MUJI: Analyzing International Operations and Business Challenges

This report provides a comprehensive analysis of 'Ryohin Keikaku Co Ltd', commonly known as MUJI, a prominent Japanese retailer of household and consumer goods. The report begins with an introduction to the brand, its history, and its core philosophy of minimalism and 'no brand, quality goods'. The study then delves into MUJI's international operations, evaluating its global presence through the lens of the Perlmutter EPRG Model, Global Value Chain governance (modular, relational, and captive), and Porter's Diamond Model. The analysis explores MUJI's firm strategy, structure, and rivalry within the Japanese retail market, including its competitive advantages and responses to market demands. Furthermore, the report identifies and discusses two major challenges faced by MUJI: the impact of maximalism, particularly in the US market, and the effects of the COVID-19 pandemic on its global operations. The conclusion summarizes the key findings, highlighting MUJI's international success and the ongoing challenges it must navigate.

Table of Contents
INTRODUCTION.................................................................................................................................................................2
COMPANY.............................................................................................................................................................................2
EVIDENCES SHOW MUJI IS AN INTERNATIONAL COMPANY...............................................................................4
PERLMUTTER EPRG MODEL...............................................................................................................................................................4
GLOBAL VALUE CHAINS........................................................................................................................................................................ 5
PORTER'S DIAMOND MODEL................................................................................................................................................................8
Firm strategy, structure, and rivalry....................................................................................................................................... 9
Factor.................................................................................................................................................................................................. 10
Demands............................................................................................................................................................................................ 10
Supporting industry...................................................................................................................................................................... 10
Government...................................................................................................................................................................................... 11
Chance................................................................................................................................................................................................ 11
CHALLENGE......................................................................................................................................................................11
MAXIMALISM........................................................................................................................................................................................ 11
COVID 19............................................................................................................................................................................................ 12
CONCLUSION....................................................................................................................................................................12
REFERENCE LIST.............................................................................................................................................................12

Introduction
This essay is about 'Ryohin Keikaku Co Ltd' or MUJI company. First, the information and
history of the brand will be introduced. Then, this paper is going to verify its international
operations by Perlmutter EPRG Model, Global Value Chain Governances, and Porter's
Diamond Model. Finally, this essay will address the two main challenges of brands:
Maximalism and the COVID-19 pandemic.
Company
'Ryohin Keikaku Co Ltd' is one of the most appropriate and interesting examples of an
international company. This is a Japanese retailer of household and consumer goods and is
listed on the Japanese stock exchange (RYOHIN KEIKAKU CO., LTD 2020). The
ecosystem revolves around Muji and manages all of MUJI’s supply chains from product
design to retail (RYOHIN KEIKAKU CO., LTD 2020). MUJI's full name is Mujirushi
Ryohin, which means 'no brand, quality goods' (RYOHIN KEIKAKU CO., LTD 2020).
Ryohin Keikaku Co Ltd's goal is to promote a simple lifestyle, for a simpler and happier
world (RYOHIN KEIKAKU CO., LTD 2020). The brand provides basic items and holds a
philosophy that focuses on minimalism (RYOHIN KEIKAKU CO., LTD 2020).
In 1990, MUJI was born. In 1983, the first MUJI store was established in Aoyama, Tokyo
(Ryohin Keikaku Co., Ltd 2021). Until Feb 2021, MUJI has around 1,000 stores in 33
countries and regions with 7,000 products, including clothing, foods, household products and
even houses (Ryohin Keikaku Co., Ltd 2021). Figure 1 shows MUJI’s Expansion (Kanai
2018).
'Ryohin Keikaku Co Ltd' and ‘MUJI' can be used interchangeably in this essay.

