Analyzing Fashion Star Ltd: PESTLE and Porter's Five Forces Framework

This report provides a comprehensive analysis of Fashion Star Ltd., a newly established private limited company in the UK clothing and homeware market, using Porter's Five Forces and PESTLE frameworks. The Porter's Five Forces analysis assesses the competitive intensity within the industry, examining factors such as existing competition, bargaining power of buyers and suppliers, and the threat of new entrants and substitute products. The PESTLE analysis evaluates the impact of political, economic, social, technological, environmental, and legal factors on the business. The report concludes that Fashion Star Ltd. must closely monitor these external factors to capitalize on opportunities, mitigate threats, and achieve long-term profitability and sustainable growth in the competitive UK market. Desklib offers a range of similar reports and study resources for students and researchers.

Introduction to
business 2 PESTLE
AND PORTERS 5
FORCES ANALYSIS

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION ..........................................................................................................................4
TASK ..............................................................................................................................................4
Porter's 5 forces competitive analysis........................................................................................4
PESTLE Analysis........................................................................................................................6
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

EXECUTIVE SUMMARY
This project is about a newly start up business. Here, the significance of business, its
contribution in increasing the customer base and its ability to face the competition will be
covered. To analyse the competition for this business, porter's five forces competitive analysis
will be done. Further, to analyse the positive or negative impact of external environment on the
business, its Pestle Analysis will also be done under this project.

INTRODUCTION
Business is an entity that is set up to conduct commercial activities in order to earn profits
and ensure growth. For any business organization, it is imperative to analyse the external
environment and its impact on the performance of the business and take corrective measures to
improve it. In common parlance, to succeed in the market, businesses need to analyse the macro
environment and strategies of the competitors to be stable in the market and increase market
share (Naidoo and Dulek, 2022). For increasing market share, it needs to expand its activities and
increase customer base. The following report will cover the Porter's 5 forces Analysis and Pestle
analysis of a newly set up business i.e. a private limited company named as Fashion Star Pvt.
Ltd. that will deal in clothing and home wares in the UK market. It is being established to
increase the market share in UK market and enjoy the long term profitability. The aim of this
business is to increase the customer base by fulfilling the demands and preferences of the
customers in the market. For the satisfaction of customers better than its competitors in the
market, it will have to observe and consider the market trends constantly and monitor its
performance to make the customers switch to its products.
TASK
Porter's 5 forces competitive analysis
This competitive analysis was developed in 1979 by Michael E. porter, Harvard business
school so as to help business organizations to analyse the competitive strength of a business and
its position in the market. According to this analysis, there are five forces of competition that
ascertain the degree of competition in the market and help businesses to identify the competitive
areas that they are excel at (Liu and et. al., 2022). It is used to analyse whether the current
products or services are prospectively profitable or not. This analysis will help the Fashion Star
Ltd. to analyse its competitive strength in the clothing and home wares industry and observing
the strategies of other big competitors such as Morrisons, Marks and Spencer etc. It will provide
opportunity to get the competitive advantage to Fashion star Ltd. by monitoring the five forces of
competition in textile industry in the UK market and thereby improving the weak areas.
The porter's five forces Analysis of Fashion Star Ltd. is as under :
Porter's 5 Forces Analysis of the forces Impact of the competitive

Forces
1. Existing Competition : It
means the rivalry among the
existing competitors in the
market. Companies should add
differentiation to their
products to face this
competitive pressure to switch
the customers to its products.
Fashion Star Ltd. should
analyse the existing rivalry in
the existing competitors in
textile and homeware industry
and other small competitors of
clothing industry in UK
market by considering their
corporate strategies.
Clothing industry is one of the
highly competitive industry of
UK with big competitors like
Morrisons, marks and Spencer
and other small competitors
such as Merchant and Mills
Ltd. Etc. so, there is High
existing competition for
Fashion star Ltd. to consider.
2. Bargaining Power of
Buyers: When buyers have
option to buy the same product
fulfilling the same requirement
from another company, their
bargaining power tends to
increase (Seese and Ryan,
2022).
Fashion Star Ltd. needs to
consider the customer base of
the textile & homeware
industry, customers'
preferences, switching costs
etc. to face this competitive
pressure.
It this case, the bargaining
power of customers is high
because it is a new company
and have a very small
customer base as compared to
other established companies
with standard prices and high
switching costs.
3. Bargaining Power Of
Suppliers : The negotiation
power of the suppliers tends to
be high for small or start up
companies.
Its competitors such as
Morrisons, Merchant & Mills
etc. have low bargaining
power of suppliers due to their
well established supplier
chain.
The bargaining power of
suppliers for this company is
high because it is a new
company in the clothing &
home ware industry having
low access to the value chain
of the market.
4.Threat of New entrants : It
means creating barriers to
entry for the new entrants in
the market. Existing
companies should strive to
Fashion Star Ltd. is itself a
new entrant in the clothing &
homewares industry, so it has
to consider the factors such as
availability of distribution
This company has more threat
of existing competitors and
less or moderate threat of new
entrants as other businesses
have fear to enter in this

