Introduction

The empirical analysis in the last three chapters dealt primarily with export pricing behavior. However, the case of Japanese entry into the U.S. luxury car market in the late 1980s suggests that export price strategy is just a part of the key success factors used to penetrate the international market. Indeed, the descriptive analysis of Chapter 4 suggests that the success of Japanese firms in the U.S. luxury car market depended on a number of factors in addition to its pricing strategy.

It is quite obvious, in the case of luxury automobiles, that the automaker has to offer an innovative product that is well designed and engineered in the export market where consumers are well-informed and sophisticated. A new product is developed by using many tasks including market intelligence, product design, engineering, and procurement that are conducted both at the headquarters at home and at the R&D and design centers in the foreign market that the firm intends to enter. Foreign R&D and design centers often play crucial roles in early stages of product development as they have better understanding of the target consumer's preference and the local market trends. Production of luxury models is often done at a the factory located in Japan where the automaker can source a layer of competitive advantages: firm-specific resources and capability that are not easily transferable to foreign locations and country-specific advantages, such as factor endowment and the existence of related and supporting industries.