PRET A MANGER FAILURE IN JAPAN: IMPORTANCE OF CULTURAL DIFFERENCES

INTERNATIONAL BUSINESS WORKSHOP PAULINE BARRIE

PREPARED BY: EUGENIO PAVON NOVEMBER 2011

TABLE OF CONTENTS SECTION PAGE

1.0 INTRODUCTIONP3 2.0 METHODOLOGY...P4 3.0 RESULTSP5 4.0 DISCUSSION..P6 5.0 CONCLUSION AND RECOMMENDATIONSP6 6.0 REFERENCE LIST.P7

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 Mangers 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 Prets 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.

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 worlds largest economies 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

RESULTS
1. Lack of awareness of the market. Pret a Manger relied on market research conducted by McDonalds Company Japan (Smithers, 2010). So, Pret failed to obtain the relevant information required to enable success in the Japanese market. 2. Lack of awareness of the Japanese 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 McDonalds may have been inappropriate, due to the fact that McDonalds themselves had difficulties understanding the Japanese consumers ways of life. (Fitzpatric, 2004) Twenty

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 RECOMMENDATIONS

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, 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:

 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 MacDonalds. Pret could take its expansion more slowly and find its own financial 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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Carter Associates marketing information and consultancy, 2008. Foreign marketing misses in Japan. [online] Available

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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-

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Smithers, R. (2010). Focus: Pret A Manger chief is stacking up healthy profits in lean times. Available at:<http://www.guardian.co.uk/business/2010/oct/08/clive-schlee-pret-a-manger-

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