Table of Contents

1. Executive Summary.......................1
2. Background Information.......................1
3. Planning Functions...............................2
3.1 Definition
3.2 Types of Plans
3.3 Importance of Planning
4. Organizing Functions...............5
4.1 Key Elements of Organizational Structure
4.2 Type of departmentalization
4.3 Advantages and Disadvantages
4.4 Recommended Organization Design
5. Leading Functions..................................7
5.1 Leadership Theory
5.2 Leadership Style
5.3 Types of Power
5.4 Suggestion on how to motivate employees
5.5 Managerial Roles
6. Controlling Functions ..........9
6.1 Importance of Controlling Function
6.2 Three Types of Control and Relevant Examples
7. References ...............................13

I.

EXECUTIVE SUMMARY

The reason of why we chose to study Uniqlos organizational behaviour is because

Uniqlo is now earning large profits and becoming a well-known brand around the
world. Uniqlo's parent company, Fast Retailing, is Japan's biggest clothing company.
While many Japanese businesses are ailing because of the stagnant domestic
economy, Uniqlo is flourishing. Research reveals that Uniqlos revenue had
increased by 24.2% in 2015. It reported higher than expected increases in revenue
and profit, in both yen and local currency terms, with Mainland China, Hong Kong,
and Taiwan and South Korea reporting especially large gains. (The Economist)
The huge success of Uniqlo can attribute to its well-maintained organizational
behaviour, which allows the company to function in a systematic, efficient and
predictable way.
Its organizational behaviour comprises four main parts: planning, organizing, leading,
and controlling, all contributing to the success of Uniqlo. The purpose of this report is
thus to research, analyze and evaluate the aforementioned four functions of Uniqlo,
in order to better understand how it achieved what it is today.
II.

BACKGROUND INFORMATION

In 1984, Fast Retailing which is headed by Tadashi Yanai, opened the first Uniqlo
store in Hiroshima, Japan. In 1997, Uniqlo was the first company in Japan to
establish an organizational structure which encompasses all stages of the business-from design and production to final sale. By continuously refining its business model,
Uniqlo successfully differentiated itself from other companies by developing unique
products that were made for anyone of any age. (Welcome to Uniqlo)
Uniqlo aims to build "a new style Japanese firm making good casual clothes
available for all to wear". (Uniqlo.com) To achieve this goal, Uniqlo initiated an
organizational structure which allowed it to make adjustments to production quickly
in order to reflect the latest sales trends and to minimize store operation costs such
as personnel expenses and rent. Their successful business model is what enables
Uniqlo to continue to provide high-quality clothing at reasonable prices. (UNIQLO's
Business Model)

III.

PLANNING FUNCTIONS

Uniqlos long-term plans, operating plans, specific plans and standing plans have
helped it reap substantial amount of profits.

3.1 Definition
Planning is known as defining the organisations goals, establishing an overall
strategy for achieving the goals and developing plans for organisational work
activities. The purposes of planning are provide direction, control effects of change,
set controls standards and minimize waste and redundancy.

3.2 Types of plans

Long-term Plans:
Long-term plans are plans that are carried out in three years or more. Uniqlos long
term plan is to become Japan's top brand by expanding urban market share.
According to its official website, Uniqlo has already expanded its horizons for new
store openings across Southeast Asia and Oceania, encompassing Singapore,
Malaysia, Thailand, the Philippines, Indonesia and Australia. Across the Pacific, it
now aims to expand its store network in the United States to 100 stores over the
next few years by opening between 20 and 30 new stores each year. (Uniqlo's
Business Strategy)

Operating Plans:
Operating plans specify how a company will use resources. According to Fast
Retailing Annua Report 2007, Uniqlo Japan Operations believe that Uniqlo has
considerable potential to increase sales of womens clothing. Therefore, they
channelled resources to respond to womens apparel needs and created skinny
jeans for women. This operating plan resulted in a great success and expansion of
market share. (Fast Retailing Annual Report 2007)

Specific Plans:
Specific plans are about budget allocation and schedule activities to achieve a goal.
Uniqlo has specific plans on its location. It has positioned large-format stores as its
growth driver. Under this large-format strategy, Uniqlo is opening stores in different
types of locations, including urban street sides, suburban shopping centers,

commercial facilities, and roadsides. They chose these locations because these
areas are the fashion capital for casual wear. (Fast Retailing Annual Report 2007)

Standing Plans:
Standing plans are plans that handle events which reoccur frequently. Uniqlo has
Return Policies which are stated as followed:
1.

