MGG495_MarketEntryPlanFinalReport

Southeast Asia Expansion Plan
ACE LIN
CHENGFENG JIANG
JEMILA HOYTE-KING
MAHO SAKA
CATHERINE CHAN
ROBERT NEWTON

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EXECUTIVE SUMMARY
This report was commissioned to examine potential international overseas
expansion opportunities for LASERTRON Inc. and provides an analysis and evaluation
of prospective markets in Southeast Asia. LASERTRON is a team-based laser tag
game system that has been in continuous development since 1988, showcased in the
LASERTRON interactive entertainment center dedicated to achieving the enjoyment of
its customers. Besides its single fully-owned location, LASERTRON Inc. sells its
technology to other entertainment centers, with 140 locations currently operating our
system.
To enter the Asian market, LASERTRON is altering its strategy to accelerate
expansion. We are implementing a plan to actively operate within Asia, particularly in
Japan, by partnering with an existing entertainment company, Round1. By partnering
with Round1, a company with over 100 locations for its entertainment facilities in Japan,
we eliminate our need to build from the ground up in Japan. We combine our two
strengths, managing a fun, family friendly attraction, as well as distributing our
specialized technology, into one operation.
Contracting a Joint-Venture with Round1 will provide better stability than the
alternative of selling our equipment to individual facilities. Additionally, by investing our
name in Round1, LASERTRON will be committed to achieving success for the benefit of
both Round1 and itself.

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CONTENTS PAGE
Executive summary........................................................................................................1
Contents…………………………………………………………………………………………2
Introduction to Company Selected…………………………………………………...…….3
Country and City Screening..........................................................................................6
Market Attractiveness……………………………………………………………………….12
Entry Mode Strategies Screening and Selection……………………………………….20
Implementation Issues.................................................................................................26
Conclusion....................................................................................................................28
References....................................................................................................................30
Appendices...................................................................................................................33

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Introduction to the company selected and its range of products/services
LASERTRON is an interactive entertainment center, which offers a laser tag
area, outdoor go-kart track area, cyber sport arena, mini-golf area, arcade games area,
full bar, and a private party room for adults and their families. LASERTRON began from
an idea of two brothers who wanted to develop a game of laser tag with a “Star Wars”
theme. The idea turned into reality when a business plan was developed at Canisius
College in Buffalo in the spring of 1986. In the fall of 1986, LASERTRON business was
incorporated and the first LASERTRON LT-1 laser tag system began (LASERTRON-
Our story, 2015). There are many fun activity areas in LASERTRON now, but at the
beginning, there was only the laser tag area.
In the fall of 1986, LASERTRON business was incorporated and the first
LASERTRON LT-1 laser tag system began. LASERTRON was not very successful at
first. They were not known, and on the first day only a few people play their game.
LASERTRON suffered years of loss but nobody gave up. They continue to develop their
laser tag system better and better. In the early 2000s when a huge breakout came
along where LASERTRON actually profited instead of loss. They begin to expand their
area by adding on arcade games to attract more customers. Now LASERTRON
operates on a ground of 5500 square ft. The hard business value that made
LASERTRON successful today is because of the amount of failures they experience.
The company’s mindset, determination, and the mistakes learn help them to be where
they are today.

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There is one actual center existing in Amherst near Buffalo, New York, which
was founded in 1988. In addition, they are planning to open one more in Henrietta near
Rochester, New York. However, basically they offer their system of laser tag game to
other entertainment centers across the United States and around the world. Also, they
manufacture laser tag equipment and arenas. Now, there are 131 clients who operate
the LASERTRON game system and arenas all over the world (LASERTRON-Our story,
2015). Their objectives are to provide a fun time to customers and to continue the
never ending pursuit for cooler and more exciting high tech multi-player entertainment.
Our group considered entering foreign markets because laser tag is a new, fun
activity and LASERTRON has already succeeded in entering foreign markets
throughout the United States, Canada, Asia and Europe. There are over 153 clients that
have invested in, and are successfully operating LASERTRON professional laser tag
game system (LASERTRON-Where to play, 2015). In fact, there are five places in Asia,
which are in Malaysia, Saudi Arabia, Jordan, Qatar and Azerbaijan; however, mostly
they are in America. When we looked up GDP of Singapore, Japan and Hong Kong,
these three country’s GDP is bigger than any other Asian countries that already have
the LASERTRON system setup. We decided, therefore, that it is time for LASERTRON
to expand their market share in Asia. After screening criteria for Singapore, Japan and
Hong Kong, the result is that Japan will be the ideal candidate for overseas expansion.
After screening which countries are promising prospects for LASERTRON and deciding
to enter in Japan, we needed to select which city in Japan we should target. For
preliminary screening, we selected Tokyo city, Osaka city, and Fukuoka city which are
three largest cities in Japan. Our city screening led us to choose Tokyo city because of

