Case Exercise On Environment of UNIQLO
Case Exercise On Environment of UNIQLO
Case Exercise On Environment of UNIQLO
Uniqlo is currently the top fast fashion brand in the Philippines and part of the top 3,
internationally. It was originally founded in Yamaguchi, Japan by Tadashi Yanai back in 1949 as
a textiles manufacturer. The brand opened its first store in the country in 2012 and is a global
brand with over 1000 stores around the world. Moreover, the brand’s product offerings range
from outerwear to tops, bottoms, inner-wear and home-wear and accessories. This Japanese
company aims to provide casual clothes for all kinds of people.
- Our vision is bold; to become the number 1 clothes retailer in the world.
We truly believe that this dream can be achieved through providing the best
Vision
customer service experience on the high street. UNIQLO’s business is, and
has always been, customer-driven, and customer-first. Products, stores,
services, people, management. Everything we do centers around the
individual who wears the clothes.
The organization is able to offer and sell a wide array of high and premium quality
products at affordable prices for all genders because its business model helps the organization
solidify the whole clothing making process, developing products with new materials and its
leading edge of fabric technology and designs though natural materials, as well as innovative
clothing (UNIQLO, 2021). Due to the emergence of digitalization, UNIQLO can communicate
directly with customers and develop its products that would cater the needs and wants of their
customers. Given this, the business model of UNIQLO consists the following: (1) Research and
Development; (2) Merchandising; (3) Development and Procurement of Materials; (4)
Production Network and Department; (5) Inventory Control; (6) Marketing; (7) Stores; (8)
E-Commerce; (9) Lastly, Customer Centres.
Research Development:
First, UNIQLO’s Research Development departments examine and investigate the latest
technology for developing new materials and global fashion trends in order to come up with new
and innovative products to satisfy the needs of customers which is the integral part of the
organization’s R&D. Furthermore, these departments would coordinate with representatives or
department heads from merchandising, marketing, and materials development and procurement
in order to discuss the appropriate concept designs of the product for every product season.
Merchandising:
Second, the organization’s Merchandising department is also one of the important aspects
in the creation and production process from design through production. This is because the
department coordinates with all departments within the organization and decides how to market
and launch their product. Since the organization produces and manufactures approximately 1
million units, the merchandising department must monitor closely the sales levels and production
volumes during a single season
Inventory Control:
Fifth, UNIQLO’s Inventory Control department is responsible for monitoring its sales
and stocks every week, deploying necessary inventory and new products to the stores.
Marketing:
Sixth, the Marketing department of UNIQLO manages promotional campaigns and
activities for its core products such as fleece, Ultra Light Down, AIRism and HEATTECH
(UNIQLO, 2021). They make use of social media platforms, email marketing, and flyers through
newspaper advertisements to update and notify customers regarding limited-period discounts on
new seasonal ranges.
UNIQLO Stores:
On the other hand, new products are distributed to 825 stores in Japan at the end of
August 2020 and now according to UNIQLO (2021). Furthermore, UNIQLO has expanded its
reach to approximately 1,439 stores worldwide together with 866 stores in Greater China, 163
stores in South Korea, 248 stores in Southeast Asia and Oceania, 100 stores in Europe, and 62
stores in North America. With the rise of e-commerce as well as the heavy usage of the internet,
everything became accessible within a click. The organization's e-commerce operations are
increasingly growing as more of its customers are enjoying their shopping experience both in
online and physical stores. According to UNIQLO (2021), “its online sales contributed
approximately 15% of its total sales while online sales accounted for approximately 13% of total
sales in Japan, 20% in Greater China, 10% in Southeast Asia & Oceania, 20% in Europe, and
40% in North America.”
Customer Centre:
Lastly, the organization’s Customer Centre where UNIQLO collects and analyzes
innumerable volumes of requests, comments and suggestions coming from their customers to
further improve and design new products. An example of this would be where UNIQLO recently
obtained requests from customers to develop unique and functional face masks created from
high-quality AIRism materials amidst the global pandemic.
Types of Products:
Uniqlo provides outerwear, tops, bottoms, inner-wear, and home wear & accessories that cater
to women, maternal women, men, and kids/babies.
- a fabric that turns moisture into heat and has air pockets embedded into the
HeatTech
fabric.
