UNIQLO MANAGEMENT CASE STUDY

GROUP ASSIGNMENT COVER SHEET

STUDENT DETAILS

Student name: NGUYEN MINH AN Student ID number: B1112021017

Student name: TRAN HUYNH GIA BAO Student ID number: 21001155

Student name: LEE TU HAN Student ID number: WSU21000243

Student name: NGUYEN HOANG KHANH LINH Student ID number: 21000915

Student name: LE HAI YEN Student ID number: 21000682

UNIT AND TUTORIAL DETAILS

Unit name: PRINCIPLES OF MANAGEMENT Unit number: PM-T222WSB-5

Tutorial/Lecture: Class day and time: Tuesday, 8:00 - 11:15

Lecturer or Tutor name: TRAN BA LINH

ASSIGNMENT DETAILS

Title: MIDTERM – MANAGEMENT CASE STUDY

Length: 1700 words Due date: 04/08/2022 Date submitted: 04/08/2022

DECLARATION
I hold a copy of this assignment if the original is lost or damaged.
I hereby certify that no part of this assignment or product has been copied from any other student’s work
or from any other source except where due acknowledgement is made in the assignment.
I hereby certify that no part of this assignment or product has been submitted by me in another
(previous or current) assessment, except where appropriately referenced, and with prior permission
from the Lecturer / Tutor / Unit Coordinator for this unit.
No part of the assignment/product has been written/ produced for me by any other person except
where collaboration has been authorised by the Lecturer / Tutor /Unit Coordinator concerned.
I am aware that this work may be reproduced and submitted to plagiarism detection software programs
for the purpose of detecting possible plagiarism (which may retain a copy on its database for future
plagiarism checking).
Student’s signature: NGUYEN MINH AN

Student’s signature: TRAN HUYNH GIA BAO

Student’s signature: LEE TU HAN

Student’s signature: NGUYEN HOANG KHANH LINH

Student’s signature: LE HAI YEN

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UNIQLO MANAGEMENT CASE STUDY

TABLE OF CONTENTS

Introduction 3

Story 4

Lesson 1 5

Lesson 2 8

Reference list 11

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Introduction

In contemporary society, fast fashion has been a late-new section of the fashion

industry. However, fast fashion is accused of negatively impacting the environment and the

phenomenon of forced labour in the garment industry when it rapidly becomes popular.

Specifically, this accusation is based on the fact that fast fashion brands manufacture many

products that release greenhouse gas and waste from production. Therefore, despite modern

technology and business model limitations, those persistent issues have played an impetus

for UNIQLO to minimise greenhouse gas emissions in green management. Besides, the

forced labour situation, such as forcing workers to work overtime or poor working

conditions, is always a severe problem in many garment factories. Unfortunately, UNIQLO

also frequently suffers from this accusation, even though they are not the owners of any

manufactories. Hence, partnering with third parties instead of directly owning its processing

factory can help solve this problem. These UNIQLO actions comprise two lessons for going

green and partnering with third parties.

Lesson 1: Due to technological and business model limitations, UNIQLO seems

unable to meet the established targets of zero environmental impact. As a result,

reducing waste and emissions is a realistic way for UNIQLO to avoid negatively

impacting the environment.

Lesson 2: Instead of involving in violating labour rights risks in outsourced countries,

UNIQLO partners with third parties directly responsible for labour issues.

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Story

In the 21st century, the community is being more enlightened to raise awareness of

the environment and human rights. By comprehending this controversial concern, many

companies without environmental and ethical consciousness have been commended

seriously, especially fast fashion brands. As a fast fashion brand, UNIQLO shows its effort in

mitigating the environmental impact in order to calm the public through its activity in

sustainability reports. The solution to climate change is to decrease waste and CO2

emissions. According to Fast Retailing (2022), UNIQLO started to reduce energy usage and

greenhouse gas emissions in 2014 by installing energy-saving LED lighting at retail stores

throughout Japan. In 2020, LED lights were installed in 763 of the 813 UNIQLO stores in

