Perfume Market in China

Strategy for UNIQLO in India Class orbicular Strategy Optimizing your Global Footprint Professor Mark Roeske Students Hidenobu Hayakawa Nagasaka Sohta Nguyen Thanh Thi Phuong Waseda Summer Intensive , August 2012 final exam typography net pass over STRATEGY FOR UNIQLO IN INDIA CONTENTS Executive Summary PART I/ UNIQLO and Appargonl patience Overview of UNIQLO strain App bel Industry Value Chain & Key succeeder involvers PART II/ environsal abstract PEST abbreviation for India 5 Forces abstract for App atomic number 18l patience in India SWOT analysis for UNIQLOs entering into IndiaPART III/ Strategy Formation Entry Strategy Entry Mode amplification Strategy 3 Phases Imple handstation Plan 4P, AAA Conclusion Reference Appendix 2 Final advertise STRATEGY FOR UNIQLO IN INDIA EXECUTIVE SUMMARY japan is famous for innovation and eminent-tech manufacturing industries only not for fashion. However, this fact should be reconsidered since the shuffling UNIQLO, a true Japanese fashion instigator, instantaneously can be found in the biggest cities of the world from world-class obtain malls like Ginza (Tokyo), Fifth Avenue (New York) to the streets of Shanghai and Malaysia.UNIQLO is the briny instigant of Fast sell Co. , Ltd (see Appendix 1 for Corporate visibleness), the largest producer in app atomic number 18l sell sedulousness in Japan and ranks the fourth in the world (after ZARA, H&M and GAP). Mr. Tadashi Yanai, the founder a nd reliable CEO of Fast Retailing (FR) used to be the richest man in Japan. In this report, we develop the strategy to fill UNIQLO to the world second largest world, India. The reasons why we choose this plan can be explained briefly as following(a).Fast Retailing aims at becoming the number one app arel retailer in the world by 2020. In order to achieve this ambitious pot, they need to get a farsighted up sales from former(a) merchandises other than depending only on the already-saturated Japanese market. First venturing into international markets in 2001, UNIQLO straightway has general operations, 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 in the world that UNIQLO has not touched, which includes India.The reason for choosing India as the next destination of UNIQLO brand is mainly because of the suckion of India itself with a big population and rising GDP developing as comfortably as an warm-welcome legal environment for foreign investment funds. About the structure of this report, we divide in three different parts. The first one depart give an overview of UNIQLO brand, its position versa other world-top apparel brands. This part also explains the value chain of apparel sedulousness focusing on SPA warning and its relevant rouge success federal agents. The second part leaves an in-depth but compact environmental analysis of India n general and its appar el industry. Based on the country and industry analysis, a summary of external and internal factors affectin g the introduction of UNIQLO brand into India is shown in the SWOT analysis. The get but virtually important 3 Final Report STRATEGY FOR UNIQLO IN INDIA part of the report focuses on forming the intro strategy as well as expansion strategy for UNIQLO in Indian market. The main data source for this report is the FRs latest annual report for fiscal twelvemonth ended August 31, 2011 as well as information available on reliable websites, which are shown in the Reference.PART I/ UNIQLO and Japanese Apparel Industry UNIQLO of Fast Retailing Changing the World with really Great Clothing is the motto of Fast Retailing which show s the corporations spirit, vision and strategy. The particularty retailer UNIQLO, the Groups mainstay operation, has enjoyed strong gain by passing gameing high schoolschool school-quality occasional(a) wear at reasonable prices based on its SPA (Sp ecialty farm animal retailer of Private pronounce Apparel) agate line model, which spans product design, manufacture, distribution and retail. UNIQLOs products range from denim, cashmere, knitwear & underwear to men & women jeans, trousers, shorts, shirts and t-shirts.The first UNIQLO store opened in 1984 and as mentioned above, UNIQLO now has operations in U. K. , China, Hong Kong, South Korea, the United States, France, Singapore, Russia, Taiwan and Malaysia. In 2011, th ey opened planetary flagship stores in Taipei, Seoul and on New Yorks prestigious Fifth Avenue, as part of plans to grow business worldwide. At the end of fiscal 2011, they had 843 stores in Japan and 181 stores in other markets. Their breakthrough products include HEAT-TECH inner wear line, Ultra Light drink jackets and Cool biz line. In Japan, UNIQLO is the nations largest apparel retailer, with a 5. % 1 share of the 10. 7 trillion yen Japanese apparel market, and 843 stores nationwide at the end of fiscal 20 11. In fiscal 2011, sales variety show magnitude 28. 7% year on year to 93. 7 billion yen and operating profit grew 40. 6% to 8. 9 billion yen. While this is still only a small amount compared to UNIQLO Japans sales of 600. 