Strategic Analysis of Isetan Company - Essay Example

Isetan Company Introduction Isetan Company has enjoyed its reputation as one of the Japan’s fashion leader attracting more than 30million customers a year at the Shinjuku store. (Isetan Foreign Customer Service) It has around 120 years of history and deals with a variety of products of international standards which meets the individual requirements. It was established in 1886 in Tokyo with an initial capital of 6 million. No Isetan is operating around 7 stores across Japan employing around 9000 people. Its revenue has crossed 17 billion in 2007 because of the innovative business strategies adopted by the management. I did my internship for 3 months at the buying office of Isetan in New York branch. It is located in the 40th street of Madison Avenue. I did the position of manager’s assistant and my main responsibilities were to research new American brands for Japanese buyers and to organize all schedule for fashion collections. This paper is written as the strategic analysis of Isetan, based on both internal and external business environments (SWOT and PEST analysis) Internal analysis of Isetan – SWOT analysis Strengths The major strength of Isetan is its wide product range. Products like ladies wear, ladies accessories, bags and shoes, ladies cosmetics, and fragrances, watch, jewellery, babies/children wear, household/ interior goods, mean’s wear, men’s accessories, shoes, Men’s grooming, sports accessories etc are some of the products of Isetan. Isetan has products which can satisfy all the people irrespective of their age or gender and hence a family can depend Isetan for its complete purchasing needs. Another strength of Isetan is the research and development department. This department constantly monitoring the fashion trends all over the world and they were able to produce high quality fashion goods based on the changing needs of the customers. In other words, Isetan was able to foresee the trends in fashion and they were able to adapt themselves based on that. They never rely entirely on one kind of product for their business. Children, adults and old people, all are dealt with equal importance and hence all the customers who visit Isetan department stores will return with utmost satisfaction. Diversification of business is another strength of Isetan. Isetan has opened men’s specialty store at next to Isetan main building in 1968. Isetan has realised the importance of customization of business and they have opened different stores specialized in different materials in order to target specific customers. The innovative business strategy “Only I” was introduced in 1990 by Isetan. The idea behind this concept was to produce only one product of a particular design so that only one customer will be able to purchase it. Most of the customers are interested in wearing unique materials which others don’t have. In order to target such customers Isetan has introduced the revolutionary business strategy of “Only I”. Weakness The main weakness of Isetan is its inability to expand the business to other overseas locations. Even after 120 years of history, Isetan has established only seven department stores in Japan and they are trying to reach the whole Japanese customers through these seven outlets alone. Even though some buying offices are working outside Japan for Isetan, still the company has not opened any overseas outlets to target the foreign customers. Limiting the activities entirely on Japanese market will never allow Isetan to explore other potential markets across the world. In other words, Isetan is still unable to utilize the possibilities opened by globalization and liberalization policies. Opportunities Fashion goods are equally popular all over the world. Countries like France, Italy, America etc are very much interested in knowing the fashion trends of other countries. Isetan have definite business opportunities outside the Japanese territory. Most of the Japanese goods are well known for its quality and reliability. For example, Japanese cars and electronic products are some of the fast moving goods in the world. Thus Japanese products have good reputation in the world market and Isetan should concentrate in exploiting this image and opportunity. Threats Like all the other countries in the world, Japan has also affected by the global recession in economy. These economic dip has affected heavily the purchasing power of the consumers all over the world. In fact consumer goods market was one of the worst affected markets because of recession. Consumer spending on food and apparels has come down drastically because of the economic problems. Isetan is also not free from such threats since people will force to reduce their unnecessary expenditures because of recession. Another threat factor is the fluctuating foreign exchange rates. As stated above Isetan is purchasing goods from overseas countries like America and hence the variation of dollar values will definitely affect the company’s business; sometimes positively and sometimes negatively. External Analysis (PEST) Political factors “In Japan, opinion was divided on how far the trend toward globalization should go. Some people advocated the active embrace of globalism and supported leaving everything up to the dictates of the market” (Hatoyama) Japan has succeeded in establishing good relationships with other countries and political leaders. America is one of the best markets for Japanese goods because of the strong political relationship Japan have with America. Japanese administration is keen in exploiting the external possibilities under the lime lights of globalization and hence they have taken every possible measure to encourage business activities across the country and outside the country. Isetan can exploit these good relationships of Japanese administration with other countries in order to protect and expand their business interests. Economic factors As everybody knows, global economy is not is good shape and Japan is also not an exception. The consumer goods especially the fashion goods will move in the market only when people have enough money in their pockets. The present situation is not so good for any of the consumer goods market in general and fashion goods in particular. But the current recession seems to be temporary one and most of the economists believe that the recession may over within two years and hence Isetan must prepare for it. The fluctuation in interest rates, crude oil price and dollar value, all can affect the business prospects of Isetan. Social factors The social concepts of fashion are changing day by day which provides a great opportunity for the fashion industry. People always look for new things and they will be fed up with old ones frequently. Moreover, society witnesses the changing trends of fashion in a positive manner irrespective of gender differences, age differences, cultural or religious differences which is a good sign for fashion goods business people like Isetan. Technological factors Computer and internet related advanced technologies have created great opportunities for all the business groups. Online purchasing and marketing is one of the common means adopted by many business groups in order to multiply their profits. Moreover, communication facilities’ have increased a lot with the introduction of internet and hence Isetan can exploit these opportunities to their own advantages if proper business strategies identified and implemented. Environmental factors With major climate changes occurring due to global warming and with greater environmental awareness, environmental factors are becoming a significant issue for all the business groups to consider. Isetan should concentrate in making the fashion goods which are environment friendly. Isetan should never use plastic like materials which cause environment problems while making their goods. Conclusions Isetan is one of the leading fashion goods manufacturers in Japan having seven outlets in Japan. They have purchasing offices at America, but they have not expanded their business activities enough to overseas countries. Even though the current fluctuations in foreign exchange rates, interest rates and economic depression causes major challenges to Isetan, the business prospects of Isetan is bright when we analyse the trends in the fashion world. Works Cited 1. Hatoyama, Yukio. “Japan Must Shake off US-style Globalization”. 19 September 2009. 2. “Isetan Foreign Customer Service”. 19 September 2009. Read More