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Toys R Us Japan Essay

741 words - 3 pages

Toys “R” Us’ business model aimed for high volume and low margin business. Being a giant toy retailer, Toys “R” Us could take advantage of its economy of scale to purchase a large amount of merchandise directly from manufactures at very low prices. Thus, the chain could be able to set prices of its goods lower 10 – 20% than other smaller toy retailers (p.2). On the other hand, Japanese toy industry consisted of many small shops and outlets and was dominated by the manufacturers who forced retailers to sell at much higher or “selected” prices. Therefore, it was impossible for local retailers to offer discount prices.
Being a late mover in Japan, Toys “R” Us gained certain advantages such ...view middle of the document...

9). These two regulations’ changes was rightly timed for Toys “R” Us’ to push forward its plan to enter Japan.
Toys “R” Us implemented its global business strategy in Japanese toy market which dispersing in the discount market, creating large-scale stores, and maintaining low prices by negotiating with manufacturers. By expanding its business to Japan, the company can take advantage of both supply and demand side scope economies. On the demand-side, there was a bight opportunity for Toy “R” Us to generate sales and profits due to the high demand for toys in Japan. For instance, in 1992, the total retail sales of Toys and Games in Japan reached roughly $7.8 billion which made the country became a world’s second largest toy market right behind the U.S (p.16). For the supply-side, the company could buy products at low prices by negotiating with local manufacture such as Bandai. Besides that, Toys “R” Us made a clever move for planning a strategic alliance with Mr. Fujita, as he appeared to be the only business leader who had succeeded in bringing foreign retail business into the restrictive market (Exhibit 1 & 2). Joint venture with McDonalds Japan would help Toys “R” Us to decrease costs and ease some burdens. For instance, it...

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