Muji in China - Introduction to Business Management

...

Recent years, China is trouble by the haze in many cities of this country. Health consciousness is becoming stronger in China. MUJI’s simplicity and environmental product exactly are in line with the customers’ requirement and appetite.

3.4 Technological

China is not a high-tech-based country in the world. Firstly, The Chinese government encourages innovation and new technology in businesses and organizations. The private online store is developing rapidly in China. Secondly, the e-commerce development in China can help MUJI expand online market and earn more market share. However, credit card is not commonly used in China, and the most used online payment is Alipay or Wechat which are rarely used in the overseas. It is a little difficult for the usage and penetration of international business.

3.5 Environment

The environment condition in the cities of China is not very good recent years. First, the pollution of air and drinking water is serious, especially the occurance of haze. Even though the government takes action to limit the private cars on road and decrease heavy industry, the pollution problem still existed. The environmental issue influences the people living in the country, so that it becomes the underlying causes for people to move from the cities. Besides, because of less manufacturing, the middle-western of China has large natural resources unexploited and the environment is good (Xiangzhao & Ji, 2008). Lastly, with the awareness of environmental protection in China and the participation in Asia Pacific Partnership on Clean Development in 2005, it is great opportunity for MUJI to explore new market in middle-western of China and small and middle cities.

3.6 Legal

In order to attract more foreign investment into China, the government has set up complete law system. The laws for foreign investment are guaranteeing the legal rights of international businesses and protect the interest of overseas and domestic enterprises. Besides, China is calculating related commercial rules and regulations in keeping with the regulations of WTO.

However, the laws on intellectual property are not perfect, so there are some pirates and patent infringement in China. The intellectual property issue in China is stressed by international businesses.

- Porter’s Five Forces

Porter’s five forces analysis is the identification and analysis of five competitive forces that shape every industry. The model helps determine the weakness and strengths of every industry for attractiveness and profitability (Staff, 2017). The figure below is a brief view of Porter’s Five Forces analysis for MUJI China.

[pic 4]

- Moderate Treat of New Entry

The treat of new entry is moderate for MUJI. This part shows that the new entry has influence on MUJI’s business but limited. Firstly, the moderate cost of the business and the variety of supply chain make it possible for new entrants to own the market share with MUJI. However, it is hard to set up a brand of retail outlets can represents the quality and trustable. The brand of MUJI wins the support from the customers after many years’ development and expanding.

- High Rivalry Competition

Even though, the products of MUJI are various, from furniture, cloth to stationary and other household, MUJI does not have featured products. The MUJI faces a great amount of competitors, such as IKEA, Uniqlo and some other retail outlets in China. More and more retail outlets occurred with MUJI mode and they offers cheaper price. IKEA’s major products are furniture and household which is as simplicity as MUJI and the cloth feature of UniqloIt is much similar to MUJI. Therefore, the competition in China shows that MUJI meets challenge for the customer keeping and marketing expanding.

- Low Bargaining Power of Suppliers

This part shows that the suppliers have little influence on MUJI’s business. Firstly, the products of MUJI are so widely that the suppliers of this organization are varied and large amount, it is impossible for a single supplier as the major suppliers of MUJI. Secondly, the quantity of purchasing products is large. MUJI has 150 retail outlets in China and totally 344 retail outlets in the world. MUJI should be a very important customer for the suppliers for the long-term cooperation. Thirdly, since the economic globalization, MUJI has more opportunities to set up factories in developing countries such as China, Vietnam and Cambodia with lower labor force.

- High Bargaining Power of Buyers

This part shows that the buyers are important to the MUJI’s business. Firstly, even though the products quality is high and mentionable, the price of MUJI is relatively higher than other organizations. The major consumers are young people, the higher price is easier for them to purchase in other stores. Besides, the switching cost for customers is very low and the products of MUJI is not so necessity in the life, the customers just need to find other products to buy the products. Thirdly, it is earlier for the customers to find substitutes if they change their preference on purchasing.

- High Threat of Substitution

This part shows that the substitution influences MUJI’s business significantly. The customers can shift to other substitutes like stationary store, cloth store, furniture store and grocery stores and so on. Besides, the switching cost is low for the customers. In addition, the price of many substitutes is lower than MUJI. This part reminds that MUJI should consider the threat from other substitutes.

- Strategic Recommendations

After the above analysis, there will give 4 strategic recommendations for MUJI China.

- Adjustment on Price of Products

The products price of MUJI in China is much high, which is higher than the majority organizations in the industry. In China, most of the consumers are young people, the relatively high price is easier to let them chose other substitutes. As mentioned before, China provide favorable tax preference for the foreign investment and international businesses, it reduces the cost of MUJI in some extent. This report suggests that it is necessary for MUJI to have adjustment on the price, such as the stationary, cloth, household products. The adjustment