Discuss the reasons why founder and CEO Mikitani feels it is imperative for Rakuten to expand beyond the boundaries of Japan. Provide examples to support your answer. How should Amazon and Alibaba combat the global expansion of Rakuten? Provide examples to support your answer. Describe any competitive advantages that Rakuten has in its competition with Amazon and Alibaba.

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  1. Discuss the reasons why founder and CEO Mikitani feels it is imperative for Rakuten to expand beyond the boundaries of Japan. Provide examples to support your answer.
  2. How should Amazon and Alibaba combat the global expansion of Rakuten? Provide examples to support your answer.
  3. Describe any competitive advantages that Rakuten has in its competition with Amazon and Alibaba.
Japan's Largest E-Commerce Company, Rakuten,
Competes Globally
The Rakuten smartphone app BeautyC Navigator, which helps
couples predict the best time to try to conceive a child.
Rakuten (www.rakuten.com) is a Japanese electronic commerce
company. (The Japanese word rakuten means optimism.) Since it
began in 1997, the company has moved into sports, banking, in-
surance, and even wedding planning. Rakuten is so pervasive in
Japan that one in four online purchases in the country occurs on
the company's B2C and B2B e-commerce platform, Ichiba. Further,
the company's loyalty program has 90 million members. (Japan's
population in mid-2016 was approximately 127 million.) The diver-
sified company owns:
Despite its national prominence, Rakuten is not as successful out-
side Japan. The company is not well known in the United States
and Europe, and Alibaba controls the majority of e-commerce in
China. Rakuten's limited global presence is a barrier to growth
given Japan's decreasing population and its poorly performing
economy. As a result, the e-commerce giant is expanding overseas,
purchasing several foreign companies and investing in others.
In just a little over a year, Rakuten spent $2.6 billion on inter-
national deals. Company CEO Hiroshi Mikitani has stated that his
firm cannot operate exclusively in Japan. Rather, it simply needs
to defend its market position there. Among the firm's major foreign
activities are the following:
• A professional baseball team and a professional soccer team;
• The Rakuten Bank;
Rakuten Broadband Service;
• In early 2014, Rakuten purchased the Cyprus-based messaging
app Viber (www.viber.com) for $905 million.
Rakuten Beauty, a chain of beauty salons;
• In September 2014, Rakuten bought Ebates (www.ebates.com),
an online coupon service based in San Francisco, for $3 billion.
Rakuten customers who sign up for Ebates can use Rakuten's
Web portal to browse the selections of other e-commerce sites,
A vehicle inspection service;
Rakuten Insurance;
Rakuten Wedding, where couples plan their weddings; and
Transcribed Image Text:Japan's Largest E-Commerce Company, Rakuten, Competes Globally The Rakuten smartphone app BeautyC Navigator, which helps couples predict the best time to try to conceive a child. Rakuten (www.rakuten.com) is a Japanese electronic commerce company. (The Japanese word rakuten means optimism.) Since it began in 1997, the company has moved into sports, banking, in- surance, and even wedding planning. Rakuten is so pervasive in Japan that one in four online purchases in the country occurs on the company's B2C and B2B e-commerce platform, Ichiba. Further, the company's loyalty program has 90 million members. (Japan's population in mid-2016 was approximately 127 million.) The diver- sified company owns: Despite its national prominence, Rakuten is not as successful out- side Japan. The company is not well known in the United States and Europe, and Alibaba controls the majority of e-commerce in China. Rakuten's limited global presence is a barrier to growth given Japan's decreasing population and its poorly performing economy. As a result, the e-commerce giant is expanding overseas, purchasing several foreign companies and investing in others. In just a little over a year, Rakuten spent $2.6 billion on inter- national deals. Company CEO Hiroshi Mikitani has stated that his firm cannot operate exclusively in Japan. Rather, it simply needs to defend its market position there. Among the firm's major foreign activities are the following: • A professional baseball team and a professional soccer team; • The Rakuten Bank; Rakuten Broadband Service; • In early 2014, Rakuten purchased the Cyprus-based messaging app Viber (www.viber.com) for $905 million. Rakuten Beauty, a chain of beauty salons; • In September 2014, Rakuten bought Ebates (www.ebates.com), an online coupon service based in San Francisco, for $3 billion. Rakuten customers who sign up for Ebates can use Rakuten's Web portal to browse the selections of other e-commerce sites, A vehicle inspection service; Rakuten Insurance; Rakuten Wedding, where couples plan their weddings; and
(TOEIC) in 2015. According to TOEIC, a score above 800 indicates
advanced proficiency.