Japan (93.8%), and they installed clean energy in 3 stores in Taiwan. UNIQLO (2021)

introduced recycling programs that collect unused clothing items to produce fuels and

transform plastic bottles into clothing. Unwearable clothes are transformed into energy in

the form of calorie-dense solid fuel that could be substituted with fossil fuels and used in

industrial applications such as boilers in paper manufacturing. The various clothing

collections were launched after they implemented the technology of recycling PET into

apparel-producing processes (Made From Recycled Materials, 2021). In terms of labour rights, a

component of human rights, in 2004, UNIQLO prepared a “Production Partner Code of

Conduct” for its approximately 70 principal production factories overseas, principally in

China, and designated those factories that signed a commitment to abide by this CoC as its

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partner factories (Fast Retailing, 2007). Although following its integrity initially, it still

suffered numerous accusations of forced labour in outsourcing manufacturing. Typically,

under the investigation of the firing of pregnant workers and the harassment of trade union

members in two Jaba Garmindo factories, Indonesia, where 2,000 Indonesian garment

workers are owed $5.5 million in severance pay, UNIQLO denies its responsibility toward

these workers (Uniqlo And The Women Owed $5.5 million, 2020).

Lesson 1

The growth of modern business contradicts the sustainability of the environment due

to cost-benefit efficiency. A company's expansion is based on profit; the more product it

sells, the more revenue it gains. To encourage customers’ spending, the company needs to

introduce the product at a reasonable price. However, to respond to this demand, the

company must participate in mass production to get lower prices. Although encouraging

people to buy more garments can invigorate the trading practice in the dynamic market to

support the economy in general, this activity leads to the stage where people buy more than

they need. As a result, most of the product ends up in a landfill. Additionally, not just the

buying practice can cause more waste in the garbage but also the manufacturing activity. For

instance, manufacturing activity requires energy generated by burning fossil fuels, which

releases greenhouse gases. Furthermore, if a company produces on a large scale, the energy

consumption is higher, which attỉbute more CO2 emission. Overall, being entirely unharmful

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to the environment can be known as releasing zero carbon, which is impossible for any

industry because every step of a business can cause specific impacts.

Comprehending that, UNIQLO has conducted environmental activities that reduce

greenhouse emissions and solve industry waste. By installing LED lighting at retail stores

throughout Japan, 38.7% of the greenhouse is decreasing (Appendix A), which exceeded 10%

of their expectation of reduction. The transformation to renewable energy in all European

retail stores significantly saved a large amount of CO2 released yearly. A standard solar panel

can save over 900kg of CO2, equivalent to an average car's emission after driving 20.7

thousand miles (Solar Photovoltaics And Environmental Cost, 2022; 1 Tonne of CO2, 2021).

Additionally, because of the practice of recycling PET bottles can decrease CO2 emissions

created from the manufacturing of the polyester chip as the raw material for the fabric by

63% compared to petroleum-originated raw materials (UNIQLO, 2021). Moreover, the

technology of recycling unused clothes for fuels for another industry is 28% more efficient.

Solid fuel combustion only releases 188g/mole compared to 2.5g/mole when using materials

from clothing (Taiwan SETNEWS Live Channel, 2021). There is an effort to innovate

technology to lessen the environmental impact and fix its mistakes with vast waste. However,

because the practice is implemented to solve the “surface” problems of global warming, not

the root of the issue, which cannot be solved, the problem of overproduction. Hence, several

limitations of methods are inevitable; the way can be received as a temporary method but

possess the achievements above, which prove what they have done up to now is satisfactory.

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Appendix A

More specifically, after recycling plastic bottles into clothing, the transformed clothes

cannot be used anymore (Lorenz, 2020). In addition, in another research by Kimberley Van

Der Wal (n.d), PET also releases microplastic and other toxic substances into the undersea

ecology system while destroying soil and water fundamental functions. Another UNIQLO act

is applying renewable energy programs for their offices; however, if expired solar panels are

not fully solved or replaced, they will be able to spoil soil and water resources status (Lao

Dong, 2021). In addition, manufacturing panels requires some environmentally harmful

chemicals such as sodium hydroxide, hydrofluoric acid, water, and electricity utilised, which

emit greenhouse gasses (Nunez, 2014). In the clothing recycling to fuel aspect of UNIQLO,

even solid fuel can be the substitute for fossil fuels, this burning practice remains as an

amount of ash waste and CO2 are released into the air.

