Threat of New Entrants High industry attractiveness and low barriers to entry leads to high threat of entry (Macmillanand

Tampoe, 2000). New competition poses a threat to the existing firms by bringing inadditional production capacity which results in lower revenue and returns for the competingfirms if demand of product is not increasing (Luffman et al, 1996; Barney, 1995). Porter(2008) argued that changes in the barriers can raise or lower the threat of new entrants. Forinstance, new competitors may be unleashed on expiry of patents, or may be reduced if thespace to keep new products is limited.Due to low barriers to entry in the garment industry, competition is gradually increasing. 2.5.6. Threat of Substitutes The availability of products or services performing similar or same functions with the actualproduct produced in that industry, and satisfying the customer needs, causes high threat of substitution in that industry (Porter, 2008; Hitt et al, 2003; Macmillan and Tampoe, 2000).With advances in technology, the threat of new substitutes being developed increases overtime. To overcome this, Porter (2008) suggested that the companies could introduce newfeatures in the existing product or provide wider accessibility thereby offering better value tocustomers (Porter, 2008). Hitt et al (2003) also supported by stating that the attractiveness of substitute products can be reduced by distinguishing a product or service through variouselement valued by customers such as price, quality, after sales service, and location. Thesedifferences in product need to be evaluated between India and China. 2.5.7. Bargaining Power of Suppliers High bargaining power of suppliers is when it is difficult to switch between differentsuppliers or if the total supply in this industry is only a small part of the suppliers totaloutput (Macmillan and Tampoe, 2000: 103). Thus, suppliers can exert power over firms byraising the prices and lowering the quality of its products (Morden, 2007; Hitt et al, 2003).Porter (2008) said that the power of suppliers changes with time. For example, the airlinesindustry was earlier only dependent on travel agents to sell tickets, now due to advent of internet, these companies are able to sell tickets online directly to customers. With this thebargaining power of airlines companies increased so as to cut down agents commission. 2.5.8. Bargaining Power of Buyers As said by Porter (2008), Powerful customers-the flip side of powerful suppliers-can capturemore value by forcing down prices, demanding better quality or more service (therebydriving up costs), and generally playing industry participants off against one another, at allthe expense of industry profitability. With tremendous competition in the garment industry, 18 this factor needs to be analysed. High bargaining power of buyers is when buyers are easilyable to switch between suppliers of the products required to gain discounts or any additionalservices. To counter this, Porter (2008) suggested that services should be expanded bycompanies, thereby raise the switching costs of buyers, or by finding alternative ways toreach customers so as to neutralize the powerful channels. 2.5.9. Extent of Industrial Rivalry

According to Porter (2008), Rivalry among existing competitors takes many familiar forms,including price discounting, new product introductions, advertising campaigns, and serviceimprovements. Existence of high rivalry in the garment industry is a cause of limitedprofitability (Hitt et al, 2003). Porter (2008) believed that the nature of industrial rivalry canbe altered by mergers and consolidations or by technological advances. He also said thatcompanies could invest heavily in unique products or expand its support services tocustomers.Apart from the five forces framework developed by Porter (1980), he also mentioned that thesixth force affecting the industry can be the government ideologies and policies. A differentsixth force was added by Grove (1996) as the power of complementors. Complementors arethe businesses from which customers buy complementary products. Porter (2008) howeverdisagreed with Grove (1996) and said that like government policy, complements are not asixth force determining industry profitability since their presence is not necessarily bad (orgood) for industry profitability. They affect the profitability by the way they influence thefive forces. In addition, Macmillan and Tampoe (2000) mentioned two other forces namelylobby groups and fashion and fickleness. Lobby groups are able to change the ground ruleswithin which the firm operates and it influences the values of customers. Increasing rate of change in fashion and fickleness can also affect the business to a large extent. All these forces 19 threaten the future prospects of garment industry, and therefore should be analysed beforedeveloping a strategy.