Rakuten now has an English-only policy, which it calls
"Englishnization." CEO Mikitani made Englishnization a key platform
in Rakuten's global expansion. Virtually all company communication
and interaction-from meetings to internal e-mails-is conducted
in English.
As of mid-2016, Rakuten's attempts to expand its business
including Amazon, and earn cash back on their purchases. In
2014, this discount service had $5 billion in transactions and
generated about $20 million in operating profit.
• In March 2015, Rakuten purchased OverDrive (www.overdrive
.com), a major e-book distributor based in Cleveland, Ohio.
• In March 2015, Rakuten led a $530 million round of funding
for Lyft (www.lyft.com/drive), spending $300 million of its own
money for 12 percent of the car-service app.
• Rakuten acquired Fits.Me (https://fits.me), a London-based
startup that creates virtual fitting rooms. The firm's technology
enables online buyers to virtually view how clothing looks on
them without visiting a physical store.
globally were still in their early stages, and there are risks to that
strategy. Specifically, Rakuten may not have the financial resources
to compete with Amazon and Alibaba. For example, Rakuten
reported $5.66 billion in revenue for 2015. By contrast, Alibaba
reported $12.3 billion, and Amazon reported $107 billion.
• Rakuten has purchased a stake in Pinterest (www.pinterest
.com).
Sources: Compiled from J. Russell, "Rakuten Launches Its Own
Security-Enhanced Android App Store in Japan," TechCrunch, August
19, 2015; "Rakuten's Research Centers Focused on Mobile," PYMNTS.
com, July 30, 2015; C. Shu, "Rakuten Opens New Research Centers
in Boston and Singapore," TechCrunch, July 29, 2015; E. Brooke,
"Amazon Competitor Rakuten Acquires Virtual Try-On Service Fits.
Me," Fashionista, July 13, 2015; I. Lunden and N. Lomas, "Rakuten
Buys Virtual Fitting Room Startup Fits.Me in a Fashion Commerce
Play," TechCrunch, July 12, 2015; D. Loo, "Rakuten to Raise $1.5 Billion
in Japan, Overseas Share Sale," BloombergBusiness, June 3, 2015;
"Rakuten Forges Ahead in English," The Japan Times, May 23, 2015;
S. Buhr, "Rakuten Is Looking to Acquire PopSugar for $580 Million,"
TechCrunch, April 13, 2015; B. Einhorn, "Japan's Amazon Has Bigger
Dreams," BloombergBusiness, April 9, 2015; www.rakuten.com, ac-
cessed August 21, 2015.
• Rakuten acquired French e-commerce portal PriceMinister
(www.priceminister.com).
• The Rakuten Institute of Technology opened locations in New
York, Tokyo, Paris, Boston, and Singapore. The institute's mis-
sion is to support both the company's research and develop-
ment and its global expansion.
Rakuten expanded its financial services into the United States,
offering a credit card through a subsidiary of First National Bank
of Omaha.
Not all of Rakuten's acquisitions have been successful. As one ex-
ample, the electronic bookstore Kobo (www.kobo.com), which
Rakuten purchased in 2011 for $315 million, had not generated a
profit as of August 2015. Nevertheless, by the end of 2014, the book-
store boosted its users by 25 percent, with 23 million customers.
Further, Kobo helped stem the tide of red ink by concentrating on
its mobile app to sell e-books.
One key element of Rakuten's strategy of global diversification
has been to encourage its employees to become fluent in English.
And they succeeded. The average employee scored 802.6 points
out of 990 on the Test of English for International Communication
Questions
1. Discuss the reasons why founder and CEO Mikitani feels it is
imperative for Rakuten to expand beyond the boundaries of
Japan. Provide examples to support your answer.