1 billion yen, UNIQLO internationals operations in Asia are providing super profitable. The summarise number of UNIQLO International stores stood at 181 at the end of August 2011. They plan to add another 107 to boost the total to 288 stores by the end of August 2012. Fast Retailings yearbook Report 2011 4 Final Report STRATEGY FOR UNIQLO IN INDIA The chart to a lower place envisions the breakdown of UNIQLO sales in the future (Source annual report yearend 2011, Fast Retailing Co. , Ltd) Apparel Industry The following chart shows the current ranking of major(ip) global SPAs in the apparel world (Source Annual report yearend 2011, Fast Retailing Co. , Ltd) SPA business model incorporates the completed clothes-making process from procurement of material s, product cookery, development and manufacture through distribution and retail to inventory management.To ensure the development of products of exceptional quality, UNIQLO has refined its SPA business model to control the entire business process (see UNIQLO business model in Appendix 2). UNIQLO successfully differentiates itself from other companies by exploitation unique products and minimize store operation cost. This model is described in the flow of supply and key success factors are identified as on a lower floor ?1) Product Planning Key Success ingredient Product development based on customer feedback. Market-Out is a one of key driver for UNIQULO to attract consumer where their preference are diversified. Final Report STRATEGY FOR UNIQLO IN INDIA ?2) Raw material Purchase Key Success Factor Material procurement from around the world. The UNIQLO Material Development Team is able to procure high-quality materials at low costs through direct negotiations with and bulk purcha ses from material manufacturers globally. ?3) Production Key Success Factor a) Expert technical guidance at factories emphasizes quality in order to produce millions of products of standardized quality. b) tensile to produce in small unit(lot) ? 4) Sales & Marketing Key Success Factor Flagship Stores Boosts the BrandUNIQLO is seeking to form its brand through its network of global flagship stores. Global flagship stores serve as hubs to get out the UNIQLO message, and innovation of high-quality basics, while showcasing what sets UNIQLO apart from competitors such as H&M, Zara or Gap. PART II/ Environmental Analysis 1/ PEST analysis for India India, officially the Republic of India, is a country in South Asia. Its population is around 1. 2 billion, second largest after China. In term of the ease of doing business, India ranks 132nd, even worse than Pakistan (105th). ? semipolitical factorAbout its political system, India is the worlds most thickly settled democracy with a parlia mentary republic with a multi-party system. However, India ranks 95th over 185 countries in term of degeneracy rate and the corporation tax is really high at 40%. The law was changed in 2011 and it allows foreign companies to ask wholly own deputisesidiary. Although tax and corruption are negative points, there are lots of positive points as the current Prime Minister, Manmohan Singh, promised to bring more transparency in work of public servant and create no barriers to investment in India ?Potential cushion to UNIQLO It is an ideal timing for UQNILO to go to India now because from 24th November 2011, Indian government allowed a foreign corporation to allow its wholly-own subsidiary of retailer. However, it needs to pay attention to potential legal risks from Indian inflexible Labor Law, for 6 Final Report STRATEGY FOR UNIQLO IN INDIA example, practically impossible to fire somebody in India, requiring payment of annual bonuses even if the company wasnt profitable, high compe nsation for workers that suffer brand/death on site of employment and trend of getting stringent on working gibe and minimum wage law enforcement. Economic factor India is a rapidly rising power. Its GDP growth rate is impressively high (2009 8. 24%, 2010 9. 55%, 2011 6. 86%). In term of nominal GDP, it ranks eleventh in the world. Nevertheless, GDP per capita is very low compared to the other BRIC countries ($1,389, 140th ranking). India contains the largest concentration of people living below the World Banks international poverty line of US$1. 25 per day. Inflation rate is very high of 11. 99% in 2010 and 8. 63% in 2011. As for apparel industry, the total market capitalization is evaluate to increase from US$32. billion in 2009 to US$57 billion in 2015. ?Potential impact to UNIQLO consumers demand is change magnitude more and more in the future. Therefore, Indian apparel market creates a vast chance for UNIQLO. However, India is too big to deal with as a one country, so that cities are important to define business strategy. The first targeted destination should be Mumbai, which is the biggest city in population (12. 5 mil people) and its density (20,694/km2) is four times higher than Tokyo (5,541/km2). It is absolutely a very brilliant business because there is no tariff to habit between Japan and India from 2010. affable factors Population growth rate is 1. 