“The key to success is in business strategy, not government intervention (Czinkota, 1999).” How can an multinational corporation (MNC) establish themselves in the Japanese marketplace? Czinkota’s quote above is how this can happen and his article will be analyzed for further insight into companies currently in Japan based on Czinkota’s article, the entry strategies and how an MNC can expand in the Japanese marketplace.
MNCs in Japan
According to Czinkota (1999), L.L. Bean Inc., Eddie Bauer Inc., and Land’s End Inc., are entrenched in Japan with stores. Using catalog mailings these companies achieved in Japan and were able to establish themselves.
- Land’s End, generated $80 million in sales in Japan in 1997.
- American International Group Inc. (AIG), is sold directly to the Japanese. McDonald’s Corp., has 2,000 outlets in Japan and annual sales of $2.5 billion.
- Morgan Stanley Dean Witter & Co. entered the Japanese financial services industry by opening retail branches in 1998 (Czinkota, 1999).
Entry Strategies & The Keiretsu
Earlier L.L. Bean Inc., Eddie Bauer Inc., and Land’s End Inc., were analyzed as being able to use catalog mailings to establish themselves in Japan. Studying how any of the aforementioned MNCs entered Japan would be invaluable to any MNC planning on entering the Japanese market. Would today’s method be via online social marketing? Would e-commerce be a solution? Would the Keirestu be an issue using these methods?
The Keiretsu groups are considered the most important impediment to MNCs entering into Japan. Keiretsu groups are lined to bank holdings, intercorporate shareholdings, and interlocking directorates. All of these are illegal in the United States. This can make it difficult for US MNCs to enter into this market and maintain their domestic ethical code.
Keiretsu is represented in Japanese as (Google, 2011), and means grouping of enterprises. According to Czinkota (1999), Keiretsu are often considered to deal predominantly with group members. This is a bias of “buy Japanese”, even in the face of superior products at lower price points. This would obviously hinder the entry for MNCs. Would Keiretsu be comparable to our term monopoly?
Expanding in Japan
Respondents to Czinkota’s article revealed that trade negotiations are still important with the Japanese government but are foreshadowed by the use of seasoned business practices (1999). This might not be the typical or common tactical method for an MNC, but the Japanese honor and regard solid business practice, therefore any MNC should follow suit.
Lastly, direct investment into Japan will aid in the expanding efforts of any MNC in Japan. Typically exports and trade are commonplace, but in Japan “seasoned business strategy-not government interventions-seem to help foreign firms (Czinkota, 1999). Market research, product adaptation, service orientation, willingness to collaborate, and long-term orientation are all tactics to a solid business strategy that will be most beneficial to the growth of an MNC in Japan.
The Japanese respect solid business practices, and the experts, according to Czinkota, support the theory that solid business strategy using tactics such as market research, product adaptation, service orientation, willingness to collaborate, and long-term orientation will aid in the expanding growth of an MNC in Japan. Entering Japan compliments these business strategies with on small difference, and that is finding a unique method in which to reach and captivate your audience. The examples listed a lot of direct mailing from companies that had success in the past. Today a more advantageous tactic could be the use of online social media.
Areas for Further Discussions
Albeit Czinkota made some valid points and arguments about the Japanese marketplace, the consistent reference to mail-order is a dated term, but relevant to the time of the articles creation, 1999. Mail-order is put on the same “future” consumer landscape as electronic commerce. If written today would this be different? Would social media have weight in Czinkota’s 2011 version? This would be a good topic for further discussion.
Lastly examining the Keiretsu would be beneficial to any MNC looking to establish in Japan. Are the Keiretsu comparable to our domestic term, monopoly? If there are similarities, how do companies tactically enter the marketplace? Studying the weaknesses of monopolies in the USA would be a good starting point for this topic.
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