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its population size, and the amount of entertainment centers already existing there,
which would be our primary clients. Next, we conducted entry screening. The possible
entry mode candidates for LASERTRON were licensing, franchising, and contractual
joint venture. In result, we decided that our best option is to go into a joint venture with
an existing Japanese arcade/activity center company.
Consumer Profile: LASERTRON
a. Who uses the product?
- People who want group activities in game centers
- Plan birthday or hang out rooms
- People interested in guns, laser guns, shooting games
- Place to spend a wonderful and fun day with family
- Age 16+
b. How is the product used?
- Birthday parties
- relief stress through being physically active with sports
- practice shooting
c. Where is the product bought?
- are not sold to the public
d. When is the product bought?
- All year long but better in warmer climate
Company sales potential:
1. Entry condition: safety on equipment, logistical costs
2. Competitive audit: (Indirect) Escape the room, War game, Disneyland,
Ryze Ultimate Trampoline Park http://www.ryzehongkong.com/Pricing, Ocean park
3. Lasertron provides unique service like renting a room for meeting, has
special programs for various parties such as graduation, new years eve, and summer
camps, and bachelor parties.
Distribution Channel: joint venture will help to advertise our new product.

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Country and City Screenings
Before deciding which country we would bring our company, Lasertron as a
team, conducted a vigorous screening process of two of the most prosperous countries
in Asia: Hong Kong and Japan, as well as one of the largest and most prosperous
economies in Southeast Asia, Singapore. When creating our screening criteria, we
separated them into three different categories, which included political, social and
cultural and economic screening criteria and assigned them a weight based on how
important we thought the criteria were for us to successfully run our business in that
country. Our weight scores of all 14 criteria totaled 1. Starting with political, we
researched taxation in each country including consumer, corporate, and importation
taxes giving it a weight of .13, legislation (violent game laws and laser laws) with a
weight of .11 and the country’s corruption index (.01). Our economic criteria included
the average percentage of discretionary income (.14), number of laser tag centers in the
region (.09), total population (.03), average total income per family (.04), GDP growth
(.04), purchasing power (.07), and the exchange rate (.11). Lastly, our social criteria
included religious sensitivity in the country (.02), minimum wage (.02), popular sports
(violent vs. nonviolent) (.01) and age distribution (.18). We then also needed to make a
rating scale to quantitatively rate each country based on their congruency to the criteria.
We rated it 1-5, one being very poor, two-poor, 3-average, 4-good, and 5-excellent.
The first country we researched was Singapore. We found that in Singapore, the
average consumer, corporate, and importation tax are 7%, 17%, and 7%, respectively
(Trading Economy, 2015). Due to the fact that these rates were neither particularly
higher nor lower than the taxes in Japan and Hong Kong we gave Singapore a rating of

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3 for this criteria. In Singapore, in terms of legislation, there are a few licenses that you
need in order to operate lasers commercially. They include the N2 possession license
and NE license as well as the N4A or N4B license (National Environment Agency,
2015). This is quite a bit so we gave them a score of 2. Singapore’s corruption index is
84/100 (Transparency International, 2015), zero being a country with that is highly
corrupt to 100 which is a country with 100% transparency. This makes Singapore the 7th
least corrupt country in the world, for this reason we gave it a score of 5. In Singapore,
the average discretionary income is $76,236 SGD, getting a 4 score. They also have
about 11 other laser tag centers in the country (Google Maps, 2015), relatively speaking
this is not a lot, so we gave them a 2. The total population is 5.47 million earning them
a score of 3 (Transparency International, 2015). An average total income per family of
$8,292 SGD got them another high score of 4 (Department of Statistics Singapore,
2015). Singapore’s GDP growth comes to $55,82.48 USD as well as 429% purchasing
power (Trading Economy, 2015) and 1.34 exchange rate between Singapore Dollars
and U.S dollars get them three more scores of 4 (XE, 2015). Socially Singapore’s
scores were a bit lower. Getting average scores (3) when it comes to religious
sensitivity, popular sports (mainly non-violent and non-contact), and age distribution.
Unfortunately for us it seems that in Singapore, only 17.8 % of their population is
between 15-24 (Department of Statistics Singapore, 2015). Their largest percentage is
50.3 being from the age of 25-54, which unfortunately not our target age group.
Singapore, not having a minimum wage also earned them a score of 2 in that category.
After multiplying the weight and the rating of each criterion, the overall sum, and total
score for Singapore came to 3.2.

