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Daiso
The document analyzes potential markets for Daiso, focusing on Brazil, India, the UK, and China. It assesses strategic importance, ease of doing business, market entry barriers, competition intensity, and consumer profiles in each market, highlighting Brazil's complexity, India's regulatory challenges, the UK’s established competition, and China's evolving retail environment. The preferred market entry strategy includes rapid entry in China, combining local adaptation and partnerships to capture emerging consumer demand.
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Daiso
- 1. COMM 374- INTERNATIONALBUSINESS STRATEGY Cassandra Prokopiw Eric Thunem Jialing He Xander Zhi Kai Tan
- 2. Agenda ¡ Background Information ¡ Selection of Potential Markets Strategic Importance of Market Firm’s Ability to Exploit the Market ¡ Choice of Market for Entry ¡ Mode of Entry
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- 7. SELECTION OF POTENTIALMARKETS
- 8. Selection of PotentialMarkets
- 9. BRAZIL Strategic Importance ofMarket Moderate Market Size Moderate Market Growth Population: 203 Million Economy Growth: World’s 5th most populous country GDP (PPP) $10,800 @ 3% growth rate GDP: 2.518 trillion USD Retail Sales Growth: Ranked 6th 6 to 7% annually from 2011 to 2015 World's largest retail market. Consumer Spending: Benefited by job and income increase, credit expansion and a relatively strong currency
- 10. BRAZIL Strategic Importance ofMarket Low Ease of Doing Business • Complex legal, accounting & bureaucratic issues Corruption Perceptions Index: 3.8 • Long & time-consuming • Lack of transparency administrative process Ease of Starting a Protecting Paying Trading Enforcing Doing Business Investors Taxes Across Contracts Business Borders 126 120 79 150 121 118
- 11. BRAZIL Learning Potential Moderate- HighPresence of Sophisticated Consumers • Flexible and innovative consumers • Price and value consciousness heavily influences Brazilian consumers’ shopping behavior.
- 12. BRAZIL Firm’s Ability toexploit the Market High Entry Barriers Low- Moderate Firm’s local- specific knowledge Highly regulated & complicated tax • No previous experience in doing system business in South America Heavy taxes increased • Cost of labor • Compensates by its overseas • Consumer prices expansion experience in Asia, Australia, Middle East, North Bureaucratic procedures & onerous America product licensing increase • Cost of doing business Fragmented nature of distribution channels • Challenging logistics
- 13. BRAZIL Firm’s Ability toExploit the Market High Intensity of Competition Fierce competition from local and global players 1. Grupo Pao de Acucar 2. Carrefour 3. Wal-mart Large retailers have launched new formats (mainly discount stores) to address lower-income consumers’ demand for price and convenience.
- 14. BRAZIL CAGE Distance High CulturalDistance High Geographical Distance • Differences in languages, • Situated very far from Daiso’s ethnicities, religion and social headquarters (Hiroshima norms Prefecture) Moderate Economical High Administrative Distance Distance • Regulations and policies in • Enlargement of a middle class Brazil are very different from that has a desire for Daiso’s those in Japan consumer goods
- 15. INDIA Strategic Importance ofMarket Large Market Size Moderate Market Growth Population Economy Growth 1.2 Billion GDP (PPP) $3,700 @ 7% growth rate GDP: 1.843 trillion USD (ranked 161 in the world) Ranked 10th Retail Sales Growth Market size of US$500 billion with expected growth of 7%
- 16. INDIA Strategic Importance ofMarket Low Ease of Doing Business • Despite market potential, it is not easy to do business in India Corruption Perceptions Index: 3.1 • Lack of transparency • Government protection of unorganized retail Ease of Starting a Protecting Paying Trading Enforcing Doing Business Investors Taxes Across Contracts Business Borders 132 166 46 147 109 182
- 17. INDIA Learning Potential Presence ofSophisticated Consumers • Introduction of Internet increases consumers’ awareness of different products • Introduction of shops providing multiplicity of choice at discounted price
- 18. INDIA Firm’s Ability toexploit the Market High Entry Barriers Low to Moderate Firm’s local- specific knowledge Regulatory Constraints • Limited knowledge • Real estate laws, relevant for • Great market to expand into distribution centers and offices given expanding Tier-2 and • Government resistance in Tier-3 cities order to keep interests of unorganized retail
- 19. INDIA Firm’s Ability toexploit the Market High Intensity of Local Competition - Presence of Kirana shops - Two organized retail giants - Pantaloon Retail (India) Limited - Trent (Tata)
- 20. INDIA CAGE Distance Moderate-High Cultural High Geographical Distance Distance • Entered Qatar and Kuwait but • Preference to work with locals India’s culture is still distinct and • Government allows 51% FDI but unique for one-brand shops only Moderate Economical High Administrative Distance Distance • Shortage of trained manpower • Low income level but rising, thus Daiso’s products may be • Fragmented distribution and appealing retail networks
- 21. UK Strategic Importance ofMarket Moderate Market Size Low Market Growth • Population: 62.7 million • Market Growth • Growth rate: 0.56% • GDP (PPP): 35,974 @ 1.4% growth • GDP: 2.481 trillion (Ranked 22 in the world) • Retail Sales Growth Size of US $469 billion Expected growth: 15% in next five years
- 22. UK Strategic Importance ofMarket High Ease of Doing Business Low Ease of Doing Business • Ranked 7th out of 183 countries Corruption Perceptions Index: 7.6 • Almost completely transparent Ease of Starting a Protecting Paying Trading Enforcing Doing Business Investors Taxes Across Contracts Business Borders 7 19 10 24 13 21
- 23. UK Learning Potential Moderate Presenceof Sophisticated Consumers • Presence of established local discount competitors who compete on price • Presence of higher-income consumers who demand quality, innovation and uniqueness
- 24. UK Firm’s Ability toexploit the Market Low Entry Barriers Moderate- High Firm’s local- Intensity of Local Competition specific knowledge • Import barriers on certain food • Previous success in Canada & and non-food items U.S. • E.g. plastic kitchenware from China and Hong Kong • Specific products not of animal • No need for technical or sales original under harmonized expertise controls in EU • Large, established distribution network
- 25. UK Firm’s Ability toexploit the Market Moderate Intensity of Local Competition • Three strong competitors with large shares of the discount retail market • Poundstretcher • Poundland • 99p Stores • Sell many of the same items • Operations only in UK • Target lower-income segment of market – low quality & low price • Less than 3500 different products
- 26. UK CAGE Distance High CulturalDistance High Geographical Distance • Differ in language, ethnicities, • Varying density religions, and social norms • Developed infrastructure • Need to translate labels • Significant physical distance • Need for local adaptation Low Administrative Distance Low Economical Distance • No political hostility or • Sufficient quality of institutional weakness infrastructure, human resources, financial resources, • Different currency natural resources, and • Varying government policies knowledge.
