Strategic Analysis and Market Entry: Danes Coffee in Japan

This report, prepared for Desklib, evaluates the potential for Danes Coffee to expand into the Japanese market. It begins with an executive summary and introduction, highlighting the rationale for choosing Japan. The core of the report is a PESTLE analysis, examining the political, economic, social, technological, and legal environments. The economic analysis includes regional trading groups, market measurements (income, consumer spending), and the impact of APEC. Barriers to entry are also considered. The social and environmental analysis focuses on Maslow's hierarchy of needs, cross-cultural comparisons, and key cultural differences. Technological factors, including internet influence, online consumer behavior, and promotion strategies, are also assessed. The report concludes with recommendations for Danes Coffee, considering the suitability of the Japanese market, and includes references.

Strategic Management

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Executive Summary
Strategic management is the process of analysing, and evaluating the environment of the
organisation. It is an essential process for the organisation to analyse the environment to
formulate the strategies for the effective decision. The process helps in making decision
regarding strategic planning. The internal and external factors of the business is analysed with
the help of strategic tools of the company. The process helps the organisation in expanding
the business in targeting new market of the other country.
The CEO of the company gives order to identify the opportunity for the company in the
Japanese market. Being hired as the marketing manager of Danes Coffee, the effective
information has been collected of Japanese market. Danes Coffee is established in Australia
but now it expands the business in the market of Japan. The main purpose of this report is to
analyse the business environment in the Japanese market. The political, social,
environmental, economical, legal and technological factors have been discussed to identify
the threat and opportunity of the market. These factors affect the demand of consumers in
making the decision related to entry of the market. The company has to adopt the rules and
regulation of the Japan while entering the market. The analysis before the entering the market
helps it to achieve the high success by reducing the challenges. At the end, the
recommendation is also given regarding the suitability of the Japanese market for Danes
Coffee.

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Contents
Introduction................................................................................................................................3
PESTLE Analysis.......................................................................................................................3
Political and Legal Environment Analysis.............................................................................3
Political Factors..................................................................................................................3
Legal Regulation.................................................................................................................4
Government........................................................................................................................5
Economic and Financial Environmental Analysis.................................................................5
Regional trading groups......................................................................................................5
Measuring market...............................................................................................................6
APEC..................................................................................................................................6
Barriers to entering an international market.......................................................................7
Country classification.........................................................................................................7
Social and Environmental Analysis........................................................................................8
Maslow’s hierarchy of needs..............................................................................................8
Cross-cultural comparison studies......................................................................................8
Key Cultural Differences....................................................................................................9
Technological.......................................................................................................................11
Implication for the international marketing......................................................................11
Influences on internet........................................................................................................11
Online consumer behaviour and spend time on internet...................................................11

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Promotion..........................................................................................................................11
Conclusion and recommendations...........................................................................................11
References................................................................................................................................12

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Introduction
The main purpose of this report is to understand the concept of analysing the country for the
expansion of business. This report is based on the analysis of the company for the expansion
of business. In this report, Danes Coffee has been taken into consideration which is
established in Australia. The company is well established in Australia with the high brand
image of its quality of product and now it wants to expand the business in Japan (Danes
Coffee, 2018). As the marketing manager of the company, it is the responsibility to analyse
the environment of Japan. The main aim of analysing the environment of country is to
identify the opportunity so that the expansions of business will achieve the success. It has
been seen that the demand of coffee is high in the current volume which is beneficial for the
company to enter the market of Japan. As per the writing basis, it is observed that the
information can easily obtain from the country as there is high demand of coffee in the
country.
PESTLE Analysis
Political and Legal Environment Analysis
Political Factors
Nature of Government
It has been seen that the Japan government is considered as a constitutional monarchy
because in which the power of the Emperor is limited. The government is classified in the
three positions such as legislative branch, executive branch, and judicial branch. The
government of the country runs under the constitution of Japan which was adopted in 1947.

