
Retail Chain Store, dedicated to
“continuously developing products of
exceptional quality, in order to create
clothing with new and unique value and
to satisfy customers worldwide.”




Originally division of
Fast Retailing Co., Ltd.
November 1, 2005 it
was restructured into a
separate wholly
owned subsidiary.
Headquartered in
Tokyo, Japan.
Now leading clothing
retail chain in Japan.
Uniqlo CEO, Tadashi Yanai
Name derived from
“unique clothing.”
 Most innovative
clothing, HEATTECH.
 Prize themselves on
mass-production
and manufacturing
of basic garments.

Research & Development: continuous research
in latest trends and fashion all over the world to
keep up with lifestyle changes.
 Manufacturing: ensure high-volume supply of
top-quality materials.
 R&D and Merchandise meet to collaborate on
products plans, materials, and seasonal trends.
 Inventory Control: end of season take over of
merchandise to coordinate with marketing to
markdown and sell remaining clothing.

• Flagship store opened in
SoHo, New York is an
example of companies
success.
• Stores located in primary
and prominent locations that
sell high volumes of
merchandise.
Stores set up in highly populated, urban areas,
offer only staple garments.
Uniqlo does not have
foothold in high
fashion like H&M and
Zara.
 Shift to focus on the
high quality of their
basic garments to fit
the high volume
demand.

Surge in the yen is a perfect opportunity for
Uniqlo to expand globally.
 Looking to transfer part of the 85% of
manufacturing in China to other Asian
countries.
 Expansion into other countries will help lower
cost of mass production.


Economic Imperative:
› Uses middle managers
› Creates value for the
products
› Good for companies that
produce homogenous
products

Environmental Scanning

Strategic implementation
› Deciding where to locate
operations

No restrictions on foreign
direct investment
10%
Leadership/Interpersonal
Skill
30%
15%
Functional (marketing,
manufacturing, service,
etc.)
Political
Economic
20%
Diversity of Local and
Japanese Workforce
25%
http://www.youtube.com/watch
?v=rcWUp6m8jLQ
President of Latin
America Division
Co-President of
Brazil Operations
(Japanese
Manager)
Organizational
Description for
Brazilian
Operations
Co-President of
Brazil Operations
(Local Manager)
Vice President of
Brazil Operations
Manager: Head
of Marketing
Division
Manager: Head
of E-Commerce
Manager: Head
of Finance
Division
Manager: Head
of Supply Chain
Manager: Head
of Inventory
Management
Manager: Head
of Human
Resources
Manager: Head
of Legal Issues

Labor Laws
› “2.1m Brazilians opened cases against their
employers in the labour courts. These courts
rarely side with employers. The annual cost of
running this branch of the judiciary is over 10
billion reais ($6 billion).”
›

"Brazil's Labour Laws: Employer, Beware | The Economist.“
Financial and Regulation
› Fiscal Responsibility Law (Corrupt Government
Spending)

Political Law
› German/Roman civil law
› Federal Constitution is the rule

Geographic & Environmental
› Rainy Season
› Retail is focused on urban areas

Economic
› BRIC country
› Top 10 economies in the world
› High growth rate

Financial
› Real (currency) has risen 35% since 2005
› Inflation is increasing  combat w/ increase in
interest rates  upward pressure on the Real

Workforce
› Uneducated, need training
› Women are a large part

Labor Market
› High job turnover rate (labor laws)
› Labor Market Bubble (IMF warns)
 Continued increase in hiring w/ economic
downturn

Industries & Business/Competition
› One of the fastest growing markets
› “Brazil's high spending on apparel items and
strong clothing imports — along with its
consumers' preference for the latest fashions
— make the country the most attractive
emerging market destination for apparel
retailers.”
›
A.T. Kearney Global Management Consultants. 2 June 2008.
 Ranked higher than India and China
Local production offices are the links between
their business and the manufacturing facilities
operated by their production partners in each
region.
 They check regularly to make sure products
are manufactured under appropriate working
conditions in factories that don’t employ
children or engage in forced labor,
 constantly strive to improve working conditions
and disclose information in a transparent
manner.
 “Takumi”

FRMIC trains business managers and
encourages corporate innovation.
 A crucial issue is cultivating people who
will be competent on the global stage.
 They realize that to develop and grow
highly profitable businesses throughout
the world it is particularly vital to train
personnel capable of managing
companies, such as Uniqlo.


Creating ideal personnel for stores and
headquarters, they systematically support the
career progression of employees through
training courses for new store managers,
improving services and career development.
permits employees to set up an independent
company and operate a Uniqlo store as a
franchise
 The “superstar” store manager designation is
reserved for individuals who have greater
authority than ordinary store managers
 Managers are expected to quickly identify
problems and issues that concern the entire
Uniqlo organization, and then play a part in
finding solutions
 The goal is to select people with the skills to set
standards for all their stores and to have a
positive impact on the entire company.

Partnered with their careful monitoring of
their partnerships, they have developed
a system to efficiently manage their
multinational brand.
 Implemented more stringent initiatives
such as introducing new evaluation
criteria established in 2008 in order to
monitor working conditions.
 Uniqlo controls quality and safety right
up to delivery to the customer.

