UNIQLO Company Internal Analysis and Company Background - Case Study Example

UNIQLO COMPANY INTERNAL ANALYSIS AND COMPANY BACKGROUND STUDENT’S NAME: INSTITUTION: INSTRUCTOR’S NAME: DATE: Company background Uniqlo is a company that deals with production and distribution of clothes ranging from all sizes for men women children and infants. This company is well known and it has branches in most counties of the world. It specializes in designing the latest trends of all clothes. The story on the success of the company dates from way back in the suburbs of Japan where the retail started as a boutique for designing and selling clothes of all sizes. The name Uniqlo originated from ‘Unique Clothing Warehouse’ (Byoungho, J 2004b,pg 125). The company gained it fame in early 1990s when there was an economic recession in Japan that forced the citizens of Japan to cut down on their spending, therefore the company decided to meet the demands of the Japanese by lowering the prices of their clothes so as to meet the needs of those people who aimed at reducing the money spent. This was a major breakthrough for the company because it was able to make high profits and to add on it, the company maintained their customer relationship through providing them the best services. All these fame about Uniqlo happened in the Japanese suburbs and therefore the popularity encouraged the company to extend its service by expanding the retail and opening up other branches around Japan (Chetty, 1999,pg 34), The fame was experienced more after the launch of fleece apparel and thereafter, the company saw a downfall as it is obvious for any company to always have ups and downs. The rise of the company was influenced by its decision to have a line of trends and focus on women clothes, and that is when it encountered profits. The company due to enough profits decided to open its branches overseas and it encountered challenges that any company would have in trying to venture into the new markets overseas. Challenges encountered by the company in venturing overseas markets The company opened so many stores in the overseas that could not be able to manage. This lead to overspending in the company since it is obvious that there are factors such as marketing, transport and distribution of products which required large amounts of money. Another challenge was about brand identity, the company encountered a challenge on the retailing department whereby they were unable to establish a good brand identity before they opened up the shops overseas. The company is now operating worldwide and it has eight hundred branches worldwide. The company has its strengths on the ability to innovate new designs and outfits for every seasons and it therefore enables its customers to get their trendy and fashion clothing’s globally. Their clothes are unique and this is one of the strategies that the company has focused on to ensure that it will always manufacture unique clothing’s (Ross D 2011,pg 67). The company is well known to have affordable pricing strategy for all the sizes of clothes, this enables people to afford their clothes and since they are unique it attracts more customers globally. The company has branches worldwide for example in the U.S, Singapore, Malaysia, France, China, Philippines, Taiwan and other countries globally. The main branches are located in Japan. The purpose of having branches is to increase the sales of the company and to look for more information on the tastes and preference of people from different countries and therefore diversify on the designing of more unique outfits. The company has a slogan “made for all” which motivates the employees in the company to design clothes for women, men and kids for all colors (Byoungho, J 2004a,pg 89). The clothes of the company are manufactured in China despite the Japan location of the company. The employees in the company are dedicated towards achieving their goals and mission by working as a team. The company has invested in hiring experienced and competent managers who are responsible for managing each branch. The main aim of the company is to be the world’s number one clothes retail and therefore it has developed strategies of ensuring that people will be more attracted to purchase their products. Uniqlo aims at focusing on polo’s and oxfords which are the basic clothes, also slim-fitting bottoms, blouses and lightweight are the main focus of the company (Doshi, G 2006,pg 148). Internal Analysis of the Uniqlo retail Internal analysis of the company will focus on the aspects that result to the fast growth of the company. It will highlight some strengths and weaknesses, which have helped the company to manage its way through to being the world’s famous clothing retail. When analyzing the internal factors of a company, we focus on the vision of the company since it will guide us through understanding the reasons underlying the success of the company. The mission and vision of Uniqlo To provide high quality, fashionable and basic casual wear for everyone at affordable prices To focus on operation at low cost and find the easiest way of linking production and marketing To develop innovative ways of ensuring efficient customer services in order to increase sales and build the company image To provide an enabling environment for employees and sensitize on teamwork to facilitate more innovative ideas To work towards becoming a global company that provides clothing’s of all designs hence influencing growth of the company The strengths of the company The strengths of the company are derived from the fact that it has developed strategies to meet the vision by ensuring the success of strategy implementation. The company also focuses on unique value chains which are a competitive advantage and it also contributes towards the strength of the company. Strength is the organization structure which allows decision making process to be done under the participation of all the subordinates. Customer’s loyalty is another factor the company derives the strength due to the fact that the company offers unique products at affordable prices and