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Every branch develops the different rules and regulation about the country as per the basis of
the country (Ward, & Rustow, 2015).
Political Stability
In the context of political stability of Japan, the average value for Japan during the period was
1.05 points in the past year which is considered as a minimum point as compare to 0.88
points in the year 2010. As per the political index, -2.5 indicate the weak economy and 2.5 is
the strong economy. As per the analysis, it is observed that the current economy of Japan is
not stable as it is have 1.05 points in the year 2017. It is a challeng e for the company
because weak stability increases the risk of insolvency for the company.
(Source: The global economy, 2017)
Legal Regulation
The authority of Japanese developed the many regulations related to various aspects of food
exportation such as packaging and container, pesticides, food additives and the other

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impurities things (Lama, 2017). The company has to follows those laws while delivering the
services of Coffee.
Government
Financial issue-
In the 90s century, Japan face the financial crisis due to taken the high loan from US.
Nowadays, it is observed that the Japan is in the better position with the motive of cope with
the crisis. The cash flow statement of banks was showed the sufficient amount to allow the
financial assets from troubled US entities in 2008. Japan is a most developed country and
most powerful and the most indebted country in the world who carrying the debt with the
roughly percentage of 233% of GDP (CFR, 2008).
Safety issues
In Japan, the people change their dietary pattern from traditional to the western pattern. The
government of Japan develops the laws related to food and security such as Agricultural basic
law of 1961, the food control law of 1942, and New Food Law 1995. The company has to
follow these rules and regulation while entering the Japan Market.
Economic and Financial Environmental Analysis
Regional trading groups
Regional trading groups are the regional intergovernmental arrangement in which the
countries are getting participated in order to reduce the eliminate barriers related to trade.
Japan has held on-going negotiations for a regional comprehensive economic partnership free
trade agreement. It is observed that the tariffs will remove in Japan due to which more than
95% of goods are traded in Japan (Export Gov, 2018).

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Expansion-It is observed that the Danes Coffee have the opportunity to expand the business
in Japan as low level of rules and regulation regarding trading.
Standardisation- the Company can also maintain the quality and standardisation in which
they can easily produce the same types of goods in Japan.
Production- It is also easy for the company to produce and supply the coffee because they
are participated in regional group.
Firm can lobby government to become members-
The company can lobby the government with the motive of becoming a member that helps
Danes Coffee in dealing.
Measuring market
In Japan, it has been evaluated that the average amount of household net adjusted disposable
income per capita is USD 28641 in a year. It has been seen that the country has considerable
gap between the richest and poorest. It is evaluated that the 20% of rich people earn six times
more as compare to poor people of the country. In the age of 15 to 64 in Japan are getting the
salary on their work. There are approximately160000 restaurants in Tokyo and the average of
$ 2000 person consumed food outside the home (OECD better life index, 2018). Japan is
popular for the café’s because the people of Japan have little room in their homes and they
prefer to go out when they entertain and socialise. The restaurant and café of Japan earned the
revenue in Japan was about $ 208 billion in the daily life. It is observed that the Danes Coffee
can easily enter the market because the demand of consumer is high towards the western food
and beverage. The people of Japan invest the huge amount in consuming the outside food.

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APEC
Japan is always a key player in the economic cooperation in the Asia pacific. It is dynamic in
the trans-pacific partnership and forming its replacement. Japan has hosted APEC twice in
order played a leading role in its development. The company has the opportunity to enter the
Japan market a as the Japan has the flexible environment. Japan followed the APEC for the
economic development of the country. It is observed that the companies of Japan can also
help the other companies of other country to enter the market. It is a beneficial for the
company to enter the Japan market as the trade agreement between the companies is flexible
(Takahashi, & University, 2018).
Barriers to entering an international market
High capital: -
It is observed that the Danes Coffee Company requires the high capital for delivering the high
quality of services to consumers. It is also observed that the expansion of business also
consumes the high cost to enter the market.
Customer response: -Danes Coffee offers the different flavours of coffee in order to satisfy
the consumer needs and demands in the Australian markets. The company can face the
challenge of different taste of consumer of Japan. Different taste of people of Japan harms
becomes a barrier for the company while entering the market.
Trade tariff: -
Trade tariff affects the Danes Coffee of Australia while conducting the business in the market
of Japan. There are many tools of trade tariff that control the tariff barriers and non-tariff
barriers (Trade Ready, 2014).