Data that is being
analyzed
Current Numbers Forecasted numbers
(As of 10-12-2011)
2012
(Company Plan)
Total Assets
533
575
Total Liabilities
213
250
Total Stockholders
Equity
319
325
Net Sales
820
870
Operating Profits
116
145
Net Income
54
65
Cash Flow from
Operating Activity
57
70
Cash Flow from
Investing Activity
26
30
Cash Flow from
Financing Activity
26
28
› Assets:
 When moving into a new market, we will
acquire more assets in order to meet the
potential demand
› Liabilities:
 Increasing, as we take on more debt to
finance our expansions
› Net Sales
 When emerging into a new market, we expect
a huge spike in net sales
› Profitability
 Will rise simultaneously with Net Sales
› Net Income
 Due to our recent expansion, we project out
net income to keep growing at a constant
rate

Brazil’s GDP (as of 2011) – 2.194 trillion
› Worlds 8th largest economy

Per Capita GDP – $10,900 (real)
› This has Risen 40% over the last 8 years

Rio de Janeiro – Economically active
population of 7.6 million people
› 47.5% of Rio’s GDP is made up of services

50% of all citizens living in Rio are less
than 20 years old
1
Group 1
U
N
I
Q
L
O
Erica Insel, Bridget Kelley,
Billy Kozain, Danielle Rellas,
Michelle Thornhill
2
Group 1
1. COMPANY OVERVIEW:
Company Description:
Uniqlo is a Japanese retail chain store dedicated to “continuously developing products of
exceptional quality, in order to create clothing with new and unique value and to satisfy
customers worldwide.” The company was originally a division of Fast Retailing Co., Ltd. but on
November 1, 2005 the company was restructured as a separately wholly owned subsidiary and
was named Uniqlo Co., Ltd. In terms of sales and profits, Uniqlo is Japan’s leading clothing
retail chain and has operations in China, France, Hong Kong, Malaysia, Russia, Singapore, South
Korea, Taiwan, Thailand, the United Kingdom, and now the United States.
This is a unique retail company, its name deriving from “unique clothing,” and has
developed certain teams to meet certain responsibilities. Research and Development centers for
Uniqlo are continuously researching all of the latest fashions and materials all over the world to
keep up with the different customer lifestyles. Uniqlo also has to ensure a high-volume supply
of the top-quality materials to make sure that all of its clothing, such as HEATTECH, can be
manufactured. The way they do this is by directly negotiating with the material manufacturers.
Product planning is a vital part in the process for manufacturing and production. The
Merchandise team meets with R&D designers to determine the product plans, materials, and
designs for the up and coming seasons. After they set up the line-up for products and the volume
for each season; the hardest part of their job is to decide when to increase or reduce productions
throughout the season. Finally, inventory control takes over and at the end of the season it works
with the merchandisers and marketing to coordinate the timing of markdowns to ensure that
everything is sold.
Many of the stores located throughout Japan and highly populated urban areas are set up
as roadside stores with a sales floor of 500 square meters. The stores that have been upgrading
now offer 800 square meters to offer a richer array of products. Recently, Uniqlo stores are
opening on an even larger scale, close to 1,600 square meters, and are focusing on more urban
areas. The shift from smaller to bigger stores in urban areas will allow for more customers to
purchase a wider variety of clothing. As of the end of the fiscal year in 2010, Uniqlo
International had 136 stores overseas. There was an increase in stores in Asia as well as an
increase in profitability. The company has also begun to open more flagship stores around the
world. Flagship stores are stores in a prominent and primary location which sell high volumes of
merchandise. The flagship store that was opened in SoHo, New York has proven to be very
successful.
Company Highlights:
Name: Uniqlo Co., Ltd.
Location (Headquarters): Tokyo, Japan
Company Annual Revenue: 54 billion Yen
Number of Employees: 30,000
Type of business: Retail Chain Operation
Purpose: Continuously developing products of exceptional quality, in order to create clothing
with new and unique value and to satisfy customers worldwide.
3
Group 1
Company Strategic Plan and Goals:
Uniqlo is expecting to see an increase in Net Income within the upcoming 12 months
based on their forecasted financial statements. Competition from other domestic companies is
going to be a challenge, but Uniqlo is looking to expand globally to utilize the surge of the yen.
Currently 85% of all manufacturing for the company is located in China. Not only has Uniqlo
expanded its global sales but it is looking to expand production into other Asian countries in the
future. Those countries they are looking to include are Vietnam, Cambodia, Thailand, and
Bangladesh. The reason behind this is to lower the costs and reduce their risks of dependence on
China. In the future, Uniqlo hopes to expand one-third of production outside of China.
Expansion into other country will help lower the cost of their mass-production which will help
them compete in the long run.
Another aspect of the company that Uniqlo is forced to confront is the excessive
competition involving top competitors such as H&M and Zara. These companies are well
established in the fashion world, providing fashionable and affordable clothing. Uniqlo does not
have a foothold in key fashion forward pieces and therefore are falling behind their competition.
What Uniqlo proposes to do is focus on the basic garments and continue to focus on masspurchasing to ensure large quantities of functional clothing. Also, it should continue its
expansion into the international market because the market of Japan is becoming too saturated
for the stores.
The bottom line that Uniqlo is faced with when looking to the future is how well will
they adapt in comparison to other supply retailers similar to themselves. They need to acclimate
to the new markets they are penetrating and familiarize the stores to the areas they are entering.
If they continue to produce quality clothing by mass-production they will have a unique hold in
