Glocalization Challenge: A Small Apparel Company in New York City

By Hirakubo, Nakato | Journal of Case Studies, November 2015 | Go to article overview

Glocalization Challenge: A Small Apparel Company in New York City


Hirakubo, Nakato, Journal of Case Studies


Introduction

Glocalization was a portmanteau of globalization and localization. In order to expand globally, firms that adapted to local environments tended to be more successful than the ones that standardized their marketing efforts. "Think Globally, Act Locally" was the mantra of many multinational corporations, and one of the key success factors in realizing this concept was the decentralization of decision making authority. Nevertheless, many Japanese organizations were highly centralized (Taplin, 2013).

Koji was on a Skype meeting with Japanese executives. He thought it was about time to change the brand's positioning and promotional strategies. In fact, Koji had another Skype meeting three days earlier for a different issue. He had to consult with the executives in Japan before making almost every key decision. When there was some disagreement, Koji usually consented reluctantly. This time, Koji did not back down easily. Since he oversaw the stores, and talked to his employees and customers on a daily basis, he was confident about his plan.

Disagreement

Koji Tanaka was the president of Red Eagle USA Inc., a subsidiary of a Japanese apparel firm. It designed and sold denim products under its own brand, Red Eagle. Manufacturing was done by contractors in Japan and China, and their products were wholesaled to small boutiques, chained stores, and online shops in Japan. Red Eagle also operated its own retail outlets including the two stores Koji managed in New York City.

Koji was in the process of reformulating the marketing plan he developed with Japanese executives a year ago. Since the New York stores heavily depended upon Chinese American customers, Koji wanted to diversify the clientele. Koji's plan was to promote Red Eagle stores' exceptional services with Japanese hospitality to attract regular American consumers, outside of their already strong Chinese-American demographic. Koji also wanted to mention that the stores carried various brands other than Red Eagle jeans. He was confident about the positioning strategy.

Executives at the headquarters strongly opposed the plan. They insisted on promoting Red Eagle as a premier jean brand from Japan, but they were not interested in promoting the stores or their services. The executives thought promoting the brand would increase retail sales, and eventually provide an opportunity to wholesale to other retailers. They particularly did not like the idea of mentioning other brands on the website, advertisements, or any other promotional materials.

Red Eagle Co. Ltd.

After receiving a marketing degree from a college in New York, Koji worked for a trading company, an e-commerce retailer, and a consulting firm that developed marketing strategies for Japanese companies in the U.S. Koji had been working for Red Eagle since it opened the first store five years ago. Koji managed nine workers at the office and 14 sales people at the two stores. Office workers were in charge of developing websites, providing online customer service, managing logistics, and supervising the stores. Koji and his staff traveled to Japan two or three times a year, while Japanese staff came to New York for a Fashion Week twice a year. They maintained close contact with each other.

Red Eagle Co. sold jeans, denim shirts, and accessories at its chain of retail stores. It started as a wholesaler 25 years ago in Japan. It imported denim products from the U.S., and sold to Japanese apparel retailers. About 15 years ago, it began designing its own products and sold them as Red Eagle Jeans. Manufacturing was contracted to Japanese sewing factories in Okayama, Japan. The cost of production was quite high, but the quality was exceptional. An average retail price of Red Eagle jeans was around $200. Low-priced jeans were made in China and were set at a price point between $50 and $100.

Because the company wanted to control the brand's image, and listen to their customers' opinions directly, it opened the first store 10 years ago in Tokyo. …

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