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By that, the circle of sustainability is not circular permanently due to the limitation

above. Pucker (2022) stated that it is necessary to acknowledge that being “less

unsustainable” does not equate to not being “sustainable”. The solutions above can be known

as a temporary method that might reduce the harm but do not solve the big picture issue, the

climate impact from the business model can never be tackled. The recycling process is still

making clothing or material end up in landfill, and the transformation to renewable energy is

still causing soil pollution at the end. However, these activities seem to be suitable solutions

to mitigate the effects of their business practices on the environment up to now.

Lesson 2

The most significant advantage for UNIQLO when third-party outsourcing

manufacturers is that they will not be directly responsible for any arraignment of forced

labour while partnering with the factories. In other words, the whole responsibility belongs

to the suppliers because the employees are under the management of the factories, not

UNIQLO. When an accusation arises of a manufacturer maltreats workers, such as not

paying wages and offering poor working conditions, UNIQLO can be flexible to cancel the

contract and find different factories.

From the event of two Jaba Garmindo factories in Indonesia, UNIQLO is not legally

responsible for the mentioned violations. In other words, once UNIQLO owns

manufacturing factories in Indonesia without knowing thoroughly the labour law of

Indonesia, they will be in trouble with the authority. Apparently, the less basic understanding

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of labour law and basic salary calculation that they have, the higher the likelihood of breach

of contract or labour law. Thus, UNIQLO can be sued for infringement and have to pay

compensation. Accordingly, UNIQLO has a clear-sighted decision when partnering with

manufacturing firms in the outsourcing country since it helps them avoid liability for labour

and human rights violations when third parties directly manage their workers in accordance

with Indonesian law. Therefore, UNIQLO had no legal responsibility or compensation to the

laborers when the two Jaba Garmindo factories were accused of violating labour rights as

pregnant workers were dismissed, harassed, and unpaid (Uniqlo and the women owed $5.5

million, 2020). Furthermore, due to a severe labour violation in Jaba Garmindo firms,

UNIQLO firmly stopped collaborating with the supplier during the investigation process,

possibly for two reasons. Firstly, UNIQLO wants to pressure the partner to solve the problem

quickly. If UNIQLO terminates its partnership with Jaba, Jaba Garmindo will lose an

important customer. At the same time, other brands do not want to cooperate with a supplier

that infringes workers' rights, resulting in the factory's bankruptcy and workers losing their

jobs. Second, such a tough move with two Jaba Garmindo factories also builds customers'

trust as a statement of the business philosophy of respecting human rights and work labour.

Compared to UNIQLO, ZARA - the fast-fashion behemoth, takes the polar opposite

approach. Specifically, ZARA outsources almost 35% of the manufacturing process and has

almost company-owned factories. As a result, in 2011, ZARA must take responsibility for the

labour violation lawsuit of ZARA Brazil's strategic supplier AHA. They had been fined for 48

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different infractions and were on the verge of being entered into the "dirty list" of using slave

labour in the third-party manufacturers for exceeding working time - up to 16 hours per day -

and restricting freedom of movement for workers. (Case Study: Zara Fights Sanctions For Forced

Labour In Brazilian Supply Chain, 2020). Hence, owning a foreign factory, ZARA must consider

the importance of understanding that country's labour laws to avoid the risks of violating

labour rights. Meanwhile, instead of owning outsourcing manufactories like ZARA,

UNIQLO only partners without necessarily comprehending the labour laws in partner

countries to avoid direct responsibility for the above violations.

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Reference list

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brazilian-supply-chain/

Fast Retailing. (2011). Uniqlo Business Strategy | FAST RETAILING CO., LTD.

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Fast Retailing Co., Ltd. Uniqlo | Winners | Porter Prize. (2009). Porter Prize.

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Fast Retailing. (2019). Pursuing Customer Satisfaction. FAST RETAILING CO., LTD.

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Gould, H. (2018, July 2). Zara and H&M back in-store recycling to tackle throwaway

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https://medium.com/modefica-global/recycled-pet-is-not-a-solution-for-sustai

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Nunez, C. (2014, November 11). How Green Are Those Solar Panels, Really? Science.

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