the industry. By utilizing their strengths they can keep their prices lower than the competition
like H&M and Zara while still maintaining desirable clothing. What Uniqlo must do now is
realize that they are no longer dealing with a domestic market; the world is globalizing and that
is what the company needs to do. Within the next two years Uniqlo will need to focus on
international markets and utilizing the low cost of production in order to keep up with the trends.
4
Group 1
Structure of Company Operations:
Tadashi Yanai
(President/CEO)
Tokyo, Japan and
Asia Division
(Headquarters)
Marketing:
Conducts
promotional
campaigns, focusing
on unique qualities
and features,offer
limited pricing.
Finance: Because
the yen is worth
more now it will be
in the companies
interest to buy
rather than sell,
enabling them to
expand.
Expansion in South
America: Utilizing the
lower prices to fit the
target market of youth
wich make up a large
majority of the
population.
North American
Division
European
Division
Customer Center:
Reaching out to
customers for advice
via phone, e-mail,
post and then
forwarded to the
appropriate
department.
International
Expansion:
Expaniding into South
America to target the
surges in the youth
with a flagship store
in Rio de Janeiro.
3. INTERNATIONAL MANAGEMENT STRATEGY:
I. Theory Foundation
International strategic management is an integral aspect of managing a global company.
In order for us to extend our business to a new region overseas, we need to develop a new
strategy to determine our mission and objectives to be able to implement a plan. This expansion
will open up many opportunities for a larger market share and is a critical phase for growing our
company. To be successful throughout our international growth process, management must
carefully consider plans for strategic management and strategic implementation. A detailed and
well researched strategy will allow us to thrive in the Latin American market and expand at a
much faster rate than we can do without a plan.
5
Group 1
Without strategic management, it would be impossible for us to succeed in foreign
markets. Planning and researching opportunities for global expansion is the only approach for us
to grow. There are many obstacles that can obstruct global outreach including differences in
culture, politics, and economic conditions. The first step to work towards expanding is to
formulate and implement a strategy. The four most common strategies to expanding to a new
overseas market are: focusing on the economic imperative, addressing the political imperative,
emphasizing the quality imperative, and implementing an administrative coordination strategy.
1
The economic imperative is used by companies to base their strategy on cost leadership,
differentiation, and segmentation. The economic imperative strategy uses middle managers as an
essential aspect of creating profit growth in company locations overseas. It also creates value for
the products through research and development, manufacturing, and distribution. This strategy is
typically used by companies that produce homogeneous products that can be the same from
country to country. Companies using the political imperative “utilize strategies that are countryresponsive and designed to protect local market niches.”2 The political imperative strategies are
important when the citizens of a country have particular preferences, usually based on cultural
norms. Since Uniqlo uses the same products globally through our fast fashion strategy, we will
not have to take this route to differentiate our products. The Brazilian market is likely to
embrace our products just as likely as any other market. The quality imperative is the third
strategy for globalizing a company and uses quality management to meet or exceed customers’
expectations. Quality management is a very complex and specific quality strategies often vary
from company to company but always focus on product quality and customer satisfaction.
Administrative coordination is another strategy that can be executed and includes making
decisions based on the specific situation instead of using typical strategies based on a country’s
economic and political systems. By implementing the economic imperative strategy, we should
be able to best reach the Brazilian market to establish ourselves with the help of many local
managers.
Strategic management also includes environmental scanning to supply management with
“forecasts of trends related to external changes in geographic areas where the firm currently is
doing business or is considering setting up operations.”3 This is extremely important for us to
obtain market share quickly before other firms start to settle in. Included in environmental
scanning is having awareness of demographic shifts and of the regulatory environment, including
governmental regulations and laws. Many developing countries and emerging markets have
many restrictions on foreign trade as well as strict regulations on new products and services due
to stringent government control. We must understand the restrictions of the Brazilian market and
alter our strategy based on what is possible for this opportunity. Once we fully understand the
political implications of this market, we can begin developing a strategy by understanding the
demographics of Brazil, especially Rio de Janeiro. Since we have determined that 50% of
citizens living in Rio de Janeiro are less than 20 years old, we see this as a perfect opportunity to
step in with our stores. Although we do have customers that are older than 20, this young market
will likely draw in other ages via word of mouth. Without predicting and understanding the
trends of a country, a company may lose the opportunity for a large share of the market.
1
Luthans, F., & Doh, J. (2012). International strategic management. In International Management: Culture,
Strategy, and Behavior. 274. New York: McGraw-Hill Irwin.
2
Luthans, F., & Doh, J. (2012). 273.
3
Luthans, F., & Doh, J. (2012). 281.
6
Group 1
Strategy implementation is just as important as strategic management and involves
implementing the plan into action. One of the first areas to consider in strategy implementation
is to decide where to locate operations. Choosing a country to set up business can depend on
