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MUJI's development plan and marketing strategies into the Malaysian market

Research · August 2015

DOI: 10.13140/RG.2.1.3434.1606

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 Understanding Global Market

MUJI’s development plan and marketing

strategies into the Malaysian market.

by

Peng Peng, OOI

Lecturer : Dr. Yasmin K. Sekhon

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Contents

1. Introduction ..................................................................................................................... 3
1.1 Aim ..................................................................................................................... 3
1.2 Three key issues .................................................................................................. 3
1.3 Conclusion .......................................................................................................... 3
1.4 Data ..................................................................................................................... 3
2. Factors critical to MUJI’s future success in Malaysia .................................................... 4
2.1 MUJI as a global company ................................................................................. 4
2.2 The political and economical stability in Malaysia/ Japan-Malaysia Relation... 4
2.3 Environmental friendly concept .......................................................................... 4
2.4 Multiple range of quality products at low prices ................................................ 5
2.5 MUJI stores in neighbouring countries of the same region ................................ 5
2.6 Lessons from past failures .................................................................................. 6
3. A Practical and Functional Market Entry Strategy for MUJI ......................................... 7
3.1 Three main market entry strategies and their key features ................................. 7
3.2 MUJI’s market entry strategy into Malaysia ...................................................... 9
3.2.1 High Corporate Tax .................................................................................... 9
3.2.2 Distribution Channel in Malaysia ............................................................. 10
3.2.3 MUJI as an established brand name.......................................................... 10
3.2.4 Reduce risk and cost / increase opportunities ........................................... 10
4. Cultural Considerations ................................................................................................ 11
4.1 Country-of-Origin Effect .................................................................................. 11
4.2 Widespread of Japanese popular culture in Southeast Asia.............................. 11
4.3 Racial, Social and Financial Diversities ........................................................... 12
4.4 The lack of online shopping culture.................................................................. 12
5. Conclusion .................................................................................................................... 13
References ......................................................................................................................... 14
Appendix 1 : Malaysia Country Overview ....................................................................... 17
Appendix 2 ........................................................................................................................ 20
S.W.O.T. analysis of MUJI........................................................................................... 20
Appendix 3 ........................................................................................................................ 22
P.E.S.T. Analysis of Malaysia ...................................................................................... 22
Appendix 4 ........................................................................................................................ 25
Porter’s Five Forces Analysis ....................................................................................... 25
Appendix 5……………………………………………………………………………….28
MUJI’s Company Profile and Financial Highlights…………………………………..28

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1. Introduction
1.1 Aim
The main aim of this report is to present a practical development and solution plan in
order for MUJI to successfully penetrate into the Malaysian market (refer to Appendix 1
for country overview).

1.2 Three key issues

! Key Issue 1
Several crucial factors for success of MUJI as a global company will be highlighted and
analysed. These factors are integrated into a discussion of crucial points highlighted in an
environmental audit of Malaysia (Appendix 3) in order to present a realistic and practical
point of view to MUJI’s expansion strategy.
! Key Issue 2
The second section proposes a possible and functional market entry strategy for a
successful start to MUJI’s business in Malaysia in close connection with relevant issues
and challenges facing MUJI highlighted in the previous section.
! Key Issue 3
For a successful development plan for MUJI to expand its business in Malaysia, some
significant cultural factors will also be emphasized and discussed.

1.3 Conclusion
An overall conclusion will be drawn up based on the various findings and discussions in
section 1.2 to provide a clear understanding and summary of the report.

1.4 Data
The data used for this report included information gathered from various journal articles
in particular those concerning the political, economical and social review of Malaysia in
2007 and 2008; web articles; MUJI’s official websites; news article on the Internet; and
academic textbooks.

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2. Factors critical to MUJI’s future success in Malaysia

For the purpose of the analysis and discussion of this section, a SWOT analysis of MUJI
as a global company (Appendix 2); an environmental audit (PEST analysis) of Malaysia
(Appendix 3); and a competitive strategy plan (Porter’s Five Forces analysis, Appendix 4)
have been carried out.

