PRET A MANGER FAILURE IN JAPAN: IMPORTANCE OF CULTURAL DIFFERENCES
INTERNATIONAL BUSINESS WORKSHOP PAULINE BARRIE
PREPARED BY: EUGENIO PAVON NOVEMBER 2011
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TABLE OF CONTENTS
SECTION
PAGE
1.0 INTRODUCTION……………………………………………………………P3 2.0 METHODOLOGY…………………………………………………………...P4 3.0 RESULTS……………………………………………………………………P5 4.0 DISCUSSION………………………………………………………………..P6 5.0 CONCLUSION AND RECOMMENDATIONS……………………………P6 6.0 REFERENCE LIST………………………………………………………….P7
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INTRODUCTION
Companies around the world attempt to expand on an international level due to their ambition to operate in other profitable markets (Delaney, 2001) and transform their domestic companies into global brands. However, the success of many companies in their local market may lead them to follow the same practices but it does not automatically enable them to expand successfully internationally (Anon., 2009). There are many cases of companies, which have failed, for reasons such as ignorance and inexperience in going into global markets. Particularly, the lack of knowledge regarding importance of cultural differences, which can be considered one of the most common mistakes leading them to failure. Frequently, companies are experiencing this expensive mistake. External factors such as culture may have the same influence as political, economic, technological and social factors, especially in the food industry and particularly in the case of the Japanese market. This paper is based on a review of Pret a Manger‟s failure in Japan whilst taking account of the importance of cultural differences. The mistakes will be explored corrective strategies actions offered in order to help other companies profit from Pret‟s mistakes.
METHODOLOGY
The data collection and the measurement of information have been based on:
The learning outcomes of International Business Workshop
Reading of some of the core books for this module.
Online newspapers.
Videos online and different websites.
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Online retail magazines.
Additional information found in the website of British Chamber of Commerce in Japan.
All the case studies analyzed so far.
Pret a Manger website.
All what we learnt about the evaluation of the challenges and difficulties of working and operating in a multi -cultural environment or scenario.
The reason why these sources lead us to take the step to choose „Pret a Manger‟ and Japan as convenient relevant example for our presentation is the following:
Pret a Manger, which has been a very successful local company for the past 25 years in the UK, with a unique business culture and strong customer loyalty (Superbrand, 2011).
Japan as the third world‟s largest economies economie s and Japanese retail market as the second largest in the world (JETRO, 2011). Furthermore, the peculiarities of consumer behavior in Japan with a high sense of high quality and innovation (Japan Retail News, 2011).
In order to encourage critical thinking about:
The cost of cultural mismanagement.
The competitive advantage of knowledge of cultural difference
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RESULTS
1. Lack of of awareness awareness of the market. market. Pret a Manger relied on market research conducted by McDonald‟s Company Japan (Smithers, 2010). So, Pret failed to obtain the relevant information required to enable success in the Japanese market. 2. Lack of awareness awareness of of the Japanese Japanese consumer consumer (Anon., 2009). Pret a Manger did not understand the sophistication of the Japanese consumer and neither matched the customer expectations in terms of quality, packaging and service (Anon., 2008). 3. Rapid expansion. Pret a Manger tried to do too much in too little time (Smithers, 2010). Instead of concentrating on one shop at a time, Pret opened 14 stores at once; they did not realize how expensive it could be where costs are notoriously high. Consequently, Pret a Manger in collaboration with McDonalds could not afford this situation and as result it failed.
DISCUSSION
To ensure success with the Japanese market it is imperative to be aware of cultural differences. The decision to delegate market research to McDonald‟s may have been inappropriate, due to the fact that McDonalds themselves had difficulties understanding the Japanese consumer‟s ways of life. (Fitzpatric, 2004) Twenty
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millions pounds was the cost of lack of understanding the Japanese Retail Market, when Pret a Manger, after 18 months, closed all shops. Pret a Manger could have collaborated with a local consultant or adviser, who would have reviewed the Asian market and provided a relevant risk assessment. This could have facilitated them with a competitive advantage by seeing things from a different perception. Allowing time to prepare the business plan and thereafter make rational decisions could have been more effective. Pre a Manger should not have rushed the process by opening 14 stores all at once and also taking for granted assumptions from the worldwide experience of McDonalds. H&M and IKEA are two examples of foreign companies who have understood the sophistication of the Japanese consumer.
CONCLUSION AND RECOMMENDAT RECOMMENDATIONS IONS
According to Hoeclkin L. (1994) one of the four strategies for managing cultural differences will be given as a recommendation in order to achieve a successful market research, strong financial system and slow expansion in the Japanese market.
“Leaving each culture alone” (Hoeclkin, (Hoeclkin, 1994, p. 53):
The case study presented enables an understanding of the need to recognize the importance of lunch practices, costumes, language, food and mannerisms as examples of how cultures differ. Pret a Manger would have benefitted from the bellow suggestions:
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Orientated its global strategy towards the peculiarities of the Japanese consumer and showing they long term commitment instead of being too ambitious and make a rapid profit.
Pret a Manger could be adopted a different international organizational structure, building a strong planning programme instead of delegating it into MacDonald‟s.
Pret could take its expansion more slowly and find its own f inancial resources until the organization was mature enough to attempt into the Asian market. The competitive advantage of the culture and with its increasingly economic growth in japan (JETRO, 2011) that might allow them to sustain a continuous growth in the long term.
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REFERENCE
Attwood, k. (2008). Focus: „Pret a Manger chain sold to private equity firm Bridgepoint in £350m
deal’.
Available
at:
manger-chain-soldto-priva manger-chain-soldto-private-equity-firm-brid te-equity-firm-bridgepoint-in-1633 gepoint-in-163350m-deal-7 50m-deal-786183.html> 86183.html> [Accessed 27 October 2011]
Carter Associates marketing information and consultancy, 2008. Foreign marketing misses in
Japan.
[online]
Available
at: [ Accessed 24 October 2011].
Delaney, L., 2001. Is it time to go Global, Entrepreneur, [online]. Available at:<
http://www.entrepreneur.com/article/39320> [ Accessed 01 November 2011]
Fitzpatrik, M., 2004. A doomed venture: How Pret a Manger failed in Japan, Just – Food, [online]
Available
at:< http://www.just-food.com/analysis/how-pret-a-manger-failed-in-
japan_id94145.aspx>[ japan_id94145.aspx>[ Accessed 01 November 2011]
G & S International Japan. (2009). Market Report Japan 2009: Retail & Consumer Goods. Available: Available:
http://www.japanretailnew http://www.japanretailnews.com/retail--consume s.com/retail--consumer-goods-japan r-goods-japan-2009.html> -2009.html>
[Accessed 27th Oct 2011]
Hoecklin, L (1994). Managing Cultural Differences: Strategies for Competitive Advantage . London: Pearson Education Limited.
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Japan Retail News, 2009. 10 global players that failed in Japan and why. [online] (12/17/2009) Available at: < http://www.japanretailnew http://www.japanretailnews.com/2/post/2009/12/compa s.com/2/post/2009/12/companies-thatnies-thatfailed-in-japan.html> failed-in-japan.html> [ Accessed 25 October 2011]
Japan External Trade Organization, 2011, 3 windows in Japan. [pdf] Available at: [Accessed 28 October 2011]
Smithers, Smithers, R. (2010). Focus: „Pret „ Pret A Manger chief is stacking up healthy profits in lean times’. Available
at:
interview> [Accessed 24 October 2011]
Superbrands,
2011,
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