Case Study of Muji

School of Continuing and Professional Education

City University of Hong KonBA / BA (Hons) Marketing Management (163-29180)[pic 1]

Assignment 1[pic 2]

Table of Contents[pic 3]

1.        Introduction         3

1.1        Company Background        3

1.2        BCG Martix        3

1.3        Porter’s Generic Strategies        4

2.        Internal & External Analysis        5

2.1        Internal Analysis - Marketing Assets (Drummond et al., 2003)        6

2.2        External Analysis        7

A.        PESTLE framework        7

i.        Political:        7

ii.        Economic:         7

iii.        Social:        7

iv.        Technological:         8

v.        Legal:        8

vi.        Environmental:        8

B.        Porters 5 force model        9

i.        Threat of new entrants        9

ii.        Threat of substitutes        9

iii.        Bargaining power of buyer        9

iv.        Bargaining power of suppliers        10

v.        Current Rivalry        10

C.        SWOT Analysis        11

3.        Strategy Concern        11

4.        Recommendation        13

5.        Conclusion        14

6.        Reference        15

1.        Introduction [pic 4]

The main objective of this report is to to determine MUJI’s current situation by analyse the it’s capabilities as well an environmental analysis first. And then, we would figure out the feasibility if MUJI extend it’s business to the new market, Mexico, based on PESTLE framework and Porter’s 5 Force model. At last, we may make recommendations on the company’s future by utilising Ansoff (1957) growth strategies.

1.1        Company Background

Branding is not only help a company to increase the sale volume but also extend the uniqueness from the competitors (Handcock, 2012). However, there was a japanese company established at 1980 with a meaningful name, Mujirushi Ryohin as known as MUJI. MUJI means quality goods with no brand in Japanese. The founder launched the brand with a mission, “Lower priced for a reason.”(MUJI, 2016). It is describe the consumer get more bang for his buck, branding is not a priority. In order to save unnecessary cost, MUJI was choosing the suitable materials and streamlining their production process. The most important is that they also simplifying the product package. This three core principles is the reason why MUJI able to provide the quality product with a reasonable price (MUJI, 2017). MUJI won many many hearts by their persistence.

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1.2        BCG Martix

A corporate portfolio matrix is useful for the managers mange the portfolio of their business. In this report, we would like to review MUJI’s portfolio though Boston Consultancy Group Matrix (BCG) matrix which introduced at 1968. The matrix evaluate product on two demotion, the general level of growth and the market share in the industry (Doole & Lowe, 2012). As food and sundries are the products offered by MUJI initially, it is able to bring profit in the in the maturity stage, it may mark as “Cash Cow”. Then, we would put MUJI’s garment in “Star”. According to the MUJI’s annual report, garments got a sweetly sales increase in 2016. Then, we may count the MUJI-design furniture as a “Question mark” due to MUJI did a quite big investment in the project of MUJI Hotel to promote it’s design. At last, those beauty products introduced by MUJI is not being competitive compare with those well-known brand concentrated at cosmetic product. Therefore, it will remark as “Dog” in the BCG matrix.[pic 6]

1.3        Porter’s Generic Strategies

In order to gain better competitive advantage against the competitors, MUJI mainly adopt overall cost leadership strategy and differentiation. According to Porter (1980), cost leadership strategy tries to occupy the market share with broad segment by focusing on low cost compare with competitors. At the above part, we had already mentioned that MUJI persist the three core principles to do the cost management in it’s production process (MUJI, 2017).[pic 7][pic 8]

2.        Internal & External Analysis[pic 9]

In the following part, we are going to analysis the probability of MUJI expand it’s business to Latin America in the trading bloc of The North American Free Trade Agreement (NAFTA). And we determine the starting point in Mexico, the “Land Bridge” connected with South and North America.

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2.1        Internal Analysis - Marketing Assets (Drummond et al., 2003)

MUJI was cultivating a good brand image and reputation by insist it’s corporate objective since the first day release it’s product. Interbrand (2017) pointed out that MUJI had fulfil the global brand standards and they able to understand the needs of customers in China and Europe. That is the main reason why MUJI able to exceeding more than 30% of its sales ratio overseas and got 20 percent growth in it’s brand value. Therefore, Interbrand was evaluate MUJI as one of the japan’s best global brands for 2017.[pic 11]