2.1 MUJI as a global company

MUJI is a successful multinational company with over 20 years of history and experience
in retailing. The company’s turnover for the financial year 2006 amounted to ¥139,350
million. With 172 directly managed stores and 146 licensed stores, this is an indication
that MUJI have done reasonably well in the past with its expansion strategy. With a
capital expenditure of ¥1,770 million set aside for new stores, MUJI is set and determined
in achieving a high success rate in entering the Malaysian market. (Appendix 5)

2.2 The political and economical stability in Malaysia/ Japan-Malaysia Relation

One major factor contributing to the success of a foreign company in a new market is the
political and economical stability (Keegan and Green, 2005 and Johansson, 2003).
Malaysia boasts a “favorable” (pg.71) and healthy economy with a recorded GDP growth
from the year 2005 to 2006 (Anon, 2008). On top of that, with a point estimate (EST) of
0.38 in 2007 (The World Bank cited Anon, 2007), Malaysia is considered relatively safe
from potential political threats and uncertainties. The strong bond shared by Malaysia and
Japan is a success factor for MUJI (Appendix 3). Although Malaysia is a new target
market for Ryohin Keikaku Co., previous trade and investment experience shared by both
countries indicate that there exists a certain level of mutual understanding and trust
between the two countries. This understanding will critically assist MUJI in its successful
launch in the Malaysian market.

2.3 Environmental friendly concept

As highlighted in Appendix 3, Malaysia is undergoing serious environmental threats due
to reckless industrialisation and economical development plans. This is a critical factor of
success for MUJI in twofold. With appropriate environmental awareness marketing
campaigns and advertising, MUJI has the potential of becoming the leading superstore in

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promoting and selling environmentally-friendly products whilst creating an awareness

amongst its consumers. However, there is also a danger of MUJI falling into the category
of a common supermarket if care is not taken to promote its product appropriately as
evidence has shown, the majority of the Malaysian society are still not aware of
environmental issues and are currently not actively involved in the environmental
conservation effort (Appendix 3).

2.4 Multiple range of quality products at low prices

Although there is a considerable level of competitive rivalry in the targeted market
(Appendix 4), MUJI still stands out as a unique company. Apart from being an
environmentally friendly company with strict concepts and ethos in product
manufacturing, MUJI is different because of the multiple range of high quality products it
offers. It sells furniture, clothing, home decorative items, travel accessories, stationery,
kitchen wares, gifts and even food. Although IKEA, Gap and The Bodyshop are claimed
to be possible rivals (Appendix 4), the three companies will have to combine into one in
order to offer what MUJI can offer under one roof.

2.5 MUJI stores in neighbouring countries of the same region

Entering the Malaysian market is not totally an unfamiliar territory to the Ryohin
Keikaku group of company. Since entering the Singaporean market in 2003, MUJI now
has 3 stores in Singapore and 2 stores in Thailand (Appendix 5) in the Southeast Asian
region. Employing similar technique and strategy adopted in entering the Singaporean
and Thai markets, MUJI can ensure a good foundation to the start of the Malaysian
business. Apart from that, the successful operations of both the Thailand and Singapore
companies can serve as a blueprint towards the expansion plan in the Malaysian market
due to the proximity between the countries. Andrews, Chompusri and Baldwin (2003) in
examining multinationals in Southeast Asia commented that ‘although there are
recognizable cultural differences between the [ASEAN] countries, they [] exhibit a
clustering of cultural tendencies which meld them (p.19).

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2.6 Lessons from past failures

In 2001, MUJI suffered a huge setback in their global expansion due to an over-ambitious
expansion strategy coupled with bad management and planning. This should be taken as a
lesson for MUJI in their future expansion plan. First of all, for a successful launch of a
new store in Malaysia, MUJI should not be too ambitious with its store size. In keeping
MUJI’s reputation, the products available in store should collaborate with the company
principles and environmental ethos. The failures of several European stores which
deviated from the core principles set a good example.

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3. A Practical and Functional Market Entry Strategy for MUJI

3.1 Three main market entry strategies and their key features
Hollensen (2007) gave a comprehensive account of three main categories of market entry
strategies. The summary below lists three main market entry modes, the subcategories
and their features:-

Export Modes
Indirect export
! an export management company(EMC) is employed
! little or no control/contact over the marketing of product
! minimal risk and cost involved
! no previous experience required; most common for initial entry into international
markets
Direct export
! direct sales from manufacturer to importer in a foreign market area
! more involvement/control in the marketing of product as manufacturer decides on
the appropriate intermediary
! better contacts with potential clients/ after sales services provided

Intermediate Entry Modes

Contract manufacturing
! ‘Manufacturing is outsourced to an external partner, specialized in production and
production technology (p.330)’
! The company still controls R&D, marketing, distribution, sales and servicing of
its product
! Offers large amount of flexibility in terms of changing manufacturer if and when
not satisfied with the quality of the products
! The company strength lies mostly in marketing and distributing the products
! Mostly short termed

