Uniqlo assignment

Uniqlo Assignment

Team A1

Al-Youzbaki, Amal Mohammad Ali Salah - r0727550

Dementyev, David Timotey - r0819340

Hossain, Ayesha Afsara - r0818501

Mortier, Hanne - r0844459

Pyne, Evan - r0779930

Rabten, Sonam - r0827728

1. What are Uniqlo’s competitive advantages today?

    An article was posted in 2007, where the presider of the company, John Hamada, mentioned specifically that Uniqlo’s competitive advantage up till that date even, was their supply chain management developed by Nobuo Domae, the company’s CIO (Hyde, 2007). Uniqlo’s supply chain direction remained the same over the years, to only produce as much as they will sell, to ensure minimal waste is procured. This business strategy is now being carried out globally by Uniqlo, in a manner that is relevant to the times- a new era of digitalization and supply chain transformation, where now they have calculated a competitive advantage over other clothing brands. Before Uniqlo transformed their supply chain management through digitization, it had taken around 6 to 12 months to decide on the materials, designs, manufacturing the products and retailing them, however, the time it took had already made it impossible for the company’s supplies to meet the demands of their customers. This resulted in a huge loss of sales and increased their inventory waste. Afterwards, when they took a more innovative approach through their Radio Frequency Identifier Tags on all the products, they were able to make accurate sales forecasting in all their storefronts and cash in more sales. This integration on all their operational processes, by making use of technological advancements, allowed them to garner pertinent information to produce items that fully meet all their customer’s needs and wants (Satoshi, 2017).

    Part of Uniqlo’s brand that attracts such a huge audience is because they offer high-quality products at lower prices. They are able to do so by cutting costs through economies of scale, such as maintaining good customer-supplier relations, negotiating prices, buying in bulk to receive discounts, and producing a limited number of items that enhances their appeal to consumers. Uniqlo also established an SPA (Specialty store retailer of Private label Apparel) which enables them to control all aspects of their operations process and therefore cut costs in an efficient manner. Their establishment of an online platform with their app StyleHint helps them to enter the ecommerce space and target a much larger audience, and with their emphasis on Innovation such as ‘Heattech’, it grants them a huge competitive edge over brands like Zara or H&M. By setting themselves apart from the basic strategies used in fast fashion industries, Uniqlo is able to become a hybrid of both a tech and clothing company, tapping into unchecked gaps in the competitive market and profiting off their low-cost innovative strategies.

2. Do you think the group (Fast Retailing Co) is really engaged in Corporate responsibility?  Back up your answer by using Carroll’s pyramid of corporate social responsibility.

    Fast Retailing Co has a high Corporate Social Responsibility (CSR) profile, claiming to care about their employees, with a code of conduct (CoC) and CSR reports that give the impression of transparency, as well as a thorough selection of suppliers, limitations on the hours allowed for overtime work, and a commitment to freedom of association whilst closely monitoring working conditions (Fast Retailing, 2020). However, we believe that the group is not engaged in corporate responsibility, due to its motives of making high profits. SACOM’s report in 2015 brought to light the labor rights violations done by Uniqlo regarding their code of conduct. It was found that employees working in the factories owned by two of Uniqlo’s major suppliers, Dongguan Luen Thai Garment Co. Ltd and Pacific Textiles Ltd, were working under conditions deemed to be inhumane – ones that did not reflect Uniqlo’s code of conduct (WaronWant Organization, 2013). Employees were being remarkably overworked, with a monthly average of 112 to 134 overtime hours and a pay below minimum wage. Moreover, they were not equipped with protective gear though working conditions were dangerous, and factories lacked good ventilation systems.

    Additionally, employees were working in high temperatures whilst forced to remain constantly standing and with a high air density of cotton fiber, which could lead to long-term health-issues. According to Carroll’s pyramid of corporate social responsibility (CSR), given a choice, economic needs will always be prioritized over legal, ethical and philanthropic responsibility. Fast Retailing is being profitable, due to the fact that it is a global company with the lead brand Uniqlo generating high annual sales with many branches all over the world.  It has been found that Uniqlo makes two weekly visits to factories to make sure and control the quality of the work being produced. The group puts forth high-quality clothing at reasonable prices and aims to create a supply chain using advanced technology to form uniform connections between partner factories and warehouses, which corresponds to both economic and legal responsibility. Through this, it aims to decrease its business’ environmental impact by creating a humane manufacturing environment as well as establishing exceptionally responsible social procurement.

    Yet based on the report, a commitment to make weekly visits to ensure a dedicated following of Uniqlo’s code of conduct and guidelines to ethical working in the factories has not been made. The lack of respect for freedom of association and a tough and stringent management in factories eliminated the employees’ platform, whereby they were not able to voice out their opinions and put forth ideas. Thus, Fast Retailing Co has not reached the ethical and philanthropic responsibility levels in Carroll’s pyramid of CSR, as the statements made in the report go against the group’s code of conduct. As a response, Fast Retailing Co has acknowledged the problems and aims to improve them (Fast Retailing, 2015). The group has since published a report in 2017 claiming to have urged strict action on issues in the suppliers’ factories pointed out in SACOM’s 2015 report. It has instructed its partner suppliers to increase holidays and days-off for employees, review working conditions and environment in terms of temperature and ventilation, requiring employees to have access to protective gear and equipment (Fast Retailing, 2017). Ultimately, had SACOM not made a report on the violations being made in the aforementioned factories, we believe that Fast Retailing would have not monitored the factories and warehouses as it should have. The group has to be ethically and socially responsible by further monitoring if the code of conduct is being followed by all suppliers as well as monitoring quality of the work, not just to withhold its reputation in the global market, but to further reflect what its unique organization represents and stands for. Hence, Fast Retailing Co is required to find a balance between being socially and ethically responsible as well as a profitable organization.  

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