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Strategy for UNIQLO in India Class: Global Strategy , Optimizing the Global Impact Professor: Tag Roeske Learners: Hidenobu Hayakawa Nagasaka Sohta Nguyen Thanh Thi Phuong Waseda Summertime Intensive, September 2012 Last Report Final Report [STRATEGY INTENDED FOR UNIQLO IN INDIA ITEMS Executive Brief summary PART I/ UNIQLO and Apparel Market , Overview of UNIQLO business , Attire Industry: Benefit Chain , Key Accomplishment Factors PART II/ Environmental Analysis , PEST research for India , a few Forces evaluation for Apparel industry in India , SWOT research for UNIQLO’s entering into India

PART III/ Strategy Development , Entry Strategy: Entry Mode , Expansion Approach: 3 Levels , Execution Plan: 4P, AAA Bottom line Reference Appendix 2 Last Report [STRATEGY FOR UNIQLO IN INDIA EXEC SUMMARY Asia is famous for innovation and high-tech manufacturing companies but not for fashion. Yet , this fact should be reconsidered since the brand UNIQLO, a real Japanese style brand, now can be found in the most important cities worldwide from world-class shopping malls just like Ginza (Tokyo), Fifth Opportunity (New York) to the roads of Shanghai and Malaysia.

UNIQLO is an essential brand of Fast Retailing Company.

, Ltd (see Appendix 1 for Business Profile), the largest producer in apparel retailing industry in Japan and ranks your fourth in the world (after ZARA, H, M and GAP). Mister. Tadashi Yanai, the creator a nd current CEO of Quickly Retailing (FR) used to end up being the richest man in Japan. Through this report, we develop the strategy to provide UNIQLO to the world second largest human population, India. Why we choose this plan of action can be described briefly as following.

Fast Retailing is aimed at becoming the main apparel store in the world by 2020. In order to achieve this driven vision, they need to boost up product sales from other marketplaces other than depending only around the already-saturated Japanese people market. Initially venturing in international marketplaces in 2001, UNIQLO has worldwide functions, including in the U. K., China, Hong Kong, South Korea, the United States, France, Singapore, Russia, Taiwan and Malaysia. There are very few big economies on the globe that UNIQLO has not touched, which includes India.

The reason for deciding on India as the next vacation spot of UNIQLO brand is principally because of the fascination of India itself which has a big populace and rising GDP development as well as an warm-welcome legal environment pertaining to foreign expense. About the structure with this report, we divide in three different parts. The first one gives an overview of UNIQLO manufacturer, its position versa other world-top apparel brands. This part also talks about the value sequence of clothes industry concentrating on SPA unit and its relevant key achievement factors. The second part provides an in-depth yet compact environmental analysis of India in general as well as its apparel industry. Based on the region and industry analysis, an index of external and internal elements affectin g the introduction of UNIQLO brand in to India is usually shown inside the SWOT analysis. The last yet most important several Final Record [STRATEGY FOR UNIQLO IN INDIA part of the statement focuses on forming the admittance strategy and expansion method for UNIQLO in Indian industry. The main databases for this statement is the FR’s latest total annual report to get fiscal yr ended Aug 31, 2011 as well as data available on dependable websites, that happen to be shown inside the Reference.

PORTION I/ UNIQLO and Japanese Apparel Sector UNIQLO of Fast Retailing “Changing the World with Truly Great Clothing is the motto of Fast Retailing which show t the businesses spirit, perspective and technique. The specialised retailer UNIQLO, the Group’s mainstay procedure, has loved strong development by offering top quality casual wear at reasonable prices based upon its SPA (Specialty shop retailer of Private label Apparel) business model, which usually spans product design, produce, distribution and retail. UNIQLO’s products cover anything from denim, pashm, knitwear , underwear to men , women skinny jeans, trousers, pants, shirts and t-shirts.