4% per year and India is expected to reach 1. 4 billion in 2030. The literacy rate is near 74. 04% (2011) and there are more than 90 million English speakers. This population is divided in the following age structure 0-14 years 31. 8%, 15-64 years 63. 1% and 65 years and above 5. 1%. Their lands are fertile and very straightforward for agriculture. The weather is various in locations and there are pass and winter and raining seasons. ?Potential impact to UNIQLO UNIQLO should make unique comfortable products suitable for various climates.Although India provides threepenny labor cost, the devia tion in salary base in India is very large, 2-3 times difference by education and 20-30 times difference for professionals. Another important factor for consideration is related to the labor confederacy in India. There are about 8,000 Labor Unions and they are very active. 7 Final Report ? STRATEGY FOR UNIQLO IN INDIA Technology factors India is well-known as the land of IT outsourcing, so the infrastructure as well as transport and communication should be good. Nevertheless, there are more and more blackouts recently.As for cloth, India is a big textile producer as being the largest producer of Jute, Cotton, Silk, Cellulosic and Synthetic fiber/Yarn. ?Potential impact to UNIQLO in the long run, UNIQLO should make its own products in India to take the advantage of cheap raw material and low-paid labor sources. However, they now need to build up their distribution from the scratch. 2/ 5 Forces analysis for apparel industry of India In general, the PEST analysis shows favorable resu lts to the business plan of introducing UNIQLO brand in India.In order to form the entry mode as well as competition strategy for UNIQLO, an in-depth understanding of current apparel industry of India is needed. The 5 forces model of Porter is applied to identify involving forces of this industry and details are shown below ? bane of new entrants High Barrier to new entrant into apparel industry is low because there are no restrictions and the current Indian government shows warm welcome to foreign investment. On the other hand, utilitarian Fiber could lose its uniqueness and distinctiveness by products from other apparel companies.For example, Private brand from chemical companies (like Du Pont Company) could be our rival in this category. ? Bargaining power of suppliers Low As the main raw materials are Cotton and Functional fiber and cotton is commodity, UNIQLO can find the cotton source from various suppliers in and outside the country. More importantly, UNIQLO has a strong s ourcing of utilitarian fiber from Toray, its strategical partner. They have had a good corpo ration on global base under a long-term contract. Finally, access to distribution conduct is not limited and retailers provide shelf-space when they receive listing fees here in India. Bargaining power of vendee Medium There is no switching cost for buyers. Most of the POS (Point of sales) are PAPAMAMA shop but they are small in size and not able to exercise buying power. However, due to the regulation change in 2010 8 Final Report STRATEGY FOR UNIQLO IN INDIA with regard to the field of retailer, quantity of massretailers has been increasing at urban area, making buyer bargaining power stronger. Consumer spending on fashion products has great(p) at 7. 1% annually from 2002 through 2010. There is a rising affluence which helps to increase brand awareness among Indian consumers.Indian is among the most brand conscious countries in the world (according to the Nielsen Global Luxury Brands piece of work). Indian often spend around deoxycytidine monophosphate$ on an average for apparel. To them, the most important factor is the look and feel of the product and price is also another important factor. Therefore, UNIQLO should market itself as the highly functional and innovative clothing brand from Japan to be sold at reasonable price. ? holy terror of substitute products of service High The substitutes are various from price, quality to brand as well as ease of access to customers.Local apparel manufacturers have consolidated in group and they are strong at low-cost operation. Still people have preference in local modal value outfit (their tralatitious custom sari). ? Rivalry of competition High India is considered an attractive market for luxury brands, about 50 aid and luxury brands, including Zara, GAP, Tommy Hilfiger, Guess, Benetton, Levis etc, have opened stores in India in recent years. Direct competitors of SPAs like UNIQLO (GAP and Zara) have been doing bu siness in India and they have solid portions of market share in the non-functional category. Rivalry among existing companies is fierce.Regarding strengths and weaknesses of current competitors, Zaras strength lies in its ability to quickly bring the latest designs to its stores while Levis and Benetton strengths are in their supply chains as they have been in India for more than 10 years. Shoppers finish up and