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Licensing
! ‘The licensor gives a right to the licensee [] in exchange for certain performance
and payments (p.332)’
! The ‘rights’ can include – a patent; manufacturing know-how; technical advice
and assistance; supply of components; marketing advice and assistance; and the
use of a trade mark/ trade name
! A mutual exchange of technical know-how and knowledge between licensor and
licensee
! Licensee is responsible for the production and marketing
! Relatively low risk
! Requires minimal capital investment with high return rate
! Usually on long-term basis
! Low control over operations and quality of products
! A license is transferable
Franchising
! The transfer of a ‘business package’ (p. 335) from a franchisor (the entrant) to an
organisation in the host country.
! The ‘business package’ can include – trade mark or trade names; copyright;
design; patents; trade secrets; business know-how; geographic exclusivity; design
of the store; market research of the area; and location selection. (pp.335-336)
! Covers and controls a wider area of the business as compared to licensing
! A ‘low risk and low cost entry mode’ (p.349)
! Valuable company brand name is open to risk of bad reputation should
franchisees under-perform
! Possible issues involving local legislation, transfers of money, payment of
franchise fees and government-imposed restrictions on franchise agreements
! Franchisees are usually selected by franchisors
Joint ventures/ strategic alliances
! A partnership(equity) between two or more companies to form an alliance
! Different coalition types are possible depending on cooperation forms

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! ‘Economies of scale by pooling skills and resources (resulting in lower marketing

costs)’ (p.349)
! Eliminates/ reduces problems associated with host government restrictions; local
tariffs and non-tariff barriers.
! Traditionally, ‘the international partner contributes financial resources,
technology and products. The local partner provides the skills and knowledge
required for managing a business in its country’ (p.349)
! Equal share of risk of failure

Hierarchical modes
Wholly owned subsidiaries – acquisition
! Acquiring an existing company
! A rapid market entry
! Ability to have a quick access to – distribution channels; qualified labour force;
existing management experience; local knowledge; contacts with local market and
government; established brand names/ reputation (p.368).
! High risk and high cost
Wholly owned subsidiaries – Greenfield investment
! Building an operation from scratch
! Potential use of advanced technology
! High investment cost
! Time consuming – slow market entry

3.2 MUJI’s market entry strategy into Malaysia

In MUJI’s case, the most practical way for entry into the Malaysian market is through
licensing. The factors illustrated below form the justification and rationale behind the
decision.

3.2.1 High Corporate Tax

As highlighted in Appendix 3, Malaysia recorded a corporate tax of 26%, a relatively
high figure comparing to its neighbouring countries. By entering the market through a
licensee, the high cost incurred due to the tax will be significantly reduced. Aside from

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that, other restrictions and trade barriers imposed by the local government will not
become an issue through a licensing agreement with a licensee in Malaysia.

3.2.2 Distribution Channel in Malaysia

Another possible method of entry strategy suitable to be employed is the wholly-owned
subsidiary method where MUJI acquires and takes over the operation of a local company
in Malaysia. This enables MUJI to have total charge over the distribution and marketing
operations, therefore ensuring better control over quality and standards of the company.
This method however is not conducive as mentioned in Appendix 4, the distribution
channels in Malaysia are tightly controlled by the powerful Chinese and the bond and
relations between suppliers and their companies exceed the business level. Distributing
licenses to potential business operators in Malaysia seems a viable and preferred strategy
as it eliminates the challenge and effort in penetrating the distribution channels.

3.2.3 MUJI as an established brand name

Another reason for employing the licensing strategy in entering this new market is due to
MUJI’s longstanding reputation and history in retailing. For an established brand name
like MUJI, it is not practical to invest money, time and effort in a wholly owned
subsidiary either through acquisition or Greenfield where product and market research
will be carried out as products manufactured by MUJI have undergone extensive R&D to
be marketed in various locations.

3.2.4 Reduce risk and cost / increase opportunities

Looking at MUJI’s ‘Sales Breakdown by Type of Channels’, it is shown that the majority
of the profit is channelled through directly managed stores (Appendix 5). However, most
of these directly managed stores are located in Japan where management and operations
of stores are more straightforward and cost effective. In establishing a licensing strategy
in a new market such as Malaysia, it will not only reduce risk significantly, it also helps
cut unnecessary cost. One good example is the expansion strategy of MUJI in Thailand
where since its opening, MUJI now has two licensed stores in Thailand. With the
employment of licensing as an entry strategy, there are also better opportunities and
possibilities for development of new stores due to its low risk and low cost features.

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4. Cultural Considerations
As highlighted by Cateora and Ghauri (2000), ‘successful foreign marketing begins with
cultural sensitivity’ (p.108). In order for MUJI’s expansion strategy to be successful and
practical, some key cultural issues have to be taken into considerations.