The first UNIQLO store exposed in 1984 and as stated earlier, UNIQLO has operations in U. T., China, Hk, South Korea, the United States, France, Singapore, Russian federation, Taiwan and Malaysia. This summer, th at they opened global flagship stores in Taipei, Seoul and on New York’s prestigious 6th Avenue, as part of plans to grow business worldwide. At the conclusion of monetary 2011, they had 843 stores in Japan and 181 stores consist of markets. Their very own breakthrough items include HEAT-TECH inner use line, Super Light Down jackets and Amazing biz range. In Asia, UNIQLO may be the nation’s most significant apparel store, with a your five. % you share with the 10. 7 trillion yen Japanese clothes market, and 843 shops nationwide at the end of money 20 eleven. In financial 2011, sales increased 28. 7% every month to 93. 7 billion dollars yen and operating revenue grew 45. 6% to eight. 9 billion dollars yen. While this is nonetheless only a bit compared to UNIQLO Japan’s product sales of six-hundred. 1 billion yen, UNIQLO international’s procedures in Asia are rendering highly lucrative. The total number of UNIQLO International stores stood at 181 at the end of August 2011. They decide to add an additional 107 to improve the total to 288 stores by the end of August 2012. Fast Retailing’s Annual Statement 2011 4 Final Record [STRATEGY FOR UNIQLO IN INDIA The graph below envisions the break down of UNIQLO sales down the road: (Source: Annual report yearend 2011, Fast Retailing Co., Ltd) Clothing Industry This chart displays the current rank of main global Health spas in the attire world (Source: Annual survey yearend 2011, Fast Retailing Co., Ltd) SPA business design incorporates the whole clothes-making process from purchase of components, product preparing, development and manufacture through distribution and retail to inventory supervision.

To ensure the development of products of outstanding quality, UNIQLO has refined its HEALTH SPA business model to control the entire organization process (see UNIQLO business model in Appendix 2). UNIQLO successfully differentiates itself from the other companies simply by developing exclusive products and lessen store operation cost. The[desktop] is described in the circulation of supply and key success elements are referred to as below:? 1) Product Planning Key Success Factor: Application based on customer opinions. Market-Out is a one of crucial driver to get UNIQULO to draw consumer exactly where their desire are varied. Final Record [STRATEGY FOR UNIQLO IN INDIA? 2) Raw material Buy Key Success Factor: Materials procurement by around the world. The UNIQLO Material Development Team is able to procure high-quality supplies at low costs through direct transactions with and bulk buys from material manufacturers internationally.? 3) Production Key Success Factor: a) Expert technological guidance in factories emphasizes quality to be able to produce countless products of standardized top quality. b) Adaptable to produce in small unit(lot)? 4) Product sales , Marketing Key Achievement Factor: Flagship Stores Boosts the Brand

UNIQLO is aiming to build it is brand through its network of global range topping stores. Global flagship retailers serve as hubs to acquire out the UNIQLO message, and concept of premium quality basics, although showcasing what sets UNIQLO apart from rivals such as H, M, Zara or Gap. PART II/ Environmental Examination 1/ INFESTATION analysis to get India India, officially the Republic of India, is known as a country in South Asia. Its human population is around 1 ) 2 billion, second most significant after China. In term of the ease of doing business, India ranks 132nd, even worse than Pakistan (105th).? Political component:

About the political program, India is the world’s the majority of populous democracy with a parliamentary republic using a multi-party system. However , India ranks 95th over 185 countries in term of corruption price and the corporation tax is very high in 40%. The law was transformed in 2011 and it allows foreign companies to have wholly own part. Although tax and corruption are negative points, there are several positive factors as the current Prime Ressortchef (umgangssprachlich), Manmohan Singh, promised to get more visibility in work of public servant and make no barriers to purchase in India?