several conditions. Since Brazil is a highly growing market, we think this is a great time to open
up our business to the country. Additionally, governmental control and restrictions on foreign
investment must be considered since they may limit the potential of the original plans set by a
management team. The type of country also heavily indicates which types of strategies should
be implemented. For example, BRIC countries (Brazil, Russia, India, and China) were
previously overlooked by many global companies but are now huge market opportunities due to
their growing economies and each need a different set of strategies to accommodate their unique
positions. But now that we already have a presence in China and Russia, it is time for us to
expand to Brazil to take advantage of the hugely growing market. In order to implement any
strategy in a foreign country, a company must understand the operations of that country.
II. Key International Management Statements
The most important aspects of our strategy to expand into Brazil are the economic
imperative, environmental scanning, and strategy implementation.
1. Economic Imperative:
a. Based on:
i. Cost leadership
ii. Differentiation
iii. Segmentation
b. Uses middle managers
c. Creates value for the products:
i. Research and development
ii. Manufacturing
iii. Distribution
d. Good for companies that produce homogenous products
2. Environmental Scanning:
a. Forecasts trends
i. External changes in potential markets
ii. External changes in current markets
b. Important to obtain market share quickly
c. Awareness of demographic shifts and regulatory environment
i. Governmental regulations
ii. Laws
iii. Restrictions on foreign trade
iv. Restrictions on new products and services
3. Strategic implementation:
a. Deciding where to locate operations
i. Growing market
ii. Demographics relate to target market
iii. No political or economic unrest
iv. No restrictions on foreign direct investment
7
Group 1
III. Key Considerations Affecting Key Statements
1. Economic Imperative: We must understand how we are going to use middle managers
to create more value in our products through proper R&D, manufacturing, and
distribution from the key warehouse in Brazil. Additionally, it is important that we
establish ourselves in this new market full force to completely reach all areas of the
market. This strategy would be best for Uniqlo since our products do not differ from
country to country and we produce the same products here that we do in Japan, which
cuts down the time it would take to create different products.
2. Environmental Scanning: This is important to consider because we would not have
come up with the solution to expand into Brazil without recognizing the different aspects
of environmental scanning. Since we target our products toward young markets, it is
important to pick regions that have a lot of young potential consumers that will follow
Uniqlo. Additionally, Brazil is moving towards an open market and has been welcoming
opportunities to grow their economy through international expansion. Since Brazil has
fairly high tariffs on apparel, in our case, it is best for us to establish a manufacturing
plant in the region to reduce costs it would take to ship our products from China.
3. Strategic implementation: In order to expand into Brazil, we must implement the
strategy in order for everything to work out. If we do not put our strategy into effect,
there is no purpose of making a plan in the first place which is why we must ensure our
strategy is implemented. We will use the knowledge and experience that our Japanese
managers have to make sure our Brazil stores become successful.
IV. Key Goals of Strategy
The key goals of this strategy include scanning all aspects, economic and political, to
ensure the best entry strategy into the Brazilian market; ensure managers oversee the operations
and development of the market, make an efficient plan that will utilize our objectives in the
timeliest manner, and establish a clear representation of the Uniqlo brand.
V. Strategic Areas that Need to be Addressed
8
Group 1
Strategic Areas That Need to be Addressed
Leadership/Interpersonal Skill
10%
15%
Functional (marketing,
manufacturing, service, etc.)
30%
Political
Economic
20%
25%
Diversity of Local and Japanese
Workforce
International Management Department Plan:
I. Organizational Description
President of Latin
America Division
Co-President of
Brazil Operations
(Japanese Manager)
Co-President of
Brazil Operations
(Local Manager)
Vice President of
Brazil Operations
Manager: Head of
Marketing Division
Manager: Head of
E-Commerce
Manager: Head of
Finance Division
Manager: Head of
Supply Chain
Manager: Head of
Inventory
Management
Manager: Head of
Human Resources
Manager: Head of
Legal Issues
9
Group 1
II. International Management Manager Descriptions:
1. President of Latin America Division: This position will be held by an experienced
Japanese Uniqlo manager who is ready and willing to be relocated to this position in Rio
de Janeiro, Brazil. Duties will include relaying information from corporate offices in
Tokyo and ensuring the Latin American division, particularly our presence in Brazil, is
presented in the correct manner and that employees are held to the same standards as in
the home offices.
2. Co-Presidents of Brazil Operations: There will be two people holding the position of
Co-President. One will be an experienced Japanese Uniqlo manager who has been with
the company for over seven years, and the other will be a Brazilian manager who has had
extensive experience in the operational aspects of the retailing industry. These copresidents will work side by side to ensure a smooth transition into the Brazilian market
and to have both perspectives put together.
3. Vice President of Brazil Operations: One person will hold this position and key duties
will include overseeing the rest of the management team in Brazil and reporting to CoPresidents on problems and successes within the system.
4. Manager of Marketing Division: One person will hold this position and will be in
charge of the overall marketing operations including overseeing advertising, market
research, and e-commerce. It would benefit the company most to have a Brazilian citizen
