Case Study of Muji

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Now on, MUJI have nearly 900 stores across Asia and America to share MUJI philosophy, not to be the best but “enough” (MUJI, 2017; Aaker, 2011).[pic 12][pic 13]

2.2 External Analysis

As Mexico market exactly is an unknown for MUJI. We would analysis this new market based on PESTLE framework, Porters 5 force model and SWOT analysis.

A. PESTLE framework

i. Political:

Regarding geographic location, Mexico is the second-largest export market of United States and third-largest trading partner. The foreign enterprises set up in Mexico are subject to the same tax system as national enterprises based on the net income (Trading Economics, 2017; Santander, 2017). The corporate tax rate is maintain at 30% since 2010 (Trading Economics, 2017). But the foreign investors do benefit from certain exemptions such as duty-free customs benefits because the Mexican government liberalise its import regulation based on the Trans-Pacific Strategic Economic Partnership Agreement (Santander, 2017; Chan, 2016; Santander, 2016).

ii. Economic: [pic 14]

The World Bank (2016) classified Mexico as an upper-middle-income country and one of the largest economies in Latin America. Although the local economy is expected to weaken in 2016 to about 2 percent form 2.5 percent through most of 2015 and early 2016, it also forecasted to retrieve at 2018 (WorldBank, 2017). However, the Mexico’s poverty rate still remains the largest concern, the Mexican government had been criticised for being over- focused on inviting foreign investment rather than focusing on poverty issue (Rölz, 2016). Having said that, Mexico is not a poor country, but an unequal one. Beside, there are a quite interesting phenomenon about the consumer behaviour of Mexican. Mexico resident would tend to reduce the number of things bought but not making the switch to inferior brands during the recession (Friesen, 2012; Garcia & Lacayo & Martinez, 2012).

iii. Social:

Mexico is the second most-populous country in Latin America. The current population was estimated at 123 million and the unemployment rate had being control within 5 percents (Trading Economics, 2017). The large amount of employed people may consider that there is quite a large amount of consumers. We may defined that Mexico is family-centric. The OECD Social Policy Division (2010) mentioned that only few countries are majority of single-income families rather than dual-earners, Mexico was one of it. In case, we can assume the Mexican’s customer behaviour and shopping habit would more related to family needs.

iv. Technological:

The Mexican government had presented a National Infrastructure Plan (NIP) which focus on transportation urban development in 2014. Now on, it receive a favourable recognition. The Global Competitiveness rankings had been introduced in the World Economic Forum, Mexico has placing in 51 from 61 since the NIP began in 2014.

v. Legal:

Mexico had became the member of GATT, WTO and OECD respectively (WTO, 2017). In additional, Mexican government was reinforced the competition policy and legislation such as implement the Competition Assessment Toolkit and the Guidelines for Fighting Bid Rigging. It all effective to build up a fair business environment.[pic 15]

vi. Environmental:

As the climate being unpredictable day by day, the reinforcement of environmental awareness had remarked on the daily schedule. For company, the production process may require to be more eco-friendly such as rationalizing the process or using recycle material. It is expected that those action enhance the company reputation and further improve the brand equity.

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B. Porters 5 force model[pic 16]

i. Threat of new entrants

Due to the product design of MUJI is minimalism, it might easy to imitate. Flannery (2010) had pointed that it might build a strong competitive advantages when a new comer borrowing from others and combining that with their own creativity. It would reduce the attractiveness for MUJI as the threat of new entrants may increase when market is under saturated.

ii. Threat of substitutes[pic 17]

Basically, quality and price would be the main criteria for the consumer doing consideration between two or more brands. Under the similar price level, It is believed that MUJI was sitting in a advantageous positions compare with other brands. Therefore, we could forecasted the threat of substitutes would under control as Mexican is quality-oriented (Garcia & Lacayo & Martinez, 2012). It means that the Mexico market is attractive for MUJI.

iii. Bargaining power of buyer

Wilkinson (2013) explained that buyer bargaining power is refer to the pressure form consumers exert on businesses to improve their products with higher quality at a specific price level . However, regarding to the three core principles, MUJI had already produce the best quality compare with other brand. The bargaining power of buyer is not high under this circumstances, the market is attractive for MUJI.

iv. Bargaining power of suppliers

It had already mentioned that material selection is one of the key principles MUJI always concern. In order to consolidate their own bargaining power, MUJI always using a common or recycle materials. They will also use materials which was discard by other company because the appearance. It might weaken the bargaining power of suppliers. In short, it is attractive for MUJI to enter Mexico as the bargaining power of suppliers is not strong.

v. Current Rivalry

Numbers of competitor is one of the factor determine the intensity of competitive rivalry (Wilkinson, 2013). The supply of fast moving consumer goods is not capable to satisfied the market demand (MINISO, 2017). The less competitor, the less rivalry, hence, the market is more attractive to MUJI.

Based on the above 5 forces, we can conclude that Mexico is a attractive and potential market for MUJI to explore.

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