Their goods have to be of a high quality (depending on price) for customer demand to continue or increase and for customer loyalty. If quality drops that will have to be reflected by the price, if not then the Tesco may have to consider getting new suppliers, this means loss of income for the current supplier and job uncertainty.
During the time of the Civil War, there were slaves working on farmers, these slaves were not compensated for their labor and services and were producing cotton for a little to nothing cost. Since the Civil War, America has produced an immense amount of cotton and would export it to different parts of the world. America has also had enough workers to meet the exact supply and demand, which follows the demand policy. Correspondingly, the manifest destiny caused for cotton growers further west. Due to the cotton growers going further out west, cotton became easier to grow and easier to protect. These technological advancements simplified the process by which people were able to grow cotton and export it to China for the workers to create these shirts. There are now many subsidiary industries to cotton; industries are always producing new clothes every day. Due to this
Tariff and Tax: The trade of a business organization also gets affected by the tariff and Tax laws. This could influence both positively or negatively. If the global market’s tax and tariff rate is high then TESCO could face difficulties to compete with those countries companies.
Ross Dress for Less has been keen to ensure it retains competitive edge where substitutes are concerned. The company through its price strategy coupled with purchasing methods which are unique can be said to be the key factors that counteract the threat of substitutes. There is the need for the company to keep watch of fake commodities in the market which may serve to undercut its market.
The Apparel industry in general and particularly the Sweater industry is facing problems of declining sales and increased overheads. Steinhouse operates in the higher price band and this sector is dominated by named brands such as Polo and others and departmental stores and the customers prefer such brands over the lesser-known brands such as Steinhouse. Large retailers such as Walmart, prefer to buy directly in bulk from low wage countries such as Bangladesh, China and others. The US market has a very high potential and trade barriers are not present meaning that the company can sell their products freely in the market. They are also allowed to sell in Europe and sales would depend on their quality, brand and price.
The book is broken down into four parts: “King Cotton”, “Made in China”, “Trouble at the Border” and “My T-shirt Finally Encounters a Free Market”. Each part explains a different step of the t-shirt process.
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.
We often question how our food and clothes can be sold so cheap, this all comes down to where it is made or grown. Our clothes are made overseas in factories by women and in some cases even children in unsuitable conditions. They work long hours and don’t get paid much in return, it is said to be less than what they can afford to live on and made to work extra hours. This is why large stores like Primark and Asda can sell their clothes at such little cost. Some of the workers are said to be working 60 to 90 hours every week for as little as £17 per month. (Making social lives pg.88) The workers in the factories are grateful for their small wage and would struggle if the factories were to close and business was took elsewhere.
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.
Tesco also have social factors that affect them, as the business have charity centre in helping the less privilege people and the more these people gets poor, the more they will have to stretch to help out which also spending money.
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
tesco can take advantage of its successful international expansion. tesco is in a position to share their know-how and also is able to apply technologies and know-how which will create a competitive edge over its rivals and also step its learning curve.