Global Clothing Industry Overview And Five Forces Analysis

The competition has been analyzed by using Porter’s Five Forces Model. By gathering an analysis of the threats that can come from competitive rivalry, potential new entrants, bargaining power of buyers, bargaining power of suppliers, and substitutes, Company G can be better compared to its competitors.

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.

In using Porter’s five-force analysis, we can discover how strong the competitive forces are within the sports apparel and footwear industry. The five-force analysis involves; rival sellers, threat of new entrants, substitute products, supplier bargaining power and buyer bargaining power, which we will explore to determine the attractiveness and intensity of competition within this market.

The Five Forces Model as defined by Dr. Michael Porter of Harvard University uses five different strategic factors to explain Competitive Rivalry a company or industry faces. The fiver forces that comprise the model are Bargaining Power of Suppliers, Bargaining Power of Buyers, Threat of Substitute Products, Potential Entrants and Completive Rivalry (Porter, 2008). The intent of this analysis is to rank-order each of these five factors from the standpoint of their influence on Target Corporation (NYSE:TGT) and their competitive position in the retailing industry. Each of the five forces are rank-ordered in terms of their importance to Target.

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

Although the Chinese apparel manufacturers would lose profitability due to rising cotton prices and competition from emerging countries, they stand to gain the most from the removal of U.S. quotas and tariffs. According to the author, in 2007, 95% of the 20 billion garments Americans made were purchased overseas. Due to U.S. trade barriers, China’s share of the U.S. apparel import was only 30%. Once these barriers were removed, Chinese apparel would flood the American market due to their low cost and dominance in garment manufacturing. Experts predict that China could eventually supply 85% of U.S. apparel. As they increase their market share in the

Defining an industry can be described as drawing a line between the established competitor and the substitute products offered by competitors outside the industry (Porter 1998). “Porter’s five forces provide a framework for an industry and business strategy development to drive the five forces that determine the competitive intensity and attractiveness of a market. The Porter’s Five Forces model helps identify where improvement can be made regarding competitive forces, threat of potential entrants, bargaining power of buyers, and bargaining power of suppliers and threats of substitute products.

Michael Porter’s Five Forces Model is a useful tool for such a purpose. The ability of the company to address the Model will be helpful in understanding the strengths of their current market position and their profitability in the industry. This model acts as an analytical tool and examines the competitive environment and identifies the external factors that affect the business. It examines the five forces that drive the industry competition: 1) potential entrants, 2) buyers, 3) suppliers, 4) substitute, and 5) the industry competitors (Lumpkin et al.

The textile industry has undergone enormous change in the past ten years. Global trade in textiles was once regulated by high tariffs and a complex system of import quotes. Not anymore. Textiles used to be produced predominantly in the U.S., Europe and Japan. Not anymore. Textile mills used to dictate fashion, everything from fabric construction to fiber content. Not anymore.

A century ago, the textile and clothing industry was a major part of the U.S. economy, but that is no longer the case. Faced with foreign competitors that can produce quality goods at low cost, many U.S. firms have found it increasingly difficult to produce and sell textiles and clothing at a profit. As a result, they have laid off their workers and shut down their factories. Today, most of the textiles and clothing that Americans consume is imported. The United States and China are economically connected through importing and exporting. Due to the United States being in a large deficit with China, we must remain in good terms with China. China has a very fast growing economy due to their advances in technology and other devices. The benefits are on a global perspective, globalization means more job opportunities. China has cheap labor, which allows them to produce at a lower cost. The story of the textile industry raises important questions for economic policy: How does international trade affect economic well-being? Who gains and who loses from free trade among countries, and how do the gains compare to the losses? A low domestic price indicates that the country or in this case China, has a comparative advantage in producing the good and that the country will become an exporter. A high domestic price indicates that the rest of the world has a comparative advantage in producing the good and that the country will become an importer. China is second to Canada as the United

In apparel industry the level of competition is very high, as there are big players competing in industries such as Jovian and Medeena. New entry threat are higher as they require less investment to enter the industry, whereas bargaining power buyers are also higher because of the wide alternative available to them. Suppliers' power is lower due to the existence of a large number of sellers and ultimately, treats of substitution is lower, as clothing is a basic needs whereas consumers have no alternative to clothing.

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

Porter’s five model is defined as the framework that evaluate the position of a company in the external environment with focus drawn on the level of competitiveness (Roy 2011). The framework considers factors such as rivalry, substitute goods, the power of suppliers and buyers as well as new entrants. Four forces can influence the success of Michael Kors. The first one is competitive rivalry. Here, the struggle is about maintaining performance despite different tactics used by different companies to increase sales. For instance, Ralph Lauren uses premium prices for quality products to differentiate itself, while Coach uses product variety within the line of handbags to remain competitive (Stewart 2016). Also, when the industry is flooded with similar companies producing similar merchandise, the probability of a company stagnating is high because consumers have a variety to pick from. Hence, the need to establish loyal customers.

Porter’s Five Forces model is used to evaluate the degree of rivalry between competitors in a given industry through assessing the four forces that lead to this outcome. These forces are the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitute products.