therefore customers will always shop from Uniqlo. The management team of the company is focused on ensuring that the performance of employees and the overall company performance will enable the company to attain their objective of being the world’s number one clothes retail. The company has enough resources that have ensured the success of the company. These resources range from human resource, physical resources, natural resources and capital resources. Weaknesses of the company The company focuses on simple and elegant clothes with minimal details, this can be a weakness considering other designer companies who go an extra mile to design clothes with a lot of details and extravagant. Also the company has unsystematic distribution strategy that slows down the delivery process, this is a weakness and may impact on the sales of the company as they will face competition from rising designer shops and retails especially in the U.S. Uniqlo also design products for low ended customers, therefore the company is facing competition from high companies that design and sell at high prices. The company is also not able to predict the high demand seasons for example during school opening whereby the customers need high supply of school attires, for the case of Uniqlo it has never been able to develop a strategy to ensure they make high profits during such seasons and this is a weakness. Organizational structure has been rated as one of the aspects that contribute towards the success of implementing decisions in a company. The structure of Uniqlo portrays the characteristics of hierarchical type of structure. This has hindered the company innovation and designing because all the activities of the company have to be done under the decisions made from the top. When the decision making process is centralized, it becomes difficult for other employees to give their own opinions and also contribute to the decisions. This has been a problem that has hindered innovative ideas from being generated. Internal factors influencing the durability of competitive advantage According to Porter,(1985), value creation and customer maintenance is a major factor that has influenced the durability of competitive advantage in the company. Uniqlo has focused on meeting customer needs at affordable prices and the reason as to why it has been able to win customer loyalty. The low price enables customers to shop more and hence the company makes profits while remaining at the top of competitive market. The quality of the products is also another value creation strategy achieved by the company by ensuring that their products are unique and of good quality. Focusing on the building blocks of competitive advantage we also analyze the superior efficiency of Uniqlo and we find that it has placed focus on employee productivity such that there is enabling environment for employees which contribute to impressive performance of the company. When it comes to superior quality, we find that the company has always received positive attributes from the customers on the products and services offered in every branch of the retail company. The customer’s perceptions towards the company are positive and this motivates the company to work towards maintaining its competitive advantage (Culpan, R 2002,pg 45). Innovations and superior customer responsiveness also contribute towards the competitive advantage to the company. How the company has been able to avoid competitive failure From the internal analysis on the strength of the company we find that the competitive advantage of the company has enabled its success and therefore through the internal resources, competencies and capabilities, the company has been able to avoid competitive failure. The company resource contributes to wards the success of the objectives because they form a basis for completing the production and distribution process. The competencies of employees ranging from Yanai the founder of the company and the managers in every branch also contribute a major part towards the success of the company (Barney, J. 1991,pg 85). Capabilities of all the subordinates in the company are another success contributor and hence enable the company to avoid competitive failure. Looking at the resources, the company has been manufacturing its products from China and this has helped to minimize the transport of raw materials. Perhaps applying the VRIO/VRINE framework on design and innovation of the company will help us understand how it has been able to avoid competitive failure. Firstly, the company values their customers and this is proved by the fact that customers place attributes towards the products of the company. The fact that the company focuses on designing and innovating places value to their products. Secondly the company emphasizes on Unique and Rare products by innovating new techniques of producing unique products which will earns the company a competitive advantage. Thirdly the company produces inimitable products, when analyzing the products we find that other competitors have not been able to copy the designs and the quality of Uniqlo products and the reason being, the company has blended designing, production and innovation of inimitable products. Lastly the company does organized delivery services for customers, as from the knowledge about the company; it has a well organized distribution channel that ensures delivery of products at the right time and place. The retails located in the country and overseas portray a strong distribution system as well. This enhances the customer relationship and it also maintains the customer loyalty. The above VRIO/VRINE strategy of Uniqlo Company helps us to understand the reason behind its ability to avoid competitive failure (Jaffee, D. 2001,pg 64). Appendix Reference Barney, J B and Hesterly, W S. 2006.Strategic Management and Competitive Advantages Prentice Hall, New Jersey. Bossini Annual Report 2007.Bossini International Holdings Limited, retrieved on 23 September 2008, from http://202.66.146.82/listco/hk/bossini/annual/2007/ar2007.pdf. 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