A Critical Review of Market Entry Selection and Expansion Into Japan's Market

ABSTRACT

This article offers a contribution to the Japan market entry model selection. It critically analyzes the various models such as the eclectic, transaction cost analysis, Uppsala, resource-based, interactive network, and bargaining power models, with examples as they relate to foreign firms that had used some of these models to successfully establish their businesses in Japan, as well as some foreign firms that have failed in the market. Data were gathered from the past academic journals, the Japan External Trade Organization (JETRO), newsmagazines, and other sources. Knowledge of corporate Japan and the society played a major role in gathering data for this study. The aim of this article is not to prescribe or offer a solution for the best-available model to use in the market entry into Japan but rather to act as a trigger for a critical checkup on foreign firms planning to internationalize their business and enter the Japanese market. Since there has not been a specific model designed for a Confucian society like Japan, an integrated model combining all the models together was examined using the market entry in Japan of Vodafone, Yahoo, Pfizer, GlaxoSmithKline, and Bayer Yakuhin as examples. Finally, the article offers some suggestions on how to enter and expand business in the Japanese market.     

An Analysis of Merger Financing

This research analyzes a theory of merger financing that indicates that the terms of payment for target shares should be used to optimally influence the post-merger liquidity and capital structure of the combined firm. In an empirical test on a large sample of mergers, the stock market reaction to the announcement of acquisition financing is support the theory. The empirical results also indicate that a large portion of the cross-sectional return differences on acquirers' shares can be explained by financing theory.     

THE ACCURACY OF CASH FLOW ESTIMATION PROCEDURES

Prior research uses mechanical procedures to estimate cash flow data. This study examines the accuracy of these procedures by measuring errors between estimated cash flows and reported cash flows. The results indicate that mechanical rules provide poor estimates for reported cash flows. We also show that the errors between cash flow estimates and reported cash flows can be reduced by adjustments made from footnote disclosures. However, large errors remain, even after adjustments are made from footnote disclosures. These remaining errors are correlated with firm specific characteristics such as sales (firm size), extraordinary items, foreign currency gains and losses, and changes in inventory.     

Consumers’ collision insurance decisions: a mental models approach to theory evaluation

Using interviews with 74 drivers, we elicit and analyze how people think about collision insurance coverage and decide whether to buy coverage, and if so, what deductible level to carry. We compare respondents’ judgments and behaviors to predictions of three models: baseline expected utility (EU) theory, which predicts that insurance is an inferior good, meaning more wealthy people buy less; a modified EU model, which incorporates income constraints and suggests that property insurance is a normal good, meaning more wealthy people buy more; and a mental accounting model which predicts that consumers budget income across consumption categories. The results suggest they purchase insurance as a normal good, guided by a cognitive model that emphasizes budget constraints. Verbal reports reveal a desire to balance two conflicting goals in deductible decisions: keeping premiums ‘affordable’ and keeping deductible level ‘affordable.’ Thus, wealth does not distinguish people by risk aversion, but by ability to pay. In other words, the behavior of less wealthy people is not driven by greater risk aversion, but by their lesser ability to pay, both now and later. We find that a simple heuristic using only vehicle value accounts for most decisions of whether to purchase optional collision coverage: out of 45 respondents who did not have loans on their vehicles, 90% of those with vehicles worth more than $1000 carried collision coverage, while less than 30% of those with lower‐valued vehicles did.