5/14/2015

Uniqlo Business Strategy

Assignment at Level 5

DONATAS MENDELIS
STU31876

Contents
I.

Introduction ................................................................................................. 2
What is Uniqlo? .............................................................................................................. 2
Uniqlo mission ................................................................................................................ 3
Objectives & goals .......................................................................................................... 4
Uniqlo competitors .......................................................................................................... 4
Financial overview .......................................................................................................... 4
Uniqlo strategy & core competencies ............................................................................. 5
Uniqlo Business Model (BM) .......................................................................................... 6

II.

Uniqlo organizational audit ........................................................................ 8

PESTLE analysis ............................................................................................................ 8
Porters five forces analysis ...........................................................................................11
SWOT analysis ..............................................................................................................12
Uniqlo stakeholders analysis ........................................................................................12

III.

Market entry ............................................................................................... 13

Uniqlo international growth ............................................................................................13
Uniqlo mergers & acquisitions (M&A) ............................................................................14
Alternative strategies .....................................................................................................14
M&A strategy motivation ................................................................................................15

IV.

Uniqlo strategy implementation............................................................... 16

Team role & responsibilities...........................................................................................16
Uniqlo resources ...........................................................................................................17
SMART targets & contribution .......................................................................................17
Conclusion ....................................................................................................................20
Referencing sources......................................................................................................21

Introduction
What is strategy? Strategy is shaping the future. Henry Mintzberg argued that only some
strategic plans ever happened the way they were intended. (McKeown M., 2010).
Strategy is not necessarily to all businesses to ensure their future, because not all organizations
face competition or experiencing change of environment, but for company as UNIQLO its a
requirement. Strategy helps to identify and develop company resources and capabilities for the
markets, where company operates in their business, its also a framework of an organization with
its capability to move forward and understand its place in the markets. How the vocabulary of
strategy informs strategic planning?

What is Uniqlo?
Uniqlo is Japanese company originally known from unique clothing or Fast Retailing Co. Ltd as
a casual wear manufacturer and retailer. Uniqlo was established in 1984, when opened first store
in Hiroshima.

In 2005, company was restructured as a whole owned subsidiary Uniqlo Co. Ltd, when purchased
multiply brands: the France-based womens fashion, Comtoir des Contonniers, the French
lingerie, Princesse tam.tam, and the womens fashion brand Theory.

Uniqlo is a company that gives back to society and continuing to impress the world. Uniqlo sale
Truly Great Clothing that anyone would want to wear. Great clothing differs from customer to
customer in a very broad and diverse concept.(FR Group Annual Report, 2014)
Uniqlo products are low priced but high quality:

Women & Men - Collections, Outwear, Knitwear, Tops, Bottoms, and Accessories &
Underwear and Footwear.
Kids & Babies - from 3 to 24 months, Infants [Years 1 - 3], Boys & Girls [Years 3+],
goods and other items. Available from: http://www.uniqlo.com/uk/corp/ [06, April, 2015]

Uniqlo mission

To create truly great clothing with new and unique value, and to enable people all over
the world to experience the joy, happiness and satisfaction of wearing such great clothes
To enrich peoples lives through our unique corporate activities, and to seek to grow and
develop our company in unity with society . (FR Group Annual Report, 2014)

Visions
Comfortable everyday clothing are Made for All can change the World in changing clothes. LifeWear brand certificate of Uniqlo unique position in the World.

Values

Long term issues from Uniqlo customers outlook & appreciate their criticism.
Welcoming innovation & challenge with respect and support by individuals in promoting
general & personal growth.
Commitment to ethical standards & regularity.

Recent activities

Increased in all products recycling initiative

Opened Grameen Uniqlo social business in Bangladesh
Sponsorship for the International Tennis Federations wheelchair Tennis Tour.

Objectives & goals

To improve and develop Uniqlo products & markets in opening new stores in Greater
China and other Asia countries.
Buy companies that could build platform for Uniqlo new businesses in Europe & USA and
boost popularity of Uniqlo brand.
Promote diversity by employing people with disability and working together with
stakeholders to reduce environmental impact.
Strengthen brand portfolio and increase in revenues & profits.

