tensions (Pride and Ferrell 54). This shows that Japan is an ideal country suitable for Pizza Haven Company to start a business. Economic analysis As of now, Japan comes third in the world’s market grid. It has a large base for customers, which makes it a fast growing state despite the presence of other gigantic markets in other nations. This indicates that, Pizza Haven can accrue adequate profits from the Japanese market and it therefore extent its operations to Japan. However, following the recent earthquake, Japan had to take a heavy toll on its economic base, as most investors including the government of Japan had to spend a bit of their time not counting benefits but losses (Lamb, Joseph, and Carl 52). Crucially, this is a natural calamity. It can happen in any country and should not act as an obstacle for Pizza Haven Company to invest in Japan. In spite of that, Japans expenditure on foodstuffs and clothing is still hence substantial for such products. Investors seeking to venture into or expand their businesses but dealing in the food, beverage, or clothing stand to benefit in large sums if they invest in this country (Paul and Ramneek 87). Social analysis The societal norms and cultural beliefs of the Japanese people used to be very rigid in the olden days but as time went by and the western culture found some grip into Japan, they started fading. Presence of American and UK made products facilitated the facet of American preference and lifestyle, which made it easier for investment by overseas companies (Pecotich and Clifford 74). Today, the Japanese people tend to buy what their relatives, friends, or age mates purchase. This indicates that, friends, family, age mates, popularity of the product, and western culture influences the choice and preference of an individual. Thus, Pizza Haven can make tremendous growth if it resolves to operate in both the beverage and food line of business (Kurtz and Louis 80). Technical analysis Knowingly, at Pizza Haven technology continues to evolve on a daily basis. Intensified and increased technological innovations and inventions can result to high competition in every multifaceted area of a business (Pahl and Anne 95). Nonetheless, when Pizza Haven ends up investing in Japan, it may find it imperative to keep on updating their technology. This would help in keeping up with the standards of technological advancements in this country’s market (Doole and Robin 66). As a marketing consultant working for Pizza Haven from Australia collecting and sampling data from different databases, it is deducible that the nature of technology and its effects on many products and services offered in the Japanese market makes it highly essential for a company to invest in this market. It is so because the company will be in a position to have its products and services updated in line with the existing technological forces of the market (Borowski 74). SWOT analysis Strengths Particularly, since Japan is a series of islands bordering the eastern part of the Korean Peninsula, it is a perfect state offering the best site for foodstuffs. Many people from other countries flock the Japanese islands every year for either sightseeing or business functions among other activities (Buckley 69). Agreeably, these people are all tourists regardless of their purpose of travel since they stay in this country for just a number of days. Presence of good and presentable demographic environment of this country is strength that is can embrace by making the most out of it through investment activities (Canzer 90). Japan has a history of inexpensive labor. Such strength is significant and can act as source for great developmental spectrums (Pride and Ferrell 75). Availability of concrete ethnic composition acts as a pragmatic foundation for diversity; specifically people with different tastes, which make the market wide and impossible to exhaust. Japan’s market is ever ready for any new product that is the reason econometric and other great thinkers refer to Japan as the nation of continuous invention (Beken 60). Japan’s economic growth expects to shoot upwards with a considerable percentage in 2012 and by an average of 1.9 percent in between the year 2012 and 2015 (Cheng, Philip, and Nancy 105). The services sector is the backdrop of this growth and since this company wants to invest in the food sector (pizza), it will grow together with the economy. Additionally, Japan enjoys a large pool of skilled labor (Pecotich and Clifford 89). Weaknesses Generally, the primary markets and financial sectors of the Asian markets are underdeveloped. Another weakness that companies seeking to venture into the Japanese will encounter is underdeveloped infrastructure. Although one of the nations with the largest economy, it still suffers from underdeveloped infrastructure (Paul 56). Most of the country’s population lives in the urban areas making the country almost an urbanized nation. To some extent, most people would think of this country as developed in terms of infrastructure but surprisingly, it has trouble with its infrastructure (Gillespie and Hubert 93). Underdeveloped primary market, underdeveloped financial sector, and underdeveloped infrastructure are some of the weaknesses that Japan encounters. In a way, they tend to discourage foreign investment hence deter faster economic growth (Sinkovics and Pervez 1115). In addition, Japan faces a weakness of relatively lower levels of disposable revenue. Such levels of disposable income are not favorable for investment and they may pose some serious challenges on investments. Reviews show that Japan has a weakness of poor protection service for intellectual property (Baourakis 88). Whenever a company is seeking to entrench its roots into another overseas market, it, at first, considers the state of security of that country. Corruption, on one end, is another weakness suffered by the Japanese market and its operations. The level of corruption is astonishing especially when dealing with foreign investors. Japan has poor