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Country classification
Japan is upper-middle incomes countries whose GDP is 4.872 million. It states that
purchasing power of Japanese consumers is high (The World Bank, 2018).
Social and Environmental Analysis
Maslow’s hierarchy of needs
Maslow’s hierarchy of needs is a psychology theory which is developed by Abraham Maslow
in the year 1943. This theory defines the stages of human growth and the satisfaction level.
(Source: Velmurugan, & Sankar, 2017)
Danes Coffee offers the different flavours of coffee on the basis of taste of consumer of
Australia. The demand of consumer towards the product is different from the different taste.
The decision making by the consumer in order to purchase the product is varies on the culture
and their values. The consumer behaves differently and has different reaction on the basis of
culture. The company has the benefits in this term because it is observed that the taste of

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Australian people is almost similar with the taste of people of Japan. Culture of Japan is
almost similar as the culture of Australia (White, 2016).
Cross-cultural comparison studies
Hofstede’s cultural dimension theory
It is a framework for cross-cultural communication which is introduce by Geert Hofstede.
This theory defines the culture and social values of different country that affects the society
and the growth of business. The theory is classified in the six terms such as uncertainty
avoidance, Long term orientation, individualism- collectivism; masculinity-femininity and
power distance (Hofstede Insights, 2018).
(Source: Hofstede Insights, 2018)
It has been seen that the difference between Australia and Japan is stated on the basis of
entire six dimension of culture. As per the above analysis of all dimensions, it is observed
that the masculinity is similar in both the countries. Power distance and uncertainty avoidance
are almost similar in both the companies. Indulgence, long term orientation, and
individualism have the large difference among the countries. It can be said that the countries
have low level of difference.
The differences between the countries affect the demand of consumer towards the products
and services of the organisation. Danes Coffee in the market of Japan can face many cultural

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challenges in the near future due to cultural differences. It is essential for the company to
follow the cultural of Japan in order to achieve the success in the business.
Key Cultural Differences
Language: -
Language is a factor which affects the growth of the business. It is one of the major barriers
for the company in Australia. In Japan, the people follow the Japanese language due to which
the local companies also used the Japanese to advertise the product or to sell the product. In
Australia most of the people use the English language for conversation as it is their main
language. In the café and restaurants, the servants have to learn the Japanese language in
order to serve the delicious food to consumers. Different languages are barriers for achieving
the success in the new market for the company.
Taste
Taste is the major barriers for the cafes and restaurants companies as they expand the
business at the international level. Different country has the different taste of consumers in
which it expands the business at the international level. The people of Japan have the
different taste and the people of Australia have different taste. It is observed that the people
of Australia prefer to eat the western food. The people of Japan prefer the sushi in fast food
and their demand for outside food is high. The demand of Japanese people is high towards
the western food and beverages that is why they required the unique and more flavours in
coffee (Ansoff, Kipley, Lewis, Helm-Stevens, & Ansoff, 2018).
Business etiquettes: -
It has been seen that the different country have different style of handle the people. The
business etiquettes of the company are shown with the dealing activities and transaction. The

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etiquettes of handling the consumer are different as per the culture of the company. In Japan,
the consumer is punctual for their time. But in Australia, the consumer consumes more time
to take the decision.
Technological
Implication for the international marketing
It has been seen that the demand of the consumers is also relies on the advance technology. In
the modern world, people invest large time on mobile phones and on social sites. Café and
restaurants develops their own pages and websites in order to provide the information related
about their food and beverages services. Nowadays, the company spend the times and money
in technology to deliver the services across the world. It has been evaluated that the Japan is
also famous for its technology.
Online consumer behaviour and spend time on internet
The attitude and behaviour of consumer is shifting by continuously with the higher rate. The
consumer of Japan shifts their preferences towards the online platform. The consumers start
spending their large time on internet in order to buy the different services and get the
information related to the services. The consumers also place their order online as per their
convenience to get the services (Facts and Details. 2018).

