CROSS CULTURAL MANAGEMENT AND DIVERSITY
The purpose of Assignment 1 is to enhance the learner’s ability to analyse issues and challenges faced by organisation in implementing cross cultural theories and discuss how related theory/s contribute to the organisation’s well-being.
Read the following case study and answer all the questions.
Uniqlo: The Strategy Behind The Global Japanese Fast Fashion Retail Brand.
Uniqlo has become yet another contender in the global fast fashion retail market through its quality, affordability and fashionable. Despite having to compete against other bigger players like ZARA (Inditex), H&M, Gap and Forever21, Uniqlo has still managed to grow at an astounding pace. How did it manage to capture a share of this competitive fast fashion retail market so quickly? Some of Uniqlo’s key brand success factors include its unwavering commitment to innovation and its company culture. Its Japanese founder, Tadashi Yanai is famous for his quote “Without a soul, a company is nothing”.
In 1972, Tadashi Yanai inherited his father’s chain of 22 men’s tailoring stores, Ogori Shoji in Ube, Yamaguchi. Shortly after becoming company president in 1984, he opened a new store – Unique Clothing Warehouse, which was later shortened to Uniqlo. His promotion is well-documented as the catalyst for the company’s rapid expansion. Inspired by his travels to Europe and the US, where he discovered large casual apparel chains like Benetton and Gap, Tadashi Yanai saw immense potential for Japan’s casual wear market and set goals to evolve the family’s business strategy from suiting to casual clothing, buying fashion goods in bulk at low cost. Tadashi Yanai also discovered that many foreign fashion chains were vertically integrated, taking control of the entire business process from design to production to retail. By 1998, he had successfully opened more than 300 Uniqlo stores across Japan.
However, one of the main challenges faced was consumer perception of the brand – it was perceived to be a discount retailer selling cheap and low-quality apparel to the suburbs. This perception completely changed when the brand opened a 3-storey store in iconic Harajuku in central Tokyo in 1998 – people started noticing Uniqlo for its high-quality fleece jackets. The brand perception instantly shifted from being cheap and low-quality, to being affordable but high-quality. Today, Uniqlo is a wholly-owned subsidiary of Fast Retailing Company Limited and it is known for providing high-quality private-label casualwear at low prices. As at January 2018, the brand has grown to more than 1,300 stores in 15 countries across Asia, Europe and US in just a matter of 20 years. It is the biggest apparel chain in Asia with close to 800 retail stores.
Fast Retailing’s market capitalization is over USD 31.8 billion and it employs more than 43,000 people globally. For the year ending 2017, Fast Retailing had revenues of USD 17.3 billion and a profit of USD 1.6 billion. The company’s home market Japan contributed 44 percent to its total revenue, with one in four Japanese said to own a Uniqlo down jacket. Fast Retailing has been growing at an incredible rate in the past 5 years and its confidence is reflected in its revenue forecast of 10.1% growth to USD 19 billion for FY2018.
Company culture and visionary leadership
In 2017, Tadashi Yanai was ranked number no. 42 on the list over the best-performing CEOs in the world by Harvard Business Review. Since 2002, he has provided an 862 percent shareholders return, and the market capitalization of Uniqlo has increased USD 39 billion. He is credited widely for the huge success and explosive growth of Uniqlo in the past 15 years due to his creation of a strong company culture which focused on teamwork, innovation and customer experience.
In the company’s early days before it went international, Tadashi Yanai made a decision considered rare in Japan – to conduct all of its operations in English. This has definitely contributed to its global success and it something other aspiring global companies can learn from. In terms of company culture, the organizational structure is well known to be flat with employees greatly encouraged to provide suggestions. The values and goals of the company are translated directly into processes and measures exhibited strongly by employees all over the world. Company financials are completely transparent to employees and sales and charted and posted daily. The brand also places a huge emphasis on its retail store experience and micromanages every customer touch point.
