CAGE ANALYSIS

CULTURAL DISTANCE

Differences in Ethnicities
Religions
Language
Social Norms

ADMINISTRATIVE AND
GEOGRAPHICAL DISTANCE
ECONOMIC DISTANCE
LEGAL DISTANCE
Absence of Colonial
ties
Absence of shared
monetary or political
associations
Political hostility
Government policies
Institutional
weakness

Cost and quality of

Size of country
Topography
Natural, financial
Communication links
and Human
Transportation links
resources
Different information
Lack of common
border
and knowledge

CULTURAL DISTANCE

Space value- Accustomed to small shops and

personal service, while toys R us is a self-service
discount Warehouse
Toys are an integral part of Japanese national
identity
Japanese are deeply connected to their culture

and averse
to westernization in language, customs and

Values they
pass on to their offspring
Small retail shops were centres of village
neighbourhood in big cities
Small stores were a natural reflection of Japanese
way ofGEOGRAPHICAL DISTANCE
life shop everyday for small quantities of
goods

Suitable real estate- Japan had limited

amounts of land suitable for retailing

ADMINISTRATIVE AND LEGAL

Large employer -DISTANCE
Japans 1.4 million store
owners wielded considerable voting power
Large scale retail Law MITI responded to
small retailers demands by introducing the
large retailers to a rigorous screening process
Government reluctant to allow foreign players
to enter
Organized domestic resistance to
displacement
Japanese economy was unfairly closed to US
imports and investments

ECONOMIC DISTANCE
High cost of land acquisition - Land Prices
around Tokyo were at an all-time high
Finding local workers Japanese economy was
in a state of virtual full employment leading to
lack of top male
graduates
Know-how disadvantage Due to differences
in distribution systems

Is Japan a good market for Toys R us ? Can you sell toys like Barbie , X-men
etc. in Japan ?
Second largest toy market after
US. In 1991, Japanese toy market
grew by Y26 million
Falling birth rate parents spent
more on fewer children
Retail sales grew 94% in 1980s
making it a lucrative target
market
Consistently high GDP growth
rate 7%
Only two dominant national
players to overcome Chiyoda
and Marutomi
Initiation of administrative
reforms by MITI in 1989
Structural impediments initiative
to encourage trade relations with

Adaptation - Toys like

Barbie, X-men which
represent Western culture, can
sell in Japan provided they are
modified to accommodate the
Japanese culture.
Majority SKUs comprising of
Japanese toys with some stock
of Toys like Barbie, X-men
etc. because of increasing
exposure of Japanese
customers to western culture

Japanese takara barbie