Uniqlo competitors
These are: Gap H&M, Zara, United Colors at Benetton, American Apparel, and Next with
strategies to increase online presence in reducing the costs and meeting consumers demand of
convenience. Theyre effective and organized supply chain management to control inventory and
marketing increasing in emphasis on unique designs.

Financial overview
Overall FR Group have reported their financial perfromance as a huge increases in revenues and
profits for fiscal year 2014 and part for 2015.

As you can see Group sales also growth by each business segment.

(Fast Retailing Co., Ltd., 2015)

FR Co. Ltd. (Uniqlo) rankings between competitors

Uniqlo strategy & core competencies

FR Group plans to expand Urban Market Share aggressively opening new stores in major cities
of Japan and increase in revenues and profit within Uniqlo Internationally in developing high
quality products and entering new markets. To develop core strategy and concept by selecting
the cost leadership strategy Uniqlo seeks to increase competitive advantage as a low-cost
producer within global markets having a broad focus in targeting market segments. In Japan, its
literally household brand with huge customer response. Uniqlo manufacturing new products and
5

sales products at low-cost through cheap raw material and low cost suppliers. Produce mass
market and maximizing the efficiency of its production and distribution process.
Supply chain arrangement at Uniqlo allow to purchase materials in bulk by impressive partnership
with suppliers that negotiate for much competitive prices. Uniqlo employs other business
innovations in mass production and sales products directly to customers, so being able to improve
its progress by locating company factories in China and Vietnam and capitalizes on the low wage
costs in these countries.

Uniqlo Business Model (BM)

Available from: http://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html [10 April,

2015].
Company long-term direction is established Specialty store retailer of Private label Apparel (SPA)
in Japan, where company ensures the development of products with exceptional quality, as a nice
of its business model. Uniqlo business model - SPA control the entire production supply chain
from such factories in these countries into various warehouses in Japan and distribution centres,
retail outlets located all over around the world. Important factors to formulate Uniqlo strategy was
SPA and elements of planning useful to know how to use company resources, develop its
activities and processes. Business model control planning schedules, clothes design, material
procurements and sales. Product development is based on customer feedback, material
procurement worldwide, and at factories, where Uniqlo experts Takumi technical guidance
6

support a product quality. Uniqlo strategy was developed that to become a top brand in Japan
and expand Urban Market Share. In 2005, Uniqlo opened over 1,600 square meters of stores in
Japan. Also fast grow of international market share and business performance. (UNIQLO
Business Strategy, 2014). Perception of Uniqlo brand is National culture, firm factors, and GDP
growth.

(UNIQLOs quest for glory, 2013)

Uniqlo organizational audit

PESTLE analysis
Political situation at Uniqlo markets as Asia, Latin and America regions are not stable of political
and legal risks required to assess and implement new marketing strategies. Company need to
take action at Quiet Period that could affect the share price until financial statements will be
prepared, as only then Uniqlo will comment on business performance.
Economical FR Group sales increased in performance and huge profits are Uniqlo brand
strengths and future economic growth in fiscal 2015.

Socially Uniqlo is facing international community and addresses they key social and economic
issues together with its ethical approach to business. Uniqlo created a fund of $10 million for
children as Clothes for Smiles by Uniqlo and professional tennis player Novak Djokovic to help
and support children fulfilling their dreams. In 2010, Group established social business in
Bangladesh, one of purest countries in the world, where found Grameen Uniqlo Ltd addressing
social problems and issues related to poverty, sanitation and education.

Available from:http://www.fastretailing.com/eng/csr/community/socialbusiness.html [10 April,

2015]
Technological integration is one of Uniqlo strategic capabilities concerned suitability of resources
and competences requirement for growth. Uniqlo always invest in technology innovations to stay
labour intensive and productive. Uniqlo make sense of computer system software which help to
draw rough sketches, print designs and store information for future retrievals to access for Group
departments by the region. Technology are tangible and intangible elements enabling the
continuous improvement and ability to develop Uniqlo strategic intent.
Legally FR Group provided comfortable working environment to their employees to maximize
productivity including Uniqlo latest information technology and offices equipment, which enhance
administrative efficiency - Work-life balance & Employee Health and Reduced Working Hours.
To control legal requirements company established FR Counselling Centre focusing on well-being
of its employees including workplace accident prevention.