4.1 Country-of-Origin Effect

One major factor that would contribute to MUJI’s success is the fact that it is a well-
established brand from a world leading and developed country, Japan. Looking at its
company profile (refer to Appendix 5), since its establishment almost two decades ago,
MUJI has successfully expanded its market from Japan to Sweden, France, Italy, Norway,
UK, among other countries. With 20 years of experience in global marketing and still
maintaining their standards, MUJI should be confident in entering the Malaysian market.
This is closely related to the “Country-of-origin (COE) effect” that MUJI products will
impact upon the Malaysian market. As highlighted in Appendix 3, there is positive
evidence that the Malaysian market is biased towards Japanese products. As quoted by
Cateora and Ghauri (2000), ‘consumers tend to have stereotypes about products and
countries that have been formed by experience, hearsay and myth’ (p.291). When MUJI
products hit the Malaysian market, the likelihood is that they will receive positive
perception from consumers who are biased towards the Japanese technology. This
reputation is further enhanced by the fact that MUJI received the Cool Brand Leader
Status in 2003.

4.2 Widespread of Japanese popular culture in Southeast Asia

The “madness” for all things Japanese has taken Southeast Asia by storm since the 1980s.
Otmazgin (2007) in examining Japanese popular culture in East and Southeast Asia noted
that “Japanese popular culture products have been massively exported, marketed, and
consumed throughout East and Southeast Asia” (p.1). The author continued by listing out
examples of translated comic books in bookshops; the licensed and unlicensed stationery
products of animated characters and ; the dubbing of popular Japanese animation into
various languages in Southeast Asia. As highlighted in the PEST analysis of Malaysia
(Appendix 3) MUJI products have a high potential for success in the Malaysian market
which readily accepts and embraces the Japanese culture.

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4.3 Racial, Social and Financial Diversities

Malaysia is a multiracial country with very diverse religious and cultural beliefs and
practices. The three main races consist of the Malays, Chinese and Indians. The problems
and challenges that face MUJI is that Malaysians are not only different in terms of race,
culture, religion and belief, they are also very socially and financially diverse. The middle
and upper classes from the urban areas are more likely to shop in multinational
hypermarkets and superstores whereas village folks from rural areas are still very much
dependant on local convenience and furniture stores (Roslin and Melewar, 2000). The
local retailers and grocers who have a better understanding of their people and culture
pose serious and practical threats to the success of MUJI’s business in Malaysia. One
good example is the fact that the colour white is the colour of death to the Malay society.
White is the prime colour employed in most of the products marketed by MUJI as it
reflects the colour of nature and simplicity. In order to establish a successful market in
Malaysia, MUJI in marketing and selling its product will have to make crucial and
careful decisions in terms of the niche market it is targeting and which line of products to
market.

4.4 The lack of online shopping culture

One of MUJI’s plan of expansion is through online retailing. However, MUJI has to be
aware that currently, like many other Asian countries, online shopping in Malaysia still
remains an unfavourable form of goods purchasing due to the lack of thrust and
confidence in security (Appendix 3). During MUJI’s expansion plan, this aspect will have
to be taken into account in order to gauge and understand the market better for maximum
profit.

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5. Conclusion
The findings and discussions revealed that MUJI’s success in its expansion plan depend
on factors such as 1. its position and status as a global company, 2. the political and
economical stability in Malaysia, 3. MUJI’s environmental friendly principles, 4. the
multiple range of high quality products that MUJI offer at low prices, 5. MUJI stores in
neighbouring countries of the same region, and 6. lessons from past failures.

For a practical and successful entry into the Malaysian market, it is recommended that
MUJI employ the licensing method due to 1. high corporate tax in Malaysia, 2.
distribution channels in Malaysia, 3. MUJI’s established brand name, and 4. the reduce of
cost and risk and the increase of opportunities.

In developing its business in Malaysia, several cultural issues have to be acknowledged

by MUJI. These key cultural considerations include 1. Country-of-Origin effect, 2.
widespread of Japanese popular culture in Southeast Asia, 3. racial, social and financial
diversities, and 4. the lack of online shopping culture.

The overall conclusion that can be drawn is that with careful planning and considerations,
MUJI is set and ready for a successful entry into the Malaysian market which is a healthy
and competitive ground with high potentials for multinational companies.

Word count: 2,888

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References

Andrews, T.G, Chompusri, N. and Baldwin, B., 2003. The changing face of
multinationals in Southeast Asia. London : Routledge.

Anon, 2007. ENVIRONMENT OVERVIEW. Malaysia Country Review. 2007, pp. 115-
155.
Available from:
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bfb577bce651%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2007. INVESTMENT OVERVIEW. Malaysia Country Review. 2007, pp.73-87.

Available from:
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8d0f-bfb577bce651%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2007. SOCIAL OVERVIEW. Malaysia Country Review. 2007, pp.89-113.