Staff training is a huge priority for the company as each new employee is trained for a remarkable 3 months – way above global industry average. Every activity undertaken by its employees are recorded and analyzed – from apparel folding technique, to the way retail staff returns credit cards to customers with both hands and full eye contact. Employees are also taught to interact with shoppers using six standard phrases including “Did you find everything you were looking for?” and all customers are welcomed with “Welcome to Uniqlo!”. The company is currently building a Uniqlo University in Tokyo in which 1,500 new store managers will be trained every year. These are just some examples of how Uniqlo’s unique company culture is a true enabler of its success.
With the intense and multi-faceted technological and business disruptions taking place over the past decade, leadership in the 21st century will be influenced by constant change, geopolitical volatility, and economic and political uncertainty. Tadashi Yanai once thought he would retire from day-to-day operations by the time he was 60, but at the age of 69, he still holds the company’s operational reins as chief executive. To effectively manage the above leadership disruptions, Uniqlo needs to quickly devise a succession plan and instill a next generation leadership team.
Students’ Guide in Writing the Assignment:
|Q1||Elaborate on changes of the Uniqlo’s management style with traditional Japanese management culture (at least 5 point).||10 marks|
|Q2||Contrast between Uniqlo’s working culture and traditional Japanese working culture by using the Hofstede’s cultural dimensions (at least 5 dimensions for each comparison)||10 marks|
|Q3||Propose Uniqlo’s corporate and management culture by referring to the type of organizational structure and justification (at least 4 points)||10 marks|
CROSS CULTURAL MANAGEMENT AND DIVERSITY
From the case study, it is observed that Tadashi Yanai, the CEO of Uniqlo, it is observed that a collaborative working environment has been established within the retail working operations of the company. The focus of the company owner has always been global and therefore has been prioritising a few changes within the working culture of the company, which is majorly not found in the Japanese organisations. Firstly, in Japan, companies prefer to use to use Japanese as the most commonly used languages in order to gain preferences of the Japanese clients (Takahashi, 2015). However, in case of Tadashi, English has been considered as the most preferable language for communicating with the customers entering the stores of Uniqlo, hence the preference of English over Japanese is the first contrasting and rare feature of the working culture of Uniqlo.
Another contrasting feature in the working culture within the Japanese organisations is the absence of flat organisational structure, whereas the corporate hierarchical structure of Uniqlo is flat and the employees are encouraged by the CEO to provide suggestions for attaining betterment for the organisation. In Japanese working culture position, authority and seniority is considered to be important and employees belonging below the hierarchical line are less encouraged to interact with the superiors (Yamamoto and Lloyd, 2019). Therefore, the flat hierarchical structure is another point of difference in Uniqlo as compared to the other Japanese entities. The freely interactive working environment is also rare as well as contracting as compared to other Japanese corporations.
Findings from Japanese Culture Contrast
In the Japanese working culture, employee training was used to be considered as one of the least prioritised activities within the scope of human resource management. In most of the companies in Japan employee training is considered as a secondary activity and the availability of training scopes were majorly limited for the inexperienced or the fresher joining an organisation (Ono, 2018). In respect to staff training, Uniqlo has also been quite different and has implemented a rare policy of providing training and development facilities for the employees on-boarded in the company. The 3 months long training for the newly joined employees is quite rare as compared to the Japanese companies and is also a contrasting factor as compared with the overall organisational culture in the country. In respect to training the decision taken by Uniqlo to develop Uniqlo University in Tokyo to train the employees is also quite innovative as well as contrasting from the context of Japanese work culture.
Close Monitoring of the Activities
Analysing and close monitoring of the activities conducted by each employee of Uniqlo is also quite contrasting and rare when compared to the Japanese organisational culture. In the Japanese working environment, it has been observed that the company, which requires completion within a mentioned time (Sekiguchi, Froese and Iguchi, 2016), mainly allocates employees with certain tasks. However, companies recording the activities of the employees and analysing the same to derive better production yield as well as attain performance improvement is quite contrasting from the context of the Japanese work culture.