2. How should Amazon and Alibaba combat the global expan-
sion of Rakuten? Provide examples to support your answer.
3. Describe any competitive advantages that Rakuten has in its
competition with Amazon and Alibaba.
Transcribed Image Text:(TOEIC) in 2015. According to TOEIC, a score above 800 indicates advanced proficiency. Rakuten now has an English-only policy, which it calls "Englishnization." CEO Mikitani made Englishnization a key platform in Rakuten's global expansion. Virtually all company communication and interaction-from meetings to internal e-mails-is conducted in English. As of mid-2016, Rakuten's attempts to expand its business including Amazon, and earn cash back on their purchases. In 2014, this discount service had $5 billion in transactions and generated about $20 million in operating profit. • In March 2015, Rakuten purchased OverDrive (www.overdrive .com), a major e-book distributor based in Cleveland, Ohio. • In March 2015, Rakuten led a $530 million round of funding for Lyft (www.lyft.com/drive), spending $300 million of its own money for 12 percent of the car-service app. • Rakuten acquired Fits.Me (https://fits.me), a London-based startup that creates virtual fitting rooms. The firm's technology enables online buyers to virtually view how clothing looks on them without visiting a physical store. globally were still in their early stages, and there are risks to that strategy. Specifically, Rakuten may not have the financial resources to compete with Amazon and Alibaba. For example, Rakuten reported $5.66 billion in revenue for 2015. By contrast, Alibaba reported $12.3 billion, and Amazon reported $107 billion. • Rakuten has purchased a stake in Pinterest (www.pinterest .com). Sources: Compiled from J. Russell, "Rakuten Launches Its Own Security-Enhanced Android App Store in Japan," TechCrunch, August 19, 2015; "Rakuten's Research Centers Focused on Mobile," PYMNTS. com, July 30, 2015; C. Shu, "Rakuten Opens New Research Centers in Boston and Singapore," TechCrunch, July 29, 2015; E. Brooke, "Amazon Competitor Rakuten Acquires Virtual Try-On Service Fits. Me," Fashionista, July 13, 2015; I. Lunden and N. Lomas, "Rakuten Buys Virtual Fitting Room Startup Fits.Me in a Fashion Commerce Play," TechCrunch, July 12, 2015; D. Loo, "Rakuten to Raise $1.5 Billion in Japan, Overseas Share Sale," BloombergBusiness, June 3, 2015; "Rakuten Forges Ahead in English," The Japan Times, May 23, 2015; S. Buhr, "Rakuten Is Looking to Acquire PopSugar for $580 Million," TechCrunch, April 13, 2015; B. Einhorn, "Japan's Amazon Has Bigger Dreams," BloombergBusiness, April 9, 2015; www.rakuten.com, ac- cessed August 21, 2015. • Rakuten acquired French e-commerce portal PriceMinister (www.priceminister.com). • The Rakuten Institute of Technology opened locations in New York, Tokyo, Paris, Boston, and Singapore. The institute's mis- sion is to support both the company's research and develop- ment and its global expansion. Rakuten expanded its financial services into the United States, offering a credit card through a subsidiary of First National Bank of Omaha. Not all of Rakuten's acquisitions have been successful. As one ex- ample, the electronic bookstore Kobo (www.kobo.com), which Rakuten purchased in 2011 for $315 million, had not generated a profit as of August 2015. Nevertheless, by the end of 2014, the book- store boosted its users by 25 percent, with 23 million customers. Further, Kobo helped stem the tide of red ink by concentrating on its mobile app to sell e-books. One key element of Rakuten's strategy of global diversification has been to encourage its employees to become fluent in English. And they succeeded. The average employee scored 802.6 points out of 990 on the Test of English for International Communication Questions 1. Discuss the reasons why founder and CEO Mikitani feels it is imperative for Rakuten to expand beyond the boundaries of Japan. Provide examples to support your answer. 2. How should Amazon and Alibaba combat the global expan- sion of Rakuten? Provide examples to support your answer. 3. Describe any competitive advantages that Rakuten has in its competition with Amazon and Alibaba.
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