Potential effect to UNIQLO: It is an great timing pertaining to UQNILO to attend India right now because via 24th The fall of 2011, Of india government allowed a foreign company to have its wholly-own additional of merchant. However , it needs to pay attention to potential legal dangers from Indian inflexible Labor Law, pertaining to 6 Final Report [STRATEGY INTENDED FOR UNIQLO IN INDIA case, practically impossible to fire someone in India, necessitating payment of annual additional bonuses even if the business wasn’t rewarding, high settlement for employees that suffer injury/death on site of employment and trend to getting stringent on working condition and bare minimum wage police force. Economic component: India can be described as rapidly growing power. It is GDP development rate is definitely impressively high (2009: almost 8. 24%, 2010: 9. 54%, 2011: 6th. 86%). In term of nominal GDP, it rates high 11th in the world. Nevertheless, GDP per household is very low compared to the additional BRIC countries ($1, 389, 140th ranking). India provides the largest attentiveness of people living below the Globe Bank’s intercontinental poverty type of US$1. twenty-five per day. Inflation rate is incredibly high of 11. 99% this year and almost 8. 63% in 2011. As for clothes industry, the total market increased is likely to increase by US$32. billion dollars in 2009 to US$57 billion in 2015.? Potential influence to UNIQLO: consumer’s require is raising more and more in the foreseeable future. Therefore , American indian apparel industry creates a huge chance for UNIQLO. However , India is too big to deal with being a one nation, so that cities are important to define organization strategy. The first targeted destination ought to be Mumbai, which is the biggest city in human population (12. five mil people) and its thickness (20, 694/km2) is 4 times above Tokyo (5, 541/km2). It truly is absolutely an extremely promising business because there is not any tariff to clothing among Japan and India coming from 2010. Sociable factors: Population growth level is 1 . 4% each year and India is likely to reach 1 ) 4 billion dollars in 2030. The literacy rate is about 74. 04% (2011) and more than 85 million The english language speakers. This population can be divided in the following grow older structure: 0-14 years: 23. 8%, 15-64 years: 63. 1% and 65 years and over: 5. 1%. Their gets are fertile and very great for agriculture. The weather is numerous in spots and there are summer and winter and pouring seasons.? Potential impact to UNIQLO: UNIQLO should produce unique comfortable products suited to various weather.

Although India provides cheap labor cost, the change in wage base in India is very large, two to three times difference by education and 20-30 times difference for professionals. Another important element for consideration is related to the labor union in India. There are about 8, 000 Labor Unions and they are extremely active. six Final Record? [STRATEGY FOR UNIQLO IN INDIA Technology elements: India is usually well-known as the land of IT outsourcing techniques, so the infrastructure as well as travel and interaction should be very good. Nevertheless, you will discover more and more power shutdowns recently.

For textile, India is a big textile producer as being the largest producer of Jute, Cotton, Silk, Cellulosic and Synthetic fiber/Yarn.? Potential impact to UNIQLO: over time, UNIQLO should make a unique products in India to take the advantage of inexpensive raw material and low-paid labor resources. However , now they need to develop their distribution from the scuff. 2/ 5 Forces evaluation for clothing industry of India In general, the PEST analysis shows favorable leads to the business plan of bringing out UNIQLO company in India.

In order to make up the entry setting as well as competition strategy for UNIQLO, an in-depth understanding of current apparel sector of India is needed. The 5 pushes model of Assurer is used on identify involving forces on this industry and details happen to be shown below:? Threat of new entrants: Excessive Barrier to new entrant into clothes industry can be low since there are no restrictions and the current Indian authorities shows nice welcome to foreign expenditure. On the other hand, “Functional Fiber” can lose its uniqueness and distinctiveness simply by products from all other apparel businesses.

For example , Private brand by Chemical firms (like I Pont Company) could be the rival from this category.? Bargaining power of suppliers: Low Because the main unprocessed trash are “Cotton and Practical fiber” and cotton is definitely commodity, UNIQLO can find the cotton supply from numerous suppliers in and outside the nation. More importantly, UNIQLO has a solid sourcing of functional fibers from Toray, its tactical partner. They have had a very good corpo ration on global base under a long-term deal. Finally, use of distribution channels is not really limited and retailers provide shelf-space when they receive record fees throughout India. Negotiating power of customer: Medium There is absolutely no switching expense for purchasers. Most of the DETRÁS (Point of sales) are PAPAMAMA store but they are little in size but not able to work out buying power. However , due to the regulation enhancements made on 2010 almost 8 Final Report [STRATEGY FOR UNIQLO IN INDIA with regard to the field of retailer, volume of mass”retailers continues to be increasing at urban area, making client bargaining electrical power stronger. Buyer spending on fashion products has exploded at 7. 1% each year from 2002 through 2010. There is a rising affluence which in turn helps to boost brand awareness among Indian consumers.