This has been observed that the decision made by Tadashi Yanai of conducting all the business operations of the company in English was definitely a vital approach for overall transition of the operators of Uniqlo. As per the traditional business operations and working culture in Japan, Japanese is the only official language in the country and majority of the business operations are performed in this language in the county (Sugimoto and Swain, 2016). However, the decision taken by the CEO for transition into English for all operations of Uniqlo was quite rare as well as effective in terms of its traditional culture of using Japanese as the business language. On close consideration of the major activities of the business after adopting English, it seems that this specific decision has contributed enough to the international expansion and brand image development of Uniqlo (Wang and Li, 2018). Most importantly, conduction of the company’s operations in English has helped the business in reaching global level along with greater revelation of the operational excellence and characteristics of the brand to the global consumers. Therefore, it is one of the prime reasons why this particular decision-making is stated to be rare in terms of its contribution in global development of Uniqlo.
Apart from these, among the core operations and activities performed by the business, training of the employees and staffs has been one of the most required steps for Uniqlo. As per the argument developed by Yang et al., (2016), transition of the business operations of Uniqlo into application of English led to the rapid advantage of making effective arrangement for skill and knowledge development of the employees. As Uniqlo has given higher priority to the task of employee training and development, application of English as the functional language has assisted the management in offering training of international standard to all its staffs. Moreover, this has helped the employees in understanding the importance of adopting a specific code of conduct and particular regulations in all their operations that is yielding higher values to the service of Uniqlo. Most importantly, application of English has assisted the employees in making effective conversation with potential customers that has been assistive in maintaining every detail of code of actions while dealing with the customers from different cultures and nations (Yanget al., 206). Therefore, this can be stated that in terms of traditional Japanese culture of management, the decision of using English has been excessively effective and fruitful for Uniqlo.
Q 2. Comparing and contrasting the working culture of Uniqlo with traditional working culture of Japan
For comparing and contrasting the working culture of Uniqlo with traditional working culture of Japan, application of Hofstede’s cultural dimensions has been quite effective.
In terms of traditional working culture in Japan, in Japanese organizations, there is strong influence of the hierarchical positions, where all the decision-making in business depends on confirmation by each layer in such hierarchical system. This is one of the reasons why in Japanese work culture, there is painstakingly slow decision-making (Minkov, 2018). Therefore, in Japanese culture, due to practice of higher equality, power distance is lower.
In the organization Uniqlo, the management encourages employees for taking part in decision-making and providing valuable suggestions. The values and goals of the organization are communicated to the employees directly for making the overall operational process quite transparent. Most importantly, Uniqlo is investing on building Uniqlo University for training new store managers. Thus, it seems that the company encourages active participation of the employees in operations and thus, maintaining lower power distance (Usui, Kotabe and Murray, 2017). However, all the tasks and decisions by employee are analysed by the management for taking control on those. Thus, like Japanese traditional working culture, the organization does not follow an ultimate power culture as the power equality is maintained and controlled by the management. From overall perspective, Power Distance of the organization culture is closer to traditional Japanese working culture.
The working culture of Japan is highly focused on accepting the terms and conditions in operations for avoiding all types of uncertainties or undesired situations in working performance of the organizations and in social contexts. Thus, feasibility study and predictability are the core basics of operations in Japanese culture (Lo, Waters and Christensen, 2017).
In compared to the higher focus on uncertainty avoidance in traditional working culture, Uniqlo maintains strict code of conduct and operational regularities as the part of ensuring higher efforts for avoiding likeliness of ambiguous situations in organization. Huge priority to training of employees and painstaking maintenance of details in every operation reflect higher efforts of the organization for avoiding uncertainty (Wang & Li, 2018). For instance, the ways of apparel folding returning credit cards or physical gestures performed by employees are scrutinised in detail under operational standards set by Uniqlo. Training of the employees for maintaining six standard phasing proves the culture of uncertainty avoidance by Uniqlo. Thus, the company culture is in close compliance to traditional uncertainty avoidance culture of Japanese workings.
Individualism and Collectivism:
Traditional working culture of Japan reflects higher degree of collectivism approach leading to emphasise on group harmony, collectivistic decision-making. However, considering from another perspective, higher loyalty to the organization by the Japanese shows a tendency of individualistic culture, depicting individualism tendency. According to Lo, Waters and Christensen (2017), this is the reason why Western nations experience Japan ac collectivist but the Asian nations think it an Individualistic culture.
