BỘ GIÁO DỤC VÀ ĐÀO TẠO

TRƯỜNG ĐẠI HỌC FPT

&œ

INDIVIDUAL ASSIGNMENT

INTERNATIONAL BUSINESS STRATEGY

Analysis International strategy of UNIQLO in Vietnam market

Lecturer: Lê Phát Minh

Name: Dương Hồ Thảo Vi – SS180075

Class: IB1809

03 tháng 06 năm 2024

1
Table of Contents

I. Introduction .............................................................................................................. 3

II. Why was UNIQLO beloved by Vietnamese target customers? .............................. 4

1. 4P’s analysis ...................................................................................................................4

III. Which type of international market penetration strategy did Brand owner decide?

Why? ........................................................................................................................... 5

IV. Has it been struggle with very competitive business environment “5 forces

model” ......................................................................................................................... 6

1.Intensity of Rivalry ............................................................................................................6

2.Threat of Entry..................................................................................................................6

3.Threat of substitutes .........................................................................................................7

4.Threat of supplier .............................................................................................................8

5.Bargaining power of buyer ...............................................................................................8

V. What could you suggest to them to get its competitive capabilities become better?

.................................................................................................................................... 9

VI. Conclusion ........................................................................................................... 10

VII. References ......................................................................................................... 10

2
I. Introduction

Uniqlo is a prominent Japanese fashion brand known for its innovative and sustainable approach,

offering high-quality garments made from new materials at reasonable prices. Originally established in

Yamaguchi, Japan, in 1949, Uniqlo started as a casual wear design, apparel, and retail company under

Fast Retailing. However, on November 1, 2005, Uniqlo became an independent entity and listed its

shares on the Tokyo Stock Exchange.

In 2002, Uniqlo ventured into the international market by opening its first overseas store in London,

rapidly expanding to 21 stores across the city and its suburbs. Transitioning from a domestic retail

brand, Uniqlo quickly gained international recognition, competing with well-known brands like Zara

and H&M. Today, Uniqlo boasts a network of 2,394 stores across 25 countries, including locations in

Europe, America, and Asia. On December 6, 2019, Uniqlo launched its first store in Vietnam, located

in Ho Chi Minh City. After three years, Uniqlo has expanded to 15 retail stores across the country.

Since its inception, Uniqlo has embraced the slogan "MADE FOR ALL," reflecting its commitment to

simplicity and universal appeal. Uniqlo's product range includes four main categories: Men, Women,

Children, and Infants. The brand is known for its research and development of new fibers, leading to

two main product lines based on "materials":

3
 - AIRism Technology: Designed for summer, these products include sunblocks, t-shirts, shirts,

and more, made from fabric woven with a special technology that provides coolness and

excellent sweat absorption.

- Heattech Technology: Uniqlo's unique heat-retaining fabric technology, primarily used in

winter products. A standout item in this line is the thermal down jacket, known for its warmth

and comfort.

Uniqlo's commitment to innovation, quality, and affordability has solidified its position as a leading

global fashion brand.

II. Why was UNIQLO beloved by Vietnamese target customers?

1. 4P’s Analysis

Product: Uniqlo's strategy in Vietnam focuses on providing functional and affordable products like

Heat-tech, UV Cut, Airism, Breathable, and Ultra Light, alongside regular casual wear for all

demographics. They plan to leverage their innovative design center in Los Angeles to tailor products to

Vietnamese dimensions, weather, and preferences, supported by a dedicated merchandise buyer team.

Uniqlo will also introduce Japan’s renowned high-quality service in Vietnamese stores by training staff

to uphold these standards. Establishing bilingual online stores will enable direct shipping and reach

customers nationwide, minimizing initial investment in physical assets. Additionally, Uniqlo will

implement an "all products recycling project" in their stores to promote sustainability, attracting

environmentally conscious consumers and enhancing brand appeal.

4
Price: Uniqlo is a mid-range and affordable product. The low competitive pricing helps Uniqlo

differentiate itself from competitors through the very good quality of its products, attracting both

budget-conscious customers and knowledgeable shoppers, along with many promotional periods so

Vietnamese people are quite fond of them.

Place: Uniqlo sells through its specialty stores in most major cities worldwide. Additionally, it sells

online through its own website. Uniqlo also maintains optimal inventory levels and releases any

necessary stock at promotional prices.

Promotion: Uniqlo has a team that analyzes customer purchase data to evaluate customer preferences

and design promotional content accordingly. With the slogan "Made for all," Uniqlo highlights its

strategy to become a global brand, attracting customers from different countries and ethnic groups.

Personally, I am most impressed with Uniqlo's Product Strategy. When talking about Uniqlo's

products, we immediately think of the following characteristics: simple design without fuss (high

applicability, suitable for various social classes), good quality, low cost, acceptable fashion, very

convenient, and comfortable to wear. This shows that Uniqlo places great emphasis on developing its

product strategy. Furthermore, without a product, we cannot implement any of the other 3P’s. And

Uniqlo's outstanding products are easy to launch into the market because they truly meet the needs

and wants of consumers.

