Toys “R” US in Japan

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Toys “R” US in Japan

 Vinsen Poonoosamy  W. Carr  A. Mag

Presentation - Overview
 Introduction  Toy R Us background/ Japan in brief  Impact on Management Practices  Entry Barriers

 Competitive Advantages
 Internalizing vs. Licensing  Future Strategy – Japan and USA

 Conclusion

Toy “R” Us background
World's leading retailers of toys, children's apparel and baby products  Sells merchandise in more than 1,550 stores 
  

849 stores in the United States 700 international stores in 33 countries 170 stores in Japan Toys R Us, U.S. Toys R Us, International Kids R Us Babies R Us Imaginarium



Has 5 Division
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 

Estimated business value: $11 billion E-commerce sites including Toysrus.com, Babiesrus.com, eToys.com, FAO.com and babyuniverse.com,

Japan In Brief
Total Area: 377,835 sq km Population: 127,078,679 (2009 est.)  Ethnic groups: Japanese 98.5%, Koreans 0.5%, Chinese 0.4%, other 0.6%  Religion: Observe both Shinto and Buddhist 84%, other 16%  Economically powerful and stable  

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Among the 3 largest and wealthiest markets worldwide Japan is the second most technologically powerful economy Culture influence by Confucianism and western culture Strong Loyalty



Strong Cultural Values
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Japan In Brief


Hofstede Cultural dimensions
PDI
54

Country
Japan


IDV
46

MAS
95

UAI
92

LTO
80

According to Hofstede, Japan’s culture has:  low power distance  High collectivism  High masculinity  High uncertainty avoidance  Long-term oriented

PDI = Power Distance Index IDV = Individualism MAS = Masculinity UAI = Uncertainty Avoidance Index LTO = Long-term Orientation

These are reflected in Japan’s Marketing practices and consumer behavior

Source: Geert Hofstede 2009

Impact on Management practices


Factors Impacting on Marketing management practices in Japan 

Japanese Culture  Long-term oriented/high uncertainty avoidance  Life – long employment Market in Japan  Preference to local products  High Quality Product Competitors and Barriers  Wal-Mart  Political barriers  Large number of retail stores present in Japan Porter’s 5 forces need to be considered







Japanese market for Toys “R” Us


Attractive Market
Along with the US and Europe, is one of the 3 largest and wealthiest markets in the world for leisure goods  Ease of entry provided by Joint-Venture with McDonald in Japan 



Cultural Obstacle
Employment culture No more than 50 employees per store regardless of its size  Loyalty to existing stores  



Strong competitors
  

specialty stores general retailers occupy the largest portion of sales in Japan

Entry Barriers - Japan


Japanese toy retail dominated by small specialty stores and general retailers 

Large toy retailers make much less sales than small specialty stores



Wholesalers deal almost exclusively in Japanesemade products 

Not specifically in foreign products.



Loyalty of suppliers
Unwilling to enter into direct deals with Toys “R” Us due to their traditional way of making trades  Go through several layers of distribution  Cannot profit from low transportation cost for goods manufactured in Japan. 

Entry/Cultural Barriers - Japan


Developed/Industrialized country


Hard to find empty space for opening large stores



Behavior of customers


High purchasing power parity
   

Values quality over low prices Values established brand name over lesser-known goods Everyday low price strategy does not work well in Japan Everyday low price also their company specific advantage

Barriers – Behavior of customers


Behavior of customers


Loyalty Towards the stores that they have visited  Primarily towards established specialty stores and general retailers around the neighborhood Huge selection of product but Japanese not interested in going into a giant store that has...
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