Going Global and Inclusion Analysis of HelloFresh

Lead By Example

College of Integrative Sciences and Arts, Arizona State University

OGL 355: Leading Organizational Innovation and Change

Dr. B

November 18, 2020

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Going Global and Inclusion Analysis of HelloFresh

HelloFresh has seen great success in its expansion into new markets. With this

success comes even more opportunities to expand into new markets to increase the value

of the company. Lead by Example has reviewed and identified a mode of entry that will

allow HelloFresh to see the greatest success in a new market. In addition, the economic

and political implications associated with this expansion have been identified and

evaluated. As HelloFresh seeks the smoothest and most efficient transition into a new

market, Lead by Example has identified differences in culture and attitude that will have

a great impact on the success of HelloFresh. The following evaluations and

determinations will assist HelloFresh in its global expansion.

Japan

In this analysis, Lead by Example proposes Japan as an expansion market for

HelloFresh’s established global geographical footprint. The team performed a

comprehensive review of Japan’s economics, politics, culture, and customs to determine

the recommended international strategies HelloFresh will utilize to enter the market. The

team also studied existing competitors and evaluated options to compete, compliment, or

partner with existing businesses.

Japan is a modern, technocentric country with a population in excess of 125

million people (Japan, n.d.). Antithetically, Japan is also deeply traditional, with time

honored customs and convention, and a respected food culture. These characteristics,

along with Japan’s high per capita GDP and recent free trade agreements make Japan an

attractive market. Food delivery is an accepted practice in this country and the added

convenience of prepped ingredients and easy recipes are an added value for the
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consumers. In addition to hectic young professionals, it is important to note that nearly

thirty percent of Japan's population is over the age of 65. This is an attractive market that

seeks food delivery to ease the difficulty of self-carrying groceries. The opportunity to

expand HelloFresh’s global reach and develop additional market value are motivators in

recommending Japan.

Mode of Entry

HelloFresh should enter the Japanese market using an acquisition approach. An

acquisition involves the purchase of an already existing meal-kit delivery brand in Japan

which has a positive reputation and strong supplier relationships. The acquisition

approach is a large risk and would require a large up-front cost; however, this approach

would be the fastest and most effective way for HelloFresh to enter the market. Using

this approach HelloFresh can to capitalize on the already existing customer base of their

acquired brand. In addition, HelloFresh is able to benefit from the relationships with

suppliers that are already in place with their newly acquired brand. By using the

acquisition approach, instead of licensing or franchising, HelloFresh can maintain control

over product quality - allowing the firm to uphold its image.

An acquisition would allow HelloFresh to bypass some of the bureaucratic

processes that are associated with developing a foreign subsidiary. That being said, the

acquired company would retain branding and name recognition while owned and

operated by HelloFresh. This is in line with the strategy HelloFresh practices with Green

Chef, EveryPlate, and Chef’s Plate. This newly acquired brand can be added to the

arsenal of meal-kit delivery brands for the HelloFresh Group. Lastly, the acquisition of
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an already existing meal-kit delivery firm within the Japanese market provides

HelloFresh with a product tailored to the flavor-profile of the market.

Political and Economic Issues

Japan's political structure is a constitutional monarchy. The nation maintains

legislative, executive, and judicial branches, with a monarch serving mostly ceremonial

duties. The executive branch is led by the Prime Minister (Overseas Business Risk -

Japan, n.d.). In late August 2020, three-term Prime Minister, and Liberal Democratic

Party (LDP) leader, Shinzo Abe announced his early retirement prior to the end of his

final term. Abe's announcement comes among rising criticism over his handling of the

coronavirus outbreak (Siripala, 2020). Japan's LDP held elections on September 14,

2020 selecting Yoshihide Suga as Abe's successor for a 1-year term, with general

elections scheduled for late 2021 (Yoshihide Suga elected, 2020). Interim Prime Minister

Suga faces the prospect of an economic recession, corona virus recovery, and a push to

revive the postponed 2020 Tokyo Olympics.

While some analysts have concerns about Japan's history of revolving leadership

and destabilization after the departure of long-term leaders, the ascension of Suga, Abe's

long serving right hand man, is reassuring to the continuation of Abe's central domestic,

economic, and security agenda. The 2021 general elections will likely result in a win for

LDP and empower Suga and the conservative LDP to continue in these efforts. In the

long-term, Japan enjoys political stability due to the popularity of the LPD, which has

held power since 1945.

