Toys R Us Japan Case Analysis Essay
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This case has a generally positive slant in that there it does not describe many weaknesses and problems present in many others with which students would be familiar. Toys R Us (TRU) has followed a path of international expansion from the US via more than 13 countries, starting from Canada in 1984 and entering Japan in 1991. By any standard this is a rapid expansion of markets. This case illustrates several elements of developing market strategies that have been central to TRU’s observed success in these markets.
First, TRU has developed a strong competitive advantage in its home market that is based on fulfilling 95% of consumers’ needs relating to children. This has been based around large retail space and counteracting the cyclical nature of toy retailing which traditionally peaks around the gift giving period during Christmas. Second, they have succeeded in transferring their retail concept from the US to its newer markets by modification of the product mix to suit local tastes.
Third, they captured international marketing experience by recruiting executives with international experience such as Mr. Joseph Baczko who has been able to adapt the strategy and use a non-standard approach to market entry. His approach has adapted their successful entry strategy to fit the needs of the country environment. The following analysis will commence with an analysis of the company and its business and consider each of the issues raised in the foregoing discussion. This will be followed by recommendations for future activities. ISSUE AND PROBLEM ANALYSIS. The Firm, its Industry and market expansion. TRU is a company whose operational core is purely in retailing. The company has no manufacturing capabilities and relies on developing its business strategies of fulfilling consumer needs with a one-stop-retail environment that fulfils the majority of consumer’s needs.
Therefore, the company’s market activities are purely in the form of a specific retail concept which is based on sourcing local and international products for sale in each of the countries in which it operates. Two key characteristics are critical for TRU to succeed: high-income per capita and high toy sales. Both of these are self-evident. The case study does not provide the order of market entry but the early entries into psychically close countries such as Canada, UK and Germany conforms to the patterns of expansion as firms gather international experience. It appears that TRU has acquired international experience by recruiting Mr. Joseph Baczko who has made direct entries into countries whose environments are more similar but used less direct forms such as franchises in Saudi Arabia, the Emirates and Joint ventures in Singapore and Hong Kong which are psychically and geographically more distant.