Global Marketing of YKK and YKK Bangladesh Strategy

Adnan Abu Saleh Mohammed Tarique

Master’s Assignment-Individual Project Assignment

November 2019
School of Business
Master’s degree Programme in International Business Management
 Description

Author(s) Type of publication Date

Adnan Abu Saleh Mohammed Tarique Master’s Assignment- November 2019
M3061 Project individual Language of publication:

Number of pages Permission for web

18 publication:
Title of publication
Global Marketing of YKK and YKK Bangladesh Strategy
Degree programme
Master’s Programme
Supervisor(s)

Assigned by
Salman Saleem

Keywords/tags (subjects)

Miscellaneous (Confidential information)

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Contents

1 Introduction: .................................................................................................. 2

2 Company Over view:....................................................................................... 2

3 YKK Globalization: .......................................................................................... 4

4 Product Life cycle:........................................................................................... 6

5 How YKK Bangladesh Using the Five Forces of Framework In zipper Industry: .. 7

6 The core competence of YKK ........................................................................... 9

6.1 Competitive advantages of YKK: .............................................................. 10

7 Generic Strategies of YKK .............................................................................. 11

Cost Leadership: ................................................................................................. 11

Benefits that YKK gains from Cost Leadership: ................................................. 11

Applying Five tests of Good Strategy: ............................................................... 12

8 The Strategy making Process of YKK Bangladesh Pte Ltd................................ 13

References ........................................................................................................... 16
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1 Introduction:

Bangladesh Garments industry is the second-largest garment industry in the world

and the textile industry is the largest and generates 80% of total exports. Until 1978
Bangladesh had only 9 textile industries that export goods to other countries.
Bangladesh RMG industry average growth was 40-50% in the last 20 years. In 2005
Bangladesh garments industry worth was around 6 billion dollars and in 2010 this
jumped 12 billion dollars and in 2018 this industry value is 25 billion dollars. This
industry is growing rapidly so by 2020 it is expected that this will be cross 30 billion
dollars. Bangladesh’s total export, in that more than 60% goes to Europe and 21%
goes to the USA and 4% goes to Canada.

2 Company Over view:

YKK Bangladesh Pte Ltd, a subsidiary of YKK Holdings Asia engaged in manufacturing
of garment accessories like zipper, button, snap, hook & eye, and rivet & burr.
Established in 1934 in Japan, YKK Group currently operates in around 72 countries
and employs 40,000 people around the globe.

The YKK Group is a Japanese group of manufacturing companies. As the world's

largest zipper manufacturer, YKK Group is most known for making zippers; however,
it also manufactures other fastening products, architectural products, plastic
hardware and industrial machinery.
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YKK currently the world's top zipper manufacturer, with $10 billion in annual revenue
and a 40% global market share.
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3 YKK Globalization: YKK group conducting business under Six region

Global managemant structure. The YKK group is currently engaged in business
in72 countries/regions around the world. YKK management system divides the
world into six regional bases.

➔ North and Central america

➔ South America
➔ Europe
➔ The middle east and africa
➔ China
➔ Asia
➔ Japan
The global business is carried out with YKK Group companies of each region playing a
leading role and making of the most of their respective regional characteristics.
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So, from 4 orientations of a view on YKK’s business activities can be summarized

as:

1. Ethnocentric
2. Polycentric (multidomestic)
3. Regio centric
4. Geocentric (global)

YKK’s business activitieswith Regio centric view. Doing business or divided with six
regional and running the business regional demad, mix up with culture and customer
demand.

Why YKK decide to go international:

Market seeking: YKK decided to go internationally for new customers, new buyers,
new cultural demand, new design and new prospect. Like some buyers from
America, some buyers from Africa, some from Asia. So everywhere is new customers
and different demand.

Efficiency-seeking: For minimizing the cost YKK goes abroad for lower
manufacturing cost.It helps to manke minimum profit throughtout the world. Also
spread their operation in various location.
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Resource-seeking: For access resources YKK doing business through out the world.
For Different product comanies need different types of resources. For that going
abroad is one of the main reason.

Strategic asset-seeking: For long term strategic plan some times home condition not
always support for conducting business. Japan is not fully occopied of all resources.
Thats why comapnies soing business in abroad

4 Product Life cycle:

YKK mainly produce the zipper through out the world. On the basis of sales or profit
YKK as a company is now in the maturity level.

Costs: YKK is the most low-cost provider of zipper manufacturing company through
out the world. On one or any competitor can provide less cost from them.

Customers: Now YKK have 40% of market share of world zipper manufacturing
industry and rest of the competitor like thousands of competitors have 60% of share
of market. So, majority of customers take goods from YKK.