Product can be exchanged or refunded if there is a manufacturing defect.

2.

Original receipt is required for exchange or refund.

3.

Product that was sold at a special price due to existing defects cannot be

returned. (Uniqlo Terms of Use)

Those policies ensure that customers and employees of Uniqlo know how to handle
events which are likely to occur on a regular basis.

3.3 Importance of Planing

Planning is important as there is a strong relationship between planning and
performance. Formal planning is associated with higher profits and returns on assets
and positive financial results. High quality of planning and implementation can
directly result in good performance.

IV.

ORGANIZING FUNCTIONS

The success of Uniqlo lies on an organizational structure which is based on process

departmentalization. Its organizational structure is a highly centralized one with clear
hierarchy, in-depth specification, narrow span of control and high formalization.
Although this structure may seem inflexible and rigid, it enables Uniqlo to supply
quality products swiftly to all its outlets worldwide.

4.1 Key Elements of Organizational Structure

Work specification is the degree to which tasks in the organization are divided into
separate jobs. In Uniqlo, each employee is trained on how to perform one small task
well. For example, people who are patient and expressive will be put in charge of
customer service. Over time, he becomes extremely proficient at performing his
particular tasks.

Chain of command refers to unbroken line of authority that extends from the upper
levels to the lowest level of organization and clarifies who reports to who.
In Uniqlo, employees reports to a manager who reports to a senior manager. CEO is
the one who makes major and final decisions.

Span of control refers to the number of subordinates a manager can supervise.

Fig1. Uniqlos Controling System (Retailing)

Inferred from Fig1, Uniqlo has many levels and managers. There are managers from
Overseas Production Offices who report to managers from Quality Establishment
Committee who in turn report to managers in Tokyo Headquarters and Customer
Care Team. The large number of levels and managers means Uniqlos has a narrow
span of control.

Centralization refers to the degree to which decision making is concentrated at the

upper levels of organization. Uniqlo is highly centralized as all significant decisions
are made at top level. This is mainly because the company is large.

Formalization refers to the degree to which jobs within an organization are

standardized and the extent to which employees behaviours are guided by rules.
Uniqlo is highly formalized as the company has consistent output and clearly defined
procedures.

Departmentalization is the basis on which jobs are grouped in order to accomplish

organizational goals.

4.2 Type of departmentalization

Fig2. Uniqlos departmentalization (Uniqlo's Business Model)

Uniqlo adopts process departmentalization. Process Departmentalization is a

practice of combining related activities into specialized functional areas. Judging
from Uniqlos organizational chart (Fig2), the company is organized by work flow,
starting from planning to production to sales. Every activity is assigned to a particular
department. For example, designing is assigned to R&D department; sales
promotion is assigned to marketing department; quality control is assigned to
production department.

4.3 Advantages and Disadvantages

The greatest advantage to this process departmentalization is that it allows for
specialization. The people in the department are focused on one task and thus they
can be expert in it. This in turn results in lower cost and higher efficiency. (Aaker)

The greatest disadvantage of this type of departmentalization is that employees may

also feel isolated and bored. Uniqlo CEO Ynai once said that Uniqlo has an inflexible
hierarchy. (Fast Retailing Co.) This rigid may make employees feel restricted and
bored.
4.4 Recommended Organization Design
A mechanistic organization design is recommended for Uniqlo. Uniqlo should stick to
its high specialization, rigid departmentalization, clear chain of command, narrow
span of control, high centralization and high formalization. This is because the size of
the organization is big and is only growing bigger. Also, Uniqlo use relatively routine
technologies in manufacturing. Unlike IT and advertising firms, the environment that
Uniqlo is in is also relatively predictable. In order to alight with its mission of creating
affordable and high quality clothes for all, Uniqlo should adhere to cost reduction
principle and be mechanistic.