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Next, we looked into Hong Kong. In Hong Kong the average consumer,
corporate, and importation tax are 17%, 16%, and 12% (Euromonitor International,
2015). These rates were all relatively high we so gave them a score of 2. In Hong Kong
there are no legislation or laws against lasers use unlike in Singapore, which makes it
just that much easier for us to penetrate the Hong Kong laser tag market. For that
reason we gave them a 5 rating for that criterion. Hong Kong’s corruption index is
74/100 (Transparency International, 2015). This makes Hong Kong decently safe but
the most corrupt out of our 3 countries earning them a score of 2. In Hong Kong, the
average discretionary income is $31,034SGD (Transparency International, 2015),
although this is not low, it isn’t particularly high so we gave them an average 3 score.
They also only have one other laser tag center in the country. This is good for us
because it shows the laser tag market in Hong Kong has not really been explored much,
and because of their large population of 7.18 million (Census and Statistics Department,
The Government of the Hong Kong Special Administrative Region, 2015), which got
them a 5 score on our point system, offers us a vast amount of consumers. The
average total income per family of $4,075 SGD, nearly half of what it is in Singapore,
and pretty low in general gave them a poor score of 1(Euromonitor International, 2015).
Hong Kong’s GDP growth comes to $38,090 USD (Trading Economy, 2015) as well as
290% purchasing power and 7.721 exchange rates between the Hong Kong Dollar
(HKD) and U.S dollars (XE, 2015) get them three average scores of 3. Socially, Hong
Kong’s scores are a lot higher than scores in other categories and even higher when
compared to Singapore’s social scores. They received a 5 score for their high minimum
wage of $35.5 an hour (Labour Department, The Government of the Hong Kong Special

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Administrative Region, 2015), as well a 4 scores for average popular sports, mostly
being contact sports such as football and basketball (Hong Kong Public Libraries;
Sports and Fitness Information, 2014). And 2, 3 scores for religious sensitivity, and age
distribution due to the fact that 11% of their population is between the ages of 12-25
(Census and Statistics Department, The Government of the Hong Kong Special
Administrative Region, 2015). After doing the same calculations as for Singapore, Hong
Kong’s overall score came to be 3.26.
Lastly, we researched Japan. We found that in Japan, the average consumer,
corporate, and importation tax are 8%, 33%, and 3% (Trading Economy, 2015), this is
relatively low so we gave a score of 4. In Japan, just like in Hong Kong, there is also no
legislation or laws against lasers. We also gave them a 5 rating for that criterion.
Japan’s corruption index is 76/100 (Transparency International, 2015). This is higher
than that of Hong Kong but still lower than Singapore’s earning them a 4 rating. The
average discretionary income is $26,111SGD in Japan; comparatively this is quite low
so they got a 2 rating. They also only have one other laser tag center in the country.
And although the population is not as large as Hong Kong’s, coming in at 127 million
this still a benefit and we rated them with a 5 and 3 score respectively. The average
total income per family is $3,862SGD, which is also pretty low so we gave them a poor
score of 1. Japan’s GDP growth is $38,633 USD (Trading Economy, 2015) as well a
123.08 exchange rates with the U.S dollars (J.P. Morgan, 2015) get them a 2 and 3
score. Socially, Japan is very average receiving 3 high minimum wage of $5.50 USD to
$7.42 an hour, popular sports, religious sensitivity, and age distribution. In Japan 9.7%