in this position to maximize our outreach to the local consumers. In our initial stages into
the Brazilian market, advertising and promotions will be the most important method of
building brand awareness and customer loyalty.
5. Manager of Finance Division: One person will hold this position and will oversee all
accounting and financial management practices. They will ensure the company’s
Brazilian operations are in good standing and are profitable and will report to the vice
president if any financial issues arise.
6. Manager of Supply Chain: One person will hold this position and will oversee all
aspects of the supply chain from the manufacturing plant to the distribution and delivery
of products to stores.
7. Manager of Human Resources: One person will hold this position and will be in charge
of recruiting and hiring, payroll, and employee satisfaction. A Brazilian manager may be
more understanding of Brazilian employees needs on the job because they are more
relatable.
8. Legal Expert: The legal expert will be a lawyer who fully understands international
trade, with a specialty in Brazilian law. This person will lead a very small team that will
ensure the defense of our company under any scrutiny or lawsuits.
9. Manager of E-Commerce: The manager of e-commerce will work under the marketing
division and will manage all online aspects of the company. Although the Japanese
headquarters will be in charge of maintaining the website for sales, the e-commerce
manager will ensure that the Portuguese language on the website is accurate as well as
maintain tracking information of online orders and marketing the company through the
Uniqlo website as well as through other technological means.
10. Manager of Inventory: The manager of inventory will work under the supply chain
manager and will specifically manage the inventory in each distribution center and store
to ensure we meet the needs for demand.
10
Group 1
III. Implementing the Plan
Alongside the corporate managers, the President of the Latin America division will be
responsible for finding the best possible candidates for the aforementioned positions.
5. COMPANY INTERNATIONAL MANAGEMENT & ISSUES:
I. Key Laws
1. Labor Laws
a. The labor laws are originally derived from the corporatist’s labor code of
Mussolini. An article written in the economist gives the best summary of the
difficulties with Brazil’s labor laws. “2.1m Brazilians opened cases against their
employers in the labor courts. These courts rarely side with employers. The
annual cost of running this branch of the judiciary is over 10 billion reais ($6
billion).”4 It is known in Brazil by employers and employees that labor laws need
reform, and with Brazil’s high growth this will most likely come about, but until
then prospective business entering the market need to be aware that they will
struggle in this sector.
2. Financial and Regulation Laws
a. The mentality of the Brazilian government used to have few boundaries on
expenditure (mostly personal). In order to combat this corrupt mentality the Fiscal
Responsibility Law was passed. It provided more regulation and delegated certain
responsibilities in order to keep government spending in check. This law is still
heavily debated within Brazil, but it is a move in the right direction. The bottom
line is that financial and regulation efforts are better than they have ever been.
3. Political Laws/Common Law
a. The Brazilian legal system is based on civil law, and the federal constitution is the
rule of the country.5 It is based off of the German-Roman form of law. This form
is quite rigid, but leaves little room for surprises. The law is available for all the
read, and if business do their homework they should know what they are getting
into. If it’s written down and you break the rules, then you will receive a form of
punishment pure and simple.
II. Other key considerations
1. Geographic and Environmental conditions
a. Regardless of the different geographic and environmental conditions in Brazil it
will not affect the industry. There is a rainy season, but it does not experience
annual tropical storms, or tornadoes or other natural disasters. There may
sometimes be flooding in rural areas where there has been intense deforestation,
but it will not be near any of the store locations. The stores will also be located in
4
"Brazil's Labour Laws: Employer, Beware | The Economist." The Economist - World News, Politics, Economics,
Business & Finance. 10 Mar. 2011. Web. 23 Nov. 2011. <http://www.economist.com/node/18332906>.
5
"The Brazilian Legal System Is Based on the Roman-Germanic Tradition." Information Exchange Network for
Mutual Assistance in Criminal Matters and Extradition. OAS - Organization of American States:
Democracy for Peace, Security, and Development. Web. 23 Nov. 2011.
<http://oas.org/juridico/MLA/en/bra/en_bra-int-des-ordrjur.html>.
11
Group 1
urban areas where there weather is much more manageable from a business
standpoint. The retail industry is not contingent upon weather as much as it is
infrastructure.
2. Economic
a. Brazil’s economy has been seeing very high growth, but like much of the world
right now is seeing that growth slow. “The economy has slowed from over 7%
growth last year to 5.1% growth for the 12 months ending in the first quarter and
is expected to top out at 4% this year.”6 It will bounce back with the rest of the
global economy, and when the world cup comes around, which is being hosted in
Brazil, the country will be on the global stage.
3. Financial
a. The Real is the Brazilian currency, and it has seen a dramatic rise in value of 35%
since 2005. On the other hand inflation is rising, which is not at 6.5% and is
expected to increase. “Ironically, the government’s principal means of combating
inflation… to raise interest rates, which further increases the flow of investment
money into Brazil, putting upward pressure on the Real.” 7 This is prompting
Brazilian citizens to actually buy dollars as a safe guard because of the
uncertainty surrounding the Brazilian Real.
4. Workforce
a. Much of Brazil’s workforce is uneducated therefore companies have taken the
initiative. They are offering more technical training programs and schools for the
workers. There needs to be an investment made in Brazil’s future labor force if