Available from:
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Quarter, p11-20.
Available from:
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43c9-af39-17c1ffe241aa%40sessionmgr7
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Anon, 2008. chapter 4: Business Environment. Malaysia Business Forecast Report. 2008
2nd Quarter, pp.33-45
Available from:
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af39-17c1ffe241aa%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2008. Malaysia: Low Tax and Incentive Regimes. Lowtax.net.

Available from:
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[Accessed 25th March 2008]

Bhattacharya, A. K.and Michael, D. C., 2008. How Local Companies Keep

Multinationals AT BAY. Harvard Business Review. Vol. 86 Issue 3, pp84-95.
Available from:

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http://web.ebscohost.com/ehost/detail?vid=4&hid=8&sid=972960d7-3641-4d8f-
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Cateora, P. and Ghauri, P., 2000. International Marketing: European Edition. London :
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Chua, A., Khatibi, A. and Ismail, H., 2006. E-commerce: A Study on Online Shopping in
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and implementation). 4th Edition. London : Thomson Learning.

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Hollensen, S., 2007. Global Marketing. 4th Edition. England: Prentice Hall.

Johansson, K., 2003. Global Marketing. 3rd Edition. Boston ; London : McGraw-
Hill/Irwin.

Keegan, W. and Green, M., 2005. Global Marketing. 4th Edition. Upper Saddle River,
N.J. ; London : Prentice Hall.

Otzmagin, N.K., 2007. Japanese Popular Culture in East and Southeast Asia: Time for a
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Phang, S., 2007. Malaysia set to ease curbs on foreign retailers. International Herald
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Rong, F., 2007. Noble Group's Leiman Says Worldwide Supply of Cotton Is `Ample'.
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Roslin, R.M. and Melewar, T.C., 2000. Discovering Relational Bonds in Channel
Relationships: A Case Study of Malaysia. Journal of Global Marketing, Vol. 14
Issue 3, pp49-77.
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Useful + Agreeable, UNKNOWN. MUJI. Useful + Agreeable.

Available from:
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[Accessed 22nd March 2008]

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Appendix 1 : Malaysia Country Overview

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Source:
Anon, 2007. COUNTRY OVERVIEW. Malaysia Country Review. 2007, pp.1-5.
Available from:
http://web.ebscohost.com/ehost/results?vid=2&hid=3&sid=2444e66e-7b26-44a6-
8d0f-bfb577bce651%40sessionmgr7
[Accessed 23rd March 2008]

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Appendix 2

S.W.O.T. analysis of MUJI

STRENGTHS
! A huge variety of over 7,000 products for daily life ranging from furniture, home
wares to clothing, stationery, gifts and food
! Cool Brand Leader status in 2003 – good reputation
! Slogan -- “Lower priced for a reason”
! Environmentally friendly; products developed with environmental ethos
! Famous and well-established brand name by Japan, with a history of close to 25
years
! High turnover rate/ high capital with more than 300 stores – powerful and
experienced multinational company

WEAKNESSES
! Failed stores – bad reputation; reflects bad management
! Overly ambitious expansion plan – store size too big
! High cost for online retailing – shipping and delivery costs
! Manufacturing and marketing of product is constricted by its slogan and
principles
! Difference in price between countries – increases competition with local
companies

OPPORTUNITIES
! Online retailing
! Environmentally friendly – ethical consumerism (competitive advantage)
! Further development of stores in neighbouring countries of the same region
(Singapore and Thailand) – a familiar market
! Brand loyalty from customers
! Opening of new stores

THREATS
! Cultural differences – preference in colour, design and functionality of products
! Competitors – Ikea, Paperchase, GAP, The Bodyshop

Sources:

Doole, I and Lowe, R, 2004. International Marketing Strategy (Analysis, development

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and implementation). 4th Edition. London : Thomson Learning.

Ryohin Keikaku Co. Ltd, 2007. Corporate Information. Japan: Ryohin Keikaku Co Ltd.
Available from:
http://ryohin-keikaku.jp/eng/corporate/
[Accessed 22nd March 2008]

Useful + Agreeable, UNKNOWN. MUJI. Useful + Agreeable.

