In-Depth Integrative Case: Wal-Mart's Japan Approach
1 . Query: Do you believe Wal-Mart could be successful by circumventing the existing Japanese distribution system?
The Japanese syndication system features two distinct characteristics: too many very small retailers and multiple layers of wholesalers. Japanese people consumers choose to buy clean, high quality food and have the inclination to purchase products in a small amount and at regular intervals. Since real estate is very expensive in Japan, persons live in tiny apartments and perhaps they are not used to doing big buying, because there is very little space to maintain things. Virtually all small-sized retailers are work as family based businesses, and there are advantageous tax therapies granted to retail stores. Additionally , there are restrictions placed on considerable retail stores. Japan's current division system is a massive barrier to Wal-Mart's classic way of conducting business. Wal-Mart's direct-supplier system cannot be more different in its style, its organization philosophy and its particular operations coming from Japan's multi-layered system. You will find two options, either Japan's system will alter, or Wal-Mart will have to adjust. In order to be effective, Wal-Mart will have to create a great unassailable competitive advantage inside the Japanese market, Wal-Mart will need to create a strategies and circulation system that is certainly lower cost and even more efficient than anything at present in use in Japan. Wal-Mart's distribution technique is likely to follow a multi-stage, multi-method approach. These types of different strategies may be contacted as parallel strategies. Even though the long term perspective will be to replace the nature in the supply chain process and fully apply their Retail-Link system, it should take time to makes transition. Initially, Wal-Mart will have to work through the multi-layered Western distribution system, treating wholesalers much because they would suppliers. Wal-Mart must work with the bigger wholesalers to upgrade their technology features. Several of the larger Japanese wholesalers are working hard to develop added value companies for their selling clients. Being viable long-term, they will need to prove that they are more efficient plus more reliable for retailers to do business with than going direct to suppliers. The other step in this process is likely to involve Wal-Mart acquiring a Japan wholesaler. Finally, Wal-Mart will need to begin expanding Retail-Link with their largest suppliers, particularly the kinds they have romance with both in European countries (UK) or the U. H. This will be a slow procedure and may have several years before it is initiated as the software program for the Retail Link will first have to be adapted to the Japanese language.
2 . Question: Will you agree with Wal-Mart's entry technique? What are a number of the inherent hazards? Do you think which a faster marketplace entry can be more effective?
I believe Wal-Mart's " bit-by-bitвЂќ way is the proper way to go in Japan. Worried over earlier market-entry failures in South america, Germany and South Korea, Wal-Mart deliberated for over four years ahead of purchasing a fraction stake (34%) in Seiyu in 2002. In show up 2005, Wal-Mart increased the stake to 54% and made Seiyu an auxilliary brand. Wal-Mart thinks that reaching to market faster doesn't necessarily equate to being better. The goal is to set up Retail Website link, a " Just Over time (JIT)вЂќ products on hand replenishment and provide chain management system shared between retailer and supplier that effectively reduces the flower nurseries and boosts payables and receivables collections. The purchase of Seiyu provides Wal-Mart power with community manufacturers and may help to work out direct deals. However , you will find risks connected with this sluggish entry approach. The biggest menace to Wal-Mart in Asia will be coming from domestic competition like YEARS ON END and Ito-Yokado. Local compete with AEON, Japan's No . 2 retailer, needs to have 90 Wal-Mart design supercenters in suburban areas by the end of 2007,...