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of their population is between the ages of 12-25 (Index Mundi, 2015). Japan’s overall
score came to be 3.29.
After finishing our vigorous screening process of Hong Kong, Singapore and
Japan, weighing each of our factors, and giving each location a total score, we found
out that Japan would be the best country for us to start our Lasertron business abroad,
seeing as they received the highest score of 3.29. Next we did the same thing with
much less criteria for three different cities in Japan, which included Tokyo, Osaka and
Fukuoka. Based on the population, average income, consumer price index, location,
and entertainment centers we gave the following weights; .05, .2, .3, .2, and .25. These
again all add up to 1.
Our first city was Tokyo. Tokyo has a population of 13.35 million (5) (Tokyo
Metropolitan Government, 2015), an average income of 4,187 USD monthly (4) (Salary
Explorer, 2015), a consumer price index of 103.7 (4) (Statistics Bureau Japan, 2015), it
is the capital (4), and has 1112 other game centers in the city (5) (Todo-ran, 2015). The
sum of the ratings and the weights for Tokyo came to be 4.3.
Next was Osaka. Osaka has a population of nearly 3 million (World Population
Statistics, 2015) (3), an average income of 3,713 USD monthly (3) (Salary Explorer,
2015), a consumer price index of 103.6 (Osaka Prefecture Government, 2015) (4), it is
the city (2), and has 444 other game centers in the city (3) (Todo-ran, 2015). The sum of
the ratings and the weights for Osaka was 3.1.
Fukuoka was our last researched city. Fukuoka has a population of 1,527,612
(Foreign Press Center, 2015) (1), an average income of 22,655 USD monthly (Career
Cross, 2015) (2), a consumer price index of 98 (Fukuoka Facts, 2015) (2), it is also a

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city (2), and there are 292 other game centers in the city (Todo-ran, 2015) (2). The sum
of the ratings and the weights for Fukuoka came to be 2.35.
After this 2nd round of screenings for cities we found that Tokyo would be the best
city in Japan for us to start outsourcing our lasers.

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MARKET ATTRACTIVENESS AND POTENTIAL
Reason for selecting Tokyo as the entry market
Japan has been the world leader in technology for decades. Being the capital of
Japan, Tokyo is now welcoming the technological inventors around the world to bring
their specialized skill into its city. Simultaneously, Lasertron is now looking for a new
market for expansion. With the existing huge demand for arcade entertainment facilities
in Japan, Tokyo is for sure an attractive place for Lasertron to reap profits.
Segmentation
Demographic Segmentation:
We will segment the market by the age. For lasertron, we chose to target the
group aged between 16 to 40. This segment consists of Gen Y and part of the young
Gen X. We found that the Gen Y and the Young Gen X in Japan are relying so much
on the social activities during their free time. They prefer spending their time to hang out
with the groups rather than staying alone most of the time. The sociable characteristic of
this group are sharply matched with the social based facilities that Lasertron offers.
Benefit Segmentation:
We will segment the market by dividing it based upon the emotional benefit
consumer look for. For lasertron, we chose to target those who are seeking for the
feeling of fantasy and excitement within a group. Citizens in Japan are suffering from

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lots of pressure in their daily lives. The news on natural disaster and economic
downturn comes unpredictably from times to times. According to the Life Satisfaction
Index from OECD, Japan was given a 5.9 grade, which is lower than the average of
6.6.(OECD Better Life Index, 2015) As a result, many Japanese are looking for ways,
like entertainment centers, to escape from their stress during their past time.
Targeting
The target market of lasertron would be the Gen Y and young Gen X who seeks
for a fantastic, unrealistic, and exciting group experience during their leisure time.
Lasertron can satisfy their needs by providing them a virtual gaming environment as a
reunion event.
Positioning
The unique selling point of lasertron is its high quality and reliable Laser Tag
Game Systems and Arenas. Lasertron offers an excellent reliability by providing the
clients with a "Bumper to Bumper" warranty and the supporting from International
LASERTRON Alliance. The dedicate testing for the laser equipment provided a safe
environment for the users which guarantees the best enjoyment and quality users can
gain from its entertainment centre.
Market Attractiveness
In order to estimate the market attractiveness, we should concern about the
economic and cultural characteristic of Tokyo as well as the current stage of

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development of Round One. We would consider whether the potential risk is bearable
and the lure factors that the market offers so as to determine whether the selected city,
Tokyo, is attractive enough for entering.
1.1 Large Market Size
The market size can be divided into two parts, e.g. Tokyo and Round One.
Tokyo
The population size is big in Tokyo with 13,230,000 Japanese in 2012, which
occupies about 10% of the total population of Japan. It is estimated that the target
market size would be approximately 6,329,940 people for the arcade entertainment
sector. In general, most of our target customers are affordable for the leisure pursuit
since the average monthly disposable income is 463,827 Yen (roughly 3750USD) for
every of the household in Japan. (City Cost,2015)The high population size and relatively
high disposable income level of Tokyo contributes to be an attractive reason for doing
arcade entertainment business over there.
Round One
By the end of 2014, Round One owns 111 stores in Japan. (Round One SR
Research Report, 2015)The number of standard stores is 66 and stadium store is 45.
Also, the company has opened new centres every year from 2006 onwards, such as 4
stores in 2013 and 1 store in 2014, while the core markets are gradually shrinking and
numerous of competitors have withdrawn in the recent years. The findings suggested