This political stability is advantageous to HelloFresh in pursuing expansion into

the country. However, another aspect of politics relates to the ease of doing business in
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Japan which holds a rating of 29 in the Ease of Doing Business Index, up from 39th in

2019 (Overseas Business Risk - Japan, n.d.). Factors that will challenge HelloFresh are

highly bureaucratic processes related to business licensing, paying taxes, property

registration, and procuring utility services. Business registration and visa requirements

can be daunting, as business applications and visa applications must be filled out in

Japanese with little available guidance in other languages (Koisumi, 2019).

Tokyo offers guidance through the Tokyo-One Stop Business Establishment

Center (TOSBEC), an effort by the city to assist and encourage new foreign business.

Other efforts to ease difficulties include the establishment of national strategic special

zones in several prefectures that offer extended visas for start-up managers (Koisumi,

2019). HelloFresh should be prepared to face these bureaucratic hurdles. One approach

is enlisting local assistance, either through employment, consultation or acquisition to

navigate the processes. Additionally, focusing on domestic areas with less complications,

such as Tokyo and the national strategic special zones, is a way for HelloFresh to

streamline entry into the market.

Japan is an attractive market for foreign businesses; it is the 3rd largest economy in

the world with a positive GDP growth rate through 2019. The country has a trend-setting

and mature consumer base with high per capita GDP. The main driver of growth is

exports, and the nation pursues trade agreements to bolster continued growth. In

November of 2020, Japan finalized its participation in The Regional Comprehensive

Economic Partnership (RCEP), which forms the world's largest trading bloc covering

one-third of the global economy. This will strengthen future exports as well as bring

added security to the import-dependent nation. Of note for HelloFresh, the trade
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agreement removes agricultural tariffs on most agricultural imports, excluding wheat,

rice, sugar, and beef and pork, which protect domestic suppliers (Kyodo, 2020). This

would be advantageous for sourcing fresh fruits and vegetables.

The 2019 consumption sales tax increase, enacted to counter growing public

sector debt related to Abenomics (Overseas Business Risk - Japan, n.d.), coupled with

pandemic restrictions, resulted in lower consumer spending. The pandemic has resulted

in a downturn in the economy pushing it into recession in 2020 with two consecutive

quarters of economic contraction (Vashwani, 2020). Japan is shoring up the economic

effects of the pandemic with national stimulus packages aimed at supporting healthcare,

employment support and small business subsidies. Despite hardships caused by the

pandemic, which resulted in a 7.9% drop in GDP growth in Q2 2020, the outlook is

positive for a rebound in 2021 (Vashwani, 2020). Cautious analysts are predicting a

modest 2 ½ percent growth in 2021 while taking into consideration the government's

willingness to enact supplementary budget measures to boost consumer confidence

(McCully, 2020).

HelloFresh has an opportunity to expand into Japan, especially during a time

when more people are staying home. This is an opportune time to introduce the name

and services of HelloFresh to Japanese households. The company will establish a

presence during the stay-at-home era of COVID-19 and have an established foothold for

growth as the economy recovers and people go back to their busy lives. Japan has a

healthy economic outlook as the Q3 2020 shows GDP quarterly growth of 5% (Japan

Growth Annualized, 2020). Navigating the bureaucracy of entering business in Japan is

manageable and should prove productive especially with the assistance of local agents.
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As the political environment focuses on Abenomics and furthering economic growth,

HelloFresh can capitalize on the market potential.

Key Cultural Differences Between the U.S. and Japan

Japan is often considered to be more culturally "western" than other Asian

countries. When it's compared to the United States there are certainly a lot of similarities,

but Japan and the U.S. also have many cultural differences. While a group of people

cannot be generalized as a whole, and culture in any country can vary from region to

region, here are the main cultural differences that typically stick out to an American in

Japan.

Religious practices differ. The vast majority of Japanese people identify as

Shinto, Buddhist, or both at the same time (Guide to Japan, n.d.). Issues that are the

basis of debates in the Abrahamic faiths, such as gay marriage or teaching creationism in

schools, lack a religious foundation in Japan. In Japan, Shinto and Buddhist practices are

predominantly limited to traditions, celebrations, and superstitions more than strong

spiritual beliefs. For example, in America, a politician's religious affiliation may become

the cause of heavy debate, but there are few such issues in Japan.

