Analysis of Global Business Expansion Essay Sample

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The article is mainly about the basic fact in the global toy industry, the Chinese market expression of large toy companies and the future plan of toys ‘R’ Us in China. The Article stands out the importance of culture differences and cultural localization.

Toy Industry Analysis—The entrance of the toy industry is low since the toy industry needs relatively inexpensive equipment, and its mainly cost comes from the labor cost, operation cost and marketing cost. Also, the switching cost of the toy industry is not that high, which means people have less brand loyalty and easy to switch from one to another brand. The power of buyer becomes stronger since the toy industry has expanded its range of target consumers. Furthermore, the bargaining power of supplier is strong since with its low level entry mode, the market has a large number of suppliers. Companies have strong bargaining powers so that the cost tends to decrease more and more. Moreover, since the industry lies in a mature stage in its lifecycle, the competitive rivalry is strong. It’s normal to trigger the pricing wars so that the industry is easy to suffer the loss of profit.

So important for toy industry is to localize product and understand the culture difference of market. In the article, it mentioned that the characteristic of the Chinese market is that due to the Chinese policy, each family only has one baby so that parents are willing to pay more on their children. What’s more, education plays an important role. It makes sense that why the suffered a failure in their famous product—Barbie dolls. And those companies which sell big box toys closed their stores continuously in China while the toy ‘R’ Us grows dramatically.

The success of the Toys ‘R’ Us is that they localized further than other competitors. In the product aspects, they emphasis on the learning-focus toys and carried toys and brands targeted to Chinese consumers, such as the TV and movie characters Pleasant Goat and Big Big Wolf. Also the placing strategy is to locate their stores, smaller than in the U.S., in the big shopping malls which are more attractive to Chinese shoppers. Since Chinese living standard increases dramatically, more affluent people are willing to pay for high quality product for their children. Thus, the Toys ‘R’ Us plans to open stores to sell high-end baby accessories, clothes and furniture. They expect strongly that baby market will be another huge potential market in China.

In the future, the Toys ‘R’ Us plans to target more consumers by providing more products lines such as tablet. Also they want to invest more in Chinese market to stand out their brand image and brand awareness. To launch it more successful in China, I personally suggest that the Toys ‘R’ Us needs to follow the consumer demand since the factors that influence consumers are variable in this industry, such as the parents’ age, the quality and the safety of the product, the brand image and the trend.

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