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that Round One is gradually become a major nationwide operator of amusement
complex in Japan. Since Round One has a high presence in the industry, Lasertron can
probably benefit from this advantageous position.
Round1 is a bowling amusement corporation. Mostly, the bowling area is the
largest and main area. In addition, there are game centers, karaoke, and SPO-CHA.
SPO-CHA is an attraction that, for a flat rate, offers multiple sports and entertainment
options, such as billiards, batting cage, basketball, rodeo, table tennis and over 30 other
attractions. Also, they have kids SPO-CHA so kids can have fun in Round1 with family.
Moreover, there is a relaxation area, where people can read comics for free and can
use exercise machines. Bowling’s price is under 10 dollars for 3 games.
Round1 was founded in 1980. The first store is established in Sakai city, Osaka
in 1993. Now, there are 118 stores including 5 stores in overseas. The capital of this
company is 25.2 billion JPY in 2014. Employees are 1,443 people in 2014. Now,
Japanese young people tend not to have cars, so to get customers they think
“transportation” is strongly related with their profit. Thus, they started a free shuttle bus
system. Also, they put their back into advertisement on TV commercial. Now, Round1 is
a well known company in Japan, so they focus on advertisement of discount services.
Furthermore, they like to do collaboration with comic characters. So far, they have
collaborated with Hello kitty, One Piece, Toy story, Disney characters, Monsters Inc,
Cars and so on. This collaboration effects for their income a lot.
Now, we are going to shift to Round1 as a joint venture. Firstly, Lasertron needs
space to play. So, we think it is better to replace some activities to put Lasertron into
Round1. There are two possibilities to put Lasertron area to Round1. First, when we

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look up activities in Round1, we can think replacing or decreasing the space of Karaoke
area because Round1’s karaoke is more expensive compared with other karaoke
stores. Honestly, because there are more than 100,000 karaoke boxes and buildings in
Japan, people are not attracted to Round1’s karaoke so much. Largely, people who
come to Round1 are going to play bowling because bowling is the main amusement
area. Next, we can think decreasing the game area or SPO-CHA area. Even though
there are so many kinds of activities in SPO-CHA area, they have popular activities and
not popular activities. Also, in the game area there are many medal games and prize
claw games, but not so many people play the games because you must pay money
constantly for them. Therefore, it is possible to replace with Lasertron to cut some of
these areas. In conclusion, we can think that karaoke area, cutting some game area
and SPO-CHA area are the possibilities to replace with Lasertron.
1.2 Easy for entering the market
According to the survey on the Amusement industry from JAMMA, the
Amusement Arcades Facilities are having a declining trend. In 2006, the number of it
was 23,902. After 6 years, the number has reduced to 18,114.(CAPCOM, 2013) It
shows that the arcade entertainment market is really competitive since it opens for the
market entering. Though it is not an attractive factor for us in long term, it implies there
is a need for the replacement of old arcade facilities with a more exciting and new
games. In other words, the entry of Lasertron will be an attempt for Round One to
replace the unprofitable facilities.

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1.3 Culture Acceptance in Tokyo
Consisting of two famous teen fashion hubs, Shibuya and Harajuku, Tokyo has a
high opportunity to profit from the economics of scale of the existing environment.
Shibuya and Harajuku are the birthplaces of most of the Japanese teen fashion and
entertainment trends. The survey conducted by Modern Tokyo Times in 2014 shows
that the young ladies aged between 18 to 26 have chosen Tokyo as their first favorite
place in Japan.(Modern Tokyo News, 2014) The results supports that Tokyo is definitely
an attractive place for entering since the cultural acceptance of Lasertron is high for the
local people.
1.4 Sales Projection
Round One has reached 41.5% sales in amusement in 2014, which is a 1.2% rise from
the sales of last year. (Round One SR Research Report, 2015) Although the increasing
rate is not very stable throughout the past five years, the sales of lasertron can at least
remains in the range from 38% to 42%. The market attractiveness of the predicted sales
of Round One in the future is medium.
Risk
Shrinking market for the arcade entertainment industry
The number of players in the arcade entertainment industry is on a downward trend in
the recent years. There are numerous of factors that contributed to this phenomenon.
One of the possible reason would be the arcade facilities is no longer attractive that
Japanese would rather spend time on other entertainment field during their past time.