Indian is among the most company conscious countries in the world (according to the “Nielsen Global Extravagance Brands Study). Indian frequently spend around 100$ with an average to get apparel. To them, the most crucial factor is definitely the look and feel with the product and price is likewise another important component. Therefore , UNIQLO should industry itself while the remarkably functional and innovative clothes brand via Japan to become sold at fair price.? Threat of alternative products of service: Excessive The substitutes are several from value, quality to brand along with ease of usage of customers.

Neighborhood apparel manufacturers have consolidated in group and they are solid at low-cost operation. Still people have desire in local style attire (their classic custom: sari).? Rivalry of competition: High India is regarded as an attractive industry for luxury brands, about 50 superior and luxurious brands, which include Zara, DISTANCE, Tommy Hilfiger, Guess, Benetton, Levi’s and so forth, have exposed stores in India in recent years. Direct competitors of SPAs like UNIQLO (GAP and Zara) have been doing business in India and so they have sound portions of market share in the nonfunctional category. Rivalry amongst existing businesses is intense.

Regarding strengths and weaknesses of current competitors, Zara’s strength is based on its capacity to quickly accept the latest designs to its shops while Levi’s and Benetton strengths are in their supply chains because they have been in India for more than a decade. Shopper’s stop and Provogue are local players and perhaps they are available in more locations of customer fascination. However , current competitors have weaknesses just like: due to fewer seasonal variations, driving new fashions just about every season was not easy for them. Except Benetton, most of others do not present traditional (embroidery) and multi-colored stuff, which will Indians choose more.

A number of the competitors don’t have good distribution infrastructure. Technically, the market in India is still in its early on ages which is growing by a high level. A lot of other high quality brands are preparing to open their stores in India rapidly. Market size is big especially in its tier-1 three the majority of populous metropolitan areas namely Mumbai, New Delhi and Bangalore (more than 30 mil people in total). 9 Final Statement [STRATEGY FOR UNIQLO IN INDIA UNIQLO focuses on customers of all ages and sexes, but in it is first bricks, it should focus on customer ageing from 15-64 and who may be more manufacturer conscious.

The targeted customers should generate more than hundred buck dollars per month to afford UNIQLO products. 3/ SWOT analysis for UNIQLO in India The introduction to UNIQLO business and the results of INFESTATIONS and your five forces analysis help all of us recognize the external elements and interior factors impacting on to the investment decision and approach formation of UNIQLO in India. All important factors will be summarized in the SWOT frameworks below: Strong points Weakness , High quality, functional products pertaining to wide range of buyer and to end up being sold at , UNIQLO originally had picture of cheap garments for everybody with basic designs Japanese lifestyle is still the core value of FR reasonable selling price , Becoming famous for innovative products backup by The japanese technology development while Indian working culture is very much diverse. , Having strategic cooperation with suppliers (TORAY) , Shortage of global human resources due to the language boundaries. , Having strong global footprint , Lack of well-established distribution network , Great SCM with SPA model , The financial position is very healthier Opportunities Threats , Raising demand of functional products with high-tech and impressive materials in government welcomes oreign expense (apparel) , High Yen , Enhance of purchasing electrical power and brand consciousness in India value for business. , Instability of consumption tax and regulations the other populous community. , Of india , Good competition which can cause a war of , Different have on behavior of targeted clients and poor access to shopping malls , A global economic downturn and Indian gradual GDP expansion , Cultural matters (labor union, warfare with Cover, security risk, market exit) , Excessive rental by shopping mall 15 Final Statement [STRATEGY FOR UNIQLO IN INDIA PART III/ Strategy Formation 1/ Technique

