UNIQLO's Market Entry Strategies in India - Case Study Example

UNIQLO EXPANSION TO THE INDIAN MARKET By (Name) Name of Class (Course) Professor (Tutor) Name of the institution (University) City and State The Date UNIQLO Expansion to the Indian Market UNIQLO is a Japanese company that started as a local clothier known as Men’s Shop Shoji at Ube city, Yamaguchi Area. In 1963 it expanded with 6 million yen in capital. 1984 it opened another store in Hiroshima going by the name Unique Clothing Warehouse leading to the adoption of the name UNIQLO. By 2001 the company had had 500 stores around Japan. This lead to the expansion of the company both domestically and globally, by 2002 there were about 4 stores in London (UNIQLO, 2017). The clothing company recently decided to enter the Indian market, this paper aims to outline the company’s entry strategy and its position in the Indian market. The UNIQLO Clothing Company used the resource-based view strategy in its growth globally leading to its formidable success. In Resource-based view resources are the ones that basically attribute to the growth of the firm or company (Hooley et al., 1997). This means if they exhibit VRIO attributes they enable the firm sustain and gain competitive advantage. Those firms that support this focus on inside the company in order to find the sources that have the competitive advantage. This made the UNIQLO focus on its manufacturing advantages in order to defeat its competitors thus by producing cheaper fashionable clothes. It also focused on exploiting external opportunities by using the existing resources rather than searching for new skills. In Resource-based View, resource is given the number one role in helping in the growth of UNIQLO. The resource-based view has two types of resources: tangible and intangible assets. Tangible assets are the physical things while intangible assets are everything owned by the company but have no physical form just like: brand reputation, intellectual property. Resource-based View also has two critical assumptions which state that resources must be immobile and heterogeneous. In heterogeneous capabilities, skills differ from one firm to another while in immobile it means that the resources are not mobile and cannot move from company to company. UNIQLO has concentrated more in mass production and producing good quality items, T-shirts, and basically focusing on all its goods to be affordable. According to its competitors like H&M, UNIQLO is still growing because it has 44stores in US 846stores in Japan and 449 stores in China compared to 4000 stores that belong to H&M a Swedish company. This is mainly because of warm winters which bring down the sales of its jackets. UNIQLO has grown better globally through concentrating on some key aspects: it brands its innovation which helps in substantiating its quality and performance which sets it apart from the other companies, it also has clear vision of its brand which helps them provide high-quality clothes, it also produces basic casual clothes at lower prices and has an exceptional leader, Tadashi Yanai, whose leadership skills are really hard to duplicate. It has also focused on procuring good global materials for specific stores around the world which means it produces clothes basing on customers’ requirements and worldwide market trends (Aaker, 2017). UNIQLO has stores all over the world which are constantly growing in number and size. They have also opened stores in shopping malls which are helping in the distribution of their product and also helped in the growth of total net sales. Another tangible asset is the cash flow. UNIQLO commands 5.5% share of the $136 apparel market for the Japanese. It has doubled its revenue in the past 6 years. In 2006 it reported a net sale of $5.1 billion (UNIQLO, 2017). It has used its financial assets in growing its company and purchasing new equipment to help in the production of its products. In inventories, they anticipate seasons thus producing necessary seasonal wears which make them have fewer updates on their designs. This means they have so many inventories at their subcontracted warehouses which are closely monitored by their staff around the world. It also has a team known as the Takumi Team who are a group of engineers who have over 30 years of experience in textile industries in Japan (UNIQLO, 2017). These engineers are the reason behind UNIQLO’s new designs; they help in controlling production and offer technical support to the company’s partners (Nordmeyer, 2017). Apart from the above mentioned, there are also intangible assets that are helping in the company’s growth and these are: One, brand expansion and advertisement; they produce quality clothes at a very cheap price which helps them focus on different markets and helps the product penetrate diverse markets. They have also goodwill i.e. have good relationships with the suppliers and customers. They also have a blog which helps them administer and connect their sales staffs that are over 700 stores to one network (UNIQLO, 2017). This helps them get immediate customer feedback. UNIQLO has set strategies which help it to reach its goals. Its first strategy is focusing on reports that outline what has to be developed, how and why. It has conformed to certain agreements like Closer Partnership Economic Arrangement and Textile Memorandum of Understanding (Jenkins, 1994). As such UNIQLO has invested in producing high-quality clothes at a cheaper price. This has been successful because of its integration of all its companies in low-cost but effective production model, Specialty Store Retailer of Private Label Apparel. In this model, UNIQLO has stabilized its production by aligning production and sales schedules. It also focuses on manipulation of the technology platform in order to extract its own limitations and draw strengths from them. Although some of its designs need a human intervention like sewing and making patterns, they use computers for designing and keeping records. It uses technology in cost analysis, material management, order processing, connectivity and reporting. It also engages in consumer orientation whereby they can email their feedback and discussion boards. UNIQLO focuses on consumer and quality, style or design. The firm also focuses on using resources that are non-substitutable, costly to imitate and are valuable. It uses luxury materials like cashmere, merino wool, premium dawn and Supima cotton. They are all expected to be expensive but it negotiates directly with the material manufactures globally and gets the products in large volumes at a cheaper price. It has situated its firms strategically near those products like in Mexico where it gets them at cheaper transportation and labor costs. With its companies near the source of its resources, it is able to incur very low production costs which it carries forward to its consumers. Through these different strategies and resources that UNIQLO uses in its growth it has grown globally and it is helping in building stores around. Like in Mexico