Ko’N Ni Chi Wa !
Check your fly !
What is the brand of the zipper ?
YKK
A quiet success
Group 2B FT 2005
Simone Huijs
Suraj Basnet
Ken Kodaka
Piercarlo Oddone
Joan Moreau
Eugene Kolesnikov
Agenda
1.
2.
3.
4.
5.
Overview
Key success factors
Structured analysis
Contemporary issues and strategies
Strategic recommendations
Overview
Success factors
Analysis
Current issues
Future
From small shop to global company



Tadahiro Yoshida
President of YKK



T otal Sales (Million yen)
600000

500000
400000

300000
200000
100000
0
1994
1996
1998
2000
2002
Founded : January 1, 1934 to produce zippers – a
new fashion product
Assets $ 6.3 bn
31% owned by Yoshida family
Remaining owned by key partners and employees
Subsidiaries : 132 in 60 countries
Production : 75 plants producing 7.2 bn zippers
Research : 4 R&D centers
Number of employees : 36,200 (October 2003)
Sales : $ 3.9 bn, 193% growth during 1994-2003
Always profitable
Overview
Success factors
Analysis
Current issues
Future
History of YKK
Tadao
Yoshida at
20 founded
San-es
Shokai
company
in Tokyo
1934
Zipper supply
contracted
with military
WWII
First overseas
affiliate in New
Zealand,
followed by US,
Malaysia,
Thailand and
Costa Rica
Automated
production
1950’s 1959
Captured 95% of Japanese
zipper business
1960’s
Changed
name
into YKK
Diversified into
aluminum building
products
1973
Tadao Yoshida
died and his
son Tadahiro
Yoshida took
control of the
company
1993 1994
Doubled
revenues
since 1994
2003
Overview
Success factors
Analysis
Current issues
Future
Corporate structure


Headquarters in Japan
2 main entities (fastening and
architectural products)
 Supported by machinery &
engineering divisions

Regional structure
 Six regional blocks
 Each block is managed as a profit
center

International marketing group
 Deals with multinationals
 Coordination
Overview
Success factors
Analysis
Current issues
Future
Global Zipper Market share
YKK Products
YKK
45%
Others
40%


Fastening products
 41% of revenue
 Market share : 45%
 Zippers, etc…
Architectural products
 58% of revenue
 Aluminum storefronts,
entrances, windows,
sliding doors etc.
Talon
7%
Optilon
8%
Overview
Success factors
Analysis
Current issues
YKK fastening market

1,500 styles in 427 standard colors and in as many
special colors as customers require

Consumer and industrial applications
 Apparel and accessories
 Special clothing and accessories
(safety, space, military)
 Other applications
(safety belts, tents, artificial turf in stadiums)
Future
Overview
Success factors
Analysis
Current issues
Why YKK is successful ?

Key success factors




Leadership and strategic intent
Product leadership
Global strategic management
Service leadership and information technology
Future
Overview
Success factors
Analysis
Current issues
Future
Leadership and strategic intent




Andrew Carnegie,
Tadao Yoshida and the
“Cycle of goodness”
In product development
In business development
In relations with local communities
“It starts with our single-minded dedication to perfection in everything
we do”
Tadao Yoshida
Overview
Success factors
Analysis
Current issues
Future
Product leadership
- 95% added value
- Superior products
- Attractive price

Total vertical integration

Proprietary
manufacturing
machines
Innovation


Total vertical integration
 95% added value rate
Proprietary manufacturing machines
 Technological advantage
Innovation
 R&D investment started in 1950s – four R&D
centers functioning today
 Discoveries in materials and products
(e.g. GIGAS)
Product quality and variety
 27 trademarks
Overview
Success factors
Analysis
Current issues
Future
Global strategic management







End of 1950s – 95% market share in Japan
1959 – first overseas affiliate in New Zealand
1960 – enter US market, first production facility in New
York in 1964
1972 – first Japanese company to open a factory in the UK
Maintaining Japanese management principles and strong
links with headquarters
 Overseas postings for 10-15 years
 First foreign executive, Alex Gregory, in US in 2001
Taking local culture into account
Local input procurements
Overview
Success factors
Analysis
Current issues
Future
Service leadership and IT – 1/2