In this relation, Uniqlo can be considered microcosm of collective society, where all employees in the company collaboratively participate in organizational decision-making and the staffs together are concerned regarding achieving organizational goals (Changet al., 2017). In Uniqlo, the employees of all levels are encouraged for collective decision-making and suggestions providing. However, the CEO Tadashi Yanai is responsible for all business decisions and operation of the company, but from holistic perspective, collectivist culture is present in Uniqlo, reflecting close similarity to traditional Japanese culture.
Masculinity – Femininity:
The traditional working culture in Japan shows tough Masculinity concepts in terms of its workaholism, motivation and hunger for perfection an excellence. The working culture of Japan is a strong reflection of hard masculine competition, fight of intellects and ready wits and intelligence for winning. Minkov (2018) has stated that this is the reason why in Japan, climbing to the corporate ladder is still tough for women.
Similarly, in Uniqlo, the working culture is highly assertive in nature, where tough competition in the market is encouraged by the management, for which the organization is too much focused on arranging appropriate training programmes for employees. However, in spite of masculinity expression of the working culture in Uniqlo, there is no role differentiation between genders and a well-maintained balance between responsibilities of men and women is taken care by the culture (Usui, Kotabe and Murray, 2017). Thus, unlike traditional masculine working culture in Japan, the Uniqlo culture is an effective mix of masculinity and feminity.
Long-Term and Short-Term Orientation:
A long-term orientated working culture prevails in Japan, where well-strategic investment of finance and operational resources is a common matter of fact in the organizational as well as social level in the country (Yang et al., 2016). In such working culture, people value durability and long-abidingness of the operational outcome.
With this respect, in Uniqlo, a highly long-term orientation exists in working culture, where excessive focus in given on future evolvement and development of the retail business of the company from many different aspects of operations. Some common examples of long-term oriented culture are introduction of high-quality products for changing consumer perception of the brand, efforts for innovation, application of visionary leadership and producing trained store managers for future. These reflect excessively detail efforts of Uniqlo for being prepared for future. Moreover, there is the consistent effort of the company for business expansion, diversification and development in future. Thus, culture of Uniqlo is exactly similar to traditional working culture in Japan.
Restraint versus Indulgence:
Traditional working culture in Japan is highly Restraint where higher tendency to pessimism and Cynicism prevails (Sugimot and Swain, 2016). The Japanese do not put much focus on leisure time or controlling the gratification of their desires. In such working culture, personal emotions and leisure or happiness has les importance.
This seems that operational culture in Uniqlo is quite similar to that of the traditional working culture as the employees and staffs in the company are highly motivated in emphasising on the aspects of organizational efficiency by their consistent engagement in restraining social norms on their skills and attitude. The company culture provides less importance on personal happiness or emotions and perceptions in social life but prefers higher restraint forces to apply by the employees. This roves well connectivity of the Uniqlo culture to traditional working culture in Japan.
Q3: Proposing Best Terms for describing the corporate and management culture of Uniqlo along with justification.
In the competitive environment, Uniqlo is well known for providing high quality private label casual wears at low rates. The global presence of the brand could be aligned with the success of its corporate culture. While the company consistently probes for innovation, its fashion sense has been able to meet the changing needs and demands of the target market at regular intervals. As far the corporate and management culture of the organization is concerned, it could be stated that the company abides by the Family Structure for gaining supremacy in the competitive market. Family corporate culture is a type of corporate body which heavily relies on personalized relationship. The employee has a strong association with the management of the company. While the family corporate culture is power oriented, it the norms, values and regulations are usually set by the father or the elder brother (Hampden-Turner and Trompenaars, 2011). The justification for the selected corporate culture for Uniqlo is illustrated below:
In this case, the regulations, norms and values are usually set by the father or the elder brother, thus suggesting the individual is responsible for handling the management and working environment and take important decisions which will help the company to gain supremacy in the competitive market. A successful entrepreneur always set the path of success in terms of revenue generation and competitive supremacy, which is followed by the employees. In this context, it could be stated that Tadashi Yanai holds the 35th spot for his performance as a CEO, as per the opinion of Harvard Business Review (Martin Roll, 2019). His success as an entrepreneur is due to the presence of a strong corporate culture set by him, followed by strong emphasis on teamworking, innovation and consumer experience. Additionally, he took decisions which allowed him to gain supremacy in the global market. He took the initiative of taking business decisions which is hardly followed in Japan. For triggering global acceptance of Uniqlo brand, Tadashi Yanai planned to conduct all of its business operations in English as it is an international language.
