Toys R Us Japan Case Analysis.

Essay by GIBBSUniversity, Bachelor'sA, October 2005

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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.


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.

Competitive advantage

TRU has developed and relied on the following key success factors (KSF) that is at

the heart of its market analysis and subsequent strategy development: the one stop

shop concept, the ability to source products in sufficiently large quantities such that