III. Which type of international market penetration strategy did Brand owner
decide? Why?

Uniqlo has adopted an "International Production Unification Strategy" to penetrate global markets

through direct investment, ensuring full ownership and control of all branches. By 2023, Uniqlo

operates over 2,400 stores worldwide, including more than 300 in Southeast Asia, over 800 in Japan,

and more than 1,439 in other countries. Notably, China leads with over 925 stores, indicating Uniqlo's

focus on expanding in China and Southeast Asia. Establishing wholly owned subsidiaries allows Uniqlo

to maintain complete control and retain all profits from global branches, enabling flexible coordination

of operations and profit reallocation to support competitive initiatives in different regions. Uniqlo's

5
strategy emphasizes mass production of simple, versatile fashion products and strategically locates

stores, factories, and R&D centers to maximize economic benefits from location advantages,

experience, and economies of scale. This approach also minimizes the risk of losing control over

proprietary technology and the value chain to competitors.

IV. Has it been struggle with very competitive business environment “5 forces

model”

1.Intensity of Rivalry

Uniqlo faces fierce competition from both international and domestic brands, particularly upon its entry

into the Vietnamese market. Established brands like Zara and H&M had already secured prominent

positions in key shopping centers like Parkson Saigon Tourist Plaza before Uniqlo's arrival in 2016.

With prime locations and established brand recognition, these competitors gained a significant

advantage over Uniqlo, fostering customer loyalty. Additionally, Uniqlo must contend with the rapid

growth of local brands, which have gained traction in recent years. The trend of prioritizing Vietnamese

products further intensifies competition, placing direct pressure on Uniqlo to differentiate itself and

capture market share.

2.Threat of Entry

Fashion trends are ever-evolving, with consumers increasingly seeking variety and paying closer

attention to environmental sustainability. There is a growing demand for minimalist yet slightly

luxurious fashion. Uniqlo has successfully targeted customers who prioritize comfort and casual wear

over fleeting fashion trends, offering products that provide comfort, pleasure, and protection. Produced

in an eco-friendly manner, Uniqlo's products minimize environmental impact. By directly negotiating

with global raw material factories and placing bulk orders, Uniqlo ensures a stable supply of high-

quality raw materials at low prices. This strategy, combined with extensive research and

experimentation, allows Uniqlo to enhance the functionality, style, and texture of their clothing, making

6
it difficult for new entrants to replicate. For instance, Uniqlo's partnership with Toray Industries, a

leading synthetic fiber producer, has resulted in innovative materials like HEATTECH and AIRISM.

As a strong and well-known brand in the retail industry, Uniqlo presents significant barriers to new

entrants, who must navigate the full costs of online selling, distribution channels, store setup, and

standardization, making market entry an expensive endeavor. Additionally, Uniqlo's well-established

brand image and customer loyalty further lower the threat of new competitors. However, if a company

overcomes these challenges and establishes itself in the market, Uniqlo would need to differentiate its

products to compete effectively.

Recently, fashion retailer ADLV, which entered the market in 2017, has made notable strides. ADLV

has generated significant excitement in the Asian fashion industry and beyond, focusing on comfort,

high-quality, durable designs, and affordable prices appealing to young consumers. Although ADLV is

not currently a direct competitor of Uniqlo, it poses a potential future threat that Uniqlo cannot

underestimate.

3.Threat of substitutes

The threat of substitute products to Uniqlo stems from the availability of competing brands offering

similar products at lower prices. While Uniqlo has built a strong reputation among customers with its

quality products, reasonable prices, and pleasant shopping experiences, it faces challenges from

competitors that prioritize current trends, affordability, and design over quality. Additionally, the trend

towards green and sustainable fashion presents another dimension to the threat of substitutes, as some

customers may opt for environmentally friendly options offered by competing brands. Given the

relatively low cost of switching within the fashion industry, customers have the flexibility to change

their preferences easily, posing a significant risk to Uniqlo if it fails to meet evolving consumer

demands. Therefore, Uniqlo must continue to innovate, offering products with high applicability and

reasonable prices to retain its customer base and mitigate the threat of substitutes.

7
4.Threat of supplier

Uniqlo adopts a cost-minimization and efficiency-maximization approach by outsourcing its entire

manufacturing process to exclusive third-party suppliers. Each supplier specializes in producing

specific types of clothing, facilitating quality control and reducing transportation costs. By 2021, Uniqlo

has established partnerships with 242 factories across 11 countries in South Asia and Southeast Asia,

including prominent locations like China, Vietnam, and Bangladesh. To ensure a steady supply of high-

quality materials at low costs, Uniqlo directly negotiates with suppliers worldwide and places bulk

orders to benefit from economies of scale.