Marketing objectives and strategy: BY obtaining market share YKK maximize their
profit from the beginning to end and also influencing customers to switch their band
by proving best quality of product

Product: There are thousand of product under the umbrella of YKK group. Different
Product in different categories for different segments.

Place: YKK build more intensive distribution through out the world.
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Promotion: Create brand value through out the world. Competitors are far behind of
YKK Branding.

5 How YKK Bangladesh Using the Five Forces of Framework

In zipper Industry:

Rivalry among competitors: There are so many competitors of the zipper industry in
Bangladesh. Already exiting 14 zipper company doing business in this industry.so the
completion is quite high for YKK. Two Asian supergiant companies, YKK, and SBS
doing business in Bangladesh head to head in a rivalry. So that is impacting the supply
chain of most major fashion brands and Rivalry among competitors is very high.
Because the zipper industry is highly fragmented and it always calculates by cost,
innovation, and quality. In 2020 the zipper market will be $13.7 billion and low-cost
chainages companies like SBS and NEO targeting to capture the market. Also, the
American company TELON joins the rivalry to take some profit from the market. In
terms of the fashion industry YKK and other companies spending their money on
Research and development. By considering Quality differences and customer loyalty
YKK is far ahead of other Chinese companies. By dealing with big fashion brands like
Louis Vuitton, Prada, Gucci, Hermes, Versace, H&M, Burberry, Armani, and others,
YKK is the main supplier of a zipper throughout the world.
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Bargaining power of buyers: In Bangladesh 4560 garments factories where the

amount 4 million of manpower is now working that factories. the number of customers
and the size of garments orders are high. So, the bargaining power is buyers is high.
Buyers have lots of opportunities to buy zippers from other companies. The bargaining
power of Buyers is high where they get low cost of the zipper and it’s an undifferentiated
product as well as the cost of switching is low. The price range is higher for YKK where
the other companies offer low prices zipper with good quality but not the best one. The
differences between competitors and the sensitivity of prices are very low. So that
buyers can easily change their order to another company. There is also the substitute
product of zipper which is known as “Button”. While the prices go high buyers can
easily change their design and the cost of changing for buyers is not high as well.
Bargaining power of suppliers: There are limited suppliers. YKK brought their
materials from limited customers throughout the world. There are scarce resources of
zipper and price is high. Although some suppliers are producing their materials from
the other corner of the world. So, The bargaining power of suppliers. Because of limited
suppliers can exercise pressure on buyers by raising prices. Some suppliers are in brazil,
Indonesia, Vietnam, and America. By this YKK disrupted normal business operation
for uncertainty results in an uncertain cost structure.
The quality of the supplied raw materials is critical too. Sometimes the quality of the
Product is not good and it regularly happened with YKK. Defective materials can
hamper production. Several times customers notice that they use low-quality materials,
their perception of the entire brand will change. Also, the availability of impacts
production cycle if suppliers do not send the materials on time this automatically results
in a delay for final customers. And That happens several times for YKK Bangladesh.
So, the relationship of the suppliers is important and the bargaining power of suppliers
is high.
The threat of new entrants: Usually YKK Bangladesh is currently operating in the
industry and is doing well. Profit is like a magnet the money YKK makes the more
company will look at when YKK doing and competitor do the same thing and profit
from this industry too. The higher the profits YKK operating in the industry, the bigger
the incentive for new entrants. New entrants, competitor, they want a piece of the and
will be willing to join and complete to get it. Firms, like YKK, are currently competing
in the market will lose some of their market share to new entrants. It means they will
have to compete with new players which will likely steal some for their current and
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future clients and if the number of new entrants is still too high YKK may lose
substantial business and produce loses.
That has happened with YKK Bangladesh. In 2017 and 2018 world-known OPTI and
SAB zippers started their operation and production with low prices and good quality.
Thus, YKK loses its current customer and futures buyers from their list as well as Some
world-class brands.
The threat of substitute products: In the Threat of substitute products YKK faces
some big challenges regarding substitute products. Instead of zippers buyers are using
snaps and buttons. There are so many companies in Bangladesh that they are producing
only Buttons and snaps. If the buyers have the option to change the style of zipper price
goes too high, they can use the snaps and buttons. It is low-cost products and delivery
of lead time is small. Also, easy to move one factory to another factory. Here, there are
low chances of damage goods by using Snaps and buttons. For substitute products, some
factors are considered as availability, quality, performance, and price. All these 4 factors
are against zipper i/o snap and buttons. Substitute goods are goods that satisfy the same
needs as the one your product aims to satisfy. YKK faces the Same problem. The threat
of substitute products is high.