(FR Co Ltd. (Uniqlo), 2014)

Environmental - Uniqlo working on project to reduce environmental impact of all operational
processes including its supply chain. Uniqlo legal environmental policy initiatives are: to reduce
and eliminate the release of hazardous chemicals, where company coordinates and maintain
controls over the business process.

10

(FR Co Ltd. (Uniqlo), 2014)

Porters five forces analysis

Power of buyers is high in retail apparel industry of no switching costs. Customers have a high
range of products to select and purchase. Possible to establish brand loyalty, but new styles or
collections should satisfy customer wants and needs before approval for new fashion trends and
mass production. To corporate social responsibility new buyers are new pressures.
Power of suppliers is low of Uniqlo has about 70 partners' factories located in China and
Vietnam, where they're making a lot of products. 90% of them are made in China at cheap labor
cost. Group specialists - Takumis team visits partners' factories and supports manufacturers for
productions and proactive technology sense. Production is made at low cost and Takumis
making a major contribution of such supplier.
Competitive rivalry is high - three key Uniqlo competitive advantages are:
Apparel components can be worn in conjunction with other items of its specific design
with many colors.
Sensible pricing value as Uniqlo the quality and style of clothing is sacrificed to keep
prices low.
Offers specific engineered clothing material with enhanced performance features as
HEATTECH co-developed by Toray Industries Inc. (Williamson, 2013)
Threat of Substitution is high - Uniqlo will have a long term positive impact as the entity and
added value (profit) of its cheaper fashion, cosmetics, accessories, and cutback due to recession.
But such qualitative factor will increase in cost weakens power.
Threat of New Entry is moderate - if Uniqlo wish to develop market, its based on new markets
entries or new business of existing markets while employing existing products. Then Uniqlo
moderate small stores and increasing globally, but its difficult of its low switching cost.

11

SWOT analysis

Uniqlo stakeholders analysis

Any person or organization who can be positively or negatively impacted by, or cause an impact
on the actions of a company is stakeholder. (Freeman, 1984). Different stakeholders have
different claims on Uniqlo, so often want completely different things. People can influence or are
influenced by the company.

Stakeholders
group

Customers

Employees

What we
them?

want

from What they want from us?

Visit Uniqlo stores, pay fair

price, grow in number &
leave a feedback that we
could evaluate your needs
and wants.

How we can add value

through our strategy?

To offer more benefits with new

products - extra warm line by
HEATTECK clothes for men,
women & kids with enhanced
comfort & greater structural
elasticity.

Develop Uniqlo products and

build customer perspective,
embracing innovations and
challenge, committing ethical
standards.

Work for us, be loyal to us Threat

them
fairly,
pay
that increase our brand.
reasonable salary for level of
work
expected,
offer
reasonable working conditions
& reward.

Corporate philosophy &

social responsibility and its
activities promoting diversity
& commitment having work
place free of discrimination

12

Suppliers/part
ners

Shareholders/
Investors

To
build
long
term
relationships, offer to us a
higher quality materials,
supply it at affordable
prices and deliver on time.
Continuously invest in us,
trust us in making the best
decisions for Uniqlo. See
us worthy and continue
lend us.

To pay them on time, be honest

with them.

To have a lot buyers, real

competitors within the field,
communicate openly and give
them a regular return on
investment, re-pay loans in full
and on time.

for women, handicaps and

non-Japanese.
Material development &
acquisitions at low costs.
Negotiations
&
bulk
purchases from partners
factories.
FR Co. Ltd (Uniqlo) shares
information
&
business
operations
fairness
maximizing our values to
corporate
and
growth
internationally.

Market entry
Chine fashion market unlike any other in the world. China is industry super power and highly
diverse country. As a fact China had a population of 1.34 billion in 2009 and has the world largest
internet-using population engaged with technology allowing for various e-commerce and new
business models. China is certainly attractive prospect for developing organizations and provides
great potential market opportunities. Only weaknesses - political and cultural environments not
easy to navigate and pose massive challenges for companies to overcome.

Uniqlo international growth

Uniqlo International is the main driver to evaluate the growth for whole FR Group in Greater China.
In September 2002, company has opened first store there and successfully expanded network to
306 stores by 2014.

