An Analysis of the Culture of UNIQLO
Cross-cultural communication is a potent element that plays a significant role behind successful expansion of the organizations globally. The organizations, which focus on expanding their business globally needs to, understand the cross-cultural challenges already existing in the paradigm of globalization. The moot objective of this study is to identify the culture of UNIQLO. The report attempts to apply Hofstede framework in the analysis of the organizational culture of the subsequent company. The primary focus of the paper is to illustrate the organizational culture with analysing the issue of expanding overseas.
Issue: The report using the case study of UNIQLO evaluates UNIQLO’s culture in order to investigate the myth behind the practices of the retail company and why they have failed in expanding their business in China.
Background of the organization
UNIQLO is the Japanese retail brand that comes with the message to dress casual. Established in 1963 the company currently has 10,273 million yen of paid-in capital. The company currently operates through 44,424 full time employees. The chain has grown over the years of early Twenties. In 1994 the parent company Ogori Shoji was renamed as Fast Retailing and it has outranked their competitors in order to become the largest clothing retailer of Asia. The leaders of the organization focuses on the goal to mass production of affordable basics in several colours. The Japanese recession of 1990s favoured the company’s sales and it benefitted through catering to the citizens of the country with affordable clothing options.
Figure 1: Logo of Uniqlo
(Source: www.fastretailing.com, 2018)
Overview of the business model:
The success of the organization lies in the coherent business model that unifies the entire cloth making process from planning through design, production and retail. UNIQLO believes in interacting with the customers directly with a will to instantly transform the consumer desires into actual products. The objective of the organization is to provide comfortable clothing line to everyone which has universal design that can be appealing to the customers all over the world.
Figure 2: Business model of the company
(Source: www.fastretailing.com, 2018)
- Research and designs: UNIQLO concentrates upon researching contemporary trends from all over the world. Meetings are arranged before intending launch of any new product. In order to be globally accepted and to provide the customers with innovative products the organization focuses on seeking new styles, materials and trends (www.fastretailing.com, 2018).
- Merchandising, development and procurement of materials: Based on the market research and the concepts of the product plan for each season the merchandisers apply the concepts into the designs. The adjustment with the production line is decided on the basis of the joint decision with the product planning team (www.fastretailing.com, 2018).
UNIQLO also secures high volume supplies of the top quality materials at low cost by direct negotiation with the suppliers (www.fastretailing.com, 2018). They also operate through direct sourcing of the materials from specific spinning standards.
- Production department and production network: The company currently operates through about 450 production team staff and skilled artisans and the production offices are in Shanghai, Ho Chi Minh City, Jakarta, Dhaka, Bangalore and Istanbul (www.fastretailing.com, 2018). The customer requirements are conveyed instantly to the production team in order to implement necessary improvisations to the products in order to suit the necessity of the customers.
UNIQLO has the potential and it has undertaken the decision of expanding globally. The company currently has business relationships with several partner factories in China, Vietnam, Bangladesh and Indonesia and they also aim at expanding their global networks across Europe and United States (www.fastretailing.com, 2018).
- Marketing: Marketing is one of the most significant operational activities of the cloth retail companies. The marketing and promotional activities of this particular organization can be considered to be seasonal. The company conducts promotional activity for the core products and advertise regarding the unique quality and features of the products. In their parent country that is Japan they advertise their brand in the popular newspaper of the country and also offers 20-30% discounts through Mondays in order to promote their new products (www.fastretailing.com, 2018).
- Stores: In Japan the company has 837 stores that includes 39 franchise stores and as they have expanded globally. The company has 560 stores in Greater China and 173 stores in South Korea. Along with that UNIQLO also has online stores and online sales operation in Japan accounted for 5.3% of the total sales (www.fastretailing.com, 2018).
The mission and vision of the company has facilitated the success of the company and their effort to promote Japanese culture and values abroad and has offered a path to globalizartion.
Justification of choosing Hofstede framework
The cultural aspects that are to be evaluated can be evaluated through several other frameworks such as Triadis’ cultural syndrome. However the binary of the framework clearly distinguishes between subjectivity and objectivity. The objective impulse includes several tangible aspects like artifacts but the subjective aspect is associated with categorization along with that norms and values. This framework is useful in understanding cultural differences among several demographic groups. However, apparently, the notions that are suggested in the frameworks are rich but they can not be treated as exclusive or straightforward. Due to the lack of objective measures this particular framework is not a structured one for practical or empirical research ( www.jare-sh.com, 2018).
