2nd Semester, AY 2022-2023

COURSE CODE: MM

ACTIVITY No. 2

Name: De Dios ,Joseph Ivan Mari M .

Year/Section: BAMM-3A
Date: 16/02/2023

WALMART IN JAPAN AND THEIR FAILURE TO DIFFERENTIATE

I. Main Problem

What kind of Effective strategy needed to enter or Crack Japanese Culture Barrier that
will give Seiyu (Walmart) successful outcome and competitive advantage in Japan retail
market ?

When a company tries to enter a foreign market, new countries present challenges to attract
customers by understanding foreign culture, demographic, taste, and custom (Valarie Foregeard,
2022 January 1). That crucial to develop strategies to draw customers with different cultural
backgrounds. Walmart subsidiary Seiyu's in Japan main cause problem is by not having effective
strategies to do so resulting on not having competitive advantage and successful outcome in Japan
Retail Market . Instead believing formula that made them success in American consumer —low
price strategy (Every Day low price ) will gain the same success , as U.S consumer appreciate
or enjoy getting a good deal or value for their money. However, did not work to Japanese
customer , as according to a Bloomberg Businessweek article, Japanese shoppers are different
because they believe that cheap goods are converted to inferior quality. They also enjoyed the
experience of visiting numerous stores "to treasure hunt pricing” and did not want to stay in central
location stores like Walmart.
 But is not too safe to suggest Japanese customer totally dislike the low-price strategy every
day . Because Costco an identical business engages in same way , show success in Japan while
Seiyu (Walmart ) failed . As Costco have 26 stores operates in Japan in 2017, they generated
$3 billion in sales , outpacing Seiya (Walmart),which operated 331 stores but only generated $7.1
billion. Show Japanese people do not entirely disapprove of demonstrating the American way of
offering discounted goods in large quantities. But is due to a different strategy approach , as
Walmart uses the same strategy formula to sell in American way (Low price ) of local merchandise
product that fail ,while as Costco sells in American way while direct importing offering foreign
American culture product in Japan (Masaya Ito, 7 November 2019). That make them to have
effective strategy to adapt or crack the Japanese cultural Barrier . As this catch the attention of
many Japanese people, who were draw , not only by the low-price merchandise but also enjoying
exploring different culture (Asian Minato).Leave the question for main problem on how Seiyu
just like Costco . Be able to have effective strategy need in order to enter or crack cultural barrier
of Japan that will lead to successful outcome and competitive advantage in Japan Retail Market .

II. Secondary Problem

What kind of method needed to adopt on Japanese shoppers culture and food culture ?

Each country has a unique general idea of their preferences to shop and food .Is the same in
Japan one of most developed economy with high demand in purchasing good and service for this
many large companies around the world chosen Japan as destination (Bertrand , Russel ).
Resulting Japanese consumers have stereotypical ideas about the market and food.

As the Japanese people is more comfortable to purchase small quantities instead of stocking
large quantities of Bulk products .As they prefer to purchase fresh food, locally sourced produce,
meat, and other fresh foods like vegetable that Seiyu not offer instead preservative foods .
Additionally, Japanese consumers prefer to purchase products that are tied to specific holidays or
seasons and geographic regions. That is something that Seiyu fails to do because they offer a lot
of products but do not supply fresh produce, meat, or other foods. Instead, Seiyu offers a uniform
product line , result people won't go there because it cheap . Result Japanese consumers will
continue to shop at their local supermarket make Walmart (Seiyu ) have problem as they will stay
to buy on their prefer , convenience stores for daily convenience, specialized stores for fresh good
, and so on . Leaving a question for secondary problem on what method Seiyu will used in order
to adapt to Japan shoppers’ culture and food culture .

III. Objective/s

The purpose of this case study is to enable Walmart (Seiyu) to develop a new, effective strategy
to have new approach regarding the peculiar Japanese consumer by identifying alternative
opportunities to successfully entering or cracking Japanese Cultural barrier .That will lead to
have competitive advantage and guide to successful outcome in Japan retail market .

Summary Objective

• Generate effective Strategy in order to crack or enter Japanese Cultural Barrier

• Create Competitive advantage in Japan Retail market .
• Guide Walmart (Seiyu ) to successful outcome

IV. SWOT Analysis

▪ Strengths
Technology
Financial Capability
International Brand Recognition

▪ Weaknesses
Business Strategy not adoptive to Japanese Consumers
Localization
Low Price Low quality
Adapt new.
 ▪ Opportunities
Create a distinct Identity.
E- Commerce
Technology
▪ Threats
Local Competitor
Difficult to penetrate Conglomerate business.
Cultural Barrier

V. Alternative Courses of Action 1

Total Re- Branding Seiyu in Japan to Walmart and have new brand identity.