companies wish to have success in the long-run. Therefore it is in their best
interest to help train the workforce, no matter if the labor laws may be a deterrent.
Women are a large part of the workforce as well giving access to a larger
workforce, but most are still not found in the higher paying jobs.
5. Labor Market
a. Low productivity growth and high job turnover. This is directly a result of the
labor laws. Poorly laid out severance packages cause workers to move a lot,
which creates a vicious cycle. Employers are not willing to invest much in their
employees if they are likely to leave.
b. There is also a Labor Market bubble. The IMF (international monetary fund) gave
the warning to the Brazil finance minister a few months ago. Brazil businesses
may be greatly overestimating demand locally and internationally causing them to
hire more workers even though the economy is slowing down. 8
6. Industry and Business/Competition
a. Brazil is one of the fastest growing markets in the world right now, so there will
be lots of competition. A study conducted in 2008 by A.T. Kearney a Global
6
"In Brazil, a Labor Market Bubble? - Forbes." Information for the World's Business Leaders - Forbes.com. Forbes,
15 July 2011. Web. 24 Nov. 2011. <http://www.forbes.com/sites/kenrapoza/2011/07/15/in-brazil-a-labormarket-bubble/>.
7
"Brazil’s Financial Position as U.S. Edges toward Default | Observing Brazil." Observing Brazil | A Blog about
Brazil, Its Politics and Political Culture. Web. 24 Nov. 2011.
<http://observingbrazil.com/2011/07/27/brazils-financial-position-as-u-s-edges-toward-default/>.
8
"In Brazil, a Labor Market Bubble? - Forbes.
12
Group 1
management consulting firm concluded that, “Brazil's high spending on apparel
items and strong clothing imports — along with its consumers' preference for the
latest fashions — make the country the most attractive emerging market
destination for apparel retailers.”9 It ranked even higher than China and India the
two BRIC countries with the highest growth. This is great news for clothing
retails, but there will be heavy competition. Since the release of this study in 2008
it can be expected that competition has increased with Brazils continued growth.
6/7. INTERNATIONAL MANAGEMENT POLICIES AND THEIR IMPACT
Uniqlo manages all of the production and distribution of their clothing through
partnerships in various countries. They make their products in manufacturing facilities that are
owned by their partners in Asian countries such as China and Bangladesh. Local production
offices are the links between their business and the manufacturing facilities operated by their
production partners in each region. Throughout the world, these offices are constantly seeking
ways to harness the expertise needed to expand and improve their business. Uniqlo’s parent
company, Fast Retailing is committed to the “correctness” of all its corporate activities. Working
together with about 70 production partners they check regularly to make sure products are
manufactured under appropriate working conditions in factories that don not employ children or
engage in forced labor, and constantly strive to improve working conditions and disclose
information in a transparent manner. They provide technical guidance with these partner
facilities with textile experts known as “takumi” who provide on-site technical guidance and
assist with process management and human-resource development.
Fast Retailing uses external auditors to conduct on-site monitoring of working conditions
at factories operated by its partners. The auditors usually begin with an opening meeting, which
is followed by interviews with the factory workers, document checking and inspections of the
factories as well as cafeterias and dormitories. Monitoring concludes with a closing meeting
during which the auditors go over their findings with factory representatives for confirmation. In
this way, Fast Retailing examines monitoring results and clarifies what the factory has achieved
and what requires further attention, fueling an ongoing cycle of constant improvement.
In 2009 Fast Retailing launched the FR Management and Innovation Center (FRMIC)
which trains business managers and encourages corporate innovation. It was tasked with the
mission of training 200 business managers within a five-year period. A crucial issue is
cultivating people who will be competent on the global stage. They realize that to develop and
grow highly profitable businesses throughout the world it is particularly vital to train personnel
capable of managing Fast Retailing companies, such as Uniqlo. The Chairman, President and
CEO Tadashi Yanai serves as the president of FRMIC. The most important issue in global
9
"Brazil Is Most Attractive Emerging Market for Apparel Retailers Looking to Invest Abroad | News &
Media." A.T. Kearney Global Management Consultants. 2 June 2008. Web. 23 Nov. 2011.
<http://www.atkearney.com/index.php/News-media/brazil-is-most-attractive-emerging-market-for-apparelretailers-looking-to-invest-abroad.html>.
13
Group 1
recruitment is that the hires clearly understand the Uniqlo philosophy and what it aims to
achieve.
Uniqlo also established its Uniqlo University in 2000 for the training and development of
store staff. With the objective of creating ideal personnel for stores and headquarters, they
systematically support the career progression of employees through training courses for new
store managers, improving services and career development. They also have systems to meet
individual career goals, such as the Employee Franchise Scheme for employees starting their
own business as a Uniqlo franchise store owner and the Superstar Manager Program for
distinguished store managers working toward having more authority and greater responsibilities.
The employee franchise program permits employees to set up an independent company
and operate a Uniqlo store as a franchise. Thus far, 8 Uniqlo store managers have used this
system to become franchise owners. The “superstar” store manager designation is reserved for
individuals who have greater authority than ordinary store managers. Through the operations of
their stores, these managers are expected to quickly identify problems and issues that concern the