This model does not consider several important measures such as attitude of the individuals in a society and aspect of time. Hofstede’s proposed framework is usually applied to the culture of national level and it defines culture as a multi-layered concept (Beugelsdijk, Kostova & Roth, 2017). Hofstede’s theory of symbols are important in understanding the significance of a particular logo, design of the stores and the colours that are used in the decoration as reflection of their organizational culture. The other index also helps in identifying the work culture and the values of the organization. Therefore, in the context of UNIQLO Hofstede’s framework can be effectively applied because it helps in the studying the organization culture at different levels. It is important to view the organizational culture from several theoretical frameworks in order to compare the values that are identified from different researches. This framework helps to understand a deeper level of organizational culture and it also helps to identify the underlying challenges in association with culture in the expansion of the company globally.
Explanation of the framework
In this study Hofstede’s cultural dimensions theory has been used as a framweork in order to evaluate cross-cultural communication which is relevant to the issue of global expansion of the company especially the problems that the organization is likely to face and possibly faced in entering the market of China from Japan. This framework offers four dimensions based on the factor analysis (www.jare-sh.com, 2018). Along with the cultural values the four aspects that are individualism, collectivism, uncertainty awareness and power distance are used in the analysis of UNIQLO’s organizational culture.
Organizational culture elaborates a particular pattern of values, assumption and beliefs that are shared by the members of the organization. The culture is prior to solving an organizational problem. Some experts have also of the opinion that organizational culture can be defined as the way that is followed by the employees to work and their thinking in accordance with the organization.
UNIQLO’s organizational culture is to be evaluated by Hofstede’s cross-cultural framework consisting of the four dimensions (Beugelsdijk, Kostova & Roth, 2017). This framework is appropriate for this evaluation as the framework provides a scope for a structured analysis of the cultural issue prior to the global expansion of the company.
According to Hofstede’s framework national culture is depicted through five different aspects and that are power distance, individualism, Masculinity, uncertainty avoidance and long-term versus short-term orientation (www.jare-sh.com, 2018). Several aspects of this framework are important in analysing organizational culture of UNIQLO. The first dimension that is associated with individualism versus collective perspective, evaluates the subsequent relationship between individual and others. Hofstede has viewed an individualistic society. The beliefs and the behaviours of the society is determined by the individuals of the society. However, in a collectivist society the attitude of the society is determined through the loyalty towards one’s family, job and other external elements.
Several researchers in order to evaluate several aspect of organizational culture rely upon Hofstede’s typology as it is an extensive and coherent literature review of the previous works including Kluckhon. In the cross cultural research the paradigm often relates to the proposed framework of Hofstede. The potent strength that contributes to the popularity of this model is its simplicity and classification of five bi-polar binaries which is an abstract notion (www.jare-sh.com, 2018). The cultural dimensions can be easily incorporated in the research frameworks. It also provides the scope of applying necessary instruments in measuring variables that are associated with cultural values. The major significance lies in the fact that this framework is highly parsimonious and the cultural values that are related to the organizational culture can be easily evaluated with prudent application of this framework.
As Hofstede’s methodology is primarily established upon attitude-survey questionnaire that is not appropriate for culture study, several critics have argued regarding its appropriate applicability. As the sample in his work is driven from a specific company, it is argued that the results can not be regarded to be universal.
As argued by Hofstede, he insisted on the notion of national culture and according to him cultural dimensions can only be applied to a national level (www.jare-sh.com, 2018). He did not provided a clear argument to assert his argument and as per the definition by Hofstede culture has a collective nature that has the credential to be applied in several levels of the society including industry and corporation.
For analysing the organization culture and its effect in the expansion of UNIQLO globally can be analysed using this frameworks as the company chiefly believes in the extension of Japanese values and making it global by the means of their products (www.jare-sh.com, 2018). The dimensions that are discussed by Hofstede can be used in measuring and analyzing the intensity of the cultural values but they are incapable of determining the relative importance of each value and it also fails to identify the core dimensions that are central to the organizational behaviour.
For an empirical research is framework is suitable because of its simplistic approach and it also facilitates the path of identifying the work related values. Work related values are important for a retail company like UNIQLO.
Analysis of the practice, issue event that uses Hofstede framework and concepts
UNIQLO’s organizational culture is majorly customer oriented. Innovation and producing quality products are the core values upon which the organization is established. The members of the organizations also reflect upon the same underlying assumptions. This assumption can be supported by the evidence that is gathered from their way of doing different things and the values that are perceived from the leaders and the employees are to be analyzed.
As argued by Hofstede the dimensions of national culture can be used in evaluating the organizational culture of the company.
- Power distance index(PDI): As per the implications of the Power distance index the less powerful members of the organization are likely to follow the organizational rules that are set by the higher authority and this also reflects that they accept and expect that the distribution of power is unequal. The higher degree of the index implies that hierarchy is clearly founded and practiced in a society. UNIQLO’s PDI is lower as the organization does not follow a power culture (Clark, 2014). For instance the marketing team and the production team undertake a particular decision through discussion. Several departments of the organization maintain discussion. The organizational hierarchy is present in the company but it does not practice an extensive power culture. It is true that the distribution of power is not equal but it does not discourage the employees or impose orders upon the employees. The major issue that the company is facing regarding the expansion of the company in China is due the difference of level of PDI in the two countries. The power distance of Chinese society is different from that of Japanese.
