This business plan is used to deal with the development plan for entering into the Japanese retail market. Based on the company's long-term need for world expansion and brand identity development, we choose Japan as the test land for Asian market penetration. The objective is to be present in major cities in Japan and introduce the concept of Citymarche with a French flavor. Monoprix is a French retailer setting up in all the big towns and is the undeniable n° 1 in town centre food stores in France. Aimed at a city market approach, it attracts mostly women, single people and active customers with above-average purchasing power. Established in city-centre for more than 70 years, the brand develops its stores based on concepts combining innovation, quality and pleasure. Monoprix was created in Rouen more than 70 years ago as a one-price outlet. Now it is a 50/50 joint venture of Groupe Galeries Lafayette and Groupe Casino. They are all AAA companies with strong turnover and good reputation. Monoprix will provide fresh, balanced, authentic and pleasant food products in the Japanese market. Original western flavor and French-style packaging will be kept and serve as one feature of Monoprix Japan.
[...] Financial projection 1 Costs Description The major cost of Monoprix's operation in Japan comes from logistics and marketing expense, while the leasing fee is also a majority of operational cost. Taxation and cost from financial activities will also be taken into account Marketing cost In our first period of business, our marketing cost will mainly come from two different types of marketing activities: first, the cost of distribution of the flyers, the store DM and MONOPRIX monthly brochures; second, the cost to organize in store special activities and lectures. [...]
[...] The purchasing power of the Japanese is also on the top of the list and there is no signal that the overall consumption expenditure in Japan is going to decline from the mid- and long-term perspective. Figure Main economic index of Japan With regard to the country risk, Japan is a single A country, defined as country with a steady political and economic environment that has positive effects on an already good payment record of companies. The probability of default is very weak. [...]
[...] With its 300 stores and 18000 collaborators presented in of the cities with more than 50000 citizens, Monoprix generated 3300.1 millions euros in 2005 under IFRS rules. The sale was up in 2006 on a same-store basis and overall. The mother groups, both Groupe Casino and Group Galeries Lafayette are AAA companies and in the way of consistent growth. Also, Groupe Casino is the world's 13th biggest retailer based on volume of sales while Galeries Lafayette SA is the 89th. Risk assessment 1 Sovereign Risks 1 Legal, Regulation, Politics Both France and Japan are mature economies, which a priori eliminates the risk of political instability or economic recession. [...]
[...] We will ensure sufficient warehousing and safety stocks in Japan so there are no goods shortages. Logistics contracts we will subscribe have to comport specific clauses for delay or non-delivery, and consequent financial burden in case of failure. To prevent any fault, the shipping has to be severely controlled by a logistics manager through an adapted information system and frequent communication with carriers. Emergency solutions like emergency air shipping in case of failure must be ready to trigger off Force majeure While terrorism and economic bankruptcy are not very probable, the environmental risk (earth quakes, tsunamis) in the region raises the price of insurance which will hedge this kind of risk Disruption As said in “Know part, there should be no much HR disruption, since we are willing to sell French products on a more Japanese way, without imposing too much our managing culture. [...]
[...] Monoprix has to subscribe options to cover the provisional takings in Japan. Thus the profit will not be undervalued through unhedged currency risk. Meanwhile (during the option time), Monoprix can handle the expenses with its retained earnings; a part of them will be the working capital for the Japanese branch. As the financial budget predicts a turnover of 300.000 per month for one store, we can roughly predict a 3.6 Million turnover per year for our three stores. Taking away the part of it which will be given to our strategic partner and operational costs in JPY used as Working Capital, we can plan to hedge a sum corresponding to Million in JPY/EUR put options; this pack of options would have a premium cost of 100.000 (with a 0.5 hedge ratio, price of an option equalt to 0.1 ) Taxation, Tariffs Entry taxes have as standard rate of 5%. [...]
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