Available from:
http://www.usefulandagreeable.com/muji.shtml
[Accessed 22nd March 2008]

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Appendix 3

P.E.S.T. Analysis of Malaysia

POLITICAL
! Stable political situation (EST of 0.38 in year 2004)
! A close relation shared by Japan and Malaysia – The Look East Policy stipulated
by the former Prime Minister Dr. Mahathir encourages strong ties between Japan
and Malaysia; both countries closely related through international trade and
investments

ECONOMICAL
! Favourable economic overview
! A recorded GDP growth from 2004 through to 2006
! Corporate tax of 26% (relatively high in comparison to neighbouring countries)
! Government welcomes investments from foreign retailers by changing policies
and rules – increases threats of new entrants

SOCIO-CULTURAL
! Great cultural diversity – creating multiple range of target markets
! Multi racial country consisting of three major ethnic groups mainly the Malays,
Chinese, and the Indians
! Different colour variant denotes different significance
! Popularity of Japanese culture, especially among the middle class
! Multinational retailers are well-accepted – Makro, Carrefour and Tesco
! Serious environmental issues -- air pollution, deforestation, water pollution, soil
erosion, due to industrialisation and rapid economic development

TECHNOLOGICAL
! Online shopping has not gained much popularity – Online shop unlikely to be a
success in Malaysia
! Wide broadcast of Japanese-based drama by the media (mainly television
programmes)
! Popular Japanese electronic equipment like Sony, Mitsubishi and Nikon are
trusted brands with longstanding history in the Malaysian market

Sources :

Anon, 2008. chapter2: Economic Outlook. Malaysia Business Forecast Report. 2008 2nd
Quarter, pp.11-20

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http://web.ebscohost.com/ehost/detail?vid=3&hid=106&sid=1650e7ce-2da1-
43c9-af39-17c1ffe241aa%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2007. INVESTMENT OVERVIEW. Malaysia Country Review. 2007, pp.73-87.

Available from:
http://web.ebscohost.com/ehost/detail?vid=3&hid=3&sid=2444e66e-7b26-44a6-
8d0f-bfb577bce651%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2008. Malaysia: Low Tax and Incentive Regimes. Lowtax.net.

Available from:
http://www.lowtax.net/lowtax/html/offon/malaysia/malhom.html
[Accessed 25th March 2008]

Anon, 2007. SOCIAL OVERVIEW. Malaysia Country Review. 2007, pp.89-113.

Available from:
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8d0f-bfb577bce651%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2008. chapter 4: Business Environment. Malaysia Business Forecast Report. 2008
2nd Quarter, pp.33-45
Available from:
http://web.ebscohost.com/ehost/detail?vid=3&hid=22&sid=1650e7ce-2da1-43c9-
af39-17c1ffe241aa%40sessionmgr7
[Accessed 23rd March 2008]

Anon, 2007. ENVIRONMENT OVERVIEW. Malaysia Country Review. 2007, pp. 115-
155.
Available from:
http://web.ebscohost.com/ehost/pdf?vid=4&hid=3&sid=2444e66e-7b26-44a6-8d0f-
bfb577bce651%40sessionmgr7
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Chua, A., Khatibi, A. and Ismail, H., 2006. E-commerce: A Study on Online Shopping in
Malaysia. Journal of Social Sciences. Vol.13(3), pp.231-242.
Available from:
http://www.krepublishers.com/02-Journals/JSS/JSS-13-0-000-000-2006-Web/JSS-13-
3-000-000-2006-Abst-Text/JSS-13-3-231-242-2006-432-Harn-Adeline-C-P/JSS-13-
3-231-242-2006-432-Harn-Adeline-C-P-Absctract.pdf
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Furuoka, F., Lo, M.C. and Kato, I., 2007. Japan’s Aid Policy Towards Malaysia.
Electronic Journal of Contemporary Japanese Studies. 1 March 2007.
Available from:
http://www.japanesestudies.org.uk/articles/2007/FuruokaLoKato.html

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[Accessed 24th March 2008]

Otzmagin, N.K., 2007. Japanese Popular Culture in East and Southeast Asia: Time for a
Regional Paradigm? Kyoto Review of Southeast Asia Issue 8/9 (March/October
2007).
Available from:
http://kyotoreviewsea.org/Issue_8-9/Otmazgineng.html
[Accessed 24th March 2008]

Phang, S., 2007. Malaysia set to ease curbs on foreign retailers. International Herald
Tribune.
Available from:
http://www.iht.com/articles/2007/06/06/business/sxmalay.php
[Accessed 23rd March 2008]

Roslin, R.M. and Melewar, T.C., 2000. Discovering Relational Bonds in Channel
Relationships: A Case Study of Malaysia. Journal of Global Marketing, Vol. 14
Issue 3, pp49-77.
Available from:
http://web.ebscohost.com/ehost/detail?vid=3&hid=104&sid=52111cd0-c788-
45b3-a84a-719c13be175f%40sessionmgr109
[Accessed 23rd March 2008]

24
 PP, OOI

Appendix 4

Porter’s Five Forces Analysis

Bargaining Power of Suppliers

! Medium

MUJI products are manufactured mainly from cotton, wood, aluminium and paper.
The worldwide supply of cotton has increased partly due to ‘new technology and the
change in husbandry’ (Rong, 2008), increasing competitive rivalry between cotton
traders and exporters thus maintaining the price.