(FR Co Ltd. (Uniqlo), 2014)

13

Uniqlo mergers & acquisitions (M&A)

M&A strategy at Fast Retailing Group (FR) is critically important of company aims to achieve
future profits. In 2010, FR aimed increase in sales to 1 trillion yen including ordinary income of
150 billion Yen. Merger means joint ownership within the FR Group. Acquisitions means
purchases of potential brands. So, M&A gives speed of market entry, competitive situation,
financial condition, and exploitation of capabilities.
Now, FR seeks to increase in sales and profitability of Uniqlo brand and have only one option
M&A - attractive new market strategy. M&A set an important goals, which Group aims to achieve:
1. Obtain businesses abroad and in a new markets that Uniqlo could strengthen FR Group
business platform.
2. To buy competitors or potential brand for global market development an expanding
group portfolio.
Our acquisitions of Theory, Comptoir des Cotonniers, Princesse tam.tam and J Brand are
examples of such M&A activities.
Available from: http://www.fastretailing.com/eng/ir/direction/manda.html [10 April, 2015]
Important criteria in assessing new strategy as M&A deals are growth and profit with potential
brands and their condition for growth. Uniqlo brand has solid idea for growth of Group share
through their facilities: capital resources, know-how in store operations, production & inventory
management and sales planning.
To expand Uniqlo FR Group management were always looking for opportunities in the U.S.,
where Uniqlo has opened store in New York, in 2006, and generated sale growth by 40%. Also
Europe as Russia stores opened in Moscow, in 2010. In 2014 company has reported loss in U.S
markets, but also think to increase in stores in the future, to buy or build joint ventures with
partners nationwide U.S.

Alternative strategies
Uniqlo can growth internally, which is low risky, and externally more risky. Uniqlo need to
consider other strategy following:
Suitability how well alternative strategy works in its situation?
Feasibility is it realistic and achievable within Uniqlo resources?
Acceptability is Uniqlo confident with their workforce in pursuing other strategy for the
future performance outcomes and returns of benefits in meeting stakeholders
expectations?
Organic growth is cost effective business expansion, mechanism of business growth from
reinvestments that build markets to increase in capacities and develop new products increasing
companys vital well-being. Therefore, external mechanism of growth are mergers and
acquisitions (M&A), which are common strategy of growth for Fast Retailing Co. Ltd.
Market entry strategies turning to strategic alliances and partnerships to collaborate in
establishing market presence in new markets. These allow to increase in sales by opening new
stores in new and in existing countries, establishing business stability within new markets.
Market development (penetration) involves offering an existing products into new markets, as
China, Asia, Europe, and USA. It takes a form of new segments, new users, and new geographic,
as a prime example of internationalization in meeting critical success factors of the new markets.
This is why diversification is a strategy that takes Uniqlo away of existing markets and its products,
but allow to increase in scope. Substantive growth strategy is made by integration and
diversification, which also may covers limited growth or do nothing strategies with market
penetration, product development, and innovation strategies. Retrenchment strategy is not a
requirement at Uniqlo of its huge profits developed by M&A.

14

M&A strategy motivation

Because Uniqlo wish to increase marker value, we should increase in pricing power in industry
by entering new markets and reducing competition. Usually, then Uniqlo purchase a competitor
and develop new products through R&D internally.
Investment decisions of M&A proposals are examined by the Board of Directors and final decision
is made on the assessment of returns on investment. Uniqlo International plan to open 250 new
stores in Greater China and in other parts of Asia, that to perform strongly with the next couple
years and outrun revenues of Uniqlo Japan. In 2014, 374 stores were opened and earned 200
billion yen in China, Hong Kong and Taiwan. Uniqlo plans to open 100 stores annually and to rich
target from 1000 to 3000 stores as a medium term direction. All of these justify the selected M&A
strategy to speed up international growth.

(Tadashi Yanai, Fast Retailing Co. Ltd., 2014)

15

Uniqlo strategy implementation

Effective implementation of strategy afford if the strategies are adopted by whole Group including
their stakeholders, the environment, resources, capabilities and competencies of Fast Retailing.

Team role & responsibilities

Because our employees and top management are united, their challenges are entirely with people
and systems at place that the Group pursue global expansion with speed and assurance. Fast
Retailing has Board of Directors and Group Senior Leadership team, which are responsible for
strategy implementation internationally. To corporate strategy for globalization by implementing
recommended strategy required a team effort headed by company directors.