entire Uniqlo organization, and then play a part in finding solutions. The goal is to select people
with the skills to set standards for all their stores and to have a positive impact on the entire
company.
Uniqlo’s basic principle is to create comfortable workplaces and continuously enhance
employee satisfaction. They foster corporate and personal growth by establishing environments
that cultivate personnel into becoming capable of performing innovative work from a global
perspective. They remain aware of issues facing the international community and the global
environment. They seek to grow and develop in unity with the community through unique
corporate activities. The Uniqlo brand is expanding internationally and continues to improve
with the growth of their store network which has given the brand presence in the United States,
the United Kingdom, France, Russia, China, South Korea, Hong Kong, Singapore, Taiwan and
Malaysia.
Fast Retailing and Uniqlo have managed their international corporation through close
monitoring and partnerships with their various manufacturers. Through their strict code of
conduct for production partners that was established in 2004, Uniqlo has used external
organizations to monitor working conditions, primarily at major sewing factories, which have
signed a pledge. They have also implemented more stringent initiatives such as introducing new
evaluation criteria established in 2008 in order to monitor working conditions. Through their
system of product and safety control Uniqlo thoroughly controls quality and safety right up to
delivery to the customer.
8. FLOW CHART
14
Group 1
9. INTERNATIONAL MANAGEMENT METRIC REPORT
Data that is being analyzed
Total Assets
(Unit: Yen In billions)
Current numbers
Forecasted
2011
numbers 2012
(as of 10-12-2011)
(Company plan)
533
575
Total Liabilities
213
250
Total Stockholders Equity
319
325
Net Sales
820
870
Operating Profits
116
145
Net Income
54
65
Cash Flow from Operating
Activity
Cash Flow from Investing
Activity
Cash Flow from Financing
57
70
∧26
∧30
∧26
∧28
15
Group 1
Activity
As a company, it is very important to look at the numbers from your previous years in
order to properly forecast for the future. Not only is it important to look at our company’s
financial statements for forecasting data, but it is imperative to look at the market we are tapping
into and make sure that the city’s infrastructure is sound in order to maximize our revenue. The
balance sheet is important for our company because it allows for it to look at total assets, total
liabilities and total stockholders equity. These numbers are vital in representing our future
growth. The income statement also houses equally important information including, net sales,
operating profits and net income. The statement of cash flows allows the company to interpret
its numbers by showing the growth (or loss) represented by cash flow from operating activity,
cash flow from investing activity and cash flow from financing activity.
Along with our financial statements, we looked at the GDP of Brazil and the per capita
income in Rio de Janeiro. If Uniqlo were to enter into a market that does not have the financial
infrastructure to support its new stores then it will never make it in that region. Uniqlo also
looked at the population of Brazil as a whole and the prospective region, to make sure the target
market was prominent there. If the target market is not sufficient, then there would be no point in
entering that region. Lastly, we looked at the market saturation, to make sure that there is room
for our company to grow.
10. SUCCESS FOR THE INTERNATIONAL MANAGEMENT PLAN
In moving our company to the new market of Rio de Janeiro, Brazil, we first had to look
at our financial statements and project our future numbers so that we could properly go about
entering the market. Our total assets for the fiscal year of 2011 were 533 billion yen. When
expanding into a new market our assets are going to increase significantly; hence, why we need
to acquire more in order to meet the potential demand in Rio. We have projected for an increase
of 42bn yen; however, our liabilities are also going to increase, seeing as we have to take on
more debt in order to finance this move. Our stockholders equity will also increase as this debt is
going to be financed from our investors, which allow for our balance sheet to equal out
(A=E+S/E).
Our net sales are projected to increase by 50bn yen. We were able to forecast this high
due to the constant increase in net sales over the last 5 years. Also, when emerging into a market
as large Brazil we can expect to see a huge spike in our sales numbers. Profits will rise
simultaneously with net sales which in turn allow for our net income to increase by 11bn yen.
This is very positive growth, seeing as in 2011 we had a decrease in net income by 7bn yen.
The statement of cash flows does not actually show us our cash flows, but helps to
compare our numbers in the balance sheet and income statement to show us how our money is
working (in both positive and negative was). Thankfully, our company has only seen increases in
activities over the past 5 years, therefore we projected cash flows from operating activity,
investing activity and financing activity to all increase by a slight, but not significant amount.
16
Group 1
In order to ensure our success, we looked at Brazil’s GDP (PPP) which as of 2011 is
2.194 trillion, not to mention they are now the world’s eighth largest economy. This is a huge
untapped and growing market for our company. More importantly, Per Capita GDP (PPP) is
$10,900, which has risen 40 percent over the past eight years.10 Rio de Janeiro has an
economically active population of 7.6 million people, and 47.5 percent of the states GDP is made
up by services11. This will allow for our company to grow substantially in a market that is largely
based on the sector we fall under. Since we have determined that 50% of citizens living in Rio de
Janeiro are less than 20 years old, we see this as a perfect opportunity to step in with our stores.
With little to no place in market saturation, a huge untapped percent of people within our
target market, and a country with the 8th largest economy in the world, Rio de Janeiro is an