MUJI, when sourcing for raw materials worldwide, aims to buy in bulk and
consequently materials can be obtained at a low cost.

One effective strategy employed by MUJI in lowering the bargaining power of

suppliers is overtaking one of its manufacturing companies such as the case of idée.

However, the grocery distribution channel in Malaysia is a tightly controlled network

operated by the powerful local Chinese and is largely dependant on close ties and
bonds and interpersonal relationship, making it difficult to penetrate as a new comer.

Bargaining Power of Buyers

! High

Multinational retailers and companies have started investing in Malaysia since the
90s. The majority of the Malaysian society has the luxury of being offered multiple
options, promotions and discounts from both the multinational companies as well as
local retailers.

Threats of New Entrants

! High

In a bid to encourage competition as well as benefiting the consumers, Malaysia has

announced that it’s preparing to ease curbs on foreign retailers. Since 2004, a number
of foreign retail outlets have been approved. Several bans have also been lifted and
restriction on store size will also be relaxed.

Competitive Rivalry between Existing Players

! High

25
 PP, OOI

Possible rivalries included multinational companies like IKEA, Gap, The Bodyshop,
Tesco, Carrefour, and Makro. One of MUJI’s strongest rivalries is most possibly
IKEA, the Swedish furniture retailer. With a similar concept in providing low-price
products, IKEA produces affordable furniture and accessories for bathrooms and
kitchens.

Other potential rivalries also include small and medium local grocers and retailers
like Giant, Parkson, and Tops, and local furniture stores who have better
understanding of local business practices, the people and their culture and
preferences, therefore, gaining an upper hand in promoting products and sales.

Evidence shows that many local companies not only posses a deeper understanding of
the characteristics of local people but also seize hold of ‘the structures of the raw
materials, components, and finished-goods markets in which they operate
(Bhattacharya and Michael, 2008: p. 87)

Threat of Substitutes
! Low

MUJI is a unique company which retails no-frills and high quality products at low
prices. Although it is possible for consumers to obtain similar products from other
retailers, those products are not regarded as real substitutes due to the fact that they
may not be cheap, environmentally friendly or of high quality, all at the same time.

Sources:

Bhattacharya, A. K.and Michael, D. C., 2008. How Local Companies Keep

Multinationals AT BAY. Harvard Business Review. Vol. 86 Issue 3, pp84-95.
Available from:
http://web.ebscohost.com/ehost/detail?vid=4&hid=8&sid=972960d7-3641-4d8f-
9e3c-8b2432a10160%40sessionmgr2
[Accessed 23rd March 2008]

Doole, I and Lowe, R, 2004. International Marketing Strategy (Analysis, development

and implementation). 4th Edition. London : Thomson Learning.

Phang, S., 2007. Malaysia set to ease curbs on foreign retailers. International Herald
Tribune.
Available from:
http://www.iht.com/articles/2007/06/06/business/sxmalay.php
[Accessed 23rd March 2008]

Rong, F., 2007. Noble Group's Leiman Says Worldwide Supply of Cotton Is `Ample'.
Hong Kong: Noble Group.

26
 PP, OOI

Available from :
http://thisisnoble.com/index.php?option=com_content&task=view&id=243&Item
id=88
[Accessed 25th March 2008]

Roslin, R.M. and Melewar, T.C., 2000. Discovering Relational Bonds in Channel
Relationships: A Case Study of Malaysia. Journal of Global Marketing, Vol. 14
Issue 3, pp49-77.
Available from:
http://web.ebscohost.com/ehost/detail?vid=3&hid=104&sid=52111cd0-c788-
45b3-a84a-719c13be175f%40sessionmgr109
[Accessed 23rd March 2008]

Ryohin Keikaku Co. Ltd, 2007. Corporate Information. Japan: Ryohin Keikaku Co Ltd.
Available from:
http://ryohin-keikaku.jp/eng/corporate/
[Accessed 22nd March 2008]

27
 PP, OOI

Appendix 5

MUJI’s Company Profile and Financial Highlights

Company name Ryohin Keikaku Co., Ltd.

Location 4-26-3 Higashi-Ikebukuro, Toshima-ku, Tokyo, 170-8424

Telephone 03-3989-4403 (General Affairs Personnel and J-Sox Unit)

Establishment June 1989 (registration: May 1979)

Capital ¥6,766,250,000 (at end Feb. 2007)

Accounts Last day of February every year

settlement date

Annual turnover ¥139,300 million (operating revenue for fiscal year ending Feb. 2007)

No of employees 3,946 (including 3,027 part-timers, at end Feb. 2007)

No of Stores Japan Directly operated Stores: 172, outlets supplied: 146

(at end Feb. 2007)

Overseas UK: 17, France: 8, Italy: 3, Germany: 2, Ireland: 1,

Sweden: 6, Norway: 4, Spain: 2, Hong Kong: 6,
Singapore: 3, Taiwan: 9, Korea: 5, China: 1,
Thailand:2
Total: 69 stores (at end Feb. 2007)

28
 PP, OOI

※ Products supplied to a design store at The Museum

of Modern Art, New York (MoMA).