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Industry Market Potential
Annual
growth
rate
High Lasertron: Accept
Medium
Small
Small Medium High
Current Market Size
Lasertron is currently owns 153 clients that have invested in the operation of
LASERTRON professional laser tag game system. With the start of entering some of
the host countries, Lasertron has already become a medium sized company. Because
of the international expansion strategy, Lasertron are now increasingly having presence
over the laser tag game market and its size of market are already reached a medium
level.
The annual growth rate would be high for lasertron since the market of arcade
entertainment in Tokyo is not saturated yet, but just experiencing the stage of weeding
out the weak and unprofitable amusement alternative. With the safety and high quality
equipment and facilities, lasertron have a high potential for reaching a excellent growing
prospect in the future. Therefore, the Industry Market Potential in Tokyo is high for
lasertron.

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1-Very poor; 2-poor; 3-Fair; 4-good; 5-Very good
1. Market Potential – result obtained from IMP estimation
2. Non-Export Entry Condition – Although we have mentioned the arcade entertainment
market is open for competition, some specific requirements on arcade industry in Japan
are something we should be aware of when entering into an entirely different country.
Japan Amusement Machine and Marketing Association, Inc (JAMMA) has set a list of
standard and guidelines for arcade operators to obey for doing arcade business in
Japan. Thus, the non-Export Entry Condition in Tokyo is set to be fair.
3. Consumers/ users- Japanese people are more sociable in general and live in a
stressful environment for a long time. Their borned-characteristic offers an excellent
opportunity for lasertron to enter the market.
4. Company sales potential – The data from Round One reflected that the sales are
quite fluctuated over the past few years, with a minor increase or decrease. However,
laser tag game is a relatively new arcade facilities in Tokyo. Thus, we believe the sales
potential would be in a middle level at the introductory stage but would be high in long
term.

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5. Competitive audit – As mentioned before, the numbers of players in the industry are
declining. In other words, the obstacle from the competitors is reduced. This make us
easier to enter the market and build a profitable portfolio at the beginning stage.
Therefore, we rated it as good.
Summary on Market Attractiveness
Based on the findings and the evaluation on IMP and CSP, we can conclude that Tokyo
is an attractive place for expansion. With the excellent competitive environment,
compatible culture,big size of market and the great economic characteristic of Tokyo,
we decide to bring lasertron into the Japanese market. Still, we should keep an eye on
the possible risk of the market. For example, we should put more resource on
identifying the possible solution for minimize the risk.
Entry Mode Strategies Screening and selection
Through an extensive of research and screening, our company has decided to
target Tokyo, Japan for our overseas expansion. Japan is a highly technologically
advanced country and we found a potential business partner in Round1.co, with whom
we hope to work to expand our company. First of all, through the understanding of our
company, we would need to enter the Japanese market efficiently. We have shortlisted
three plausible entry modes that would help LaserTron gain a foothold in Japan; they
are Licensing, Franchising, and Contractual Joint-Venture.
1. Licensing is an option for market entry because it would provide us the
opportunity to enter the market by the sale of our equipment in Tokyo Japan. Through
this choice, we would not need a physical store location in Tokyo and would therefore

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save abundantly on operating costs. We would only need to sell our product to Round1
co as a distributor. There are many factors involved in this action and would further
explain through our criteria shortlist.
2. Franchising is another option for us to enter the market. We will be the
franchiser looking for a franchisee to fill the spot and we have the franchisee round1co.
Franchising would bring a physical store location into Tokyo, and the system would be
run exactly as LaserTron in the United States. There are many laser tag games out in
the public but the selling point of LaserTron is the game system itself and its unique
equipment. Franchise would be a great option to expand not only our business but our
brand as well because it will get the LaserTron name itself more well-known rather than
being viewed as just another laser tag game.
3. Joint-Venture is our last shortlisted option. We think Joint-Venture would
be a good option because LaserTron is not very famous so it could be very risky to
expand overseas without prior recognition. If we are able to join and partner with a
known company such as Round1 in Japan, then the chances of LaserTron getting
known would greatly increase. There would be a contract and we would want to have
plans of our own if LaserTron does get popular and we do believe that it will.
Through these three entry modes, there are still many things to consider before
deciding which entry mode is best for our company. A list of screening criteria was
created to break down the benefits and risks involved with the execution of each entry
mode. Each entry mode would lead to a totally different business for LaserTron and we
must analyze and decide very carefully because the success of the company depends
on the entry mode.

