Glocalization Strategy: Eagle Jeans USA Market Analysis

SWOT Analysis of Eagle Jeans USA

Eagle Jeans has several strengths from which it can build. First, the company maintains a strong customer base among Chinese-Americans, which provides enough revenue to sustain operations — a meaningful advantage that allows the brand to explore other markets. The New York stores generate $3 million per year, representing 10% of total Japan-wide revenue. As a further strength, the product is of high quality, which is reflected in its price. While the jeans are not great value for money, there is generally a market for premium-quality goods. Whether American consumers perceive a product labeled "Made in China" as high quality is debatable, however. An American consumer might accept "Made in Japan" as a quality signal, but "Made in China" frequently carries the opposite connotation — a potential hidden weakness. The sales staff represents another significant strength. The strategy of hiring staff fluent not only in English but also in Korean, Japanese, and one or more Chinese languages has been a successful tactic for Eagle, and the staff are exceptionally well-trained.

A notable weakness is the company's high degree of centralization, with decision-making for the American market located in Japan. This arrangement requires extensive communication between the local manager and overseas leadership, diverting time from operational duties. More fundamentally, Japanese managers do not necessarily understand what works in the American market. At best, they are applying a strategy suited to Japan onto a very different consumer landscape — a strategic error. Another underexamined weakness is the product itself: jeans cut to fit Asian body types do not typically fit non-Asian customers well. Clothing must fit well and look good on the wearer in order to generate and sustain demand. If Eagle jeans do not fit or flatter non-Asian consumers, that may explain the company's difficulty breaking into other demographics. This issue also drives an inventory problem: Eagle acknowledges it cannot manage production of larger sizes, yet sells those sizes from other brands. The result is that the company is using valuable floor and inventory space to sell a competitor's product to a demographic that does not naturally shop at Eagle stores — an inefficient and contradictory approach.

A third weakness is the brand itself. Japanese denim has no particular mainstream reputation in America; none of the major Japanese brand names are well known to American consumers, and Eagle is no exception despite its apparently American-sounding name. The brand must invest in brand-building to justify its premium pricing to consumers. A further weakness is that U.S. sales have plateaued at a level insufficient to finance further growth, leaving the brand essentially at a standstill in the American market.

There is a substantial opportunity to expand the brand beyond the Chinese-American niche. Many other demographics represent potential growth targets. Even within the overseas Chinese market alone, Eagle could perform well in cities such as Toronto, Vancouver, and London, as well as numerous U.S. cities where it does not currently operate. Additional opportunities exist in online retailing and wholesaling, and there is some support among senior management for pursuing these channels.

In terms of threats, competition must be addressed first. The denim market is saturated at virtually every price point. Complicating matters further, the U.S. retail system is multi-tiered and frequently results in high-end brands being sold at a discount — either through store-branded outlets such as Nordstrom Rack and Saks Off Fifth, or through third-party discounters such as Marshall's. Many American consumers do not expect to pay full price for clothing on major shopping streets. While Asian-American consumers may view paying full price as a mark of prestige, a large segment of the broader American market would be reluctant to do so.

Based on this SWOT analysis, neither of the strategies under consideration is perfectly suited to the situation. The SWOT framework is most useful when strategy flows directly from its findings. Here, the analysis suggests that Eagle must adjust its product to appeal to other demographics — the current product simply does not resonate with consumers who do not have an Asian body type. The analysis also implies a need for stronger brand promotion. While the service offering does differentiate the brand, it is only meaningful if the underlying product meets consumer expectations. Any premium-priced product must combine an exceptional product with high-end service — the two are inseparable, and both must be emphasized in brand-building efforts. The service model does create an opportunity for meaningful differentiation in a highly competitive marketplace, but for a $200 pair of jeans, the brand must sell both the experience and the product itself. Japanese management needs to be less rigid on this issue, particularly given its reluctance to promote other brands. Achieving real commercial success in America requires offering something that American consumers can actually use and want to buy.

The PR Agent Decision

The PR agent is not the most pressing issue facing the brand's U.S. operation, but at $5,000 per month the arrangement does not represent good value. The agent's work to date has been satisfactory, but the current need is for someone with the ability to generate mainstream media coverage — a capability this agent lacks. Whether the agent is the core problem or whether the constraints placed on messaging (specifically, the prohibition on promoting anything other than service) are the limiting factor is ultimately irrelevant: nothing is happening to justify continued expenditure at this level. If central management ever relaxes its stance on brand promotion, or if the local manager chooses to act independently on this front, the question of which agent to retain can be revisited. In the meantime, Eagle is not achieving adequate return on investment from the current arrangement, and the agent's contract should be terminated.

Management Style and Glocalization

The concept of glocalization holds that a company operating globally should nonetheless develop local market strategies, customizing its product and marketing to suit local tastes (Roudemetof, 2005). In a business context, glocalization reflects the need for companies that wish to thrive across multiple markets to adopt a blend of global and local characteristics (Svensson, 2001). The logic of this framework is clearly illustrated by the Eagle Jeans case. Headquarters is operating the company purely as a Japanese enterprise. Not only is it maintaining a high degree of centralization, but it is making decisions calibrated for the Japanese market and applying them to the United States. This makes the strategy locally Japanese, but not even genuinely global. A true global strategy would be applicable across many national contexts — the current approach fails even at that level. Moreover, it is not localized to the U.S. market, which constitutes a significant constraint on the performance of the Eagle Jeans USA subsidiary.

The management style is therefore incongruent with both a global and a glocal approach, and at least one of these would need to be adopted for the subsidiary to perform meaningfully. The preferable choice would be the glocal approach. The failure to adopt it is partly responsible for the subsidiary's mediocre performance and its inability to gain significant traction beyond the Chinese-American niche.