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(Source: IMRG, 2018)
Online shopping is more convenient for the consumers that is why, in Japan people prefers
the online as compare to face to face interaction. As per the graph, it has been seen that the
people of Japan have high percentage of preferences towards the online services (IMRG,
2018).
Danes Coffee also has to adopt the advance technology in order to beat the competitors in
high competition and deliver the services to consumers. It has to develop their social sites
pages and websites in order to attract toward the services.
Promotion
Japanese companies promote the product by providing the different services to consumers.
Danes Coffee has to adopt the digital tools and strategies in order to attract the consumer
towards the services of the company. It also helps the company in aware the consumers
toward its services of coffee and its different flavours (Schütte, & Ciarlante, 2016).

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Conclusion and recommendations
At the end of the report, it has been concluded that the Japanese market is suitable for coffee
companies for the expansion of business. It is observed that the company has the opportunity
to grab the Japanese market by expanding the business. However, the market is appropriate
for the company in terms of expansion and earning the money. But still, there is some high
level of threat that affects the growth of Danes Coffee such as cross cultural differences,
international trade barriers, legal and political. It is recommended that the company has to
study the market again while expanding the business in Japanese market. It helps the
company to overcome the challenges of political, legal, social and economic in the market.

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References
Ansoff, H. I., Kipley, D., Lewis, A. O., Helm-Stevens, R., & Ansoff, R. (2018). Implanting
strategic management. Springer.
CFR. (2008). Japan’s New Economic Challenge. Retrieved from: https://www.cfr.org/expert-
brief/japans-new-economic-challenge
Danes Coffee. (2018). The best specialty coffee in Australia. It’s a fact. Retrieved from:
https://www.danes.com.au/coffee/
EU business in japan. (2018). Food Regulation. Retrieved from:
https://www.eubusinessinjapan.eu/issues/legal-regulatory-issues/food-regulation
Export Gov. (2018). Japan - Trade Agreements. Retrieved from:
https://www.export.gov/article?id=Japan-Trade-Agreements
Facts and Details. ( 2018). Restaurants In Japan. Retrieved from:
http://factsanddetails.com/japan/cat19/sub123/item648.html
Hofstede Insights. (2018). Compare countries. Retrieved from: https://www.hofstede-
insights.com/product/compare-countries/
IMRG. (2018). Online shopping behaviour in Japan. Retrieved from:
https://www.imrg.org/japan-shopping/
Japan Gov. (2018). Issues. Retrieved from: https://www.japan.go.jp/issues/
Lama, P. (2017). Japan’s Food Security Problem: Increasing Self-sufficiency in Traditional
Food. Retrieved from: https://medium.com/indrastra/japans-food-security-problem-
increasing-self-sufficiency-in-traditional-food-f48937a757c5

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OECD better life index. (2018). How’s Life?. Retrieved from:
http://www.oecdbetterlifeindex.org/countries/japan/
Schütte, H., & Ciarlante, D. (2016). Consumer behaviour in Asia. Springer.
Szmigin, I., & Piacentini, M. (2018). Consumer behaviour. Oxford University Press.
Takahashi, T. & University, S. (2018) Opportunity for Japan as APEC stumbles. Retrieved
from: https://www.eastasiaforum.org/2018/11/28/opportunity-for-japan-as-apec-
stumbles/
The global economy. (2018). Japan: Political stability. Retrieved from:
https://www.theglobaleconomy.com/Japan/wb_political_stability/
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http://www.tradeready.ca/2014/fittskills-refresher/barriers-foreign-market-entry/
Velmurugan, T. A., & Sankar, J. G. (2017). A Comparative Study on Motivation Theory with
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Princeton University Press.
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