Japanese are nationalistic, but are not overall very political. Politicians in Japan

have a shockingly low approval rate. Politicians are quick to resign after making

mistakes, which is why, with a couple of exceptions, Japan has switched its prime

ministers almost once a year since 2005 (Aliasis, 2013). Japan has a parliamentary

system with many parties, and politicians do not win elections with a majority vote

(Guide to Japan). In fact, Japanese people have a notoriously low voter turnout rate. On

the other hand, Japanese people tend to have a lot of love for their country, and they
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celebrate their unique history, language, and culture in a way that is not dissimilar to

Americans.

Unlike the US, where the population is made up of individuals from many

different countries, the population of Japan is about 98% ethnic Japanese (Aliasis, 2013).

Most Japanese citizens have an identical ethnic and national identity, therefore seeing

people who do not appear to be of East Asian descent can lead to instant assumptions.

This can affect society in the sense that because Japanese people view their culture as

homogeneous, it is expected that everyone understands the traditions and rules of society.

Japanese culture places importance on groups and communities. Satisfaction and pride

are meant to be found within the group you belong to. In the United States, people tend

to find satisfaction in their own accomplishments, and people tend to focus on their own

aspirations. An example of this can be observed in Japanese business culture. In Japan

employees tend to work for one company for their entire lives. Company loyalty is

valued, and promotions are often given on the basis of seniority. In Japan, this can also

influence the ways that people live in and contribute to society. In America, people focus

on their careers independent from the companies they work for, and they will often

change companies a number of times throughout their professional lives.

In Japan, people tend to stand a relatively far distance apart when speaking, and

last names with honorifics are used when people speak to or about one another (Etiquette

in Japan). An example of this can be seen in different approaches to customer service. It

can even be insulting to tip because doing so is considered to be an affront to an

employee's salary. In America, tips are meant to show appreciation for good service. In

America, ideal customer service is usually warm and friendly. In Japan, it is formal and
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unobtrusive. Waiters do not usually stop by tables to ask customers how the food is or

what their weekend plans are, and strangers will not often chat while waiting for the bus.

Another well known cultural difference in relation to formalities is that many Asian

countries utilize bowing instead of shaking hands, but Japanese people bow in more

situations than just greetings. Bowing can be done while apologizing or expressing

gratitude. People might bow to a deep 45-degree angle in business or professional

environments, but most bows are just a casual bob of the head and slight incline of the

back (Etiquette in Japan). Despite the prevalent importance of bowing in Japan, Japanese

people are well aware of the fact that foreigners usually shake hands, and they might

readily offer their hands in greeting instead of bowing.

Being too direct in Japan can be considered rude. This can be seen in body

language too. People in the U.S. are taught to look directly in someone's eyes when

speaking or listening to show that they are actively participating in the conversation. In

Japan, extended eye contact can be uncomfortable between people who are not close, and

eyes are often averted. Japanese people also tend to be more reserved than Americans,

and they share less personal or sensitive information, even with close friends.

In Japan, there is less of a social stigma surrounding an unmarried person living

with their parents during or after college. In fact, it is not unheard of for newlyweds to

live with one partner's parents until they can find a place of their own. In the U.S. people

tend to move out of their parents' homes unless they are financially or culturally

discouraged from doing so. In relation gender roles are extremely strict. In 2012, Japan

received an embarrassing rank in the Global Gender Gap Report, which measured

women's equality in various countries. America received the 22nd place and Japan
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received the 101st spot (Global Gender Gap Report, 2012). There are very few female

politicians and CEOs in Japan. When women join companies, they are often expected to

quit when they get married to become housewives and stay-at-home mothers.

In the U.S. people are often seen eating snacks or small meals while traveling on

public transit, during their commute, or while they run errands. People in Japan usually

eat while sitting in restaurants, cafes, or at their own kitchen tables. Eating on-the-go can

be messy and food odors in places that are not designated for eating can be unpleasant to

others. In the U.S., people tend to do whatever they want while riding public transport.