availability of rare resources has led to the setting up of a company. It has also helped in the supply of cheaper clothes because of the availability of cheap labor. This has also helped in increased production of the clothes and also the good supply of their clothes globally. Through their leader, there strategies are hard to take and are not easily copied by their rivals. India is the tenth largest economy in the world and UNIQLO is looking forward getting into the country’s market. It has planned to go into the market by 2018 (Anand and Bailay, 2017). With the UNIQLO’s aim of growth by 18 percent, India looks like a country that would help in this ambition. Its retail market is the fastest growing in the entire world. India had policies that resisted international companies from coming into the country to do business but by 2008 it had had some reforms and by Indian ministry of industrial policy & promotion allowed foreign companies to come but only own 51% equity in the business (Anand and Bailay, 2017). In 2011 India allowed China and Japan to work in their country which meant UNIQLO could import and export with minimum tariffs. India has a large population posing as a good market for them. UNIQLO is targeting the population ages below 35 years because they are fashion oriented. India also has 50 million retailers and only 18.9% are apparel. Its enormous size and high growth levels put India on the list of UNIQLO expansion plans into Asia. India had some macro problems that outsource its growth rate but it is a benefit to UNIQLO. The company majorly depends on its internal resources to grow so it would have labor and teach them technology adverseness and production. It also has a micro problem which is high level of employees which has made it expensive for the country to sustain its labor. UNIQLO can use this opportunity to get cheap labor and produce more (Kuruvilla & Ranganathan, 2008). UNIQLO’s expansion to India can be compared to that of Taiwan. There is a large population which translates to market for the products (Dacus, 2017). Taiwan has GDP of $39600 per capita and India has $4,000 per capita. There is a greater chance for UNIQLO to get more labor in India than in Taiwan (The Japan Times, 2017). Far from that, sales in Taiwan are likely to be higher because of the lower rate of people below poverty line, but it would also thrive in India because of there are cheaper products (Silkenat & Aresty, 2000). For UNIQLO to get into India it has to first consider the cultural ways of the Indian people. It should enter India as a joint venture. India has a unique taste of clothes and fabric so this means it should have good correlations between its consumers and its producers. It should bring up retail stores around its urban areas especially in malls. It should also make a flagship store in the capital of India. This will help in marketing and selling of the brand. In the case of the poverty levels in India, it should also create a volunteer program to donate some of its clothes to the poor. This helps in building trust among consumers. This should work for both the workers and consumers. UNIQLO has been known for having cheap labor but still producing high-quality products. It should also offer jobs to the community members and help reduce unemployment rates. This will also ensure they have people who will design the clothes with regard to the country’s culture and preference. UNIQLO has several market entry strategies. First is the joint venture where it plans to join a company that is based in India in order to create another company. This is basically used in countries that haven’t fully allowed foreign companies to own 100% of their company shares. (Dozier, 2017). Second is the Greenfield investment where it opens stores in a foreign country and operates them basing on the policies of that country. This is the Flagship Stores Market Entry method were it has stores that vary from each other in different countries as a result of the design of that particular market (Sharma, 2015). The UNIQLO Market entry mix strategies are affected by both internal and external environments and capabilities. The first internal factor is Resource-based View; with the good distribution of resources the firm can enter the Indian market swiftly like in Mexico. In Mexico, there are good resources like cotton and this has helped in the good growth of UNIQLO into that economy. The other internal factor is good administration; the leader emphasizes on good work ethics and his leadership skills have aided in the quick integration into the foreign market (Sharma, 2015). It has also focused on the development of its internal structure from educating its workers to encouraging innovation. In the external environment UNIQLO has focused on producing the best products in order to impress its consumers. The consumer relationship with the company has been good for years leading to its growth into foreign markets. The company carries out intensive market research before getting into a certain market (Tradestart, 2017). This helps in creating good relations between the people and the business. UNIQLO works with the Japanese government which helps them in creating a good relationship with the host country. It also provides employment to the people of the host country which helps in a stable growth rate into the market UNIQLO mainly focuses on both good quality and fashion leading to its expansion all over the world. It is mainly focused on growth and development and has good market entry strategies. These help it to merge into the economy and have good relations with its market. It has recently decided to enter the Indian market. India has one of the greatest populations in the world which translates to a potentially large market base. If UNIQLO focuses on the market entry strategy discussed above it would definitely thrive in the Indian market. Reference List Aaker, D., 2017. Why UNIQLO Is Winning. [Online] Available at: https://www.ama.org/publications/MarketingNews/Pages/why-uniqlo-is-winning.aspx [Accessed 21 Mar. 2017] Anand, S. & Bailay, R., 2017. UNIQLO to go solo in India, first store likely by 2018. [Online]. Available at: http://economictimes.indiatimes.com/industry/cons- products/fashion-/-cosmetics-/-jewellery/uniqlo-to-go-solo-in-india-first-store-likely-by 2018/articleshow/56792749.cms [Accessed 21 Mar. 2017]. Top of Form Dacus, S., 2017. UNIQLO’s oversees strategy: To become the world’s no. 1 casual brand. [Online] Available at: https://www.fastretailing.com/eng/ir/library/pdf/earnings060413_Dacus.pdf [Accessed 21 Mar 2017.] Dozier's B., 2017. International marketing UNIQLO. [Online]. Available at: https://barbradozier.wordpress.com/2015/02/26/international-marketing-uniqlo/ [Accessed 21 Mar. 2017]. Hooley, G. J., Moller, K., & Broderick, A. J., 1997. Competitive positioning & the resource based view of the firm. (3rd Edn). Birmingham: Aston Business School Research Institute. Jenkins, D. T., 1994. The textile industries. (1st Edn). 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