It is suggested to have Total -Re branding of Seiyu in Japan by changing its brand and as
well brand identity in order to successfully have effective strategy to crack Japanese culture
barrier and have successful outcome in Japan Retail Market ,the main goal is to learn from
Costco's by successfully break or crack Japanese Cultural Barrier . As the Costco rather than
selling local goods in low price strategy like Walmart , they succeed by selling direct imports
from the United States have low price strategy . Gain distinct competitive advantage in Japan
, as customer enjoy exploring "Different culture . In this instance, Seiyu will have an
alternative course of action total Re - brand procedure coping the same solution Costco
business model have in Japan and offer as well more fresh , seasonal and geographics
merchandise .At the same time the new brand name will be used is Walmart to gain more
global recognition rather Seiyu or other suitable new brand names .

Pros

• Gain Brand Recognition Largest Retailer in the World

• Proof that such a strategy is used.
• Develop a new brand identity for the business and consumer.
Cons

• Lose the current brand recognition of local customers.

• Additional Promotion
• Create Confusion
• Expensive

Alternative Courses of Action 2

Digital Strategy and partnership in Yamato company - Concentrate in online venture or

e-commerce business while engaging partnership with the largest courier in Japan and
providing "Every Day Low Price “ offering merchandise suitable to Japanese Customer

It is suggested focusing on e-commerce platforms and forming a partnership with Yamato

Transport, one of Japan's largest couriers, in order to successfully solve the main issue of
ineffective strategy in order to enter or crack the Japan cultural Barrier. To provide solution
focusing on online venture as data show e-commerce sales in Japan increased at a compound
annual growth rate of 5.2% between 2018 and 2021, reaching JPY20.9 trillion ($181.7 billion) in
2021 and being projected to reach JPY 27.4 trillion by 2026. Showing E- commerce is strong force
that rapidly cracking Japanese Cultural and Society Barrier.

As Experts said advancements in ecommerce at the same time is evolving the consumer
behavior (Parenthetical ,2022). For this ,define Japanese consumer behavior as well cultural
barrier , will be affected as the E- Commerce advance they will evolve in favor of online venture
. For this I suggest this strategy as having infinite opportunity and giving a solution to problem ,
as the E commerce itself is already enter the different cultural barrier included Japan as well
charge how retail market industry work worldwide . At same time by having online venture and
partnership to Yamato gain the credibility of a reliable Logistic brand in Japan .Will give
competitive advantage to be easily change or adjust Seiyu offering more based on fresh , seasonal
,geographic merchandise of Japanese people .And as well sell like Costco have direct import
offer foreign product come with different culture while applying the Everyday low price will
most likely lead to successful outcome in Japan Retail Market .
Pros

• Greater or unlimited opportunity

• Easy to adjust in distinctive cultural or geographic background of Japanese people.
• Infinite Range
• Not impacted by location
• Dependable Logistic Yamato company (Have reputation & Brand Recognition )

Cons

• Skepticism Low prices, low standards

• Cities or customers in Japan are surrounded by numerous, easily accessible stores or shops.

Alternative Courses of Action 3

Acquisition of Aeon to have related Diversification Strategy

To successful solve the main issue ineffective strategy to enter or crack Japanese Cultural
barrier as well to gain competitive advantage that will lead them to successful outcome in Japan
Retail Market . Is suggest having to acquire Aeon company as well their existing business model
match Japanese culture and have already establish very strong competitive advantage . Is safe to
say Yes , Walmart's do the same strategy to enter the Japanese retail market in 2002 by purchasing
the already existing supermarket Seiyu, that can see ineffective ,but it’s not the reason ,instead
because of implementing the "Every Day Low Price Strategy" business model they do in U.S
consumer . For this, I suggested doing the same with Aeon, which as of now have market value of
17.36 billion dollars, and Walmart, whose value is 387.58 billion dollars .And its owner Jim
Walton has a network worth 61.05 billion dollars have the ability to acquire Aeon, company that
will give them rights to have the majority of the Japanese retail market. Result achieving the main
objective to successfully have competitive advantage and outcome in Japan Retail Market .By not
successfully generate a marketing strategy to enter or break Japanese cultural barrier but instead
by related diversification strategy by acquiring the existing business Aeon included their business
model
Pros

• Increased market dominance for Walmart in Japan

• Remove Obstacles to Entry
• Overcoming, saving time,
• Acquire a market share that already exists!