US 1960s – “Delivery yesterday” – won over Talon and
Optilon
1990 – Adidas as a global client
1993 – PARTNERS procurement system
1997 – electronic shop-floor control system
“Now we can respond to important orders within the
hour. Needless to say, our customers are delighted”
2000/2001 – internet based supply chain and customer
management solutions
 Delivery dates by suppliers are being met with a success
rate of 97%
Overview
Success factors
Analysis
Current issues
Future
Service leadership and IT – 2/2
“Our goal is to create a ‘Virtual Company’ that brings us together with our
partner companies”
Overview
Success factors
Analysis
Current issues
Future
Porter analysis
New entrants
High threat in low cost sector
Zipper patents expired, Lower-end technology
and cheap labor available in high demand areas
Medium threat in mature markets economies of scale
Suppliers
Low bargaining power
Raw materials such as zinc
and copper, plastics, are in
good supply
Buyers
Industry rivalry
High due to large number of
competitors and significant growth
in light industries in Asia
Substitutes
Low threat
Other fastening products are available
(e.g. Velcro) but did not take market
share
High bargaining power for
low cost producer
Medium for global customers
(high switching costs )
Overview
Success factors
Analysis
Current issues
Future
SWOT today
Strengths
• Private ownership shared with employees and key
business partners
• Customer relationship management
• Innovative and strong R&D capabilities
• International management experience
•Total vertical integration
•The diversification in two key product lines
Weaknesses
• Less flexibility in raising capital due to private
ownership
• Leadership succession problem
• Less flexibility in labor force scaling due to culture and
ownership structure
Opportunities
• New markets in developing countries
• New fastening products with new technologies
• Further integration with key customers
• New distribution channels (portals)
• Standardization of production
Threats
• Low cost competitors
• Increasing cost of raw material
• Counterfeiting
• Trends in the fashion industry
• Increasing vertical integration of main customers
Overview
Success factors
Analysis
Current issues
Future
Value, cost & speed



Value:
 High variety / High quality
 Customer relationship including e-customer relationship
Cost:
 Assumed fairly low costs due to economies of scale, superior
manufacturing technologies, and vertical integration
Speed:
Customers
 Fast manufacturing and delivery enabled
by IT and proximity to customer
 Innovation and fast time to market
Company
Cost
Speed
Competitors
Overview
Success factors
Analysis
Current issues
Future
Layers of competitive advantage

Efficiency
Lower
Unit Costs
Innovation
Quality
Higher
Unit Prices
Customer
Responsiveness
It may be easy to imitate the
zipper, it is difficult however to
duplicate the complete model
 Innovation
 Superior technology
 Total vertical integration
 Product variety
 Staff experience and loyalty
Overview
Success factors
Analysis
Current issues
Contemporary issues



Decline of older markets and dramatic global
geographical shift in apparel manufacturing
Growing size and power of the players in Asia and
increasing price competition
Substantial counterfeiting (e.g. 10% of zippers
imported into the US are counterfeit, majority of
them as YKK)
Future
Overview
Success factors
Analysis
Current issues
Future
Contemporary issues
YKK responds




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Shifting production to new manufacturing countries (Bangladesh,
China, Russia, Romania, Poland, Czech Republic)
 Factories in China will provide 17% of global capacity vs. 10%
 US capacity with fall by 22% to account for 10% vs. 14%
 Output capacity in Japan will fall 13% and reductions will be made in
the UK and Germany
Competing on price by launching a new brand aimed at Chinese
domestic market
Offsetting pressures on fastening division by growth in aluminum
construction sector
Corporate restructuring (marketing, aluminum products)
Standardization and cost cutting
Fighting counterfeiting
Overview
Success factors
Analysis
Current issues
Future
Looking ahead

YKK Corp. expects group net profit
to increase two-fold from the previous year

For the next fiscal year beginning April, the company expects a
healthy group profit of $ 194m on sales of $ 5.4bn
“To ensure mid- and long-term growth for the YKK Group in an
increasing difficult business environment, we must focus on
specific goals that reflect the overall mission of our group
activities”
Tadahiro Yoshida, President
Overview
Success factors
Analysis
Current issues
Future
Recommendations

Target cost buyers in developing countries beyond China by
introducing basic low cost products under different product
names

Actively pursue global standardization and e-commerce
applications to improve efficiency, reduce costs and improve
customer service

Identify and grow a successor to Tadahiro Yoshida
No
questions ?