V.

LEADING FUNCTIONS

5.1 Leadership Theory

Uniqlo uses the Houses Path Goal Theory, which comprises of four leadership
behaviors; directive, where the managers will give specific instructions to their
subordinates, supportive, where the managers show concern and support to their
subordinates and are friendly, participative, where the managers will involve the
employees by getting feedback from them and allowing them to participate in
decision making, and achievement-oriented, where the managers set goals to
challenge employees and to help them reach their fullest potential.
This can be seen in Uniqlos managerial style, where they involve all four leadership
behaviors.
In the directive part of the leadership behaviors, the management will give
instructions to the quality establishment committee, who will then give instructions for
improvement to the overseas production office, where it will then be communicated
to production partners so that they know what to produce.

Under the supportive element, it is said that the founder of the company, Mr Tadashi
Yanai, is a very charismatic man who successfully created a motivating and
supportive corporate culture and working environment for his employees. (Aaker)
5.2 Leadership Style
In the achievement-oriented aspect, the staff are monitored to ensure quality
customer care and they are also required to practice interacting with shoppers and
are monitored to the smallest details, such as a persons folding technique or the
way they return change and cards to customers, with both hands and full eyecontact. This ensures that the employees are always performing at their best, which
demonstrates the achievement-oriented leadership behavior. (Aaker)
Under the participative part, the management will allow the designers free will to
design whatever they want, and also to decorate the store windows as they please.
This shows that they involve the employees in decision making and also get
feedback from them in the form of suggestions to ensure a good employee/manager
relationship. (Aaker)

5.3 Types of Power

Reward power is the ability to control rewards that the employees values. Uniqlos
reward system is based on seniority. Young workers get little compensation but will
increase with their years of commitment with the company. Rewards include different
types of loans for housing and cars, vacations etc. (Congress)
Expert power is the leaders ability to give his employee instructions to follow. In
Uniqlo, people with specialized knowledge has expert power. (Fast Retailing Co.)

Coercive power refers to the ability of a leader to give penalty to team members.
Uniqlo follows a hierarchy style of corporate management, thus superiors are usually
allowed to punish their subordinates by cutting their pays.

Referent power occurs when the leader have a particular characteristic which
employees admire. In Uniqlo, it is common to see motivating bosses as they

commonly do a cheer before the start of the work. Learning from their leaders, many
Uniqlo employees do a welcome cheer for every customer that walks into the store.

Legitimate power is a formal recognition of the status and the power a leader has
over his workers. Japanese companies usually value and respect senior employees.
Uniqlo is not an exception as it allows them to instruct junior and new employees.
(slideshare.net)

5.4 Suggestion on how to motivate employees

According to McClellands 3-Needs Theory, an organization should satisfy
employees need for achievement, power and affiliation to motivate them.

Need for power means the need to influence the behaviours of others. Managers
from Uniqlo can encourage junior employees to give feedback to senior managers
about the way company can operate. Bottom-up feedbacks can be given to the
management level. This allows junior employees feel empowered and valued.
Need for affiliation refers to the need for interpersonal relationships. Uniqlos senior
employees should take the initiative to befriend junior employees and promote
bonding in team works. This gives everyone a sense of belonging.
Need for Achievements refers to an individual's desire for significant success.
Leaders should praise and rewards subordinates for their success and association of
achievement with one's own competence and effort, not luck.
5.5 Managerial Roles
Leaders needs to be a resource allocator as there is a limit to the resource that a
company can use on a particular area. A leader needs to set a budget that will not
empty the organisations resources. A leader will also need to know if certain project
is feasible before approving these projects so that the company will not waste
precious time and resources on projects that does not reap enough benefits or profit
for the organisation.

