Expanding internationally can be a profitable venture, and it can be the first business of its kind in an international market. Although there have been success stories of big companies expanding internationally, there are also companies that failed. When expanding internationally it is important to consider the external factors. These external factors include regulation, investors, competition, technology, globalization, and customers (Sheth & Sisodia, 2009, para 10). Companies like Wendy’s and General Mills were unsuccessful in Japan because they were not willing to adapt to the external factors. Wendy’s and General Mills are at the top of its class, but their status in America was not enough to survive in the Japanese market.
Wendy’s was a failure in Japan due to the customer trend. Wendy’s consolidated revenues were $636.3 million, an increase of 4.1 percent compared to $611.4 million in the third quarter of 2011. In Japan, Wendy's sales amounted to 6.2 billion yen ($70 million) in sales in its fiscal 2009 (Gilbert, 2009, para 2). Wendy’s revenue in Japan was not comparable to its American counterpart. This resulted in all 71 Wendy’s restaurants to shut down on January 2010. Japanese consumers desire high quality, nutritious, tasty, and safe food at a reasonable price. In the early 2000s, after a few Japanese cows were inflicted with mad cow disease, consumers boycotted beef nationwide, causing a severe setback in the dairy industry (Gilbert, 2009, para 2). Japanese consumers are skeptical about food safety.
Competition was a main external factor to Wendy’s failure. According to Gilbert (2009), “Japan is McDonald’s largest market outside of the United States. It has nearly 4,000 restaurants there.” McDonald’s dominates the fast food business in Japan. Wendy’s found it difficult to compete with McDonald’s since it was in the market longer and also McDonald’s understands the cultural aspects of Japanese customers....