UNIQLO - Essay Example

The UNIQLO has established R&D centres in Tokyo and New York with intent to collect information from various parts of the world regarding recent trends in designs. They collect information mainly from city streets and business clients and develop appropriate concepts for each season on the basis of gathered information. While forming the strategies, they consider the geographical aspects and cultural peculiarities of the market segment. After the phase of information collection and strategy development, they apply the proposed changes to their five sections of products such as men’s, women’s, kid’s, goods and innerwear. Then UNIQLO concentrates on different market segments using the tools of sales planning, sales promotion, and visual merchandising (UNIQLO official website). The company makes families as their focal point of sales and it keeps wide variety of models so that the customers can choose what they require. UNIQLO operates on the basis of the Ansoff’s matrix theory which says market development and product diversification are the two best techniques to enter into a new market segment (QuickMBA). Since the designers are familiar with the geographical peculiarities of each area, they give more priority to cultural designs which are highlighted in the visual merchandising. The product demonstration has a very effective role in entrancing and dominating a market as it is the fact that ‘first impression is the best impression’. 2. UNIQLO is one of the prominent leading companies with highly extended worldwide network. This large scale network reduces the material costs as it engages in large scale production and purchases. At the same time the commitment to buy 100% of the raw materials of a particular dealer adds to the diminished material costs. The intension to conquer the raw materials at the minimized prices reduces the quality of the materials which eventually leads to less worth products. This puts pressure on the supply chain of UNIQLO. The decision of UNIQLO to dissect the supply chain in order to differentiate the areas of highest and lowest costs gave way for the mismatching of the coordination between the dissected supply chains. It was concluded that reduction in the number of fabrics, designs and cuts resulted in cost effective mass production. As Hoffman and Wimbish (2009) state, changing to mass production encourages the sacrifice of style and excitement which would have an effect on the supply chain (p.10). According to the ‘Product Life Cycle’ theory, the commencement of a product in the market attains utmost customers during the business enlargement (The Product Life Cycle PLC). To illustrate, subsequent to the market stabilization, the product becomes mature. Gradually superior competitors overtake the product which leads to the declination and eventually the pulling out of the product. As per the ‘Product Life Cycle’ theory every product goes by the introduction, growth, maturity and decline stages. The desire of mass production and low cost production should not be a barrier for the essence of the quality of products being produced. Effective managerial strategies are one of the key issues to minimize the pressures on the supply chain such as framing of an effective managerial team with innovative thoughts, online feedback collection of the customers etc. Store revolution and streamlining product offerings would add to the efficiency. In the view of ‘Product Life Cycle’ theory product and brand differentiation play vital role in the maturity stage of a product. Product promotion and media utilization becomes essential aspect when the product is in the decline stage. Hence the maturity strategy of PLC needs to be considered during the encouragement of product offer. 3. Online customer engagement refers to the interaction between customers and company through an online medium. It enables the company to market their products and identify the changing tastes and preferences of the customers through online feed back collection. It is the least expensive and time consuming method for the market forecast since majority of the modern people have access to internet. The most fascinating feature of the online customer engagement is that it can conduct trade and easily collect information from all parts of the globe regardless of geographical as well as language barriers. The Levitt’s added value model suggests that all products and services contain elements such as generic, expected and augmented. According to Levitt, augmented elements are surprises that a customer never expects from a product or service. This theory indicates that, the success or failure of a business largely depends on the range augmented elements a business possesses. In order to understand what makes a customer excited, it is necessary to identify with the ranges of their interests and this would be practicable to some extent by the application of online customer engagement. On the other hand, the information obtained from this method may not show the actual market trend as it does not ensure cent percent participation from the public. Similarly, uneducated persons would not be conversant with the terms of the internet usage and thereby they would not have the opportunity to engage in online trade. Online customer engagement is one of the major initiatives currently being implemented by UNIQLO so as to enhance customer satisfaction. UNIQLO provides online traders with the entire products offering them maximum conveniences. In addition to the existing product lines, they also design some special products exclusively for online sale. The customers can buy company’s products by just typing their account number and credit card number. Since customer gets the chance to know all about a product without the help of a salesman, he can buy a product with minimum procedures time. 4. Information system enables the company to store its information in a systematic and integrated manner; and information security system ensures privacy and integrity of the stored information. Unauthorised computer users are the main threats to the information system security as they use their technological skill to break the system protection in order to get access into private information (Foster, 2010). Even though the organizations have a well developed security systems in operation, sometimes it may be broken by its mishandling. For instance, if an information desk worker of a firm reveals the system passwords to anyone without knowing his/her actual intention, the security systems become useless. Though firewalls are designed to meet the information security requirements, a computer hacker can easily access into the network if these securities are shut down for just a minute. Therefore UNIQLO takes every effort to prevent the leakage of information by acting in accordance with the “Act on the Protection of Personal Information” (UNIQLO). They maintain separate department for this purpose under the auspices of a Personal Information Manager. The Human Resource Management system in UNIQLO values its employees very much and they maintain an efficient Performance Management as an inevitable part of HRM. The performance management evaluates the performance of each employee and it also concerns with other areas such as incentives, training and employee development. In case of company failures, the UNIQLO’s performance management must concentrate more on employee motivation and retention. In order to exercise these practices efficiently, the HR management can conduct some effective training classes along with initiating additional incentives to employees. 