Analysis of Toys R Us Case in Japan

Topics: Japan, Japanese people, Globalization Pages: 7 (2835 words) Published: January 10, 2011
Analysis of Toys R Us Case in Japan
There are various fundamental basics that any organization large or small scale needs to follow when setting up a new company locally and also when they venture across borders in international entrepreneurship. Effective management is one important aspect that will ensure that the company successfully achieves its goals and objectives efficiently. Management consists of organizing, planning, and leading (Adler & Gundersen 2008). Many businesses today define management as simply the things that need to be done to keep the organization going. However, for the business to penetrate the market, and experience continuous growth while maintaining healthy competition, it requires good leadership skills, effective communication, decision making skills and planning to maintain sustainability of the company in the local as well as international markets. Toys R Us is one company that has risen from one small store in the 1950’s to a multinational company that has a number of chain stores operating in the United States as well as other states such as Europe, Hong Kong and Singapore. This was achieved through effective leadership and management skills and good assessment of various markets. Lazarus, the founder of the company, observed the market in regards to customer spending and preferences. He build toy stores with self-service like in supermarkets and put discount prizes to undercut any threatening competition thus gaining competitive advantage capturing 20% of the toy market in the United States. By the 1980’s the company was flourishing and was way ahead of its competitors. As it expanded it wings internationally, the discount formula attracted many customers who rushed into Toys R Us supermarkets to purchase new toys. This move was not welcomed well by the locals in fear that the giant stores would drive them out of business. For instance, manufactures in Germany refused to sell toys from R Us fearing that their existing relationship with the local retailers and wholesalers will be damaged. The same thing happened in the United Kingdom and retailers protested noticing the decline in the number of stores since the arrival of Toys R Us. However, this did not hinder the company from wanting to expand further into other countries especially in the country that has the most lucrative toy business market, Japan. The company tried many times to crack the neatly joined Japanese market to no avail. They faced many challenges and any attempt to make it in the market was met with outright opposition from the local retailers and wholesalers. Apart from the retailers, the Japanese media denounced Toys R Us. The whole distribution system of Japanese toys conspired against the company hence thwarting the company’s attempts and perpetuating further the high prices on Japanese products. A number of issues have led to the unfruitful efforts of Toys R Us to penetrate the Japanese culture. First, the Japanese and the American markets function very differently. According to Adler and Gundersen (2008), conducting research on potential markets to venture new businesses in is very important as it will enable an organization to gather crucial information on target markets and their needs, the current market trends, information on the competitors in the market and the satisfaction of customers with the goods and services available. Adler and Gundersen (2008) also add that through this information, an organization will be able to know about the prices of commodities already in the market and the supply and demand rates currently in the market. Hence, with such information Toys R Us found that the Japanese market had grown tremendously and it would be a great country to conquer and add to the already existing chain supermarkets. Analysis of the Japanese toy market shows how neatly joint that their processes are and how they are meant to block out any new foreign investors as well as...

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