People are often observed eating snacks, talking on their phones, listening to music (with

or without headphones), texting, playing mobile games, sleeping, working, dancing, etc.

In Japan, most people adhere to social etiquette that discourages disruptive activities on

trains and buses. People typically silence their phones while they are utilizing public

transportation, and they do not usually answer phone calls. Because sexual harassment

has been a widespread issue on Japanese trains, many rush hour routes offer cars that are

solely for female commuters so they will not be at risk of groping or harassment.

Actions for Inclusion

Due to the significant cultural differences between the United States and Japan, it

is important to keep Japanese customs in mind when determining a way to introduce

HelloFresh in Japan. Considering the Japanese take their meal time seriously and do not

tend to eat on the go, we came up with a few do’s and don’ts for our employees to follow.

Do’s Don’ts

Do offer meals that are ready to cook to Do not offer a wide variety of food from
maintain HelloFresh’s vision but make other countries
sure they are similar to cultural food.
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Do offer jobs with advancement Do not deliver weekly, instead every three
opportunity days.

Do offer bigger meal kits Do not offer only one size

Do offer proper utensils such as Do not offer only one promotion

chopsticks and forks

The table above includes do’s and don'ts that align with Japanese culture.

For example, HelloFresh wants to offer ready to cook meals for convenience and to

maintain HelloFresh’s vision, but the company wants to make sure they are also

culturally acceptable as traditional food is important in a Japanese household. As stated

earlier, the Japanese take their mealtime with their families seriously and are not easily

open to other cultures the way Americans are. Ensuring adequate family sized cultural

meals are included on the meal kit menu will attract more families towards buying a

subscription. The company will also refrain from offering just one size in meal kits. In

the US, the typical HelloFresh meal kit is sized for 2 people. In Japan, HelloFresh will

aim to offer the regular 2 portion meal kits as well as expanded family sized meal kits

and singular meal kits for those who live alone. Because the Japanese like their food

fresh, HelloFresh will refrain from additional servings if they are not needed. HelloFresh

wants to offer a meal kit size for everyone.

A number of Japanese recipes are already offered through HelloFresh such as

Wasabi Zinger Salmon or Pork Katsu (HelloFresh, 2020). Expanding the Japanese food

menu will ease the idea of a meal kit into a family’s dinner plans and potentially bring in

new customers. HelloFresh will aim to offer more Japanese meals and less ethnic meals

because the Japanese are not as open to other foods as the target market in the United

States.
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In the meal kits, HelloFresh will offer proper traditional utensils such as

chopsticks for consumers to use. Unlike in the US, chopsticks are more conventional in

the Japanese culture and used more than forks or spoons (Tripsavvy, 1). HelloFresh will

also refrain from delivering weekly, and choose to offer delivery every three days

because the Japanese enjoy eating food fresh. To maintain extra freshness, HelloFresh

will refrain from dropping off meal kits when no one is available to receive them or

utilize drop-off lockers for safe and secure delivery. Japanese people are not as

accustomed to drop-off packages as other countries and have only recently experienced

this delivery practice as Amazon expanded in the country.

Japanese tend to stay in one workplace throughout their life. HelloFresh will

offer a variety of employment opportunities located in their future Japanese headquarters.

This will ensure a positive employee turnout rate and HelloFresh will be able to expand

more freely with loyal long term employees.

HelloFresh will also refrain from offering only one type of promotion because

families are big in Japan and it might be more likely that one big family is ordering meal

kits rather than individual smaller families. By offering more than a one time new

customer promotion, HelloFresh will be able to attract existing customers to renew their

subscriptions if more promotions are offered. HelloFresh does not want to stray away it’s

customers with its prices, rather keep their business even if it means offering more

consistent promotions from time to time.

