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Prof. Herbert Sherman

MBA 625 Final Project:
Technological Innovation Analysis of UNIQLO

YE YU

Submitted to meet the requirements of MBA 625
in partial fulfillment of the requirement for the Degree of
Master of Business Administration in Finance

LONG ISLAND UNIVERSITY
June 15, 2012

Introduction
In many industries technological innovation is now the most important driver of competitive success. Due in part to the globalization of markets, firms needs to keep continuously innovated to produce new products and services (Shilling, 2006). It is no doubt that technological innovation is a vital factor to these high-tech firms, even for these traditional industries, it is also very important. In this article, UNIQLO Co., Ltd. is selected as a sample to study what kinds of technological innovation it choose to support its business strategy and how the firms utilizes these technical affect to its processing, management, cost controlling and presenting. Overview of UNIQLO

Background information
UNIQLO Co., Ltd is a 100% consolidated subsidiary of Fast Retailing Co., Ltd. which is a public Japanese retailing holding company founded by Tadashi Yanai. The brand name “UNIQLO” means “unique clothing” which also delivers a message that UNIQLO’s product is creative and innovated in the apparel industry. The first UNIQLO store opened in 1984 and it began expansion into chain stores in 1991 (Yanai, 2001). Today, the UNIQLO owns more than 1000 store in Japan and more than 300 stores over the world. Strategy

UNIQLO’s main strategy is developing products of exceptionally high quality at a reasonable price. It aims to create apparel MADE FOR ALL—offering the elements of styles in clothes that suit for people of all ages and both genders. UNIQLO also weights lowering the cost by quickly combing production section and sales section. R&D. UNIQLO’s four main R&D centers, located in Tokyo, New York City, Paris and Milan, are continuously researching the latest fashion styles around the world as well as looking for and developing new materials. Quiet distinct from fast rival such as H&M which regularly introduces new ranges within a year, UNIQLO pursues a strict quick response strategy. It begins most of its pattern making and a year in advance of product launch (Fast Retailing, 2011). Therefore, it can purchase in a massive amount of fabric, which means a large quantities but high quality garment and high barging power against suppliers. This is party the reason how UNIQLO can provide relative high quality product at a low price.

Production. UNIQLO has 70 partner factories, and roughly 75% of UNIQLO products are made in China, where the labor costs are relative low but the infrastructure and employee skills are qualified. UNIQLO also produces only 1000 styles a year, but adds variety by stocking a multiple colors, which expand the economics of scale to lower the price (LTD, 2012).

Logistics and Inventory. UNIQLO combines the warehouse and store together. The Inventory Control Department maintains the optimum level of store inventory by monitoring sales and stock on a weekly basis, and dispatching necessary inventory and new products to fulfill orders (Fast Retailing, 2011). Therefore, UNIQLO can reduce the risk of overstock or stock out, adjust the price at a proper time and improve the ability to cut the unnecessary cost.

Store Standardization and Visual Merchandising & Display (VMD). Visual Merchandising & Display is a system which aims to catch customers’ eyes, to make them comfortable while shopping, and save the store space as well. And all UNIQLO stores are highly standardized, so customers will receive high quality customer service in every UNIQLO stores.

To achieve these goals above, UNIQLO has established an SPA (Specialty store retailer of Private label Apparel) business model encompassing all stages of the business—from design and production to final sale and other...
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