The norms, mission and vision of the organization are translated directly within the procedures which is exhibited by its employees across the globe. The financials of the company are transparent to the employees so that they are in a position to monitor their progress and areas of improvement at regular intervals (Martin Roll, 2019). For building a strong rapport with the consumers, Tadashi Yanai took the initiative of strengthening the experience of the retail stores by micromanaging each touch point of the consumer. While the competitor brands of Uniqlo keeps in pace with the altering consumer demands, Tadashi Yanai follows an alternative approach where he plans to produce new fashion trends based on the practical basics of the Urban Style in advance, which indeed allowed the company to enhance the overall revenue generation in the global market. Additionally, Tadashi Yanai prioritizes fabric innovations which is one of the pivotal factors of success for Uniqlo within the fashion retailing sector. Another key factor of Tadashi’s entrepreneurial success is his initiative towards societal development.
A company can have a good public image when it is serving the society dutifully. Avoiding such initiatives could affect the company image, thus affecting the revenue generation of the company (Feldman, 2014). In the competitive era, companies only emphasizing on profit maximization will not be surviving. The company has taken the initiative of producing sustainable clothing, which will not be wasted even after consumers have stopped wearing it. Considering the above-mentioned factor, it could be stated that Tadashi Yanai has a strong entrepreneurial character which is essential within the family corporate culture. The entrepreneurial success could further be evaluated from the fact that the company has managed 700% of returning of shareholders, which increased the market capitalization of the company by 39 billion USD. Tadashi Yanai consistently probes for changes and innovation which is essential for any company to gain supremacy in the competitive market.
It is a scenario, where the leader acts as the fatherly figure. He is the person taking the ultimate decisions, irrespective of other employees having vital roles to play in the organizational context. Tadashi Yanai is known to set high goals and he ensures the fact that the goals are in sync with the level of commitment given by the employees (Nagata, 2019). In this context, the employees strive for attaining the organizational objectives. Tadashi Yanai gives approval regarding vital decisions such as hiring and firing of employees, approving product development, planning marketing campaigns, making significant investments and deciding upon international market expansion. He also takes the final call in areas of Research and Development. Other than just being an apparel brand, Tadashi Yanai thinks Uniqlo is a technology company. He also has the latitude of appointing other managers within the management.
The operations and financials of the firm are also regulated under his supervision. He leads any of the organizational shorter- and longer-term strategies. He also ensures the fact that the company is maintaining social responsibility properly, where ever it is conducting business. He takes the initiative of assessing the organizational risks and takes strategic decisions accordingly. For example, Uniqlo launched a fabric innovation known as Heat Tech, for gaining supremacy in competitive market. Heat Tech refers to a fabric which has the capability of turning moisture in to hear and is also having air pockets for retaining the heat. The product range was an immediate success and generated huge interest amongst the consumers (Martin Roll, 2019). Considering the above-mentioned discussions, it could be stated that Tadashi Yanai is the ultimate decision maker and therefore justifies the power-oriented aspect of the family corporate and management culture.
