JAPAN

PRESENTED BY:

KAMLESH KUMAR-PGP/15/20 SHIVAPRASAD-PGP/15/139 GOWTHAM SRINIVAS-PGP/15/142 JAI KUMAR-PGP/15/144 JAYAKIRUPA J-PGP/15/145 KIRAN SAGAR-PGP/15/151

JAPANESE TOY INDUSTRY

Highly fragmented and locally focused
Display areas cramped, inventories turned slowly
Manufacturers Distributors Retailers

JAPANS RETAIL STRUCTURE

Retailer

Wholesal er

Distribut or

Manufactur er

4th and Onwards

3rd Level

2nd level

1st level

TOYS R US
Establish large-scale stores

Central control

Buying power created to negotiate lower prices from manufacturers

Extensive computer networks ensured automatic replacement

IS JAPAN GOOD FOR TOYS R US

POSITIVES
Japan is second biggest market after US

Structural Impediments Initiative

MITIs reform of Japans retailing sector

Den Fujitas Partnership Retail experience, political influence, vision Understanding of both Japanese and American cultures

NEGATIVES
Difficult to form tie up with manufacturers

High real estate cost

Partnership with Fujita has concerns

IS TOYS R US GOOD FOR JAPAN ?

Negative Impacts
Increase in Unemployment Old Age Security Issue Change in Culture

Positive Impacts
Price reduction Increase in FDI Increase in Quality

INVESTMENT
1985
Others US Owned FDI Others

1991
US Owned FDI

48%

52%

44%

56%

Investment

Income

Growth

ENTRY STRATEGY

STRATEGY - CATEGORY KILLER

Big box retail store format tried and tested successfully

Large specialty stores with great discounts

Large scale standardized production/ procurement is symbolic of reduced costs and is not mutually exclusive from quality

The Hedgehog Global Corporation Everything about one thing

PRICE LEADERSHIP CULTURAL BARRIER

New age Japanese have woken up to the fact that the retails are overpriced

The consumer has become globally conscious of availability and price of products

Go for the what the customer wants and not what he says
Research shows consumer may give a response and believe the same to be true however when the opportunity presents a new and better option they will chose the new.

Price and promotion Toys R Us strategy-Not personalized service

POLITICAL BARRIER
The very strong local shops network, high political influence due to significant vote bank The manufacturing sectors old ways

All were being countered by the promise and irresistible offer Toys R Us was making
Negotiations for increasing US FDI were underway - Lobbying Keiretsu can be countered with an direct and sole procurement by Toys R Us

MITI - LEGAL BARRIER

Amended Large Scale Retail Stores Law

Had already relaxed the rule on shop size Cumbersome distribution network - the reason for high prices
Has relaxed the rule on approval from the local toy shops Reduced the time for obtaining approval

CHOICE OF PARTNER

Global brandsJapanese EntryJoint Venture

Den Fujita The right man for the job

Has made bi-gu ma-ku (McDs Big Mac) a staple in the rice eating Japan

Has knowledge of the local ways, has leverage while negotiating with the government

Has the drive to bring about the change