Economic Environment
The economic growth of the fashion industry has grown exponentially and has affected
Uniqlo directly to allow it to become the most valuable clothing company. This is measured
through the market capitalization when being compared to its competitors. As of February 2021,
Uniqlo has reached 105.6 billion dollars of market capitalization with big name brands such as
Zara, H&M, and Gap, trailing behind it. (Bain, 2021) This is all possible due to Asia’s growing
spending power or Purchasing Power Parity (PPP). There are three countries in Asia that are
considered to be among the largest in the world in terms of share of global Purchasing Power
Parity - based GDP. The global PPP is a measurement used by macroeconomists to compare
different countries’ exchange rates and their outputs. China leads with 16.4% followed by India
at 6.7% and Indonesia at 2.4%. This is ranked first, third, and tenth respectively, in the world.
(Song, 2021) Together, they contribute to about 26% of the global economy.
China manages to account for 23% of Uniqlo’s sales in the world. However, the
pandemic was seen to slow down sales of the company by restricting physical shopping. This
resulted in China closing half of its stores until April 2021. (Lung, 2021) However, this brought a
rise to E-commerce of 48.3% in growth and 14.5% of total sales during the pandemic. This
influenced Uniqlo to produce more loungewear and active wear for people staying at home, as
stated by Chief Financial Officer, Takeshi Okazaki.
Fast fashion is becoming everyday wear. These are cheap, trendy clothes that are based
on influencers and celebrity culture that are able to keep up with consumer interests and
demands. The goal is to be the first company to get the latest wear out on the market and once
the trend dies down, the company discards the product from their stores and will move on to the
next big clothing.
This has influenced Uniqlo to participate in this business model just in order to stay
ahead of their competitors. In reality, this is in turn affecting the natural environment since fast
fashion is not environmentally friendly. Uniqlo and plenty of other fast fashion companies are
wasting huge amounts of cloth and garments every year, Uniqlo has also made a statement
supporting animal welfare but continues to use leather and cashmere garments for their products.
(Abdallah, 2021) Simply put, Uniqlo continues to make profits at the planet’s expense.
Technological Environment
The apparel industry is a fast paced industry that relies heavily on mass production of
clothing. As such there’s a need for innovation on the machinery used in production. Due to the
increased need for efficiency and accuracy, different machines have been produced to address
these needs. Examples of such machines would be sewing robots, laser cutting sewing machines,
and seam bonding machines to name a few. The improvements brought about by these
innovations range from faster production to lesser margin of errors. Furthermore, the
technological advancements in this industry also apply to the design of the clothing (CBI, 2019).
Legal-Political Environment
Uniqlo outsources their own goods from factories that they are partnered with since they
don’t own any factories (fastretailing, 2021). As such, depending on the location of their
partnered factories, Uniqlo needs to observe the respective rules and regulations of the country.
They are obligated to pay, in accordance with the country’s legislation, the necessary fees
incurred, such as taxes and tariffs. Asides from the fees that they are mandated to pay, there’s
also the matter of worker’s rights. These need to be observed to ensure that the employees
working are getting correct compensation and benefits in relation to the law of the country.
Competitors
UNIQLO is a Japanese clothing company which began in 1949. The brand is now
global and has been redefining apparel with an unyielding focus on its quality and fabrics. With
the industry growing along with new competitors joining the market, new challenges arise
everyday which makes the leading position to be more competitive and wavering. According to
Danziger (2021), UNIQLO has three major competitors: Giordano, H&M, and Zara. Tadashi
Yanai (CEO of UNIQLO), stated that the difference UNIQLO brings to the market compared to
its competitors is that the company does not make disposable clothes. This means that the
company focuses more on the product’s quality rather than the quantity.
Customers
The company has been around for more than a decade and has improved ever
since. UNIQLO caters to global markets and according to Darbinyan (2021), the difference
UNIQLO does with its customers compared to its other competitors is that its apparel are
sustainable but at the same time, the looks are fascinating and sustainable. For the company’s
demographics, the target audience would be people from ages 18 to 35 years old which would
also widen the range for the occupations since these would be students to working professionals.
Furthermore, the company highlights how the products look well with all races and puts their
utmost priority on their geographic locations being urban areas.
Regulators
The clothing industry is heavily regulated globally so the company makes sure that all
regulations are followed. These regulations need to be abided by UNIQLO regardless of the
changing environments from international trends. According to Lee (2017), the two departments
usually involved with the garment industry which would be the Department of Trade and
Industry and the Department of Labor and Employment provided a joint guideline in terms of the
accreditation of garment companies such as UNIQLO. As for the global regulators, important
regulations which UNIQLO would need to follow would be laws from other countries such as
the United States Environmental Protection Agency which examines the materials used in the
garments.
