A. The target market will be two of the four distinct groups of women who set trends in Japan. One is young woman from the second post-war baby boom generation who is women born in the early 1970s. As consumers, they are “fashion literate” and feel very confident about their own choice. They are better able to weed out from the hype and sales pitches of advertisements what is relevant and useful. They set the trends more through word of mouth. The second group is the youngest trendsetters, which are those girls born in the early 1980s. They have a relatively strong sense of self. They grew up drawing the attention of their parents and grandparents. They like to attract the attention of others and they strive to be in the media. They not only feel attracted to but also exhibit openly their sub-cultures. Through their participation in the short-lived fads, they set the most conspicuous trends of sub-cultures. The main income level would be between minimum wage and salaries up to $100,000 a year. The income of the Japanese families grew almost 3 times in real terms during the 60 years until the mid-1990s. Household spending expanded 2.5 times over the same period of time. The population estimate will be around 16 million people who will be shopping in our stores. Most of them will be males and females between the ages of 18-35. The primary and secondary markets will be females and males between the ages 14-17 and 36-45. Others markets will be children and seniors. In a mature economy, as in Japan, consumers do not buy simply to meet their needs for subsistence or to improve their standard of living. They actively select goods and services in order to pursue the lifestyle they like. Through consumption of goods and services the Japanese began expressing their personal preferences. One, they buy goods or services as a means for expressing their choices. In other words, they are consuming selectively in order to establish their preferred lifestyles. Some consumers are already self-reliant in their selection of goods and services; others seek the advice and recommendations of those who are better experienced. Those who have not yet established their own criteria for selection often follow the advice of those who are considered connoisseurs. They tend to rely upon the information available in the media. Since the 1970s, Japan saw the largest variety of so-called lifestyle magazines born in the world. In those magazines the readers can get information on the goods and services they might consider in order to establish the lifestyle they want.
2. The potential location for our business is Shibuya Mark City. In recent years, a succession of new shopping complexes have been opening in Tokyo and other large metropolitan areas throughout Japan, all of which are focusing their efforts on luring adult consumers. Shibuya Mark City opened for business in early April 2000 in the Shibuya district of Tokyo. Shibuya has been a haven for young women in their late teens and early twenties. The area has likewise been called a Mecca for high-school girls. The city hopes to usher in a new era by targeting a slightly older range of consumers than commonly found in Shibuya-women aged 25 to 45. This is a perfect place for our business to be located because all our customers are right within our reach. Not only will we be catering to the needs of our business; we will also help Shibuya Mark City to bring in that new consumer that they are trying to reach. The requirement of the trade documents state that the trade deficit is due in part to the exchange rate between the United States` dollar and the Japanese yen. Since the dollar has been weaker on the exchange market in comparison to the yen, the United Stated is not able to produce as much income from the exports to Japan then the Japanese are able to on exports to the United States. In the last decade several trade agreements finally opened the Japanese market to U. S goods. The U.S-Japan Framework for Economic Partnership is an “attempt to resolve the imbalance in our bilateral economic relationship by addressing its macroeconomics, structural, and sectoral causes”. This agreement was largely responsible for opening Japanese areas of the market that had been previously been closed to foreign imports. With this trade agreement others say the trade deficit has taken a sharper decline between the United Sates and Japan.
IV. PLANNED OPRERATION OF THE PROPOSED BUSINESS
A. The type of ownership we will establish will be a corporation. Since we are already established as a foreign corporation, we will maintain our same structure overseas. The administration will be in charge of personnel, financial, legal, and public relations. The heads of production will be in charge of managing purchasing, manufacturing, distribution, and service. The marketing department will be responsible for advertising, sales, public relations, and service. We plan to take a staff of current board members and relocate them in Japan. We will also take some of our top marketing executives who specialize in foreign business promotions and relocate them as well. To handle all financial aspects, we will consult our current international financial department and take some of our employees to relocate as well.
Organizational chart—Business functions
B. Proposed product/service
1. The products that we offer are different according to which division they’re in. Here are short descriptions of different divisions and products for each brand: The Gap- From jeans and khakis to Pocket-Ts and Pro-Fleece, Gap is synonymous with classic, American style. Whether you’re shopping in one of our Gap, GapKids, BabyGap, GapBody, and Gap Outlet stores or at gap.com, we make finding modern clothes easy. The Banana Republic-With an emphasis on all things modern, relevant and versatile, Banana Republic is the ultimate destination for style-conscious shoppers. Customers feel it in every aspect of the brand — from personalized service to a distinctive shopping experience. We offer luxurious cashmere sweaters, business apparel, and evening and casual wear for the sophisticated and style conscious consumer. Banana Republic Catalog and BananaRepublic.com, enjoying the Banana Republic lifestyle is easier than ever. Old Navy offers a wide variety of jean and denim clothing, from Tech-Vests, to DrawString Pants, Old Navy is for the fun, fast paced, on-the-go type of customer. We offer an array of sizes and colors that run in turn with the seasons and a large selection of accessories which include hats, scarves, and a line of clothing with the logos of Magic the dog.
