PORTERS FIVE FORCES

Porters five forces:

Porter's five forces analysis is a framework
for industry analysis and business strategy
development formed by Michael E. Porter.

It determines the competitive intensity. It also

determines the ultimate profit potential of the
industry

Apparel industry
Apparel industry primarily concerned with
the production of yarn, and cloth and the
subsequent design or manufacture of
clothing and their distribution. The raw
material may be natural or synthetic using
products of the chemical industry.

The Industrial processes

Cotton manufacturing
Synthetic fibers- rayon nylons and
polyesters
Natural fibers- sheep, goat, rabbit, silkworm flax, Hemp, Jute sisal

In 2002, textiles and apparel manufacturing grew

huge.
The countries with the largest share of their
exports being textiles and apparel were as follows:
Bangladesh: 85.9%

Mauritius: 56.6%

Macau: 84.4%

Sri Lanka: 54.3%

Cambodia: 72.5%

Dominican Republic:

Pakistan: 72.1%
El Salvador: 60.2%

50.9%
Nepal: 48.7%
Tunisia: 42.4%

Michel porters five

competitive force model for
Apparel industry

Entry barriers

 Economies of scale apparel industry is

high

Industry will buy raw materials in bulk for

further production when raw materials buy
in bulk the average cost will reduce

Product differentiation : High

Product differentiation will be high for new
entering industry in terms of brand
identification, brand loyalty, quality,
consumer service and advertising to
overcome by strong existing one and who
are first in market
Eg :Harpa and calvin klein

Capital requirement: High

Apparel industry need huge capital
requirement for plant & machineries, land,
raw material and advertisement
endorsing and startup losses.

Government policy Less

Comparatively the Government policies
are few for apparel industry to startup ,
they required license for textile mill ,
import & export etc

Conclusion for entry barrier

When the firms financial aspects are
strong it can enter apparel industry easily,
legal aspects play a role when the
manufacturing is into textiles.

Over all entry barriers for entering into

apparel industry is not so difficult too.

Powerful suppliers:
Suppliers refer to the firms that provide
inputs to the industry.
Bargaining power of the suppliers refer to
the potential of the suppliers to increase
the prices of inputs like labour, raw
materials, services, etc or the costs of
industry in other ways.

The suppliers power is high

When it is for unique product
Ex: Fur
When it is for less product differentiation
Ex: Silk

Conclusion
Suppliers have high bargaining power
when the supply is for unique and un
differentiated products.

Powerful buyers:

Buyers refer to the customers who finally

consume the product or the firms who distribute

the industrys product to the final consumers.
Bargaining power of buyers refer to the potential

of buyers to bargain down the prices charged by

the firms in the industry or to increase the firms
cost in the industry by demanding better quality
and service of product.

Power for buyers

When they buy in bulk
Ex: Manufacturer
Whole seller
When they can find alternative
suppliers:
Ex: Levies, Spykar, Pepe jeans etc

Conclusion
Bargaining power of buyers is high when they
by in huge quantity and also when there are
more number of suppliers to the market

Substitute product
These are the alternative products/ brands
satisfying the similar need of the customer
Substitute products affect when the switching
cost is high
Ex: Levis and Pepe jeans
Switching for quality, durability and status
Ex: Luiviton, Gucci

Conclusion
Substitute product affects when the
switching of brand takes place.
It also affects for the factors like
quality, status symbol etc

Rivalry among current competitors

Rivalry refers to the competitive struggle
for market share between firms in an
industry.
Extreme rivalry among established firms
poses a strong threat to profitability.
Competition is high in apparel industry

 Competitors include numerous apparel

designers, manufacturers, distributors,
importers, and retailers
Ex: competitors like
Nike, Puma, Reebok and Adidas
Biba and Global Desi
Peter England, Van Heusen, Louis
Philip, Arrow, Allen solly

Conclusion
Apparel industry is facing huge
competition
Due to such intensive competition
survival of a new entrant is hard.

Final conclusion
Apparel industry is one of the booming
industry
The above factors determine that the entry
barrier for a new entrant in apparel industry
is high.
It is difficult for a new entrant to enter and
exit easily, because it will have to face the
initial losses

 It is very difficult to match the

service level of the established
competitors of the market for initials.
Gaining the customer loyalty is too
difficult and involve huge time, cost
to achieve it.