Embracing a "long-term fashion" strategy, Uniqlo prioritizes strategic alliances with Japanese

manufacturers known for their quality and innovation. With a dedicated R&D team, Uniqlo focuses on

developing fabrics in-house, such as HeatTech and AIRism, reducing its reliance on external suppliers.

Collaborations with esteemed companies like Kaihara Corporation for denim fabric and Toray

Industries for synthetic fiber production further enhance Uniqlo's proprietary technologies.

By manufacturing in regions abundant in labor and achieving cost reductions while maintaining control

over proprietary technologies, Uniqlo effectively diminishes the bargaining power of its suppliers.

5.Bargaining power of buyer

By prioritizing customer satisfaction, Uniqlo continually enhances its services to provide the most

comfortable and personalized experiences. Their well-trained staff in stores strive to deliver excellence,

fostering customer loyalty. However, the bargaining power of customers remains moderately high for

the company. In today's rapidly evolving garment industry, with increasing attention to environmental

concerns, there exists a plethora of substitutes and competitors with minimal switching costs for Uniqlo

customers. Customers enjoy freedom of choice among various brands offering similar products at

comparable prices. With a plethora of options available, consumer pressure on businesses intensifies,

as they must vie for market share. As consumer awareness grows, so does their bargaining power,

further influenced by fluctuating incomes. While higher-income customers may opt for pricier brands

to elevate their lifestyles, Uniqlo retains customer loyalty by catering to the middle-class populace with

budget-friendly offerings.

8
V. What could you suggest to them to get its competitive capabilities
become better?
Inbound Logistics: Uniqlo strategically manages its supply chain to ensure the timely delivery of raw

materials and components from suppliers worldwide. By negotiating directly with suppliers and placing

bulk orders, Uniqlo achieves economies of scale and secures high-quality materials at lower costs.

Additionally, partnerships with innovative Japanese manufacturers, such as Toray Industries and

Kaihara Corporation, enable Uniqlo to develop proprietary fabrics like HeatTech and AIRism, reducing

its dependence on external suppliers.

Operations: Uniqlo outsources its manufacturing processes to exclusive third-party suppliers, primarily

located in South Asia and Southeast Asia. Each supplier specializes in producing specific types of

clothing, facilitating quality control and minimizing transportation costs. Uniqlo's focus on efficiency

and cost minimization drives its "long-term fashion" strategy, emphasizing the development of durable

and high-quality products that align with customer preferences.

Outbound Logistics: Uniqlo operates a global network of retail stores and online platforms to distribute

its products to customers worldwide. By strategically locating stores in key urban centers and shopping

districts, Uniqlo maximizes its reach and accessibility to consumers. Additionally, Uniqlo's online

channels enable customers to shop conveniently and access a broader range of products, further

enhancing its distribution capabilities.

Marketing and Sales: Uniqlo invests in targeted marketing campaigns to promote its brand and

products to consumers. Emphasizing the unique aspects of its offerings, such as quality, comfort, and

affordability, Uniqlo differentiates itself from competitors and builds brand loyalty. Moreover,

collaborations with local influencers and celebrities help Uniqlo connect with its target audience and

generate buzz around its products.

Service: Uniqlo prioritizes customer satisfaction by providing excellent service both online and in-

store. Well-trained staff offer personalized assistance to customers, creating a pleasant shopping

9
experience and fostering brand loyalty. Additionally, Uniqlo's commitment to sustainability and

innovation resonates well with environmentally-conscious consumers, further enhancing its value

proposition.

Overall, Uniqlo's value chain model emphasizes efficiency, quality, and customer-centricity, enabling

it to deliver value to customers while maintaining a competitive edge in the global fashion industry.

VI. Conclusion

Uniqlo's core strength lies in its unique competitive edge, which remains unparalleled by competitors.

Through meticulous research and manufacturing, Uniqlo develops fabrics tailored to create products that

excel in environmental sustainability and wearer comfort. Uniqlo's versatile clothing caters to a wide

range of demographics, accommodating individuals of all ages, professions, and genders. Their apparel,

while simple, holds immense appeal for consumers. By preserving its current distinctive features and

innovating to meet evolving customer needs, Uniqlo can undoubtedly maintain its position in the market

and continue to progress in the future.

VII. References
1. About UNiQLO | UNIQLO. (n.d.). Available at: https://www.uniqlo.com/eu/en/company/.

(Accessed 2 June 2024).

2. Fastretailing. (2022). UNIQLO Business Model. Available at:

https://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html. (Accessed 2

June 2024).

3. Ngo.M. (2021). Uniqlo's Supply Chain Management. Available at:

https://logistician.org/blog/hoat-dong-quan-tri-chuoi-cung-ung-cua-uniqlo.html

(Accessed 2 June 2024).

10