Major business Operation of exclusive stores of MUJI / product planning /

development / production / wholesale / retail

Source:

Ryohin Keikaku Co. Ltd, 2007. Corporate Information. Japan: Ryohin Keikaku Co Ltd.
Available from:
http://ryohin-keikaku.jp/eng/corporate/
[Accessed 22nd March 2008]

29
 PP, OOI

Ryo

UK France
2003 2004 2005 2006 2003 2004 2005 2006
Number of
16 15 16 17 4 5 7 8
Stores
Italy Germany
2003 2004 2005 2006 2003 2004 2005 2006
Number of
- 1 2 3 - - 1 2
Stores
Ireland Sweden
2003 2004 2005 2006 2003 2004 2005 2006
Number of
1 1 1 1 - 3 5 6
Stores
Norway Spain
2003 2004 2005 2006 2003 2004 2005 2006
Number of
- - 2 4 - - - 2
Stores
Hong Kong Singapole
2003 2004 2005 2006 2003 2004 2005 2006
Number of
3 4 5 6 2 2 2 3
Stores
Taiwan Korea
2003 2004 2005 2006 2003 2004 2005 2006
Number of
- 4 6 9 1 1 3 5
Stores
Shanghai Thailand
2003 2004 2005 2006 2003 2004 2005 2006

30
 PP, OOI

Number of
- - 1 1 - - - 2
Stores
Total number of Overseas Stores

2003 2004 2005 2006

Total 27 36 51 69

2003 2004
Sales(mil. Share( YOY( Sales(mil. Share( YOY(
¥) %) %) ¥) %) %)
Directly Managed Stores 76,250 69.4 116.3 83,032 71.1 108.9
Lisensed Stores 13,602 12.4 94.3 13,648 11.7 100.3
Seibu Dept. Stores group 8 0.0 0.1 - - -
Shops in The Seiyu 11,488 10.5 105.2 10,919 9.4 95.0
FamilyMart group 5,472 5.0 107.8 5,172 4.4 94.5
JR East Retail Net
1,188 1.1 87.5 1,168 1.0 98.4
Co.,Ltd.
Askul 183 0.2 1,143.8 314 0.3 171.2
Wholesale 31,943 29.1 82.6 31,224 26.7 97.7
Internet Store 1,627 1.5 102.1 2,478 2.1 152.2
Others 22 0.0 64.7 38 0.0 117.1
Total 109,844 100.0 103.7 116,774 100.0 106.3
2005 2006

31
 PP, OOI

Sales(mil. Share(% YOY(% Sales(mil. Share(% YOY(%

¥) ) ) ¥) ) )
Directly Managed
90,538 71.6 109.0 98,496 71.3 108.8
Stores
Lisensed Stores 14,675 11.6 107.5 15,806 11.4 107.7
Seibu Dept. Stores
- - - - - -
group
Shops in The Seiyu 11,077 8.8 101.4 11,034 8.0 99.6
FamilyMart group 4,961 3.9 95.9 6,119 4.4 123.3
JR East Retail Net
1,111 0.9 95.1 1,152 0.8 103.7
Co.,Ltd.
Askul 436 0.3 138.6 454 0.3 104.1
Wholesale 32,262 25.5 103.3 34,646 25.1 107.4
Internet Store 3,553 2.8 143.4 5,078 3.7 142.9
Others 167 0.1 430.5 - - -
Total 126,522 100.0 108.3 138,221 100.0 109.2

2003 2004 2005 2006

Directly Managed Stores 123 141 153 172

Licensed Stores 63 65 67 68
Shops in the Seiyu 80 79 78 78
Total 266 285 298 318

32
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2003(mil.¥) 2004(mil.¥) 2005(mil.¥) 2006(mil.¥)

New Stores 357 1,299 743 1,770

Like for Like Stores 407 751 367 860
IT System 319 762 358 1,961
Logistics 18 105 233 141
Foreign Investments 139 1,391 651 580
Others 7,105 290 176 5,009
Total 8,345 4,600 2,528 10,321

33
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Source : Ryohin Keikaku Co. Ltd, 2007. Financial Highlights. Japan: Ryohin Keikaku Co
Ltd.
Available from:
http://ryohin-keikaku.jp/eng/ir/finance_info/
[Accessed 22nd March 2008]

34

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