5. The ultimate aspiration of every company is its international expansion which requires the creation of awareness among the media, customers and partners. Simultaneously an efficient and effective management of the company is very essential. There are quite a lot of risks associated with strategy of international expansion. Absence of a flagship store was the reason for the substantial financial losses for Uniqlo to trade gainfully in the Uk. Flagship stores play vital role in promoting awareness and loyalty to the brand. Hence establishment of flagship stores is a necessity for a well organized management of a company. Flagship stores should not be a marketing expense; instead it should serve both to ‘showcase the brand and generate profit’ (Kent & Brown, 2009, pp 25-27). International expansion can significantly affect the financial position of the company. The success of each and every company depends on meeting the increasing and distinguishing demands of their customers. As customer’s satisfaction is the service motto of modern global market, UNIQLO must endow the customers with the latest trends at affordable rates. The growth of a company relies on the quality of the products which can be obtained through the selection of the best raw materials available. International expansion requires good financial position of the company. According to Marc Gobe’s 10 commandments aspiration is more significant than recognition as being recognized may not be equivalent to being liked. Hence, to grow globally and financially requires passing from generating identity to creating personality in the international market. UNIQLO must focus on international market giving priority to relationship. Although some crises would become the barriers to UNIQLO’s expansion, they can be overcome by the formulation of effective managerial strategies. 6. The UNIQLO’s success as a retailer can be attributed to their four competent factors such as price, selection, sales promotion, and market information. UNIQLO’s price rates are absolutely affordable to customers and their most of the products do not exceed the rate of $200 (Retail Market Management). They generally start a season with low prices and they further reduce their prices at the end of the season; it tends to create good stature for the UNIQLO products among the customers. As we make a SWOT analysis, ‘good reputation among the customers’ is the most strength of the firm that facilitates fast movement of company’s products (QuickMBA). Similarly, UNIQLO possesses a large variety of collections which would make customers happy as they get the opportunity to choose from a bundle. Sales promotion is another technique that enhances the growth of UNIQLO brand. They use media advertisements, promotion campaigns and visual merchandising in order to familiarise the company’s products with the public. In addition to the above mentioned competencies, UNIQLO also possesses some additional qualities such as durability and sustainability so that they can continue their operation without any interruptions. From the light of observation by Bhamra and Hon (2004), UNIQLO manufactures products with long durability and sustainability, and hence they are protected from the risk of damage of goods and subsequent losses. 7. UNIQLO initially failed to set up lucrative business in UK. According to Coble (2007), UK CEO explained that the nonexistence of flagship stores was the main reasons that lead to Uniqlo’s monetary fatalities and trade failure in UK (cited in Kent & Brown, 2009, p.25). There could not have been any issue concerning the location and popularity of the flagship stores since one of the formerly established one could have gained the flagship store status. Comparatively feeble position of the store disallowed it from achieving the relevant status despite of the region being trustworthy for exclusive designer brands. Use of inefficient strategies was one of the causes for UNIQLO being not talented to trade profitably in UK. The inability to build a strong brand image among the customers was the key issue. The inefficient management strategies and the lack of sufficient financial guidance added to the failure. According to ‘Diamond model-Porter on nations’ the accomplishment of a company depends on several factors such as firm strategy, structure and rivalry, demand conditions, related supporting industries and factor conditions. Uniqlo was not much successful in implementing supporting industries such as flagship stores. GAP mode concept insists that adequate market research orientation and effective management of customer expectations are the essential factors for the growth of a company. Using the related supporting industries strategy of Michael Porter’s Diamond model, Uniqlo managed to upgrade the flagship stores in UK which worked out as an important strategy in upgrading trade in UK. Reconsidering the grounds for trade failure in UK, Uniqlo managed to establish a new flagship store which was supposed to alter customer’s perception and raise its brand acknowledgement in UK (Kent and Brown, p.25). Reference Bhamra, T & Hon, B. (2004). Design and Manufacture for Sustainable Development 2004. Wiltshire, UK: John Wiley and Sons. Business Model. Uniqlo. (23 Jan 2011). Retrieved from http://www.uniqlo.com/us/employment/model/ Foster, N. (2010). What is Information Security?. Wisegeek. Retrieved from http://www.wisegeek.com/what-is-information-security.htm Hoffman, J. L & Wimbish, M. R. (2009). Recovery retailing: tomorrow starts today. Accenture. Retrieved from https://microsite.accenture.com/landing_pages/retail_tomorrow/Documents/Accenture_RecoveryRetailing.pdf Kent, T & Brown, R. (2009). Flagship Marketing: Concepts and places. Milton Park, Abington: Taylor & Francis. The Product Life Cycle (PLC). (n.d.). Marketing Teacher. Retrieved from http://marketingteacher.com/lesson-store/lesson-plc.html Privacy Policy. (n.d.). Uniqlo. Retrieved from http://www.uniqlo.com/jp/global/guide/us/privacypolicy/index.html ‘Strategic Management’. (n.d.). QuickMBA: Knowledge to Power Your Business. 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