Suppliers
One of Uniqlo's suppliers is Fast Retailing which disclosed 146 more garment factories
that supply Uniqlo’s clothing chain. Fast Retailing is a public Japanese retail holding company
and its subsidiary is Uniqlo and has provided premium functional clothings.
Strategic Partners/ Strategic Allies
Owners:
Worth an estimated US$ 32.2 billion, Tadashi Yanai is the current president, chairman,
CEO and the biggest shareholder of Fast Retailing Corporation, the parent company of
UNIQLO, and a director at 17 other subsidiaries of the organization (Lamare, 2018).
Furthermore, Tadashi Yanai owns approximately 46% of Fast Retailing Corporation while his
wife and two sons own approximately 40% of the organization. Tadashi Yanai became the
president of the organization in 1984, launched his new warehouse-style, casual wear apparels
and established his new clothing store in Hiroshima, Japan. By 1998, it was a turning point for
Tadashi Yanai because UNIQLO became more urbanized and it opened at least 300 stores across
Japan. Currently, UNIQLO is the world’s fourth largest clothing company with over 2,000 retail
stores worldwide as of August 2020 (Business of Fashion, 2021). Now, Tadashi Yanai aims to
maintain its company as the world;s largest apparel retailer and increase its sales by 50 billion
based on the global expansion in US, China, and online.
Board of Directors
To promote sustainable operations within the organization, UNIQLO works relentlessly
in order to create an effective corporate governance structure (UNIQLO, 2021). The
organization is formed and consists of the Board of Directors and Statutory Auditors. For the
Board of Directors, UNIQLO has 5 external and 3 internal directors, as well as the
Chairman/CEO/President, Tadashi Yanai. On the other hand, UNIQLO has the Board of
Statutory Auditors where they are responsible for ensuring compliance with mandated laws and
regulations, and the Articles of Association. The Board of Statutory Auditors consist of Standing
Statutory Auditors (3) and External Statutory Auditors (3).
Therefore, the organization critically emphasizes on the accordance with laws and
regulations in order to provide proper implementation of controlled systems within UNIQLO,
and they adhere to promote an effective corporate governance by reassuring their employees to
abide by the organization’s Code of Conduct and their compliance with the code.
Employees:
The organization motivates its employees and staff by providing them recognition awards
in exchange for their hard work and meeting above job requirements or criteria in his or her work
performance. For example, UNIQLO would give the “Best Staff Award” for the staff who was
able to deliver outstanding results in a job task. The basis of receiving the recognition award
would be punctuality of the employees, problem-solving skills, address customer or shopper
complaints, and the number of sales that the employee contributed. Furthermore, another way
of motivating its retail employees is by offering them a fair and just staff training program in
order to improve their communication and problem solving skills in assisting customers or
shoppers in UNIQLO. Given the training program by UNIQLO, they may be able to gain a
deeper understanding of their customers while showing value to UNIQLO how different they are
from other retail clothing stores. As for the organization’s workforce, UNIQLO hires more
people with disabilities worldwide (UNIQLO, 2021). The organization’s global target is to hire
one disabled person in each store in accordance with UNIQLO's tagline: “Making the World
Better”. Given the organization’s initiative, this will give more employment opportunities for
people with disabilities and provide an additional benefit to the organization such as improve
staff communication, reinforce respect and understanding among employees, and offer good
customer service as well.
The working conditions of the organization are friendly, but requires more discipline.
Employees should always smile at customers or shoppers, be of assistance, and do their work
punctually. Unlike most retail clothing stores from different clothing companies, UNIQLO
teaches its employees to fold their clothing products with the “Body Fold” folding method
without the assistance of a plastic board. While the staff practice UNIQLO’s folding technique
on their own, after work, until they get it right, UNIQLO retail employees are expected to fold
the shirts within one minute. Therefore, UNIQLO leaves a minimum trace of error in doing their
work.
Organizational Culture:
UNIQLO prescribes, records, and analyzes each work activity undertaken by every
employee, from folding techniques to returning customer credit cards in a Japanese way with two
hands, and bowing slightly at the hip. Every morning, employees would always practice the
ways in which they are taught to interact with customers including “Hello. How are you today?