increase high economies of
scale and switching cost of
buyers so as to pose threat to
new entrants to enter in the
market.
channels in the market, high
growth rate of this industry,
number of competitors in the
industry who have high
economies of scale that set
barrier to enter in the market.
highest competitive industry of
UK. However, Fashion Star
Ltd. needs to consider the
economies of scale &
switching cost of buyers to
avoid this competitive
pressure.
5. Threat of Substitute
Products : This competitive
pressure arises when
company's products have
substitutes available in the
market that the customers can
switch to for fulfilling the
same need (Larbi-Siaw and et.
al., 2022).
Fashion Star Ltd. should
analyse the number of
substitutes available in the
clothing & homeware industry,
their prices, quality etc. It
should strive to add
differentiation to its products
to increase switching cost for
the buyers.
Threat from substitutes in the
market is high for Fashion Star
Ltd. As most of the successful
companies in UK deal in
clothing and homewares.
This Analysis helps the businesses to analyse the factors of competitive pressures that
affect the profitability of business in a particular industry and facilitates to make decisions
whether to enter that specific industry or not considering its profitability and implementing the
corporate strategies accordingly. It is not used to analyse an individual business (Yan and et. al.,
2022). To use this competitive analysis for evaluating the competition, start up companies like
Fashion Star Ltd. Needs to consider the factors such as, number of competitors in the market,
impact of government on the textile industry, lifecycle stage of the industry, changing market
trends of the industry etc.
PESTLE Analysis
PESTEL Analysis refers to the analysis of macro environment by considering the impact
of Political, Economical, Social, Technological, environmental and Legal (PESTEL) factors of
external Environment. It is a market research tool for corporate business strategy that provides a
framework to analyse the external factors' current and prospective impact (Chan and Tai, 2022).

It helps the businesses in identifying the opportunities and threats in the external environment
and improve the performance of business by making better decisions and following appropriate
strategies (Pires and Barros, 2022). By facilitating in understanding the impact of external
factors, it provides strategic advantage over the competitors, helps in evaluating the risks
associated with the markets that the business is operating in (Betiku and Okon Bassey, 2022).
PESTLE Analysis of Fashion Star Ltd. is shown hereunder :
PESTEL Factors Analysis for the Business Positive/Negative Impact on
the business
1. Political factors : It
includes the political issues
such as taxation policies,
foreign trade policies,
government grants to small
businesses, price controls etc.
Government tends to impose
foreign trade barriers to protect
the domestic suppliers of the
country. Fashion star Ltd. will
have to face the trade
restrictions due to lockdown
policies.
It has negative impact on its
operations due to foreign trade
restrictions and fall in prices
due to lock down restrictions.
2. Economic factors : These
factors are associated with the
performance of economy and
affect the operations of small
businesses. It includes interest
and inflation rates,
unemployment, stock market
conditions etc. Businesses
need to consider the
fluctuations in inflation rates
due to their impact on the
prices of products (Oualkacha,
Stour, and Agoumi, 2022).
The economic condition of UK
is not good since Brexit and
then Covid19, and now due to
the war between Russia and
Ukraine. Although, the
clothing industry is the most
contributing sector to the
economy of UK, Fashion Star
will not be able to derive
economic benefits due to the
down economy.
As it is a small business, it will
have negative impact on the
price and profitability of the
business due to current
economic conditions in UK.
3. Social factors : These
factors include cultural norms,
It needs to analyse whether its
products would be accessible
Fashion Star Ltd. may have
Positive or Negative social

customer preferences, age
distribution, population
growth, education level,
religion, etc. that affect the
demand of the products of
small company and thereby its
operations.
in foreign markets such as
India, China that also have big
textile industries to expand the
business operations globally.
Company should offer the
products according to the
cultural lifestyle of the
customers.
impact according to the
geographical location of
business, customer preferences
and market trends.
4. Technological factors : It
includes automation of the
processes for marketing or sale
of the products, using
innovative methods of
production. It helps small
businesses to analyse the status
of current technology of
business.
Fashion Star Ltd. needs to
analyse its technological
requirements to satisfy the
needs of customers in the UK
market by providing them
home delivery by the use of E-
commerce and thereby
increase customer base.
The arising and innovative
technology will have a
positive impact on the
business of Fashion Star Ltd.
as it will increase its customer
base by demonstrating the
clothes and home wares
through online platforms.
However, as it is a small
company, it may face lack of
funds in initiating the
automation processes for
human resources and can have
negative impact of technology
from competition perspective
as others will be using
technology effective methods
of operation.
5. Environmental factors :
These factors include
sustainability of environment,
waste management, adherence
Due to the burning and
wastage of clothes, this
industry is responsible for
polluting the environment.
It has negative impact of
environmental factors due to
poor wastage management of
clothing industry.

to the environment protection
laws etc.
Fashion Star Ltd. should use
environmental friendly
methods of production to
avoid any violation of
environmental protection laws.
6. Legal factors : These
factors include the laws and
regulations of the country such
as consumer protection laws,
company laws, licensing
regulations etc. that affect the
profitability of businesses in
case of any violation.
Fashion star Ltd. needs to
adhere to the company laws
and other applicable laws in
order to avoid any fine or
penalty due to any violation of
these laws.
It may have negative impact
on the company's profitability
in case of any violation.
PESTLE Analysis is a cost effective method of conducting the systematic and entire
evaluation of the macro environment of business. It helps in grabbing the valuable opportunities
available in the external environment and makes the business aware about the prospective threats
to be prepared for and take corrective measures to face it. It allows the business to stay flexible
to the changes occurring in the outer environment. Fashion Star Ltd. needs to monitor the above
factors constantly to control the performance of its business by taking advantage of the positive
impact and try to reduce the negative impact of these factors.
CONCLUSION
From the above discussion, it has been concluded that to earn long term profitability and
expand the operations of business, companies need to monitor their performance constantly by
using various frameworks of performance appraisal and evaluation of competition in the market.
Fashion Star Ltd. can be set up in clothing and home ware sector considering the analysis of
external environment by PESTEL Analysis and competitive analysis by porter's five forces
framework. As clothing industry is the most growing and contributing sector of the economy of
UK, setting up this business will provide long term profitability if regularly monitored by
adopting suitable corporate strategies.

REFERENCES
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