Based on environmental analysis and also strengths and weaknesses of UNIQLO, pursuing is the suggested strategies for UNIQLO upon entering into India. Perspective: Becoming the number one lifestyle clothing SPA in India in next a decade.? Value Positioning: highly efficient clothes advertising at middle section to higher price? Competitive approach: Differentiation by simply innovative product and trying to be creator of new clothe types (ex: HEAT-TECH or perhaps Ultra Light Down Clothes lines)? Targeted segmentation: Client aging coming from 15 to 64 years old of equally genders, belonging to the social classes having medium and high-income, living in city area. Admittance mode: initial entering as being a wholly-own subsidiary of Fast Retailing Co., Ltd sometime later it was expand your local store networks through alliance with strategic merchants or franchising/licensing models. UNIQLO had very successful business results with the wholly-own part model far away like China, US and EU, which needs to be an advantage for these people in India.? Expansion Approach: Phase-based style Phase 1 (Year one particular , Year 2) Industry penetration , Brand and Network building Target: Having piloted your five big-sized stores in the five most condensed shopping malls of Mumbai (5 stores) Period 2 (Year 3- 12 months 5)

Brand building , Regional growth Target: Having 10 retailers in malls of four big cities: Mumbai, Delhi, new Delhi and Bangalore (40 stores) Phase 3 (Year six ~ Season 10) Brand strengthening , National growth Target: Building the initially flagship retail store in Mumbai and having in total 90 stores nation-wide (1 flagship and 75 stores) 2/ Implementation plan: To realize the above strategy, 4P marketing framework has been utilized and details are demonstrated in the table below: eleven Final Record [STRATEGY FOR UNIQLO IN INDIA Products Place , Phase 1: highlight functional interior wear , Phase you: start from big-sized stores in top-tier ine (heat-up and cool-biz types). This makes shopping malls in Mumbai and corporate with Indian more at ease when merging domestic stores who are easy to be manipulated UNIQLO innerwear with their classic by UNIQLO. sari. , Phase 2: develop various stores in big and , Phase 2: offer diverse informal apparel tiny shopping malls in top 5 biggest cities products of vivid styles for men and including Mumbai, Delhi, New Delhi, and women for any situations. (T-shirt, sleeveless Bangalore. outfit, jackets, jeans, etc ) , Period 3: style styles and develop supplies for Of india market to show UNIQLO as the Stage 3: Open one worldclass flagship retail store in Mumbai and improve the store amount through franchising or licensing nation-wide. leading lifestyle garments for home-based people. Price Promotion , Pricing to get UNIQLO in India depends , Their grocer design, home furniture, fixtures and music competitors’ pricing in India along with its are carefully designed and coordinated to global price strategy. create a buying experience that reflects , Considering UNIQLO’s unique differentiated products and the income of target customers, the price will range from moderate to excessive. global UNIQLO’s brand idea. Marketing strategy will certainly emphasize within the senses to inspire the aspiration life styles as , The possibility of cutting down price of some Exceptional Clothing by means of strong purchase in items is substantial because GPD per household of marketing on Tv sets, journalism and on-line India is still very low compared to various other websites. Discounts at week-ends and special BRICs. events will be used on boost the revenue. Moreover, India is a completely different market when compared to its home Japan in term of culture, religion and politics. Therefore , in order to win through this market, UNIQLO must follow the triple A technique for its global operation and planning. Variation: India is incredibly big and varies in climate, people, religion and tradition. Consequently , UNIQLO must provide different products changing to wear patterns of localities. For example , in Mumbai, exactly where UNIQLO aims to open initial stores, is incredibly hot so UNIQLO’s excessive -tech dry T-shirt will be ideal. With the very end, UNIQLO should provide the particular design and fabric specifically for India (ex: embroidery products with vivid color). By adapting the firm’s products and services for the local doze Final Report [STRATEGY FOR UNIQLO IN INDIA context, it can boost profits and business.?

Aggregation: India’s population is 10 times than Japan and this market is receiving bigger and bigger. Therefore , if UNIQLO makes a big success in Indian marketplace, they would get the benefits of economy of scale by turning India in regional or perhaps global operation of UNIQLO. Although they surely have a production factory in Sri Lanka, India is a very very much bigger marketplace connecting to the Asian bass speaker continent. In the future, all creation, production and marketing may be grouped in India because the regional operations headquarter.? Arbitrage: India has a big apparel bunch and low-cost labor force.