My name is [Name of Employee]. Please let me know if you need any assistance.” , and other
common responses which are benchmarks of offering their polite services to shoppers. In every
UNIQLO store, the retail employees are usually dressed in black while some retail employees
wear their uniforms in red and white branded kimonos. Furthermore, they perform their tasks
and duties with purpose and precision. From properly folding a pile of clothes at a lightning
speed to properly handling customer credit cards, even the smallest tasks are performed in an
etiquette manner and rooted to Japanese culture.
UNIQLO is a type of organization that has a strong culture that can be observed and
followed by their employees. There are sets of values established within the organization that
can help drive their decision-making process in order to carry out its mission (UNIQLO, 2021).
These core values are Approaching issues from the Customer Perspective; ; Respecting and
Supporting Individuals to Foster both Corporate and Personal Growth; and Committing to
Ethical Standards and Correctness. Furthermore, UNIQLO does not only produce high-quality
and superior apparels, but also manages the employees health and safety. The organization
heavily promotes diversity in the workplace and this would contribute to the growth of the
organization. This is because the organization aims to grow together with its people, and achieve
outstanding success for both.
Moreover, UNIQLO offers special needs to employees with disabilities in order to make
the world a better place (mission) and create a unique business environment that can contribute
to the fulfillment of people’s lives (UNIQLO, 2021). The organization promotes and provides
employment opportunities to employees with disabilities in order to create a mutual
understanding and respect within the workplace. Also, roughly 90% of UNIQLO’s retail stores
in Japan have employees with disabilities in each store location. Given this kind of environment,
UNIQLO is a company that fosters employee morale, personal development, diversity and safe
work environments.
Uniqlo has, in their terms, “upgraded” their selling strategy from “selling what we
produce” to “producing only what we can sell”. This was achievable through the extensive
research of numerous departments such as marketing, sales, logistics, etc. (Yanai, 2017) Yanai
has also stated that the digitalization of this day and age has broken all boundaries and limits of
all industries, data is now considered to be the most important asset for them and their
competitors. Uniqlo utilizes fast fashion in the industry due to consumer demand. However, it
can take 6-12 months all for designing, receiving materials, and manufacturing the product. This
means that there is always a potential loss of sales opportunities and possible excess inventories.
Due to this, Uniqlo has connected its digital platform to a based automated production system to
share real-time production status information regarding its products. The life cycle of Uniqlo’s
products is short due to uncertain market demand. Due to the company needing to respond
quickly to market changes, Uniqlo practices the pull-type supply chain. This type of supply chain
focuses on in-time inventory management and aims to minimize stock on hand. Products will
only enter the supply chain when consumers demand it. Uniqlo can easily avoid costs of holding
items in their inventory that could possibly not make sales.
● Summary for the Task and Internal Environment - (De Leon, Presillas, & Torres)
At a glance, the illustration above shows what organizations are associated with UNIQLO
and what aspects are involved with the task environment of the organization. For the
competitors, these would be the companies who offer similar products or services to their
customers. In this case, UNIQLO’s competitors would be the following: H&M, Zara, and
Giordano. For the customers, these would be the people who purchase products from an
organization and for UNIQLO, these would be individual customers or regular/natural persons.
For the suppliers, these would be the people or the organizations which provide products and
services to other organizations. For UNIQLO’s suppliers, there are currently 146 suppliers for the
company but due to privacy issues, only the main supplier of UNIQLO was disclosed which is
Fast Retailing Co. LTD. For strategic partners, these would be the people and the organizations
which you form an agreement with would help in guaranteeing the success of an organization.
For UNIQLO, these would be Grameen bank, Marimeko, Tiktok, and Toray Industries. Lastly,
for the regulators, these would be the people or organizations which check whether an
organization is complying with the rules and regulations. For a company such as UNIQLO which
deals with clothing, the regulators would be the FDA, the DTI, and the DOLE.
The internal environment are factors that would affect within the organization such as
employees, operations, management, organizational structure and culture. Thus, factors affecting
the internal environment of the organization can be controlled and managed since these elements
occur within the organization. Based on the group’s research and the illustration above, the
internal environment happens within the UNIQLO. The internal environment of the organization
consists of the owners, board of directors (BOD), employees, and the physical work
environment. Moreover, another internal environment would be UNIQLO’s organizational
culture that fosters, to reiterate, employee morale, personal development, diversity and safe work
environments.
