SakuraCraft – Penning a Global Chapter
SakuraCraft is a family-owned Japanese stationery company founded in Kyoto in 1968. Known for its exquisite gel pens, handmade journals, and calligraphy sets, the company has a loyal domestic following and has become a cultural icon in Japan for quality craftsmanship and artistic flair.
However, in recent years, Japan’s stationery market has become increasingly saturated and is experiencing slow market growth due to the shift toward digital note-taking. In response, SakuraCraft is considering international expansion into Western markets, starting with the United States, United Kingdom, and Germany.
Aiko Tanaka, Head of Marketing, has presented a bold new vision to the executive team: “SakuraCraft: From Kyoto to Kensington.” Her strategy outlines international marketing as the future of the business and highlights several compelling opportunities:
Aiko’s Opportunities:
- Access to Growing Markets: Stationery trends like journaling, bullet journaling, and calligraphy are booming on platforms like TikTok and Instagram in the US and UK.
- Brand Prestige and Cultural Appeal: Japanese craftsmanship has a premium reputation. Aiko believes Western consumers will value the brand’s authenticity and attention to detail.
- Diversification of Revenue: With Japan’s market stagnating, international sales could reduce risk and create new streams of income
- E-commerce Expansion: With existing digital infrastructure, Aiko believes SakuraCraft can quickly adapt to global online marketplaces like Etsy, Amazon, and Shopify.
However, Kenji Sato, Chief Operating Officer (COO), raised several concerns during the board meeting:
- Cultural Misalignment: “Our designs reflect Japanese aesthetics – minimalism, sakura blossoms, traditional patterns. Will this resonate with Western consumers?”
- Logistical Complexity: “We’ve never handled overseas distribution. What about customs, delivery times, and returns?”
- Local Competition: “The US and UK markets already have established players like Muji, Paperchase, and Moleskine. Can we truly stand out?”
- Legal and Packaging Issues: “Germany has strict environmental packaging laws. Are we prepared to adapt our current packaging to comply?”
The executive team now faces a crucial decision: should SakuraCraft stay rooted in its home market or take the leap into unfamiliar but potentially lucrative global territory? With passions high and risks evident, the board must carefully weigh Aiko’s vision against Kenji’s warnings before deciding the next chapter in SakuraCraft’s journey.
Task for Students:
Q1. Explain two opportunities for the international expansion of SakuraCraft.
Q2. Explain two potential threats that SakuraCraft may face when entering international markets.
Q3. For each of the threats outlined by the COO Kenji Sato, prepare a counterpoint which Aiko could present at their next meeting on how the company can avoid/mitigate this issue.
Q4. Given the current global economic climate, would you recommend SakuraCraft to go global? Explain why, using evidence from mainstream media to support your opinion.
SakuraCraft’s Next Step: Evaluating the Financial Leap
Following Aiko Tanaka’s compelling proposal to take SakuraCraft global, the executive board has agreed to pilot their international expansion in Vietnam—a fast-growing market with rising interest in premium lifestyle and creative products. This decision allows the company to test its operations in a new region before tackling larger Western markets. Now, with a tentative plan in place, the finance team must evaluate the viability of this move. Students will act as SakuraCraft’s financial analysts, using projected sales and cost data to construct key financial statements, assess profitability, and determine whether this bold step is not just creatively inspiring—but also financially sound.
Data for first 6-months
– Expected unit sales: 100,000 units
– Price per unit: ¥500
– Cost per unit (COGS): ¥300
– Monthly Marketing Cost: ¥80,000
– Monthly Rent in Vietnam: ¥30,000
– Monthly Salaries: ¥120,000
– Monthly Utilities: ¥15,000
– One-off Initial Setup Costs: ¥200,000
– Annual Loan Interest: ¥60,000
– Tax Rate: 25%
– Remaining inventory after 6 months: 20,000 units
– Accounts Receivable: ¥1,500,000
– Accounts Payable: ¥1,000,000
– Long-term Loan: ¥5,000,000
– Cash: ¥8,725,000
– Equipment Value: ¥5,000,000
– Share Capital: ¥1,500,000
Student Tasks:
Q1. Construct a bi-annual Profit and Loss Account using the provided data.
Q2. Create a Balance Sheet for the time period.
Q3. Analyse the financial statements to assess the viability of the international expansion. Calculate as many financial ratios as you can to assess financial performance.