Alternatively, now in China, where 80% shows of UNIQLO products is there, labor salary is elevating rapidly. In the event UNIQLO decided to go to India, they can push factories supply by china manufacturer to India to reduce to cost burden as well as stay away from the threat of intense politics conflict among China and Japan. SUMMARY UNIQLO should create clothes MADE FOR ALMOST ALL, offering the elements of style in garments that match diverse ideals of customers. Therefore , although India is various in term of traditions and buying behavior, in the one-world one-market era, UNIQLO has a big chance.

Relating to us, short-term objective for UNIQLO is to build profitable business structure and boost brand understanding. Long-term target is to be a leading lifestyle brand in India. Starting from high-quality shopping centers, then simply flagship shops but at some point UNIQLO would become popular practical casual garments that its shops are available in every cities of India. As for corporation and procedure, to meet plan the huge demand of work force in the future, we suggest UNIQLO to generate and educate university participants in India in the same way as in Japan (either in India or Japan).

The fresh approach to staff training will help aggressive fresh stores opportunities in India later. Finally, regarding the corporate culture, to prevent cultural issues as well as to maintain UNIQLO’s Japanese Core Ideals amid Globalization, (UNIQLO is a company born and bred in Japan), they have to balance and integrate their Japanese GENETICS and American indian DNA to feature by itself as a new type of Japanese-originated global firm. 13 Final Report [STRATEGY INTENDED FOR UNIQLO IN INDIA RESEARCH 1/ Be aware on Globalization and Approach http://www. iese. edu/en/files/AR-Apuntes9. pdf format 2/ Fast Retailing Most recent Annual Record 2011 http://www. astretailing. com/eng/ir/library/annual. html 3/ Other websites: http://www. jetro. go. jp/world/asia/in/biznews/4ed43b5b0cb20 http://www. jetro. go. jp/world/asia/in/invest_04/ http://en. wikipedia. org/wiki/Corruption_Perceptions_Index http://ja. wikipedia. org/wiki/%E3%82%A4%E3%83%B3%E3%83%89 http://www. yahoo. co. jp/publicdata/explore? ds=d5bncppjof8f9_=ny_gdp_mktp_kd_zg m=country: IND=ja=ja=%E3%82%A4%E3%83%B3%E3%83%89gdp%E6%88%90%E9%95 %B7%E7%8E%87) http://ja. wikipedia. org/wiki/%E3%82%A4%E3%83%B3%E3%83%89) http://www. google. co. jp/url? sa=t=j==s=web=1=0CGAQFjAA =http%3A%2F%2Fcsi. ckinsey. com%2F~%2Fmedia%2FExtranets%2FConsumer%2520Shopper%252 0Insights%2FReports%2FIndias_fast_growing_apparel_market. ashx=LtM0UN7mGIb4mAWmwoG YCQ=AFQjCNE5VELIQ-B385iwXw_VnAjkCscOCw=rXzMNQp0szM7wLXWKzPqXQ http://ja. wikipedia. org/wiki/%E3%82%A4%E3%83%B3%E3%83%89 http://ecodb. net/country/IN/imf_inflation. html#pcpipch http://www. meti. go. jp/policy/trade_policy/epa/country/pdf/india0408. pdf http://www. google. co. jp/url? sa=t=j==s=web=1=0CGAQFjAA =http%3A%2F%2Fcsi. mckinsey. com%2F~%2Fmedia%2FExtranets%2FConsumer%2520Shopper%252 0Insights%2FReports%2FIndias_fast_growing_apparel_market. shx=LtM0UN7mGIb4mAWmwoG YCQ=AFQjCNE5VELIQ-B385iwXw_VnAjkCscOCw=rXzMNQp0szM7wLXWKzPqXQ http://www. indexmundi. com/india/age_structure. ht 14 Last Report [STRATEGY FOR UNIQLO IN INDIA APPENDIX Appendix 1: Fast Retailing Corporation Profile Index Number Country The japanese Found yr 1963 Sales( billion) 820. 35(2011. 8) Net profit( billion) 54. 35 Total assets( billion) 533. 78 ROE(%) 18. 1 Their market value (() 13, 742 Retailers 2088 (10 countries) Workers (full-time) 16, 612 Region sales charge 73(Japan): 27(Oversea) (Source: Twelve-monthly report yearend 2011, Quickly Retailing Company., Ltd) 15

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