Guess?, Inc. - External and Internal Business Environmental Analysis

1.0 Introduction
Guess?, Inc. is an American clothing brand and retailer founded in 1981 by the Marciano
brothers (Shop.guess.com, 2019) namely Georges Marciano, Maurice Marciano, Paul
Marciano, and Armand Marciano. Its core business is in designing, marketing, distributing
and licensing of contemporary apparel and accessories for men, women, and children that
reflect the American lifestyle and European fashion sensibilities (Money.cnn.com, 2019). It is
listed in the US stock exchange with a stock price of $19.08USD (Bloomberg.com, 2019) and
its for the year 2018 revenue at $2.4B USD (Herrero, Marciano, and Marciano, 2019).
Guess?, Inc mission is to become the worldwide leader in the fashion industry
(Content.guess.com, 2019).
In this report, we will discuss and analyse the internal and external environment of the
Fashion Retail industry though Guess using tools like DEPSTGP, Porter’s Five Forces, Value
chain analysis and VRIO. The current strategies of the organisation will also be discussed to
analyse the efficiency and benefits to come out with recommendations to reduce the issues
and challenges faced by the company.
2.0 External and Internal Business environmental analysis
2.1.1 Macro environment analysis DEPSTGP
Demographic
 328,488,217 population in United
States (Worldometers.info, 2019)
 Increasing number of millennial and
less baby boomers
Economical
 Sixth highest per capita (GDP) in the
world
 Second largest manufacturer in the
world (Focus Economics, 2018)
Political
 Risk of changing the government
 Different rules and regulation
 Free from the barriers of Tariff and
non-tariff during trade
Social
 Diverse Culture
 High Immigration
 Clothing style is varied by social
status (Zimmermann, 2017)

Technology
 Improve living standard
 Workers are more productive
 Internet (Hitlin, 2018).
Global segments
 High rate of exports
 Business in worldwide
 Rate of export is increasing year by
year (United States Geogrpaphy,
2018)
Physical environment
 Environmental regulations and the environmental movement have emerged in order to
reduce the threat of environment
 Changing climate fluctuate the demand of consumers (United States Geogrpaphy,
2018).
Demographic
The population of United States stands at 328,488,217 as of 2018 (Worldometers.info, 2019).
The number of millennials occupied about close to a quarter of the total population at
75million strong (Frey, 2019). This group of customers are expected to overtake the
boomer’s generation as the largest US adult group by 2019 (Anon, 2019). This changing age
structure is favourable to the youth-centric fashion retail industry. Millennials are also the
most highly educated generation in history (CityLab, 2019), making them the group with
stronger spending power. As baby boomers are getting retired, the chances of Millennials
getting the new job will also be higher.
Social
It has been evaluated that the America is the only country who influence the other countries
to adopt their culture. It is one of the most culturally diverse countries in the world.
Therefore, percentage of Immigration is high as compared to the other countries leading to a

high percentage of growth in the U.S workforce. It is expected that the rate of workforce will
increase from 173million to 183 million in the year of 2035 through immigration (Cillufo,
2017).
The clothing style of Americans is varying by social status, religion and climate. Jeans,
baseball caps, sneakers, and boots are some items of clothing that are closely related with
Americans. The people of Americans are widely influenced by celebrities and the media and
fashion sales (Zimmermann, 2017).
Technology
It has been seen that the developing technology improve the living standard of a consumers.
Changing the living standard affects the demand of consumer towards the industry.
It has been evaluated that the workers are getting more productive as they use the advance
machines to do the work. In the year, the rate of using the advance technology products such
as broadband is 65% to 67% but it is observed that it is increases over the last two years with
the rate of 78 % to 73% (Hitlin, 2018).
Nowadays, no one can live without the mobile phones and internet. Every person uses the
smartphones and has an account on social media applications. It is beneficial for the
companies to promote their services (Litan, 2001).
2.1.2 Porters Five Forces
Threat of new entrants (High to
moderate)
Low level of capital requirement
(Hançerlioğulları, and Aktunç, 2016)
Bargaining power of consumers (High to
moderate)
Many companies provide similar services
(US Fashion Industry, 2019).
Bargaining power of Suppliers (Low to
moderate)
Low bargaining power
Companies can easily switch (Guess Los
Angles, 2019).
The threat of competitors (High to
moderate)
Charlotte Russe, J. Crew, Gap Inc. and
many others (Owler, 2019).
The threat of substitutes (Low to moderate)

Basic demand of consumer (US Fashion Industry, 2019).
Threat of new entrants – High to Moderate
It has been seen that the threat of new entrants is high to moderate. The companies have the
advantage to enter the US fashion industry as per the political support and high GDP rate.
Retail companies can easily enter the market due to low level of capital requirement.
(Hançerlioğulları, and Aktunç, 2016). The reason of high threat is its advance technology
which is used by the new entrants while entering the market (Yang, Song, and Tong, 2017)
The existing companies have high brand image in the market due to which it is difficult for
new entrants to beat the existing companies in the competition that is why; the new entrants
have high to moderate level of threat (Pratap, 2018).
The threat of substitutes
It is evaluated that the threat of substitutes is high to moderate there is no product that can
replace the clothes (Smith, 2007). It is observed that there are two types of clothes in the
industry such as ethical and fashion. Guess sales the fashion trends product that is why ethnic
wear is also a substitute for the company (Guess Los Angles, 2019). There is no item that can
replace the clothes from the other product but it is observed that the sports apparel and many
other industries of different clothes affect the business. It has been seen that the consumers
have many options in brands. There are many brands that can be easily replaceable the Guess
such as Venus, J.crew, Kohl’s and many others (Owler, 2019).
2.1.3 Competitor Analysis