PESTLE Analysis of Clothing Industry for International Business Environment
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This report provides a PESTLE analysis of the clothing industry for international business environment. It includes political, economic, social, technological, legal and environmental factors affecting the industry.
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International Business Environment
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BUSINESS ENVIRONMENT1 PESTLE Analysis There are different tools which are used to analyse the environment in order to expand the business at the global level. Marketing analysis is necessary for the company and the new entrepreneur to enter the new industry (Enterslice, 2018). There are many tools such as SWOT Analysis, PESTLE Analysis, Value Chain Analysis, and many others. These tools help to analyse the macro-environment and micro-environment. PESTLE Analysis is a best tool in order to analyse the business environment of the new market and industry. PESTLE Analysis helps to analyse the different factors which affects the market directly and these factors considered as the main factors for any industry as well as for company. This tool contains the six factors and these are political, economic, social, technological, legal and environmental. This tool is also useful for the marketers to monitor the environment as per the condition of the market. It is beneficial for the companies to analyse the competition in the market in order to gain the competitive advantage (B2U, 2018). In this section of the report, the clothing industry has been taken into consideration to analyse the environment in the different factors. The industry will be analysed in these factors which are discussed below: (Source:Marketing Dawn, 2018)
BUSINESS ENVIRONMENT2 Political Analysis Political analysis contain the information about the government intervenesin the industry. It includes the government policy, foreign trade policy, tax policy, labour law, political stability and instability in overseas market. In the clothing industry, government encourage the companies to buy the fabrics locally due to taxation on imports from the other countries. Government also implement the policy in related to the animal use in the manufacturing the clothes. There are many companies use the animal furs and skin in manufacturing the clothes. There are many women in the politics that inspires the people regarding the fashion trends. The fashion trend in politics was begun in 1960s by Jackie Kennedy and after that it is in the continuous progress. The political factors of the tool are indicating that the rules and regulation of the government is in the favour of the industry. It has been analysed that the government develop the different policies related to the export and import of the clothes. The government of different country develops the different policies as per the economic condition. It is difficult for the companies to implement the different policy as per the country (Marketing Dawn, 2018). (Source: Murphy Marketing, 2015) Economic Analysis
BUSINESS ENVIRONMENT3 Economic Analysis refers the economic conditions of the market in the terms of tax, GDP, and capital requirement. It includes the interest rate, exchange rate, inflation, disposable income of consumers and economic growth. In the clothing industry, there are many popular brands who earn the high revenue such as Zara, H&M, GAP and many others. These brands are the competitors in the terms of design as well as financial. After the 2008 recession, the economy is still recovering in the terms of finance. People are finding the extra money to put on the fashion and accessories. There are many places where the people are still struggling to earn the money to fulfil their basic needs for the survival. Clothing is also a basic need for the people that is why people spend their money on it. But it is noted that the fashion clothes cannot be afforded by all types of people and the well popular brands of this industry offers the products on the high prices. Zara earned €25.34 billion per year and H&M earned €25.19 billion per year which reflects that the companies earned the high revenue with their premium price strategy (Statista, 2018).. The companies also paid the taxes on the high revenue to the government as per the tax policies. The revenue of the companies also states that the both the companies have high competition in the market. Social Analysis Social Analysis includes the population, taste, trend, age, career and many others elements which affects the industry. People always want to wear the best outfit on the special occasions due to which they spent their money in order to buy the dresses. It is noted that the companies earned high profit at the time of festivals and special occasions due to high demand of the customer. But it is observed that the
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BUSINESS ENVIRONMENT4 companies also faced the issue because it is difficult to operate as per the taste of the consumer. Different people have their different taste and it is changing as per the time. It is negative factor for the brands because they develop the product with the high cost of raw material and due to decreasing demand they can face the heavy loss (Frue, 2018). Technological Analysis Technological Analysis is a factor which includes the development of technology which directly affects the quality of the product of the companies. GAP, H&M, Zara and many other brands uses the different machines to manufacture the quality of product. The companies have high competition in the market from each other. They promote their product in the market in order to gain the competitive advantage by selling their product in the large amount (Owler, 2018). Nowadays, the companies use the social media to promote their products in the market by developing their own web pages. It is noted that the companies also offer the product online to increase their demand. The companies earn more net worth as compare to the previous net worth due to adopting the online shopping technology (Steele, and Major, 2018). Legal Analysis Legal Factor includes the laws and acts regarding the health and safety, advertising standards, consumer rights and many others. It has been analysed that the brands of clothing industry follows the similar rules and regulation such as tax restriction, export restriction and inflation costs. The companies earn the high profit that is why they also have to maintain the workers’ rights in order to provide the effective salary. GAP, H&M, Zara are the brands which are also popular for the strength of their employees. The companies also follow the accurate organisation structure by
BUSINESS ENVIRONMENT5 maintaining the law and rights of the employees and consumers (Suceesstory, 2018). Environmental Analysis Environmental Analysis refers the elements related to the atmosphere such as pollution, humidity and many others which affects the material. Many laws are made related to the animal uses in the manufacturing of clothes, and the use of chemicals. As compare to the other industries, clothing industry is the only industry which uses less chemical while manufacturing the product. The manufacturing companies such as Adidas, Reebok and many others use the chemical in the cotton to modify it into the quality of material. It is less effective as compare to the other industries (Stulle, 2018).
BUSINESS ENVIRONMENT6 References B2U. (2018)Scanning the Environment: PESTEL Analysis.[online] Available From: https://www.business-to-you.com/scanning-the-environment-pestel-analysis/ [Accessed 24/1/19]. Enterslice. (2018)Introduction and Types of International Business Environment (IBE).[online] Available From: https://enterslice.com/learning/international-business- environment-ibe/ [Accessed 24/1/19]. Marketing Dawn. (2018)PESTLE Analysis of Garment Industry.[online] Available From: http://marketingdawn.com/pestle-analysis-of-garment-industry/ [Accessed 24/1/19]. Murphy Marketing.(2015)What is a PESTLE Analysis and how can it help?.[online] Available From:https://www.murphymarketing.ie/what-is-a-pestle-analysis/ [Accessed 24/1/19]. Owler. (2018)ZARA's Competitors, Revenue, Number of Employees, Funding and Acquisitions.[online] Available From: https://www.owler.com/company/zara [Accessed 24/1/19]. Frue, K. (2018)PESTLE Analysis Of The Fashion Industry.[online] Available From: https://pestleanalysis.com/pestle-analysis-of-the-fashion-industry/ [Accessed 24/1/19]. Statista. (2018)Value of the leading 10 apparel brands worldwide in 2018 (in million U.S. dollars).[online] Available From:
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BUSINESS ENVIRONMENT7 https://www.statista.com/statistics/412567/value-of-the-leading-global-apparel- brands/[Accessed 24/1/19]. Steele, V., and Major, S. J. (2018)Fashion industry. [online] Available From: https://www.britannica.com/art/fashion-industry [Accessed 24/1/19]. Stulle,R. (2018)The Macro environmental Factors Affecting the Clothing Industry. [online] Available From: https://smallbusiness.chron.com/macroenvironmental- factors-affecting-clothing-industry-37254.html [Accessed 24/1/19]. Suceesstory. (2018) What is Zara?.[online] Available From: https://successstory.com/companies/zara [Accessed 24/1/19].