Provogue are local players and they are available in more locations of customer attraction. However, current competitors also have weaknesses like due to fewer seasonal variations, driving new fashions every season hasnt been well-heeled for them. Except Benetton, most of other brands do not offer conventional (embroidery) and colorful stuff, which Indians prefer more.Some of the competitors do not have good distribution infrastructure. In brief, the market in India is still in its primeval ages and is growing at a high rate. A lot of other premium brands are planning to open their stores in India soon. Market size is big especially in its tier-1 three most populous cities namely Mumbai, New Delhi and Bangalore (more than 30 million people in total). 9 Final Report STRATEGY FOR UNIQLO IN INDIA UNIQLO targets customers of all ages and genders, but in its first bricks, it should focus on customer aging from 15-64 and who is more brand conscious.The targeted customers should earn more than $100 dollars per month to afford UNIQLO products. 3/ SWOT analysis for UNIQLO in India The overview of UNIQLO business and the results of PEST and 5 forces analysis help us recognize the external factors and internal factors affecting to the investment decision and strategy formation of UNIQLO in India. All important factors are summarized in the SWOT frameworks below Strengths Weakness High quality, functional products for wide range of customer and to be sold at UNIQLO to begin with had image of cheap clothes for everybody with basic designs Japanese culture is still the core value of FR reasonable price Being famous for innovative products back up by Japan engineering innovation while Indian working culture is very much different. Having strategic cooperation with suppliers (TORAY) Shortage of global human resources due to the language barriers. Having strong global footprint Lack of well-established distribution network better SCM with SPA model The financial status is very healthy Opportunities Threats Increasing demand of functional products with sophisticated and innovative materials in government welcomes oreign investment (apparel) High Yen Increase of purchasing power and brand consciousness in India price for market share. Instability of consumption tax and regulations the second populous world. Indian Strong competition which may cause a war of Different wear behavior of targeted customers and abject access to shopping centers The global economic down circle and Indian slow GDP growth Social matters (labor unio n, war with Afghan, security risk, market exit) High rental at shopping mall 10 Final Report STRATEGY FOR UNIQLO IN INDIA PART III/ Strategy Formation 1/ StrategyBased on environmental analysis as well as strengths and weaknesses of UNIQLO, following is the suggested strategies for UNIQLO upon entering into India. Vision Becoming the number one modus vivendi apparel SPA in India in next 10 years. ? Value Positioning highly functional clothes selling at middle to high price ? Competitive strategy Differentiation by innovative product and aiming to be creator of new clothe types (ex HEAT-TECH or Ultra Light Down Jacket lines) ? Targeted segmentation Customer aging from 15 to 64 years old of both genders, belong to the social classes having medium and high-income, living in urban area. Entry mode first entering as a wholly-own subsidiary of Fast Retailing Co. , Ltd and later expand the store networks through alliance with strategic retailers or franchising/licensing models. UNIQLO ha d very successful business results with the wholly-own branch model in other countries like China, US and EU, which should be an advantage for them in India. ? Expansion Strategy Phase-based model Phase 1 ( course of study 1 Year 2) Market penetration & Brand and Network building Target Having piloted 5 big-sized stores in the five most condensed shopping malls of Mumbai (5 stores) Phase 2 (Year 3- Year 5)Brand building & Regional expansion Target Having 10 stores in malls of 4 big cities Mumbai, Delhi, new Delhi and Bangalore (40 stores) Phase 3 (Year 6 Year 10) Brand strengthening & discipline expansion Target Building the first flagship store in Mumbai and having in total 100 stores nation-wide (1 flagship and 100 stores) 2/ Implementation plan To realize the above strategy, 4P marketing framework has been applied and details are shown in the table below 11 Final Report STRATEGY FOR UNIQLO IN INDIA Products Place Phase 1 emphasize functional inner wear Phase 1 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 comfortable when combining domestic retailers who are easy to be controlled UNIQLO innerwear with their traditional by UNIQLO. sari. Phase 2 develop various stores in big and Phase 2 offer diverse casual apparel small shopping malls in top 4 biggest cities products of vivid designs for men and including Mumbai, Delhi, New Delhi, and women for any occasions. (T-shirt, sleeveless Bangalore. dress, jackets, jeans, etc ) Phase 3 design styles and develop materials for Indian market