Figure 1. MUJI’s Expansion from Kanai (2018).
Evidences show Muji is an international company
Perlmutter EPRG Model
Ryohin Keikaku Co Ltd has a geocentric or world-oriented approach. Figure 2 shows EPRG
FRAMEWORK from Hebergementwebs (2020) . The company sees and presents itself as a
global entity (RYOHIN KEIKAKU CO., LTD 2020). It offers the same products, services
and brand philosophy to the whole world (RYOHIN KEIKAKU CO., LTD 2020). The
company aims to be a 'worldwide classic' and is an internationally recognizable brand
(RYOHIN KEIKAKU CO., LTD 2020). It also has a policy of building the same human
development programs worldwide (RYOHIN KEIKAKU CO., LTD 2020).
Figure 2: EPRG FRAMEWORK from Hebergementwebs (2020)

Global Value Chains
Figure 3: Five types of value chain governance from Gereffi, Humphrey and Sturgeon (2005,
p.78–104)
MUJI applies three out of the five basic types of value chain governance. It is modular,
relational and captive governances to build inclusive supply chains. Figure 4 shows stages of
New Product Development to sales from International Finance Corporation (2021).

Figure 4: Stages of New Product Development to sales from International Finance
Corporation (2021)
Firstly, modular governance, MUJI has about 1,000 supply factories worldwide, which are
run by third parties located in ASEAN (International Finance Corporation 2021). Muji
requires its partner factories to meet the ‘Ryohin Standards’ qualities for products and code of
conduct ‘Ryohin Keikaku Basic Policy for Environment, Labor, and Safety’ (International
Finance Corporation 2021).
Secondly, relational governance, participating in Better Work is an attempt by Muji to
increase the productivity and working conditions of the apparel factory's employees in
Cambodia and Vietnam (International Finance Corporation 2021). For suppliers, the program
evaluates, provides training and advice, and enhances communication between the
management and workers of the garment factory (International Finance Corporation 2021).
For Muji, the program helps to widen Muji's network and information, enhance two-way
communication, address critical labour issues and build trusted relationships with producers
(International Finance Corporation 2021).
Muji received advisory services from International Finance Corporation (IFC) to support
producers from developing countries with sharing knowledge and expertise, and product
development (International Finance Corporation 2021).
Finally, captive governance, MUJI cooperates with IFC to provide opportunities for
producers at the base of the pyramid (BOP) since 2015 (International Finance Corporation
2021). This includes working with Small-Scale Producers (Artisans), smallholder farmers and
Women Producers in Kenya, the Kyrgyz Republic, Lao People's Democratic Republic and

India (International Finance Corporation 2021). These engagements also contain three main
challenges that Muji needs to solve as shown in Figure 5 (International Finance Corporation
2021). Challenge 1 was resolved by constant capacity development such as access to
networks, information, inputs, and peer learning, training from Muji for small scale suppliers
(International Finance Corporation 2021). Challenge 2 was handled at a lower cost and
challenge 3 was solved by effective communication and increased business activities
(International Finance Corporation 2021)
.
Figure 5: Challenges in Engaging with Small- Scale Suppliers from International Finance
Corporation (2021)

Porter's Diamond Model
Figure 6: Porter’s Diamond Model from (Business to you 2018)

Firm strategy, structure, and rivalry
Japan is a fertile retail market with a value of US$1.32 trillion in 2016 (Masuda 2019, p.45-
72). MUJI ranked 39th in sales in Japan in 2017 (Masuda 2019, p.45-72). To achieve this
position, MUJI had to face fierce competition. Other major players in the Japanese retail
industry include Kains in-home centre, NITORI in home furnishing, Daiso as one price store,
Kaldi in the food sector, Shimamura in Apparel, and Fast Retailing: UNIQLO in Apparel
(Masuda 2019, p.45-72). Fortunately, although MUJI has many competitors in each category
until now it has no direct rival as a multi-category brand (Masuda 2019, p.45-72).
The fierce competition has sharply increased the brand innovation process for survival and
growth (Masuda 2019, p.45-72). This includes three things, which are unique brand concept,
product development and communication as shown in Figure 7 (Masuda 2019, p.45-72).
First, the brand concept, its philosophy focuses on 'This will do' enough and basic items
instead of luxury goods or short-term impulsive purchases (Masuda 2019, p.45-72). Second,
there are three principles in the MUJI way: material selections, processes streamlining,
packaging simplification (Masuda 2019, p.45-72). Finally, communication, tag label is an
effort against copycats, better life articles and smartphone applications are tools to
communicate with and explain to customers about the brand's minimalist concept (Masuda
2019, p.45-72).