- 27. CHINA Strategic Importance ofMarket Moderate Market Size Low Market Growth Market Size 5.93 trillion Economy Growth Population: 1.3 billion GDP growth: 10.4% Retail Market: $2.1 trillion Retail Sales Growth: 16.3% (2011 Discount stores: $485,903.5 million Q1) of latent demand 2011, expected Rank 6 on the A.T. Kearney Global to grow to $788,246.02 million in Retail Development Index 2011 2016 Consumer Spending: expected to increase by $100 billion per year
- 28. CHINA Strategic Importance ofMarket Low Ease of Doing Business • Starting a business, and Corruption Perceptions Index: 3.6 dealing with construction permits are the most difficult • High levels of corruption processes Ease of Starting a Protecting Paying Trading Enforcing Doing Business Investors Taxes Across Contracts Business Borders 91 151 97 122 60 16
- 29. CHINA Learning Potential High Presenceof Presence of Sophisticated Sophisticated Consumers Customers • Large foreign investment in retail has changed the business environment to one involving modern management techniques and brand recognition • Very sophisticated competitors – Wal-Mart and Carrefour • Chinese consumers are becoming more sophisticated
- 30. CHINA Firm’s Ability toexploit the Market Moderate- High Entry Barriers Moderate Firm’s local-specific knowledge • Complex business licensing • Chinese market requires a processes and market access high-degree of local limitations specialization • Need to develop guanxi • Little knowledge of subcultures, • Retail market is dispersed and mainland consumers across large regions • Beachhead operations • Limited knowledge of subcultures • Have beachhead operations in Taiwan and Hong Kong
- 31. CHINA Firm’s Ability toexploit the Market Moderate Intensity of Local Competition • Strong rivalry among existing competitors. Many small and large retailers, and even the large players have small market shares (Wal-Mart only has around 6%) • Online shopping • Discount store market is still evolving and is less competitive
- 32. CHINA UK CAGE Distance Moderate- High High Cultural Distance Geographical Distance • Existence of multiple subcultures • Japan is relatively close to China • Different languages • Manufacturing bases exist in China • Different cultures despite their • Country is large, transportation links proximity are relatively weak Moderate Administrative Moderate Economic Distance Distance • Intellectual property rights has • Incomes are increasing been an issue • Lower cost of labor ect. • Negative sentiments towards the Japanese
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- 34. SUMMARY BRAZIL INDIA UK CHINA Market Size Moderate Large Moderate Large Market Moderate Moderate Low High Growth Ease of Doing Low Low High Low Business Presence of Moderate- Moderate Moderate High Sophisticated High Customers Entry Barriers High High Low Moderate- High Firm’s Local Low- Low- Moderate Moderate Knowledge Moderate Moderate Intensity of High High Moderate - Moderate Local High Competition CAGE High Moderate- Moderate Moderate Distance High
- 35. MARKET SELECTION High Strategic Importance of Market Low Low High Learning Potential
- 36. CHOICE OF MARKET High Strategic Importance of Market Phased-in Entry: Rapid Entry Beachhead Ignore for Now Opportunistic Entry Low Low High Learning Potential
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- 38. Entry Mode What type? Greenfieldoperation: Why? First Launch in Shanghai -Limited discount store - Already have a manufacturing competition base in Shanghai -Very westernized and developed - Highest latent demand city ($25,335.2 million), covers 5.22% of greater China, will almost double -Control over operations by 2016 -Have enough local knowledge - Might be beneficial to try a M&A - Restructuring of state owned retailers
- 39. Entry Strategy Rapid Entry -LocalAdaptation to Chinese market -Start in developed tier 1 cites, which have the highest demand, and then move to tier 2 and 3 cities -Start in East China -Ally with distributors -Concentrate on under- 40s -Strengthen the brand -Get celebrity endorsements - Internet Shopping