regulatory systems (Kurtz and Louis 99). This feature exerts a heavy toll on foreign investors hence very few investors can risk to invest in a market with poor regulatory systems. This country’s labor is inflexible and the level of literacy is low. These weaknesses make investments in Japan rigid and unfavorable to many foreign investors (Wilson and Gilligan 56). Opportunities A general survey carried by different researchers revealed that, the Japanese investors concentrate very in the manufacturing sector leaving the other sectors potential for exploration (Pride and Ferrell 91). The service industry is still ripe and has a large potential for investment. Companies, including Pizza Haven, thinking of venturing into the Japanese market should avoid the manufacturing sector as is flooded. Further, outsourced services dominate the Japanese market (Mueller 96). This makes it easy for companies with internally trained staff to reap the best out of this market, as there is no competition from internally trained employees. Another opportunity is the benefit obtained from the technology transfers. The technology transfer market is not yet exploited and stands to benefit Pizza Haven in many ways (Doole and Robin 79). Threats Japan’s development is unbalanced. In some countries, the level of development values the spectrum of balanced development. Balanced development is essential for an equitable share of market exploration and investment. Unbalanced development tends to concentrate investors only in places where development is high. This characteristic makes it hard to have development countrywide (Dibb and Lyndon 70). Apart from unbalanced development, Japan has unfocused development. Development occurs wherever investors find interesting to operate. This is leading to scanty development with no focus. From a different perspective, political instability is part of the things threatening the well-being of investments in Japan. Occurrence of violence emanating from political activities poses serious pressures on investment activities of a country. PORTER’S Five Forces Industry and Competitor Analysis Microenvironment analysis Other organizations and individuals surrounding a company make the microenvironment part of a business since they directly influence the experience of customers. Threat of new competition may come in the latter days after Pizza Haven enters the Japanese market but this is always available in every market. The threat of products for substitution may not be a problem for Pizza Haven as Japanese consider what influences their friends and family among others (Powell 79). Presently, Pizza haven can achieve a whole lot of benefits given that the company would be looking at the local ways of maximizing on profits (Kurtz and Louis 124). It is easy to control the microenvironment of any business in Japan since the actions of the business can influence stakeholders, suppliers, and customers. The ratio of bargaining power of clients to that of the business is almost equal. Considering way of recruiting, retaining, and extending products and services to the company’s clientele can act as the cause of the business operations in this country (Morden 145). This shows that the microenvironment of Japan is controllable. Macro environment The macro environment of Japan is less controllable. The suppliers’ bargaining power is less effective in this country hence cannot affect the performance of Pizza Haven negatively as it has a experience from its mother country. Macro environment comprises of much broader influences all encompassing and influencing the microenvironment aspects from the larger global community. Bear in mind, the people of Japan have strong and unique characteristics in relation to their ways of life, which strongly influence their buying preferences, attitudes, response to the promotion and marketing, and taste of design (Pecotich and Clifford 134). With that respect, Japanese tend to agree or conform to the opinion given by others instead of insisting on their own. Thus, other people’s opinions such as colleagues, neighbors, and friends tend to affect the reputation and recommendation of others. Japanese buy products or merchandise due to their practical use meaning that their buying behavior tends to lie on either the highest side or the lowest of a product price (Gillespie and Hubert 101). Conclusion The country of Japan is big and hosts a huge population with large pool of potential customers. Therefore, Pizza Haven can perform enormously in this market since the service industry still has a great potential of growth (Pride and Ferrell 126). The level of competition in the service sector is healthy as it ranges from low to median. Growth in employment and wealth levels is an opportunity that awaits exploitation from overseas companies given the local investors are failing to explore it (Lamb, Joseph, and Carl 123). The service industry is developing as technology intensifies and this is an opportunity suitable for new ventures. Recommendation The market of foodstuffs in Japan is very vibrant and investors can or reap maximum benefits out of it if they can consider all the above factors. Nevertheless, it is recommendable that a company like Pizza Haven can blend into this market well by making its available products cheap and preferable. Japanese buy products made by international investors because they are either affordable or their brand is exotic (Cherunilam 140). The company should consider ostentation of all users’ social status. Japanese choose the highest ranked product in price over the lowest without regarding the product’s performance. Works Cited Baourakis, George. Marketing Trends for Organic Food in the 21st Century. Singapore [u.a.: World Scientific, 2004. Print. Beken, Tom. The European Pharmaceutical Sector and Crime Vulnerabilities. Antwerpen: Maklu, 2007. Print. Borowski, Arkadi. Report on the Toyota Company. München: GRIN Verlag GmbH, 2010. Internet resource. Buckley, Peter. 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