A leader of an organisation may also need to be a disturbance handler at times. It

is important for the leader of a company to take on this managerial role nevertheless
because he is in the legitimate position to call for a change. He can also be the one
that helps calm down a crisis faced by the company.

VI.

CONTROLLING FUNCTIONS

6.1 Importance of Controlling Function

Although goals maybe set out to employees of Uniqlo, there is still no assurance that
the activities taken are going according as planned. Controlling is a way for the
company to ensure that managers know if the companys goals are being met. And if
the goals are not met, the company could find the source of the problem and take
corrective actions towards it.
6.2 Three Types of Control and examples

Feedforward control expect problems that a company might face. The key of this
control is to take action before a problem even occur. The Uniqlo Material
Development Team only procures high-quality cotton which can only be harvested
from three percent of the worlds cotton plants. (Uniqlo's Business Strategy) This
way, they could prevent foreseeable imperfections on their products, such as high
fragility.

Concurrent control occurs when the problem has already taken place. Companys
would have to quickly source out the problems and put a stop to it before the
situation gets out of hand and becomes costly. Therefore companies would have to
be on a constant look out to see if something is not working particularly well and find
a solution to it. For concurrent control, Uniqlo uses direct supervision to source out
problems and correct them before it becomes too costly for the company. The
supervisors from the Production Department, based in the Shanghai office, make
weekly visits to partner factories to check the quality and progress of production.
(Uniqlo's Business Strategy)

Feedback control only occurs when a problem had occurred. Feedback provides
companies with key informations that are meaningful on the effectiveness of the

companys planning. The Uniqlo Customer Center receives approximately 90,000

comments from customers annually. Its HEATTECH products, for example, have
been refined each year based on customers feedback some comments asking for
softer fabric, and a function to keep skin both warm and prevent dryness. It is
precisely this customer feedback function that makes it possible for Uniqlo to
effectively solve all the problems in their products which dissatisfied customers.

(2497 words excluding cover page, table of content and reference)

VII. REFERENCE
Aaker, David. Marketing News-Why Uniqlo is winning. January 2015.
https://www.ama.org/publications/MarketingNews/Pages/why-uniqlo-iswinning.aspx.
CEO's message. 1 5 2015.
http://www.fastretailing.com/eng/ir/direction/message.html.
Congress, United states Library of. country studies. n.d.
<http://www.slideshare.net/guestd7f9b0/japanese-culture-and-leadershipslideshare>.
Fast Retailing Annual Report 2007. 2007.
http://www.fastretailing.com/eng/ir/library/pdf/ar2007_e_07.pdf.
Fast Retailing Co., Ltd. Uniqlo Analyst Meeting Q&A. 10 April 2014.
http://www.fastretailing.com/eng/ir/library/pdf/faq20140410_en.pdf .
Interview with CEO. 19 2 2015.
http://www.fastretailing.com/eng/ir/direction/interview.html.
Retailing, Fast. UNIQLO's Product and Safety Control System. 22 April 2015.
http://www.fastretailing.com/eng/csr/customer/safety.html.
slideshare.net. slideshare. n.d. <http://www.slideshare.net/guestd7f9b0/japaneseculture-and-leadership-slideshare>.
Studymode. Report on Organizational Culture of Uniqlo and Giodano. n.d.
http://www.studymode.com/essays/Report-On-Organizational-Culture-OfUniqlo-142823.html.
The Economist. n.d. http://www.economist.com/node/16436304.
Uniqlo Terms of Use. n.d. http://www.uniqlo.com/sg/corp/guide.html.
Uniqlo's Business Model. 19 2 2015.
http://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html.
UNIQLO's Business Model. 19 2 2015.
http://www.fastretailing.com/eng/group/strategy/uniqlobusiness.html.
Uniqlo's Business Strategy. 11 7 2014.
http://www.fastretailing.com/eng/group/strategy/tactics.html.
Welcome to Uniqlo. 2013 May 6. http://cawesproecons.blogspot.sg/2013/05/introduction_6.html.