Analysis of Global Business Expansion

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Article: Toys 'R' Us Grows in China, With 'Tiger Moms' in Mind By LAURIE BURKITT in Beijing and ANN ZIMMERMAN in Dallas http://online.wsj.com/article/SB10001424127887323622904578128840637201504.html

The article is mainly about the basic fact in the global toy industry, the Chinese market expression of large toy companies and the future plan of toys ‘R’ Us in China. The Article stands out the importance of culture differences and cultural localization.

Toy Industry Analysis—The entrance of the toy industry is low since the toy industry needs relatively inexpensive equipment, and its mainly cost comes from the labor cost, operation cost and marketing cost. Also, the switching cost of the toy industry is not that high, which means people have less brand loyalty and easy to switch from one to another brand. The power of buyer becomes stronger since the toy industry has expanded its range of target consumers. Furthermore, the bargaining power of supplier is strong since with its low level entry mode, the market has a large number of suppliers. Companies have strong bargaining powers so that the cost tends to decrease more and more. Moreover, since the industry lies in a mature stage in its lifecycle, the competitive rivalry is strong. It’s normal to trigger the pricing wars so that the industry is easy to suffer the loss of profit.

So important for toy industry is to localize product and understand the culture difference of market. In the article, it mentioned that the characteristic of the Chinese market is that due to the Chinese policy, each family only has one baby so that parents are willing to pay more on their children. What’s more, education plays an important role. It makes sense that why the Mattle.inc suffered a failure in their famous product—Barbie dolls. And those companies which sell big box toys closed their stores continuously in China while the toy ‘R’ Us grows dramatically.

The success of the Toys 'R' Us is that they...
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