- Individualism vs. Collectivism: This particular index explores the level to which the people of the society are integrated into several groups. Collectivism describes a society that reflects coherent relationships that are extended beyond families and into other groups (Clark, 2014). The members of such groups help and support each other at the time of conflict. The chosen company can be considered as the microcosm of the collective society in which the members or the employees of the society collaboratively participate in the decision making and they are also concerned with achieving the organizational goal together. UNIQLO works as a team and therefore it reflects the characteristics of a collective society that emphasizes on the potency of ‘we’ (Yi, 2016).
- Uncertainty avoidance index: It is defined as the ability that reflects on the society’s tolerance for ambiguity. Societies that score a high degree in this particular index, believed to have strict rules and code of conduct and a lower scale shows acceptance of various perspectives and ideas. It is important for the workers of a retail industry to understand that every organization has its own set of codes and rules as well as rituals. UNIQLO is not different from the other retail companies and it has its own values (Fielding, 2015). The organization has the requirement that the employees need to follow a set of rituals or traditions. Their employees need to follow Six Standard phrases such as “Good-bye, we hope to see you again soon, please let me know if you need my help.” Along with that they also have other common replies that are representative of polite behaviour to the co-workers. It can be argued that such codes of conduct are rigid and the organization is demanding their employees to follow the six standard phrases to interact with the customers that at sometimes can tend to be robotic to some extent. To elaborate this, another instance can be cited. UNIQLO has analysed and dictated each of the activities undertaken by the employees for customer interaction. They have a specific standard way of folding to the way that is used by the adviser in returning their payment. This system does not seem to be appropriate for Chinese society. Therefore, it has been difficult for the company to succeed in China.
- The norms that can distinguish UNIQLO from its competitors in the retail market are the pricing of their products (www.fastretailing.com, 2018). The cultural norms reflect on a particular standard that emerges from the organizational values. The company has strategized their pricing and they have kept the prices lower than their competitors while they provide high quality products. This can be measured through the long-term vs. Short-term orientation index as the company is focusing on expanding their business successfully. Their efforts of globalization has not been effective and according to the CEO of the company they are focusing on the focal points that requires improvement in order to effectively expand their business as their effort has not been paid off in China.
- Symbol is another factor that Hofstede mentioned as an indicator of a particular culture in understanding the characteristic of the particular culture. Symbol in an organizational context can be a logo or the office layouts and the type of the dress code that reflects the culture of an organization. UNIQLO as per their display of clothing in-store, it seems to be well organized as it is organized in colour with a culminating rainbow (www.washingtonpost.com, 2018). They have also demonstrated a neat and tidy sales floor and their store reflects the modern minimalism leaving the clothes to be the central of their attraction to the design of the space of the store. Their unbranded fashion philosophy is aligned with the primordial Japanese culture. They have even standardized the music that is used in their stores. Their global music palette reflects familiarity and optimism and it is vaguely international. This is another reason for their failure in expanding in China.
- In the organizational culture of UNIQLO the element of effort can be clearly distinguished. The ideology of the organizational culture works as the moot driving force in shaping the organizational culture (Beugelsdijk, Maseland & Hoorn, 2015). It is not necessary to replicate a particular model that is already existing and this organization has shown its reliance on innovation and their products reflect their vision of thinking ahead.
The success of the company lies to a great extent to the universal policies that are implemented by the founder Tadashi Yanai (Alvesson, 2016). As the founder of the company he has set the organizational values accordingly with the alignment to the Japanese culture. However the company has faced difficulties in expanding globally. Their attempt to open stores in China has not received much organizational profit. Therefore, it is important for them to identify and evaluate the cross cultural elements that are associated with the external factors in expanding the business overseas. The company has enjoyed great success because their employees are able to perform effectively in a team. This becomes challenging in case of expanding the company as the employees often fail to perform in a different cultural context. It is important for the organization to create effective leaders in order to sustain their development for retaining the organizational culture after the retirement of the current CEO.
In the light of the above evaluation much evidence has been found that reflects upon the needs of the organization to come up with effective strategies and ideas to promote innovation and collaboration with other companies. As far as the organizational culture is concerned, it is important for the authority to rely on the globalized culture and understand the regional culture of specific markets in order to meet the consumer needs of the market. The goal of UNIQLO can be successfully achieved with a better understanding of the organizational culture associated with the expansion of the company globally. The major reason of their failure in expanding to China and USA can identified as their emphasis on aligning their products to the culture of the parent country. Therefore, it can be suggested that the company needs to understand the cultural aspects of other countries and instead on focusing on a specific culture it is important for them to come up with products that can be accepted globally.