6 The core competence of YKK

Competitor differentiation of YKK:

YKK creates the ecosystem throughout the organization. Like they have their
machine, own raw materials, own mechanism and own technologies to make
the zipper and button. These things don't sales the other companies or rivals.
Customer Value: If one garment manufacturer or buyer buys YKK zipper then
they never went out from YKK’s quality. Zipper quality is too good within low
prices so mainly customers get the real impact from the product.
Application of competencies to other markets: YKK has lots of variation on their
products. mainly produce zipper but plastic hardware, hook and loop, snap and
button, architectural materials are the unique and best quality that no one can
copy it.
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6.1 Competitive advantages of YKK:

There are so many competitive advantages if YKK rather than the

competitor. Mainly low cost and good quality. It has a brand name and huge
goodwill behind the name of YKK. Buyers can buy zippers or nominated the
zipper to their products because of the quality. After 10 to 15 years later the
quality of zippers will be the same as they provide.

YKK has to maintain and sustain a favorable market position throughout the
beginning of their business. They always offer buyers something different
from a competitor and provide more value for the money.at the end of the
day, their strategy is a successful strategy when YKK is unique in the industry
and get the competitive advantage form it.

Competitive advantage from the perspective of strategic resources:

According to the resource-based view of the company, the sustainable

competitive advantage is achieved through the continuous development of
existing ones and the creation of the assets and skills of new companies in
response to rapidly changing market conditions. Intangible resources are the
main sources of a company developed in terms of today's economy.
According to Guthrie, in a knowledge-based economy, the source of
companies’ economic value no longer depends on the production of
material goods but the creation and manipulation of intellectual capital
(Guthrie, 2004).

strategic resources of YKK:

Valuable: YKK products create value and able to exploit an opportunity and
neutralize the external threat. So, it increases the customer's perceived
value relation to YKK.

Rare: Raw materials which mainly YKK use in their product, all raw material
produces by YKK themselves. So, this special material only uses YKK for their
zipper production and the technology like a machine and another
mechanism also from YKK's technology. Other companies or rivals cannot
access these resources.
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Imitable: It's not possible for a competitor to copy the capability and cannot
copy the YKK source. That why YKK gets the real competitive advantage
from the Competitor.

Organized: YKK is so organized, ready and able to exploit its resources and
capabilities any time. Management is so organized that they can take
decisions anywhere, at any time.

7 Generic Strategies of YKK

As a big manufacturer of Zipper, the accessories garments industry in

Bangladesh, the company also follows the generic strategies. YKK analysis the
competitive scope and competitive advantage for doing batter Business. YKK
always focusing on cost leadership strategies and follow the trend.

Cost Leadership:

In cost leadership, YKK is the low-cost producer of the zipper in the industry
and YKK is called the cost leader of the accessories industry and YKK. This
can be achieved by the economies of scale where low-cost producers (YKK)
sell zipper products (standard product) to a board target of the industry
customers that means they sell their product to the full garments industry.

YKK also focuses on cost-effective segments. YKK procurement their

materials from their own sister's concern. So, in the procurement section,
YKK has the cost leadership benefits as well as mass production of zipper
and YKK has well developed the delivery channel. YKK also invest in newer
technologies.

Benefits that YKK gains from Cost Leadership:

YKK, the low-cost leader in the garments accessories industry or markets gains
competitive from being able too many to produce the zipper and other products
at a lower cost.
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Mainly it helps YKK for costs shaves off every element of the value chain.
Products that tend to be "no-frills". However, low cost does not mean always
lead to low prices.

YKK could price at competitive priority, so YKK can exploit the benefits of a bigger
margin than competitors.

YKK, are very good not only at producing high quality of zipper and other
accessories product but they have the brand and marketing skills to use a
premium pricing policy.

Applying Five tests of Good Strategy:

First, YKK must choose a distinctive value proposition:

YKK creates a distinctive value proposition by fulfilling for big garments
industry's accessories demand. YKK has the contact thousands of buyers
throughout the world and garments manufacturer must have to buy the zipper
from them at a lower price. YKK has the brand value with a good quality of the
product that differentiates from other competitors
Second, and far less intuitive, must choose to tailor activities to that value
proposition: YKK has organized their activity different way and it creates a
distinctive value proposition. They make the delivery of goods within a short
time or sometimes an urgent basis. Short lead time helps YKK for differentiating
from rivals.
The third test of strategy, making trade-offs: YKK has a vast list of customers
throughout the world. Sometimes they face a huge order at a time. But some big
customers like Nike, Adidas, H&M, Lidl, and others give the priority and give
service urgent basis. That's why YKK sometime does making tradeoffs with some
buyers and as well as customers that means the garments manufacturer. YKK
Knows what to do and what not to do.
Fit is the fourth test: YKK has done that activity or takes action to do that
activity that supports the activity of the other as well. It's not only creat value
there but it does it radiates value to others activities and they reinforce each
other a great relationship between people reinforces each other so there's a
tight fit. Mass production or extra production always gives you extra benefits
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for YKK. They delivered the product immediately when buyers and customers
order them. So definitely competitors go behind this point and it helps other
activities as well.
Continuity is the strategy's fifth test: YKK always improves its strategy and strict
its strategy to follow from the last 50 years. YKK always goes deep in the strategy
and goes dipper and dipper to improve its Strategy and make it successful at the
end. YKK Make sure the quality of the product at any cost, no compromise with
quality, make customers happy and make a profit.

