2. Opportunites and Threats faced by UNIQLO
The SWOT analysis matrix is used to identify the strength, weakness, opportunities and
the threat of Uniqlo to exploit the opportunities, build on the strength, counter threats
and eradicate threats however it does not necessarily offer solutions. Before deciding to conduct SWOT analysis, one should be aware that there are also limitations.
Now let’s analyse the opportunities, and threats faced by Uniqlo with the help of SWOT analysis matrix.
Opportunities for UNIQLO
New technology is an opportunity to UNIQLO to practice differentiated pricing strategy in the new market. The company can keep its loyal customers with its exceptional service and attract new customers through other value-oriented propositions.
Decreasing fees for shipment because lower shipping cost lower down the cost of UNIQLO’s products thus providing an opportunity to the company – to increase its income or give the benefits to the consumers to increase its share in the market.
Government’s Green initiatives also open an opportunity for attainment of UNIQLO products by the state as well as federal government contractors.
Constitution ‘s core group competencies can be a success in similar other products field. A comparative example could be – GE healthcare research helped in development better Oil drilling automobile
Market Development the lead to dilution of competitor’s advantage and enable UNIQLO to increment its fight compare to the other competitors.
The openings of new markets because of government agreement – the acceptance of new technology standard and government free trade agreement has provided UNIQLO with a chance to enter a newly advancing markets.
Stable, cash flow provides opportunities to invest in adjacent product segments. With more cash on hand, firms can invest in new technological advancement and in new products segments, which should open a window of opportunity for UNIQLO in other product categories.
A Lower inflation rate – Lower inflation rate brings more constancy in the market, enable borrowings at a reduced interest rate to the customers of UNIQLO.
Threats of UNIQLO
Increase in raw material cost can pose a danger to the UNIQLO profitability.
Imitation or counterfeit and low-quality product is also a threat to UNIQLO’s
Products, especially in the emerging markets and low-income markets.
Liability laws in different countries are different. Therefore UNIQLO may be exposed to numerous liability claims given change in policies in those markets.
Growing strengths of local distributors also present a threat in some markets as
the competition is paying higher profits to the local distributors.
No regular supply of innovative product – Over the years the company has developed
numerous products, but those are often due to exploitation by its competitors. Top of Form
Rising pay level especially movements such as $15 an hour and increasing prices in China can lead to severe pressure on the profitability of UNIQLO
Tough competition – Stable profitability has improved the number of competitors in
the market over last two years which not only put pressure on the profitability but also on the overall sales of the company.
Tadashi Yanai’s insights
Tadashi Yanai is Japan’s richest man, the chairman, president and Chief executive officer of Uniqlo who wrote “23 Management Principles” which were printed on pocket size plastic cards and carried around by its employees. These principles were written by him over the years one by one. Yanai called these principals as “soul” of his company. Yanai was a billionaire, and the most talked about a leader often featured on various television shows. Uniqlo sells clothes for all walks of life, but their brand is not leading fashion. Their clothes are wearable and affordable. Yanai was one of the hundred most influential person. His insights closely paralleled embracing change and the ability to put in hard work and play as a team. He believed that capabilities are essential for public relations and managing the brand name. Public Relations went through a gradual change in the two areas of video and mobile. Yanai chose to invest to quip his Public Relation team with
expertise and equipment to help clients in embracing the world of video, live content and mobile. If remained obsolete, 2013 onwards would have been challenging. His exploration and insights to technology paid off. Yanai always believed that everyone should embrace change.
Yanai’s vision is to make Fast Retailing the number one retail outlet in the world by 2020.
He believes that they have the abilities and are on track to achieve this vision. He moved away from formal clothing to casual wears which were able to make a high sales revenue.
The daily wears did not only attract the young and old in Japan but also across the world. Even the wealthy were attracted to the wears. Though Japan’s retail industry has a supply of designers, producers and distributors, Yanai inspired by Gap, took control of the end to end process from design, production to distribution to bring the lowest price to customers. During the economic downturn, he outsourced his production to factories in China to bring costs down to shoppers who had low spending powers during the economic downturn. He had a well-managed supply chain which meant Yanai could control price and quality at the same time.
Though in the beginning to expand his business he opened three outlets in the USA, which failed as the brand was unknown, he later opened an outlet in a prime area. This time with highly visible advertisements campaign with movie artist ensured that the brand is no longer unknown. Now it has seven outlets in the USA and aims to have 200 outlets by the year 2020.
Yanai deviates from traditional management practices as he thinks it is a bottleneck. Yanai controls the direction of the firm and even hands-on design and marketing. He also drops by Uniqlo outlets to personally look at the display and services provided.
Yanai’s extraordinary long-term vision is focused on global expansion and advancement where other fashion brands were focused on winning the old game of fashion. Yanai’ thinks that the fashion industry is not about process improvement and making a perfect piece of garment, but about chasing after trends.
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