They provide directions on how to corporate level strategy including market penetration,
consolidation, product development, and diversification through Uniqlo International.
Project management team control risk factors with the operations of FR and directly plans
approach, process, and activities necessary to achieve Uniqlo projects objectives. They engages
important risk management plans, acquires staff, equipment, and resources needed to perform
such activities. These includes general risk management for product liabilities, weather
conditions, natural disasters, lawsuits, and change in economic conditions and consumptions
trends. Team develop international business activities through M&A strategy by expanding Uniqlo
operation outside the Japan, manage risk operations plan.
Uniqlo senior managers role covering preparation of activities for production releases, manage
change, post-implementation reviews, activity to learn the objectives. Theyre responsible and
should create communications with all stakeholders, manage risks and issues including staff
training & development, project status reporting.

16

Uniqlo resources
To evaluate and implement new strategy for Uniqlo International growth required FR Group
existing resources and capabilities. These are:
Physical resources partners factories in China also known as a plan, machinery,
physical assets, production, people and finance.
Financial resources Group capital, cash, debtors and creditors, shareholders and
banks, etc.
Human resources where employee involvement is a heart of every business leaders
work. Uniqlo business is people.
Intellectual capital intangible resources known as new SPA strategy and Takumi team
knowledge and experience the major asset of Fast Retailing.
As financial risk Uniqlo reports a loss from Australia & U.S. markets with a gross margin short
falls and the cost of new stores openings contributes into a negative results. Overall Asias market
will compensate new strategic intent for whole Group. How many millions of yen will need to
implement new strategy for Uniqlo?

SMART targets & contribution

Specific - speed up Uniqlo International growth by expanding new stores opening in Asias
countries including Europe & USA. Plan to open 100 stores each year and increase network to
1000 stores in Greater China, where takumi team will manage production standards at partners
factories, when Group project management team will implement store opening strategy.
Measurable - total Uniqlo International stores increased to 716 by the end of February, 2015 with
assumed growth by +48,9% year on year, when operating profit should rise by +63.2%. Therefore,
Uniqlo International stores will increase to 818 (+185).
Achievable - FR Group has strong performance from all business segments and Uniqlo
International generates large profits to implement new strategy from its capital resource for
investment. Operations are continued expanding Asia markets for mass new store openings using
FR Group resources and aggressive strategy.

17

(Tadashi Yanai, Fast Retailing Co. Ltd., 2013)

Relevant - Uniqlo strength in expanding market share in developing of women & baby wear is
growth. In China growth initiative are boost in sales per stores, adopt product marketing mix, and
maintain growth by expanding stores floor area through scrap & build strategy.

18

(Fast Retailing Co. Ltd., 2014)

Timely - by first-half in 2015, Uniqlo Greater Chine, Honk Kong, Taiwan & South Korea has
reported increases in revenues exceeding Group expectations. When other places as Europe UK, France, Russia and Germany are in line with Uniqlo expectation.

(Fast Retailing Co. Ltd, 2014)

19

Conclusion
The Japanese model of decision making is developed within the team, transferable for solution
and can take longer period for decision to arrive, but once a decision has been made, it can be
quickly implemented and its implications are widely understood. (Needham D., Dransfield R.,
Coles M., Harris R., Rawlinson M., 1999, p. 665)

20

Referencing sources
Books:
1) Campbell D., Edgar D., Stonehouse G., 2011, Business Strategy an Introduction, 3rd
edition, published by Palgrave Macmillan.
2) Cotton D., 2010, The Business Strategy Tool Kit, published by Management Books 2000
Ltd.
3) Mckeown M., 2012, The Strategy Book, 1st edition, published by Maverick & Strong Ltd.
E-books:
1) Johnson G., Scholes K., Whittington R., 2008, Exploring Corporate Strategy, 8th edition,
published 2008
2) Pearson RDI University, 2015, Students Materials.
Bibliography/Web:
1) http://www.fastretailing.com/eng/about/ [10 April, 2015]
2) http://www.slideshare.net/JennyLee4/global-marketing-uniqlo-case?next_slideshow=1
[08 April, 2015]
3) http://www.uniqlo.com/uk/corp/ [09 April, 2015]

21