As stated, the external forces are brought from five general environments. The first is the
economic environment which allowed Uniqlo to dominate the fashion industry due to Asia’s
growing spending power and being able to capitalize on the market. In terms of the legal political
environment, Uniqlo outsources suppliers to continuously make their products while at the same
time paying the fees and adhering to workers’ rights. The socio-cultural environment also creates
a big impact due to the trends and followings of its target market. The natural environment is not
being carefully monitored by Uniqlo currently, since being in the fast fashion business model has
the consequence of earning profits at the planet’s expense. Lastly, the technological environment.
Uniqlo is able to purchase machines such as sewing robots and laser cutting sewing machines to
speed up production, they have also made it easier for consumers to purchase their products by
having vending machines. This releases the necessity of going to a physical store.
● Lessons Learned from the Group:
Luis Baligod
The case study activity helped me become more informed with the textile and clothing
industry since it is one of my interests and may be a future industry I enter. It also allowed me to
know how different internal and external factors affect Uniqlo, and how the company strategizes
in order to differentiate itself from the competition. Uniqlo uses functionality and innovation as
its main differentiation strategy. Product lines such as their HeatTech, AIRism, UV line, and their
LifeWear enable Uniqlo to attract several market segments, which ultimately affects the
profitability of the company. Lastly, the case study helped me see that organizations are
interdependent and other organizations such as the government regulate and monitor these
industries in order to avoid unjust tactics to thrive.
Timothy De Leon
This case study helped me know more about the clothing industry. For example, the
number of suppliers UNIQLO has. I always wanted to start a clothing company and I thought
that it would not require many suppliers if ever I get well-known or go international. I was
surprised that the company has over a hundred suppliers which made me reconsider what I
wanted to do. I also learned about the regulators of this kind of industry and what kind of process
a company has to go through first before even having their products shipped locally or
internationally. Lastly, I was able to learn how doing an analysis on companies such as this
would be important before stepping in this line of work and to know more about the industry I
would be dealing with.
Miguel Presillas
While working on this case exercise, I started to gain information about the structure of
the textile or the fashion industry. I started to appreciate the in-depth data of how organizations
like Uniqlo work. From its supply chain management to its economic environment, I was able to
relate it with my past subjects in operation management and in competitive strategy analysis.
During this exercise I was able to gain knowledge on how Uniqlo does their supply chain
management to cope up with the so-called “fast fashion” to meet the consumer’s demand by
using pull-type supply chains. Moreover, from this business model, I specifically learned how
Uniqlo’s process internally goes and started to appreciate how top companies plan, market, and
develop their products to compete with other leading companies. It also just shows how every
leading organization is adaptable to meet demands such as coping up to digitalization to reach
their customers and develop new products to cater the needs and wants of the consumers.
Paulo G. Torres
Based on this workshop activity, I was able to learn that the UNIQLO’s business model
was able to guarantee the development and production of unique, and quality products due to the
“Special store retailer of Private label Apparels” (SPA) strategy. This strategy or model helps
control and unify the overall “clothes-making process” of the business from initial design to the
distribution to the final consumers. In addition, I also learned that UNIQLO fosters diversity and
promote comfortable workplace within the organization since it relates to one of the
organization’s core values which is respecting and supporting individuals in fostering both
corporate and personal growth, as well as complying and adhering to the ethical standards and
correctness of the organization.
Jio Villegas
The one factor that surprised me while writing this paper is how fast fashion is killing our
natural environment. The industries produce about 10% of the world’s carbon emissions, are the
second biggest consumers in the world’s water supplies, and 85% of these textiles from excess
clothes go to the dump annually. Washing clothes releases 500,000 tons of microfibers into the
ocean, this is about 50 billion plastic bottles. This is due to the fibers being made out of polyester
and producing this type of garment releases carbon emissions.
This just shows that every industry comes at a cost. Companies can however promote
sustainability initiatives and green friendly movements, but in my opinion, I don’t think it can
ever combat the process of how they produce their products that is harmful to the environment.
Joshua Jamilla
A thing I learned from the activity would be that in the era of digital information, it pays
for businesses to be efficient and accurate. Especially, in the clothing industry, where the trend or
fad of the clothing design doesn’t stay too long. As such, there is a high need for a constant and
continuous next “big thing” when it comes to design before the current fad or trend fadeaways.
This is where the innovativeness of technology comes in, with the help of different analytical
tools, an Artificial Intelligence specifically for design could be constructed which would process
big data and produce different unique designs at an incredible rate. Furthermore, through the help
of artificial intelligence, it could also predict how long before the current design’s trend or fad
will fade away so businesses could properly plan their future release properly.
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