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The list of screening criteria includes the following:
· Cost (capital requirement)
· Resource commitment
· Risk (technological)
· Intellectual Property Protection
· Reversibility
· Profitability
· Speed of market entry
· Long term sustainability
1. Cost (capital requirement) – The cost incurred with the entry mode taken
place. This will include all type of costs involved, such as shipping cost, operating cost,
location cost, resources cost, etc… This is weighed as .3.
2. Resource commitment – Some of the entry mode options may involve
setting up an office in Tokyo to work with round1 or a distribution centre from which we
would house and ship our equipment. The office would include human resources, office
equipment, and operating costs and would provide to us a base of operations abroad so
that we don’t have to fly back and forth to discuss meetings or deal with issues that may
potentially arise. This is weighed as .02.
3. Risk (technological) – Defects or impairments in our equipment may occur
and need immediate replacement or repair. An office would be needed for repair teams
to give quick assistance and maintenance. This is weighed as .05.
4. Intellectual Property Protection – The cost of protecting our equipment
from being duplicated or sold by a third party other than ourselves. The LaserTron
system is unique especially because of our advanced technology which has been
researched and tested to be better than any competing laser tag system. Patents,
copyrights, and IPP will be applied to protect our investments. This is weighed as .25.

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5. Reversibility- The importance of being able to terminate our business
abroad if anything goes wrong. It is important to minimize our losses if a necessary
situation arises. We would rate this base on which entry mode is easy to pull back after
deficit or misfortune. This is weighed as .03.
6. Profitability – This would be dependent on which entry mode would best
profit our company. Each entry mode would have a different type of business model and
to make money is the basic goal of anything business. This would be rated on its
importance and which can make the greatest profit. This is weighed as .2.
7. Speed of entry – This decision would be rated on which entry mode of the
three can let us enter the market the fastest. Entering the market sooner would profit us
better. This is weighed as .05.
8. Long term sustainability- This criteria measures which entry mode can
make LaserTron the most profitable in the future. The three entry modes will have
different outcomes in the long run and evaluation of it is very important. This is weighed
as .1.
Licensing strategy for market entry would be to enter the market quickly through
distributing LaserTron equipment to Round1.co. The cost would be the least; however,
the profit would also be the least due to the small percentage of royalties we would be
rewarded. The main system of LaserTron is its unique play style and Laser equipment
so, because licensing allows us very little control over the operation and use of our
products, this woul d not benefit LaserTron in the long run. This would be a great option
to enter the market and make stable income through our distribution but it is also risky

24
because others may duplicate our products and distribute them on their own. This entry
mode receives an overall rating of 3.14.
Franchising would also be a profitable option. Franchising would require that we
open a physical location in Tokyo and run the business exactly the same as the mother
store in Buffalo, New York. This would provide us good long term sustainability and
would be a great way to get LaserTron known by establishing ourselves in the market.
We would need to commit a large initial investment to open a store in Japan, but the
long-term profits would be more than enough to offset the cost. Looking for franchisees
may be difficult because Laser Tag is not yet very popular in the Asian countries, and
investors may hesitate because they do not know how well Laser Tags will do. The
overall rating for franchising is 2.95.
Joint-Venture is the third entry mode we considered for our business. Our
company would join with Round1.co and operate in Japan. Round1.co has hundreds of
stores in Japan and if we work with them in this project we can get our brand known.
With our partnership with Round1, we seek to open LaserTron arenas within Round1
locations. We will still able to keep our name on our product, and the customers of
Round1 would know that the game they are playing is LaserTron versus licensing, in
which our brand would not be advertised. Our risks will be lower since we are working
closely with a well-established business, and we have the opportunity to break away
after our contract expires and run it on our own if our venture is successful. The difficulty
with Joint-venture arises in that we must prepare an attractive and persuasive plan to
convince Round1 to work with us. The overall rating for Joint-Venture, the highest of the
three options, is 3.2.