Longer term connectivity of the employees towards the organization (High level of Loyalty):
Under the family corporate culture, employees usually tend to stay loyal towards the organization, therefore reducing the chances of employee attrition from the organizational perspectives. The employees stay committed to the organization owing to their involvement in decision making (Mayfield and Mayfield, 2016). As far the culture of the organization in Uniqlo is concerned, it is flat by nature where employees have the right of providing suggestions. The organizational goals are translated directly within company process and measurements. The operations and organizational productivity are transparent to the employees of the company as the achievements and sales figures are posted at regular intervals. The company strongly prioritizes training of staffs so that they are well equipped with the job specifications and responsibilities to be carried out. The employees work in a friendly atmosphere and they are always encouraged of developing a strong interaction with the consumers.
The employees of Uniqlo are have freedom of speech and expression in regards to decision making as they are the ones that have the best idea about consumer interest and needs. Motivations and rewarding also add to employees’ interest of staying in the organization for a longer tenure. Considering the benefits and liberty employees get from management, they can easily leverage their creative skills which is the cornerstone of success for Uniqlo (Townandcountry.ph, 2019). Automatically, the employees tend to stay loyal to the organization for a longer tenure, which is one of the key aspects of family corporate culture. The employees have a cordial connection amongst each other, therefore mitigating conflict within the working environment. With interest packages and effective maintaining of work ethics, the loyal employees prefer working at Uniqlo in comparison to several other brands.
Focusing on Personal Relationships:
A family corporate culture always emphasizes towards establishment of personal relationships for attaining business objectives. Proper establishment of personal relationships assists in developing trust in the mind of the consumer towards the brand, which is an essential attribute for influencing the repeat purchasing behavior of the consumers (Jones et al., 2015). The company stress on the fact that each employee is dealt with care in an atmosphere driven by etiquette. The queries of the consumers are dealt with care and executives always try to provide the best solutions available. Greetings of employees for the shoppers also serves as a catalyst for establishing strong personal relationships.
The in-store environment automatically assists in developing a strong communication amongst the employees and consumers. Presentable displays, neat stacking of shelves, bright lights, empathic and responsible approach of the service executives are the factors which assists in developing a strong bonding with the consumers (Business Insider, 2019). The brand communication is highlighted by detailing the practical benefits of various types of fabrics. Effective after sales service also serves as a key driver for establishment of personal connections with the brand from the perspective of the consumers. While considering the above-mentioned information, it could be stated that Uniqlo stresses on establishment of personal relationship which aligns with the family corporate culture.
Home Like Atmosphere:
Maintaining of a homely atmosphere, where an employee can share their ideas with ease is one of the key attributes of a family corporate culture. Uniqlo is an organization that always probes for technological innovation ahead of time. In this context, it could be stated that if the employees have to work in a suffocating working environment, they will automatically fail to improvise their thoughts. Therefore, the company abides by an open work culture, while keeping in mind proper maintaining of etiquette and ethics. All employees are treated equally irrespective of their position in the hierarchical management (Van Essen, Otten and Carberry, 2015). Transparency of information across all forms of management results in development of a positive working environment in Uniqlo. Since employees are subjected to fair treatment, they tend to stay more relaxed in the organization. Instead of being too much professional, the company prioritizes establishment of personal relationships which can never be possible in a strict working environment (Business Insider, 2019). The shift timings of employees are flexible by nature where the company strongly emphasizes on proper maintaining of work life balance. The employees tend to behave cordially and probe for team effort for achievement of business goals and targets. Organizational politics is negated in the organization, rather all employees are in the same page, and employee rights are protected with utmost respect irrespective of designations. From the above-mentioned discussion, it could be stated that the working culture of Uniqlo aligns with the specifications of family corporate culture.
While concluding it can be stated that the organizational success of Uniqlo is heavily dependent on the implementation of the universal policies by Tadashi Yanai. The company has tasted success owing to its strong connectivity with consumers, innovation and collective team effort. The Hofstede model of cultural dimensions is also discussed in details for understanding the contrast between the traditional Japanese and Uniqlo working culture. Lastly, the study has justified the management pattern of Uniqlo under the Family corporate culture, which could be aligned with the entrepreneurial character, power orientation, establishing personal relationships and leveraging employee loyalty. The company is one of the most consumer preferred brand across the globe and will continue its dominance in the competitive market with its innovative approaches ahead of time.