8 The Strategy making Process of YKK Bangladesh Pte Ltd

Environmnetal Scanning: YKK Bangladesh is always analayes its internal

environment and External Environment. As a manufacturing company YKK
Bangladesh Knows its strengths like as Metal zipper (Metal zipper section) can
produce more zipper within short time and good Quality as well as company can
suffer by plastic zipper department can bring some complaine for quality issue.

For External Industry environment there are two big companies, Opti and SAB
operate and set up factory and started operation in Bangladesh. In 2017 YKK
bangladesh has 60% of market share and rest of other companies has only 40% but in
2018 market share has been reduce rapidly and other company capturing the
market. YKK Bangladesh collecting the information that two big company started
operation In Bangladesh market and face paroblem to capturing the marktet
share, management should evaluate it on a continuous basis and strive to improve it.

Also YKK Bangladesh analyse the market oppurtunity that is changing the fashion
trand, environmental friendly product.

Strategy Formulation: After analysisng the environmental Scaning YKK bangladesh

take some functional strategy as well as business and corporate strategy. For
accomplishing organizational objectives and achieving organizational purpose YKK
decided to increase the production and increase the monthly and yearly production
terget and capacity to capture the market again. Strightly maintain and follow the
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task by Developing, maintain and continuously improve the operations, continuously

review areas of responsibility to increase productivity and improve efficiency.

In Functional strategy YKK management take decision to change the old macheraries
for increasing the production terget. Management has change the production plan
and production layout with new machenaries.

Strategy Implementation: For leading the bangladesh market in zipper/Accessories

YKK bangladesh Implement their strategy one by one.

 Change the old cycle time machine i/o new cycle time machine.
 Set up Big capacity m/c instate of small capacity m/c
 Introduce new concept of button and replacing zipper
 Produce Low cost zipper
 Short lead time of zipper production and deliverty to customer
 Extend the Old factory and set up a new factory
 Start Recharce and development deaprtment to improve the quality
 Set up new sales office in every garments related area
 Bring experts from YKK corporation
 Sign up new buyers and customers through out europe and USA.
 Introducing eco friendly zipper and button for europe and USA buyers
 Selling the zipper and button minimum profit
 Start new production line of slider.
 Sharing production bonus and profit bonus with employees
 Stop turnover of experience employees .
 The company follows a principle dubbed 'The Cycle of Goodness'; the belief
that YKK can only prosper if it serves customers better than anyone else
can.
By Implementing all this YKK in 2019 again capture 60% market share of bangaldesh.

Their competitor like SAB, HHH, Neo and Opti zipper still struggle to survive in the
market.
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Strategy Evaluation: Management of YKK Bangladesh Appraising internal and

external factors measuring performance and taking corrective action/remedial.One
of the major corrective action is that maitain the production flow in stright line.If the
production flow ups and down then cost will be increase. To meet the organizational
objectives YKK bangladesh review the strategy implementation and take to improve
the action.

Conclusion: For growing a comapny expand business is imporant for the firm.
YKK do exeat that for a longer period of time. That creats their success as a big
manufacturer in the world. Marketing, mass production, branding, creat vale chain,
maintain product life cycle, operation different destination, strategy maintain, profit
sharing, variation product those are the success of YKK.
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References

YKK Bangladesh conducts Global Marketing Forum. 2014. Page on fibre2fashion

website. Accessed on 25 November 2019. Retrieved from
https://www.fibre2fashion.com/news/apparel-
news/newsdetails.aspx?news_id=167923
This Is YKK. 2019. Page on YKK. Accessed on 25 November 2019. Retrieved from
https://www.ykk.com/english/corporate/group/pdf/this_is_ykk.pdf
Page on YKK website. Accessed on 25 November 2019. Retrieved from
https://www.ykk.com/english/philosophy/index.html
Page on YKK website. Accessed on 25 November 2019. Retrieved from
https://www.ykkfastening.com