2. Gap Inc. works with third-party manufacturers in more than 50 countries, including the United States, to make the products we sell in our stores. Though we don’t own any manufacturing facilities, we developed a Code of Vendor conduct to ensure the factories we do business with make our clothes under safe and humane working conditions. To do this, Gap Inc. has a global network of more than 80 employees who must inspect and approve factories where orders are placed for the first time, and then monitor those factories on an ongoing basis. They inspect factory conditions, review payroll records, interview workers and meet with factory owners and managers to discuss and correct compliance issues.
Most factories work hard to meet or exceed our requirements. If factories don’t share our commitment to maintaining safe conditions and treating workers fairly, we stop doing business with them altogether. Today, we have the most comprehensive internal monitoring organization in the apparel industry, complemented by independent and external monitoring. The cost will be around $32,000-$42,000. The benefits of using these types of distribution are that we don’t have to go through Japanese subsidiaries. Since we are already an established manufacturing company in Japan, we already have the documentation for the transport of products.
B. Proposed strategies
1. Proposed pricing policies
Our pricing policies will be determined on how well the Japanese economy is doing. As far as how much we’ll charge starting off, we’re going to use the prices that we charge in the United States. Except for the fact that we’ll have a 25% increase on the prices due to tariffs and taxes. We will use the Japanese currency, yen. We’ll convert it as needed. Markups will depend on the economy. There will be a trial time to see how well our products do in the market, and if an increase in price is in favor, then we will proceed as needed. The same coincides with markdowns. Except, that we will have markdowns when we have sales and when we need to make room for new merchandise coming into the store. In relation to competition, our prices will compete with the Japanese companies and we feel we will do very well. 2.
2. The proposed promotional planning will include putting up billboards before we are established in Japan have the Japanese consumers feel our presence get familiar with our name. We will also put out ads in the most popular magazines and newspapers. We’ll put new ads in magazines every four months and in newspapers every six months. The promotions will be different for each brand and will be as follows: At Gap, we will premiere a new line called “1969,” a collection of vintage-inspired clothing and accessories for men and women. Above all else, Gap’s merchandise and marketing will remain simple and focused. We will feature the latest special effect film techniques. For example, for our GapKids TV spots, we will show boys and girls outlined in bold black, to spotlight the details of the Carpenter Flare and the Contractor Jean. Classic, modern clothing. Unique, easy style. That’s Gap. Banana Republic will go with the simple approach to marketing and merchandising. This will speak directly to our customers looking for style that is effortless and flexible. The result? Everything we offer will reflect our customers` lifestyle-and transitions easily from career to casual, weekend to evening. When it comes to exceptional style and service, Banana Republic stands alone. Old Navy will focus on merchandise availability and distribution-and increased style, size, and color selections for customers throughout Japan. We will have an Item of the Week to make it easier for customers to find fashion and value by highlighting key fashions at low prices. Featured promotions will be emblazoned on theater-style marquees and clothing will by cleverly merchandised on displays that stimulate merry-go-rounds and market counters.
V. PLANNED FINANCING
1. Start-up costs and expenses
Deposits (rent utilities, telephone, etc.) $3,900-$35,300
Furniture and Equipment $21,300-$42,300
Machinery and Equipment $5,000-$32,500
Transportation Equipment $32,000-$45,000
Building Improvements $11,300-$52,500
Professional Fees $1,500-$4,000
Advertising $10,000-$15,000
Working Capital $3,800-$93,700
Inventory $35,000-$157,500
Tariffs and other taxes $11,000-$45,000
Budget $500,000
Totals $130,900-$487,500
2. Financial highlights (balance sheet for the end of the first year)
Operating Results ($000) 52 Weeks ended Jan. 29,2002
Net Sales $11,635,398
%Change from year to year 29%
Earnings before taxes $1,784,949
%Change from year to year 35%
Net Earnings $1,127,065
%Change from year to year 37%
Per share data
Net earnings-diluted 1.26
Cash dividends paid 0.09
Statistics
Net earnings as a % of net sales 9.7%
Return on average assets 24.6%
Return on average shareholder equity 59.2%
Current ratio 1.25:1
Number of stores open at year end 3,018
Comparable store sales growth 7%
Bibliography
VI. BIBLIOGRAPHY
Annual Report on Current Population Estimates
As of October 1st, 1999
Statistics Bureau & Statistics Center.
Management and Coordination Agency
Annual Report on the Family Income and Expenditure Survey
Statistics Bureau & Statistics Center, Management and Coordination Agency
(2000)
“Consumer Trends”-women as consumers
http://www.jinjapan.org/insight/html/focus05/women_as_consumers/consumer_trends01.html
“Consumption of Goods and Service”
http://www.jinjapan.org/insight/html/focus08/consumption%20of%20goods/con03.html
“Generational Differences”
http://www.jinjapan.org/insight/html/focus05/women_working/generational_differences.html
“Household accounts”
http://www.jinjapan.org/insight/html/focus05/women_as_consumers/household_accounts01.html
“Japanese Consumers”
http://www.jinjapan.org/insight/html/focus08/flash%20backs/fb03.html
PRICES OF GOODS AND SERVICES
http://www.jinjapan.org/insight/html/focus08/prices%20of%20goods/pric10.html
“Women in the work force”-women working and pursuing careers
http://www.jinjapan.org/insight/html/focus05/women_working/women_working_and01.html