excellent opportunity that we cannot pass up. In forecasting our financial statements, Uniqlo can
significantly increase its net income and continue to grow into an even more global company by
expanding into Brazil.
11. EXECUTIVE SUMMARY
Uniqlo is a unique clothing company that was restructured from a successful Japanese
retailing company into a leading retail clothing company in the country. The drastic success lead
to the expansion into other global markets, predominantly in Asia to begin with and then later
into Europe and North America. Their focus on mass-production of basic garments has helped
them gain a competitive advantage over other high fashion companies like H&M and Zara.
Uniqlo also focuses heavily on research and development to ensure that they are maintaining
current trends and fashion worldwide. The surge of the yen in Japan has given Uniqlo an
opportunity to expand to even more countries as well as help them to look outside of China for
their manufacturing. Complete dependence on China is an unsettling thought given the
unpredictability of certain regulations they have. In the near future Uniqlo will expand to other
parts of Asia to continue their mass-production of top-quality clothing.
We believe it is a great opportunity to expand into Latin America, primarily Brazil,
because of the tremendous growth and young market that is present in the country. In order to
successfully enter this market, we are focusing on the key strategies of international management
that include the economic imperative, environmental scanning, strategic implementation, and the
fact that there are no significant restrictions on foreign direct investment in Brazil. We have
placed the majority of the importance on leadership and interpersonal skill in relation to what
needs to be addressed because we understand how important management is in implementing
facilities in a foreign market. Along with this importance on leadership, we will focus on the
diversity of local and Japanese workforce within management to ensure there is a seamless
transition for Uniqlo in our new market. Within our Brazilian operations, we will include both
Brazilian and Japanese managers throughout the organization to bring the two cultures together
for the best possible results.
10
"Brazil." U.S. Department of State. 8 Mar. 2011. Web. 20 Nov. 2011.
<http://www.state.gov/r/pa/ei/bgn/35640.htm>.
11
"Why Invest in Rio de Janeiro?" Sistema Firjan. Web. 20 Nov. 2011.
<http://www.firjan.org.br/data/pages/2C908CE92593A8810125B15DD6F80126.htm>.
17
Group 1
As part of our international expansion it is important to understand and be aware of
international management issues that the company may likely face. Labor Laws will be the most
difficult area to deal with, but the area has come under heavy bombardment and will be likely
seeing reform in the future. The financial and regulatory laws have just seen a reform in order to
combat corrupt government spending. Being one of the BRIC companies there is huge growth in
the economy. Additionally the clothing retail industry in Brazil is booming, outranking China
and India in 2008, meaning that competition will be steep. The Real, the Brazilian currency, has
seen such a quick increase in value, that many citizens are worried about the currencies stability.
The IMF has also noted its concerns of a possible labor market bubble. The continued increase in
hiring of businesses in Brazil is believed to be creating a bubble with the current economic
downturn. Brazil is taking steps to ensure that it is a more attractive location for foreign
investors, but there are always situations that companies that have to be wary of.
Uniqlo’s system of safety and control, partnered with their careful monitoring of their
partnerships has created a system to efficiently manage their multinational brand. The company
began and thrived in Japan and has grown globally through the use of franchises and partnerships
with manufacturers. With the introduction of their company in South America, specifically in
Brazil, they can effectively spread their brand name and raise awareness.
In order for our company to be successful in expanding to Rio De Janeiro, Brazil, we
needed look at a few key pieces of information. As Brazil is the 8th largest economy in the
world, we will get a huge share of the market to tap into. We found out that 50 percent of the
population is less than 20 years of age, which is consistent with our target market, allowing our
net income to increase significantly. Over all, moving our company to Brazil will allow us to
grow and expand in this growing global world.
18
Group 1
WORKS CITED
"Brazil’s Financial Position as U.S. Edges toward Default | Observing Brazil." Observing Brazil
| A Blog about Brazil, Its Politics and Political Culture. Web. 24 Nov. 2011.
<http://observingbrazil.com/2011/07/27/brazils-financial-position-as-u-s-edges-towarddefault/>.
"In Brazil, a Labor Market Bubble? - Forbes." Information for the World's Business Leaders –
Forbes.com. Forbes, 15 July 2011. Web. 24 Nov. 2011.
<http://www.forbes.com/sites/kenrapoza/2011/07/15/in-brazil-a-labor-market-bubble/>.
"Brazil's Labour Laws: Employer, Beware | The Economist." The Economist - World News,
Politics, Economics, Business & Finance. 10 Mar. 2011. Web. 23 Nov. 2011.
<http://www.economist.com/node/18332906>.
"The Brazilian Legal System Is Based on the Roman-Germanic Tradition." Information
Exchange Network for Mutual Assistance in Criminal Matters and Extradition. OAS Organization of American States: Democracy for Peace, Security, and Development.
Web. 23 Nov. 2011. <http://oas.org/juridico/MLA/en/bra/en_bra-int-des-ordrjur.html>.
"Brazil Is Most Attractive Emerging Market for Apparel Retailers Looking to Invest Abroad |
News & Media." A.T. Kearney Global Management Consultants. 2 June 2008. Web. 23
Nov. 2011. <http://www.atkearney.com/index.php/News-media/brazil-is-most-attractiveemerging-market-for-apparel-retailers-looking-to-invest-abroad.html>.
"Brazil." U.S. Department of State. 8 Mar. 2011. Web. 20 Nov. 2011.
<http://www.state.gov/r/pa/ei/bgn/35640.htm>.
"Why Invest in Rio de Janeiro?" Sistema Firjan. Web. 20 Nov. 2011.
<http://www.firjan.org.br/data/pages/2C908CE92593A8810125B15DD6F80126.htm>.