Merrill Lynch in Japan

Sheila Kennedy

MGT/448

Gary Solomon

April 4, 2011

Merrill Lynch’s first endeavor to penetrate the market of Japan was unsuccessful because their marketplace was not synchronized to acknowledge international companies. However, in 1997 the situation changed in the World Trade Organization (WTO) contract for enhancing overseas firms to promote financial services to national investors. This was the beginning of a new age in the global market. Previous experience made investors hesitate to come into the Japanese market, but also made it abundantly clear that effects have changed with a enormous amount of assets and an open market owned by households in Japan were too attractive of opportunity to pass up.
Merrill Lynch’s timing was perfect because there were only a few other foreign competitors with preceding experience in confidential consumer market, which made the transition more accommodating. In 1997 when Yamaichi Securities obtain bankruptcy, was an ideal opportunity for a company from American to enter Japanese market. Although first considering a joint endeavor this would permit the minimum expenditure as developing an ability to utilize an accessible distribution structure of a well-known bank of Japan. The flipside they did not observe their existence on the market because this ventures in the extensive flow, therefore Merrill Lynch began reconsidering the agreement and were fortunate to hire employees and buy branch offices of Yamaichi's in 1997.
When establishing the company's position, Merrill Lynch definitely won in this state of affairs without coordinating and reporting moves with other Japanese companies. The risk that was taken paid off very quickly regarding massive assessment of the possessions held by the company.
For all big businesses worldwide, the years 2001-2002 were significant as the global downfall of the stock markets occurred. This event was unpredictable, and caused by the macroeconomic factors that could not be controllable by a solitary country. This event softened the crisis for Merrill Lynch; however, entirely avoiding it was unfeasible because international business is firmly connected with macroeconomic circumstances as it was in this particular occurrence. Most of the retail locations were closing and significant layoffs of employees was the simply way the company could continue operating in the Japanese market. Potential aspects show this resolution was a sound one and began renewing the company's power because approximately all resources were still restricted by the initial company. After many years of success and experience on the market, withdrawing would be outrageous. This company shows that it could withstand tribulations, losing half of their proceeds and massive workforce lay off, were still running stronger than ever in six months. Having knowledge of specifics of market structure in Japan and loyal customers are foundation for Merrill Lynch’s competencies as compared to other competitors in this line of work. Although there is never a guarantee of stable and perfect, as 2001-2002 crisis has proven, the company should continue conducting business in Japan.

References

Hill: International Business: Competing in the Global Marketplace, Seventh Edition; Chapter 20, p 701. The McGraw−Hill Companies, 2009

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