Cons

• Cost a lot of Money.

• Loss of Customer because of Change

VI. Decision Criteria

5 (Excellent) 4 (Very Good) 3 (Acceptable) 2 (Less than Acceptable) 1 (Unacceptable)

Decision Criteria ACA 1 ACA 2 ACA 3

Sales 3 5 5
Expenses 3 3 1
Function 3 4 4
Risk 4 4 4
TOTAL 13 16
16 14
 VII .Recommendation

In order to successfully solve the main problem by Seiyu Walmart (Seiyu ) not having effective
strategy to enter or crack the cultural Barrier of Japan, out of three alternative course of action .It
recommend using the effective strategy e-commerce platforms and forming a partnership with
Yamato Transport, one of Japan's largest couriers. That will lead to a successful outcome by having
a competitive advantage as the numerous rivals that Walmart (Seiyu) currently faces that have
already outsmart them and taken over a significant portion of the retail market in Japan, by
successfully had to come up with innovative ways to meet Japanese retail market .

For this ACA 3 is being recommended because of its function, which makes it possible to
overcome the cultural barrier in Japan with ease as online venture itself overcome it . It also offers
limitless opportunities for sales because of its reach with a low cost and acceptable risk. As well
by having an online business and logistical partnership, one can easily generate marketing
strategies to enter cultural barriers, government regulations, geographic limitations and many
others resulting in gaining an advantage over rivals in Japan . Such strategy offering more low-
price product of fresh good ,Foreign good and seasonal product in Japan to match their Shopping
and food culture will be easy to implement .And will be long term because experts claimed the
development of ecommerce at the same time evolving or influence consumer behavior. This would
mean that if Walmart (Seiyu) successfully used ecommerce as well evolved through the years in
Japan ,as e commerce will develop this lead changing consumer behavior of Japanese people as
would be toward E- Commerce mean in Walmart's (Seiyu ) favor in long run .

VIII. Conclusion

In conclusion on this case study , Walmart's (Seiyu) primary cause or problem for failing in
Japan was to unable generate effective strategy that will crack or enter Japanese cultural barrier
that will lead to have successful outcome and competitive advantage in Japan Retail Market . By
failing to Differentia’s Japanese people , applying the same strategy succeed in U.S customer
believing in "Every Day Low Price". As the Walmart realization is must think Global and Act
in a Local way . Nothing can be changed in existing traditional culture and should not try to change
it instead adapt . Because if Walmart tried to change the existing culture it would result in loss
and can be avoided just like how low-price strategy in Japan .
 For this in end this case study concludes by analyzing the issue and using a SWOT analysis that
yielded three possible courses of action: total re-branding, a focus on e-commerce while having
formation of logistical partnerships, and the acquisition of Aeon to achieve its objective . But it
concludes to Maximizing E-Commerce and Logistical not only because it is the largest growing
retail platform in Japan and have the highest point in decision criteria . But providing solution to
be able Seiyu (Walmart) will be easily cross the cultural barrier of Japan and generate marketing
strategy that will match the Japanese customer preferences ,that leads Seiyu to have competitive
advantage and successful outcome in Japan retail market .

References

Bond, J. (2022, February 22). Why Walmart is failing in Japan. Global Marketing
Professor. https://globalmarketingprofessor.com/why-walmart-is-failing-in-japan

Ito, M. (2019, July 9). Why Walmart Is Falling in Japan. Asian Minato.
https://asianminato.com/why-walmart-is-falling-in-japan

Top 10 Best Courier Services Companies in Japan [2023]. (n.d.).

https://www.clickpost.ai/blog/top-10-best-ecommerce-courier-services-provider-companies-in-
japan

Aeon (8267.T) - Market capitalization. (n.d.). https://companiesmarketcap.com/aeon/marketcap/

Wikipedia contributors. (2022, October 13). Jim Walton. Wikipedia.

https://en.wikipedia.org/wiki/Jim_Walton

Walmart Seiyu. (2019, April). Course Hero.

https://www.coursehero.com/u/file/23877425/Walmart-and-Seiyu-report/