25
Our final decision of what entry mode we wish to implement is Joint-Venture. To
work with Round1.co as a partner is, for us, the most logical and profitable way to enter
the Japanese market. Round1 is already a well-known company and would add value
to us because we are new to the market. Another benefit is that we are able to keep the
name LaserTron on our product and our service, because we are partners and this
would be a great benefit for us in the future because we want to be known. We want to
further develop a market for future growth. The risk is also greatly lowered because
Round1 will draw in many customers for us. We would contract them for 5 years to
develop popularity for LaserTron, and by signing a contract to work together, we are
guaranteed stability during that period since Round1 already attracts such a large
audience. If we determine that it would be more profitable, we can potentially withdraw
from Round1 to start our own business after the term expires. If things go smoothly
then we can implement licensing or franchising after the contract expires.
To work as partners with Round1.co we will provide a thorough plan with contract to
appeal for partnership. Japan is a very technologically advanced country and
LaserTron provides a top technology game for friends and family to have a good time.
It is the perfect complement for the various game stations already found in Round1 as it
provides an entirely new and exciting experience that is equally as amusing as the other
attractions throughout the game centre. Surely many customers will join to try the new
laser games and the profits for both LaserTron and Round1 would greatly increase.

26
IMPLEMENTATION ISSUES
We introduce our business, Lasertron into Tokyo, Japan through joint venture
with a a local popular arcade company called Round 1. Besides various market
attractiveness and potential we have talked about, it is critical for us to consider some
possible implementation issues we might encounter. In order to succeed, the following
aspects should be paid attention to by potential joint venture partners:
1. Commercial consideration and Marketing issues
Advertisements can cause a natural fundamental mistrust base on the two
companies based on their similarities. They should avoid competing with partners by
stating clearly what information they should share with each other and what information
they should reserve. Reconstruct company’s operation to avoid conflict of interest if
necessary.
2. Technology breakdown and maintenance
Company need a backup plan to repair or replace equipment if broken or
damage. A specific time such as every few months is need to do a maintenance to
make sure the equipments are functioning well and safely. Human technician will be
need for this project. An office will be need in Tokyo to keep track of functions there.
3. Training center for local employees
Since we are planning to open a store in Tokyo, our company needs to send
people overseas to train the local employees how to use the Lasertron system. The
language barrier may present a problem, but will need to be solved when hiring local

27
employees by providing translations for all the instructions and demonstrations.
Employees need to be able to communicate with the parent company but also they
must be able to explain to Japanese customers.
4. Partner conflict (profit)
Setting up clear agreement stating each partner’s obligations toward the common
goal. Both partners should have realistic expectations for profit and have the agreement
on how the profit should be distributed such as loan payment and reinvesting a portion
of the profit to the joint venture.
5. Cultural differences and adaption
Japan is considered to be a more western country as compared to other Asian
countries, but there are still many cultural differences between Japan and the USA. For
example, Japan is high in power distance and social hierarchy is important. Japanese
bow when greeting seniors. And the population in Japan is 98 percent Japanese but
USA has more diversity in ethnicity and race (Hubpages, 2013).When initiating a joint
venture between two companies, combining two cultures of companies might cause
some conflicts to emerge. Japanese employees and American employees might use
different standards when solving problems. It is hard for one another to learn new
methods and change their way of thinking. The company should train managers and
employees how to adapt to the cultural difference.
7. Regular financial update

28
The company should have a plan on where they should spend money on and
how much they should spend appropriately. A dual signature might be required when
disbursing a joint check account. The company should also avoid rapid consumption of
capital in order to prevent the need to raise funds from taking additional loans. Having a
monthly financial statement along with providing invoice copies and bank statements is
necessary so that both partners can keep track of their financial status.
8. Exit strategies
The company should plan for all the scenarios in which their joint venture might
end. Joint venture partners might breach their agreement, or they may want to exit
because they are not satisfied with the partner relationships. Do not wait to plan an exit
strategy until the last minute.
CONCLUSION
Lasertron, Inc., having considered the alternatives, has firmly decided that a
Joint-Venture with Round1 in Japan will lead to our success in Asia.
Among our opportunities, including Singapore, Hong Kong, and Japan, Japan contains
the most promising market into which we can expand. Through the screening process,
Japan’s social, economic, and legislative factors proved to be a close match for what
LASERTRON seeks in a potential market.
Joint-Venture prevailed against the alternatives of Franchising and Licensing as
a market entry tactic because it offers the best profitability and is sustainable in the
long-term. Our strategy to work with Round1, if successful, will yield greater reward

29
than we could expect to earn on our own, and will help us to introduce our name to the
Japanese and Asian market.
LASERTRON is excited for its future in Asia, and we know that this is the first of
many opportunities for us to take our brand a step further on the global scale. With our
superior laser tag technology, we are confident that our company will flourish in Japan,
and wherever our future prospects may lead us as the leading name in interactive
entertainment.

30
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APPENDICES

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