Toys “R” Us' business model was aimed at high volumes and low margins. As a giant toy retailer, Toys “R” Us could use its economy of scale to purchase a large amount of merchandise directly from manufacturers at very low prices. Therefore, the chain may be able to price its products 10-20% lower than other smaller toy retailers (p.2). On the other hand, the Japanese toy industry consisted of many small shops and outlets and was dominated by manufacturers who forced retailers to sell at much higher or “select” prices. Therefore, it was impossible for local retailers to offer discounted prices. Being a latecomer in Japan, Toys "R" Us gained some advantages such as facing fewer competitors and changing demographics in Japan. From 1980 to 1990, the overall number of toy stores in Japan dropped from 8,000 to nearly 6,000. Therefore, by entering the Japanese toy market, Toys “R” Us would experience less pressure due to the decrease in the number of its competitors. Additionally, Japan's declining birth rate has encouraged families to spend more on toys and less on food because they have fewer children to care for. Rigorous Japanese education also led parents to reward their children with gifts such as toys. Furthermore, as Japanese retailers sold their products at inflated prices, Japanese consumers began to demand lower prices. Toys “R” Us' advantage was that it could sell at much lower prices than its competitors. (p.3). Japanese regulation tended to limit foreign investment, instead focusing more on domestic businesses. Therefore, this competitive advantage has created an entry barrier for investors from other countries, especially US companies, to enter Japan. However, in 1990, this problem was improvised... in the middle of paper......lers, wholesalers and manufacturers attempted to build long-standing relationships, there was a possibility that local manufacturers would refuse to work with Toys "R" Us. Additionally, the Japanese government has attempted to support and protect its small toy retailers. Large retailers in Japan have been forced to undergo a series of screenings and directly explain their business plans to local retailers. The company has also had difficulty finding real estate because Japan has a limited amount of land suitable for large-scale retail. This was another problem in Toys “R” Us's attempt to open stores and become part of the cluster effect in the Japanese toy industry. Figure 1 Figure 2: Reference: Works Cited Kumar, V., & Subramaniam, V. (1997). A contingency framework for entry decision mode. Journal of World Affairs, 32(1), 53 – 72.