Introduction to Business
This report is about Uniqlo’s competitive environment using Michael Porter’s Five Force Model. Uniqlo is a Japanese company which engages in designing casual wear clothes, manufacturing clothes and retailing clothes. Uniqlo in Hong Kong has established a profitable business constantly recording extremely high sales on a per store basis. Uniqlo offers fashionable and high quality clothing at reasonable prices, and was seized as an opportunity to establish a brand position domestically and internationally.
1. Existing Rivalry
1.1 Number of direct competitors:
Gap, Bossini, Zara, Giordano, and H&M are the direct competitors of Uniqlo. As the numbers of direct competitors are higher; the existing rivalry of Uniqlo is strong.
1.2 Market Structure
Uniqlo’s market structure is monopolistic competition. There are large numbers of competitors of Uniqlo in the market such as Gap, Bossini, Giordano, Zara and H&M, etc. They sell similar products. And each of them sets prices of similar products at comparable levels.
There are many famous international retailing, manufacturing and clothing companies like Uniqlo are running their business in Hong Kong. All are trying to manufacture high quality products to compete to attract customers. Because of this Uniqlo have large number of competitors in the market, thus, the rivalry is keen.
From the above three points, we can know that Uniqo’s existing rivalry is keen.
2. New Entrants
2.1 Technological barriers
Uniqlo‘s competitors such as Gap, H&M and Zara are using online shopping method to sell its products. But Uniqlo Hong Kong does not have an online shopping method; it will be hard for it to compete. It will lose some of its customers who purchase online. It will decrease Uniqlo’s sales. This is a disadvantage for Uniqlo.
Uniqlo is the only company in Hong Kong which is selling Heattech; Heattech is a unique highly functional line of innerwear that offers amazing comfort combining the merits of heat-retention and anti-perspiration functions.
It is also selling new type of jackets down ultra-light, which are very light in weight. And Uniqlo is selling them at very reasonable price. No other companies in Hong Kong selling these types of jackets.
Uniqlo is also selling +J collection, the +J collection, a cooperative venture with renowned designer by Ms. Jill Sander, has been enthusiastically embraced by consumers in Hong Kong. These collections are only in Uniqlo.
Uniqlo can gain advantage from these special products to compete with its competitors. There is a disadvantage although it has its special products it cannot prevent new entrants as other companies are also selling similar products.
2.2 Government barriers
In Hong Kong, trade secrets and undisclosed commercial information such as formulas, methods, technologies, designs, product specifications, business plans and client lists that have commercial value are protected by common law of confidence. This can help companies like Uniqlo to keep their business secrets safe.
Also, companies can register their product designs. Registered design owners have the right to prevent others from manufacturing, importing, using, selling or hiring the design product. This is an advantage to Uniqlo, as its designs will be kept confidential and there will not be any imitating of product designs.
2.3 Financial barriers
Uniqlo Hong Kong is a 100% wholly subsidiary of Fast Retailing, Japan. Fast Retailing established a SPA (Specialty store retailer of Private label Apparel) manufacturer/retailer business model that enable them to control Uniqlo’s all stages of the supply process from product design to the procurement of materials, quality control, inventory adjustments and end sales. Fast Retailing provides financial support to Uniqlo.
2.4 Exit barriers
Many international companies like Uniqlo have maintained a...
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