Attitudes

While looking into the personality and characteristics of employees in the

Japanese culture, the team identified attitudes to assist employees while interacting with
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Japanese customers. The list below may seem like common sense traits to display to

those customer service minded individuals, but also goes well beyond work hours. The

culture ingrained in employees in Japan starts within the house-hold. Some of the Do and

Don’ts are listed below:

Do’s (Have) Don'ts (Have Not)

Have an understanding of the Be rude to customers

culture/environment you are working in

Be punctual with staff and team members Leave customers waiting long

Be respectful to customers and fellow Be late to your scheduled shift

employees

Have a clean work area Ever raise your voice towards customers

Take pride in what you a do, by being a Respond with sarcasm when dealing with
hard-worker an irritated customer

Treat others kindly /polite Give unnecessary facial expressions

Think outside the box and use your Do the bare minimum of work
intelligence

The three attitudes chosen to elaborate a bit more on are punctual, clean, and

hard-working. These three attitudes or traits will help build trust and respect in the

Japanese community, here is why;

Punctuality in Japan is a sign of true professionalism. Being punctual displays a

person’s understanding and respect for people’s time. If an employee can not be present

or is late, it interferes with the work of others. More importantly, these employees are

considered unreliable, so having this attitude/trait will build respect and trust when

demonstrated. This is not only seen by management, but also by customers. People tend
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to go back to places (food in particular) when the service is good and handled in a timely

manner.

Cleanliness may seem like a strange attitude/trait to have, however, in the

Japanese culture this is a huge one. Regardless of industry, maintaining a clean work area

speaks volumes to others. Having a clean area displays efficiency and in the food

industry it is an indicator of a healthy and safe environment. Having a healthy and

hazard free workplace in the food industry will build trust and respect with customers.

The last attitude/trait to consider in expansion is being a hard-worker. It is

extremely important to have employees who are willing to go above and beyond when

expanding into new territories. It is not possible to achieve great things if our employees

are not all in themselves. Employees who have hard-work ethics strive for better work,

more camaraderie, and figure out ways to be innovative. Having this attitude is also

contagious and will influence co-workers. This attitude/trait also builds trust and respect,

more so amongst the team.

Conclusion

Lead by Example has proposed Japan as HelloFresh’s expansion market. Japan,

rich in culture and tradition, is the 3rd largest economy in the world and has proven to be a

great opportunity for growth and foreign businesses. Japan’s characteristics, high per

capita GDP, time-honored accepted practices, and population make for an attractive

market for HelloFresh.

Lead by Example recommends HelloFresh’s expansion into Japan’s market use

the acquisition strategy as the mode of entry. This would be the most effective and fastest

approach to entering the market. HelloFresh would benefit and capitalize in many vital
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areas from the acquisition strategy and relationship of the already established company.

The company would see tailoring and redesigning of products to accustom to the

partnered company as well as Japan’s tastes and needs.

HelloFresh is expected to face some political and economic issues including

monolingualism, cultural differences, and bureaucratic factors that could potentially be

barriers and setbacks if not approached correctly. Frequent changes in leadership,

Abenomics focus, and language requirements prove to be a challenge; however political

stability with the power of the Liberal Democratic Party (LDP) contributes an advantage

to the expansion in the country.

Japan has many key cultural differences that are dissimilar to the United States.

These cultural differences vary in formalities, religious practices, conformity,

communication, etiquette, political, population, diversity, satisfaction and pride, company

loyalty and values, punctuality, ways of expression, living conditions, gender roles,

women’s equality, social etiquette, as well as eating habits and behaviors. HelloFresh

must recognize and respect these differences when entering into the market.

Japan’s unique culture and stringent code of etiquette will require exceptional

skill, attitude and sensitivity from employees when creating trust and respect with the

expansion into the country. Lead by Example created two tables of Do’s and Don'ts, one

for employees to follow for inclusion and another for attitudes. Japan’s important

manners and customs that HelloFresh felt the need to observe and be accustomed to

include: eating traditional foods, mealtime, table manners, and the requirement of using

chopsticks. HelloFresh must also ensure traditional foods are offered and that every meal
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kit is expanded family sized as well as offering a single meal kits for single households.

HelloFresh will also recognize the tradition of utilizing chopsticks and will include

chopsticks with every meal kit offered. Three very important attitudes Lead by Example

identified HelloFresh employees would need to manifest to build a trusting relationship

with the Japanese people are punctuality, cleanliness and hardworking.

As HelloFresh seeks to expand into the new market, Lead by Example supports and

offers all the above research and strategies to ensure a successful expansion.

APPROVAL:

Kelsey Stephen Camille Margaret David Viviana

Clark - KC Goodman - Miguel - EvanSon - Gurrola - Ramirez

SG CM ME DG VIR
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