AEON Essay

AEON (or ÆON Co. Ltd.) is a well-known general retail company. AEON is the parent company of a group of companies. The company operates general merchandise stores, supermarkets, specialty stores, drug stores, and convenience stores. AEON is a Japan-based company incorporated in 1926 that now employs around 70,000 people (as of January 1, 2008). Its headquarters is located at 1-5-1 Nakase, Mihamaku, Chiba, 261 8515, Japan. AEON is traded on the Tokyo Stock Exchange, with the ticker symbol AONN-Y. AEON has 183,000 shareholders (as of January 1, 2008).

AEON generates its revenues through general merchandise and other retail stores (73 percent of its 2007 revenues); service and other operations (13 percent of its 2007 revenues), specialty store operations (12 percent of its 2007 revenues, and other operations (2 percent of its 2007 revenues). The company has operations in Japan, Asia, and North America. Japan is AEON’s largest market (89 percent of its 2007 revenues). Asia is the second-largest market for AEON (6 percent of its 2007 revenues). North America is the remaining market and accounted for 5 percent of the total revenues in fiscal year 2007.

In its various stores, AEON offers general merchandise, food and drink, medical care products, and electrical appliances. The division owns Topvalu, the company’s private branded range of apparel, food items, leisure goods, and home products. The company operates around 4,200 retail facilities in this division. The company operates 471 general merchandise stores, 765 supermarkets, 2,974 convenience stores, and 197 other stores, which include home centers, discount stores, and department stores.

AEON engages in four business segments: general merchandise stores; specialty stores; shopping center development; and service and other activities. General merchandise stores are operated under the name Jusco, supermarkets under the name Maxvalu, and discount and convenience stores under the name Ministop. AEON operates specialty stores under the names Talbots, Blue Grass, and Sports Authority for women’s apparel, family casual fashions, health and beauty-care products, footwear, and other specialty retail activities. Moreover, AEON develops shopping centers and also engages in the leasing and management of these commercial facilities. AEON also engages in the financing of retailing stores, food service, store maintenance, wholesale and other service activities, along with the operation of certain restaurants and amusement parks, namely AEON Fantasy Outlets and AEON Cinemas.

AEON was established in Mie, Japan, on September 21, 1926, as Okadaya Gofukuten Co., Ltd. Its name was changed to its current form in 2001. Some of the biggest events in AEON’s history include its 1988 acquisition of Talbots, Inc., of the United States through a subsidiary. In 2005 AEON acquired Carrefour Japan and changed its name to AEON Marche. Also, in 2006, AEON through its subsidiary Talbots, Inc., acquired J. Jill Group, Inc., of the United States.

In January 2009, at the World Economic Forum held in Davos, Switzerland, AEON has been listed in the Global 100 Most Sustainable Corporations in the World.

AEON has a diversified business portfolio. It operates in different forms and also provides several support services. Other than its core business, AEON also provides service and other supportive operations, mainly credit financing. AEON’s diversified business portfolio enhances its revenue generating capacity. Also, AEON increased its strength with well-established supermarket operations. The company’s decision to focus on private label brand products especially improved the profit margins. Moreover, AEON’s financing services enhanced its profits significantly. The opening of new shopping centers contributed to the rise. The credit services operations were another growth-driver for AEON.

The major weaknesses of AEON may be regarded as its geographic concentration. AEON is mainly dependent on the Japanese market. Considering market forecasts with the projection that Japanese buying power will lessen in the near future drives a gloomy overall picture in the coming years. Moreover, AEON’s concentration on financing strongly decreases its flexibility for required financial liquidity. That is, whereas AEON enjoys new business growth by offering accessible credit, its debt management causes problems for itself. However, strong geographic diversification gives the rivals of AEON competitive advantage in sourcing and distribution of their operations. Because of intense competition, AEON needs to allocate large quantities of resources to maintain its market share.

AEON’s main competitors in Japan include: Takashimaya, UNY, Seiyu, Hankyu Department Stores, and Marui. Its rivals in North America include Wal-Mart Stores, Costco Wholesale, Target, Sears Holdings, BJ’s Wholesale Club, Pantry, Family Dollar Stores, Foot Locker, Big Lots, and Dollar Tree.

Bibliography:

  1. AEON, www.aeon.info (cited March 2009);
  2. SEC-EDGAR, www.sec.gov (cited March 2009).

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