The Five Forces Framework
The five forces model by Michael Porter focuses on analyzing the key aspects that are essential for entering new marketplaces. He defines the industry as 'the group of firms producing products that are close substitutes for each other' (Porter, 1998). Prior to exploring any new marketplace and business line, it is essential that a profound structural analysis be performed. The forces that determines the ultimate potential and threats for competitions for an industry are 1. Competitive Rivalry 2. Threat of Entry 3. Threat of Substitution 4. Bargaining powers of Buyers 5. Bargaining power of Suppliers
Textile Industry Analysis
Industry Overview
Pakistan is the world's 4th largest producer
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The Pakistani textile industry though, has such large population of manufacturers that any new actors may hardly be noticed by the competition, which minimizes the risk for retaliation. Patents rights:
As the textile industry is a technology oriented industry but it can't be regarded as a high tech industry so there are no patents and other restrictions which may prevent new entrants or serve as a competitive advantage for one company. Customer Loyalty:
Considering the customers in Pakistan and dress patterns, there is not much brand loyalty. However in markets such as European and American where Pakistan exports its textile products, brand loyalty is a hurdle in establishing customer base. Absolute cost:
Overall Pakistan has a cost advantage by having cheap labor available for the whole supply chain of the textile industry, which serves as an attraction. * Substitution
When using such a broad term as Textile, there are obvious reasons for identifying substitute product groups proves difficult. Of course, there are variations in types of clothing and material. Variations in textile segment can also be identified as trends in fashion and styles. Hence products within the apparel segment can act as substitutes but the general conclusion still stands; there's no substitute to apparel. * Bargaining powers of Buyers
Pakistan is a country where we have numerous players in textile industry. All are varied in terms
The relevance of this book can be measured by its ability to speak to the everyday individual, who may or may not know anything about economics, and plant the seed toward global economic education. It provides a keen social awareness to people who may or may not ordinarily care about international economics and can have an eye-opening effect toward what really happens in the textile industry.
Esquel, one of the leading cotton-shirt-manufacturers in the world came from China and it supplies lots of clothing brand such as Banana Republic, Tommy Hilfiger, Hugo Boss, Brooks Brothers, Abercrombie and Fitch, Nike, Nordstrom and Lands’ End, in addition to private companies (Plunkett Research, Ltd.). However, due to the high demand of the US apparel stores for Chinese products, the low cost, which was the main reason why raw materials are being purchased from China, have increased. China’s competition is huge, with Vietnam, the Philippines, Malaysia and Sri Lanka also producing material at cheap prices (Plunkett Research, Ltd.). The US apparel stores can instead purchase from these other Asian countries. It is hard to determine the exact number of suppliers in this industry; but, in general, majority of them are in Asian countries that can provide low-cost raw materials to US-based apparel stores. Therefore, the US apparel stores may acquire higher net profi
Porter’s Five Forces is defined as threats of new entrants, bargaining power of suppliers, power of buyers, the threat of substitutes and rivalry among existing competitors. New entrants into the industry aim to gain market share from rivals, so the intensity of competition may require to make changes on current strategy of marketing to maintain existing market share. The bargaining
In order to get our information on the innovation and impact of the textile mills, as a group we gathered information from various places and did extensive research on our topic. We found a great quantity of information by visiting the Upland Public Library, surfing numerous websites, collecting many primary interviews,
With the elimination of U.S. government subsidies, cotton textile manufacturers will pay more for cotton. As the leading buyer of cotton, the Chinese apparel industry’s profitability will be reduced due to their inability to pass on increased cotton prices to their buyers. China’s manufacturing costs had already increased by as much as 40% due to higher market wages and costs with complying with worker and environmental protections. Although China has substantial labor and is accused of utilizing sweat shops to keep their costs extremely low, their increasing manufacturing costs have opened the door to other countries with cheap labor such as Vietnam and Pakistan.
The export of towel from Pakistan to other countries is not generating much revenue but it has some importance as Pakistan ranks with India and China among the world’s leading towel manufacturers. The towel export business is specially a good one for Karachi-based producers, bringing Pakistan $300 million each year from sales to the United States alone. It is also good for urban Pakistanis seeking factory work According to the Towel Manufacturers Association of Pakistan (TMA), the manufacture of nine tons of towels—enough to fill a standard 20x20x8-foot shipping container puts 485 Pakistani men and women to work.
Just like other industry, clothing industry have different player involved, including the cybermediaries. And the two clothing
According to the Oxford Dictionary; textiles is a “ type of cloth or woven fabric.” Everyone wears some form of textiles, which is why the textiles industry is quite large.
There Is a similar relation among the clothes. Several customers shop there based on the quality and prices as well as the features associated with the products. An advantage of the store is that it has a wide product mix and various offering in different categories and all these can be located at one place. This attracts a wide variety of customers. In line with their positioning of offering quality, trendy products, the brand is consistently updating its product line. The brand does not focus on innovation but rather on always leading trends. In relation to the product life cycle, clothing has a short life span from the first to last stage as tastes change easily. For this reason, it is important to constantly anticipate consumer tastes and preferences prior to launching a product so as to retain and possibly build customers loyalty. It is also necessary to develop a successful marketing strategy to display product offerings.
As stated by Weller (2007) Australia's textile industry has seen a steady growth from 1970s to date, which makes it one of the major contributors to the economic development of the nation and a greater source of employment opportunity. The industry is unique from other markets around the world specifically from European and U.S. markets. This unique arrangement of the Australian space economy frequently contributes to several barriers for many clothing firms which has intention to establish in Australia. However, Australia's population within most urban centers is very less density which creates a lot of obstacles for any firm investing in Australia to make a nationwide market.
There are segmented clothing and retail industries around the world. Therefore, there are provisions for a smaller number of firms in the industry. Although Creación has direct competitors like Jovian and
Rivalry among existing competitors: The apparel industry is highly competitive with a great number of both local and global competitors. As the market is mature, its growth is small. Accelerated growth and expansion to new markets are not easy goals to achieve. The barrier to get out of the industry is quite low for distributors, but high for producers. Most fashion manufacturers moved their production base to low-cost countries like China as wage and raw materials in developed markets like Western Europe are high. Besides, there is no great discrepancy in terms of quality of products, so customers make their purchase choices based on price and brand recognition.
According to the data, the total volume of textiles exported from China has started a continuous rapid growth since 2001 (the year of China’s accession to the WTO) as shown in the first graph above, which roughly
Kamal limited is one of the oldest and foremost textile manufacturing houses of Pakistan. Established I 1950
The cost is kept low with labor and the production. This helps competing in the export trading world. “I am telling, in textile nobody can beat Bangladesh in price and quality”