My client Kodak has not been able to capture more than 7-10% of the Japanese Market because of the unfair trade practices and biased distribution structure. Essentially Kodak has purposely not been allowed to penetrate the Japanese market above a certain limit due to structural impediments, government interference and backdoor unfair trade practices that favor FUJI. To bolster my stand I would like to present the following arguments.
The distribution system in Japan is highly questionable .Kodak’s products were available in only 15% of the store. This was not due to insufficient investment .Kodak invested 750 million in the infrastructure and marketing and despite of that their market share remained below 10%. Kodak is a well-recognized brand and has enjoyed a market share of over 40% in the rest of world except Japan. This inconsistent distribution is beyond the normal market conditions.
Japan has more retail establishment than any other country. The retail system layered and the major distribution relied on the wholesalers .So a big way to penetrate the market was through these wholesalers. My opponents would say that there are other ways to enter the market like pricing , aggressive advertising and better sales organization .And this is exactly what Kodak thought when they invested 750 million ,however by 1990’s they realized that their efforts are not getting paid off well .They realized that the penetrating strategies are closely tied to the distribution centers.
* Pricing: According to the study by US Trade Commission on Japan’s distribution system, the distribution system did restrict the access to distribution channels to foreign entrants to protect its own firms and encouraged oligopolistic practices. In addition, Fuji was a shareholder of some wholesalers and controlled the wholesalers by including rebates throughout the distribution chain and the security deposits of wholesalers. Because of the heavy rebates, no retailer...
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