The effects of globalization can be considered to be in its most dynamic to date. Previously reluctant companies have now been engaging in worldwide investments in order to keep up with the fast changing pace of international trade. As for Wal-Mart, its entry to the Japanese market can be one very drastic move which will definitely change the way the company operates in international platform. On a personal perspective, there can be a few difficulties that can be experienced in managing a Japanese branch of Wal-Mart.
The first of which is the seemingly high purchasing power of money required to put up and maintain a business in Japan. Due to its very high cost of living rate, even an American investor would have second thoughts in establishing its presence in the country. Managing a Wal-Mart store using an allocation of a US dollar value can be quite a challenge. Another possible dilemma that the store may experience is the fact that the Japanese market is not really dependent of the US trade sector.
In this aspect, if Japan’s economy slightly worsens, Wal-Mart’s administration in the US may not be able to support its retail branch in Japan. However, the good news is, if the US on the other hand will have a recession, it does not necessarily equate to Japanese economic slow down. Lastly, the possible the most difficult scenario to be encountered by Wal-Mart would be marketing. The Japanese people have an extreme sense of patriotism towards their home made products.
In this case, Wal-Mart may have a very stiff competition against the local brand names or stores, thus keeping its profitability at a minimum. Most foreign investors agree that Japan is nearly impenetrable for external business entities (Businessweek, 2005). The different political, economic and investment climates of the countries should be the main indicators in considering an investment procedure. For Wal-Mart, the best next step for it to maintain a sound presence in Japan should be to adapt enormously on how the country manages its internal trade.
Courtney from Study Moose
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