to turn UNIQLO as the Phase 3 Open one world-class flagship store in Mumbai and increase the store quantity through franchising or licensing nation-wide. leading lifestyle clothes for domestic people. Price Promotion set for UNIQLO in India will be based The store design, furniture, fixtures and music competitors pricing in India as well as its are all carefully planned and coor dinated to global price strategy. create a shopping experience that reflects Considering UNIQLOs unique differentiated products and the income of target customers, the price will range from medium to high. global UNIQLOs brand concept. Marketing strategy will emphasize on the senses to inspire the aspiration lifestyles as The possibility of lowering price of some Unique Clothing via strong investment in products is high because GPD per capita of advertising on TVs, journalism and on-line India is still very low compared to other websites. Discounts at weekends and special BRICs. ceremonies will be applied to boost the sales. Moreover, India is a totally different market compared to its home Japan in term of culture, religion and politics. Therefore, in order to win in this market, UNIQLO must follow the manifold A strategy for its global operation and planning. Adaptation India is very big and varies in climate, tribes, religion and tradition. Therefore, UNIQLO has to provide div erse products adapting to wear behavior of localities . For example, in Mumbai, where UNIQLO aims to open first stores, is very hot so UNIQLOs high -tech dry T-shirt would be ideal. At the very end, UNIQLO should provide the specific design and fabric all for India (ex embroidery products with vivid color). By adapting the firms products and services to the local 12 Final Report STRATEGY FOR UNIQLO IN INDIA context, it can boost revenues and market share. ?Aggregation Indias population is 10 times than Japan and this market is getting bigger and bigger. Therefore, if UNIQLO makes a big success in Indian market, they would get the benefits of economy of measure by turning India into regional or even global operation of UNIQLO. Although they now have a production factory in Sri Lanka, India is a very much bigger market connecting to the Asian sub continent. In the future, all development, production and marketing can be grouped in India as the regional operations headquarter. ? Arbi trage India has a big apparel cluster and cheap labor force.On the other hand, now in China, where 80% productions of UNIQLO products are there, labor wage is increasing rapidly. If UNIQLO decided to go to India, they can move factories from China to India to reduce to cost burden as well as avoid the threat of piercing political conflict between China and Japan. CONCLUSION UNIQLO aims to create apparel MADE FOR ALL, offering the elements of style in clothes that suit diverse values of customers. Therefore, although India is diverse in term of culture and shopping behavior, in the one-world one-market era, UNIQLO has a big chance.According to us, short-term goal for UNIQLO is to set up profitable business model and increase brand awareness. Long-term goal is to be a leading lifestyle brand in India. Starting from high-profile shopping centers, then flagship stores but eventually UNIQLO would become popular functional casual clothing that its shops can be found in every cities of In dia. As for organization and operation, to meet up with the huge demand of labor force in the future, we suggest UNIQLO to recruit and train university graduates in India in the analogous way as in Japan (either in India or Japan).The fresh approach to staff preparation will facilitate aggressive new stores openings in India later. Finally, regarding the corporate culture, in order to avoid cultural conflicts as well as to preserve UNIQLOs Japanese Core Values amid Globalization, (UNIQLO is a company born and bred in Japan), they should balance and integrate its Japanese DNA and Indian DNA to feature itself as a new type of Japanese-originated global corporation. 13 Final Report STRATEGY FOR UNIQLO IN INDIA REFERENCE 1/ Note on Globalization and Strategy http//www. iese. edu/en/files/AR-Apuntes9. pdf 2/ Fast Retailing Latest Annual Report 2011 http//www. astretailing. com/eng/ir/library/annual. html 3/ Other websites http//www. jetro. go. jp/world/asia/in/biznews/4ed43b5b0cb20 ht tp//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. google. co. jp/publicdata/explore? ds=d5bncppjof8f9_=ny_gdp_mktp_kd_zg m=countryIND=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. htmlpcpipch 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 Final Report STRATEGY FOR UNIQLO IN INDIA APPENDIX Appendix 1 Fast Retailing Corporation Profile Index Figure Country Japan Found year 1963 Sales( billion) 820. 35(2011. 8) Net profit( billion) 54. 35 Total assets( billion) 533. 78 ROE(%) 18. 1 Market value (() 14,742 Stores 2088 (10 countries) Employees (full-time) 14,612 Region sales rate 73(Japan)27(Oversea) (Source Annual report yearend 2011, Fast Retailing Co. , Ltd) 15