Documents the American retailer's process of entry into the Japanese toy market. Discusses the history of Toys R Us in the United States as well as the history of the Japanese toy market, distribution, wholesaling, and retailing systems. Eager to enter the world's second largest toy market, Toys R Us executives begin in the late 1980s to formulate strategies for opening large discount toy stores in Japan. The American company faces a series of setbacks due to Japanese store-size regulation, application procedures, and a long-standing multi-layered distribution system. Continued effort and the acceptance of a Japanese partner enable the company to prepare for the opening of a Toys R Us outlet in 1991. Faced with a lack of direct distribution deals and high land and labor costs, executives of Toys R Us Japan worry about the ultimate success of their new venture.
1. Was Japan an attractive market for Toys R Us? Do you think there were any cultural obstacles to product acceptance? Strong competitors?
2. What were the entry barriers into Japan? Any culturally based barriers, in terms of how to do business?
3. How did Toys R Us manage to cross the entry barriers into Japan? What alternative modes of entry could have been tried?
4. What were the problems in transferring Toys R Us competitive advantages to a foreign market?Why did Toys R Us internalize the firm specific advantages rather than license another retailer abroad?
5. Were the company executives in Japan too optimistic in their assessment of competitors in Japan? What should their future strategy be?