Global Business Environment: Impact of Pandemic on Fashion Industry

This report provides an in-depth analysis of the global business environment, focusing on the fashion industry. It begins by examining the impact of the COVID-19 pandemic and other significant forces shaping the industry, including political, economic, social, technological, environmental, and legal factors (PESTEL analysis), as well as the competitive forces identified by Porter's Five Forces model. The report then critically assesses the challenges and opportunities these forces present to companies like Next Plc and Primark, highlighting the impact of low economic growth, changing regulations, and intense competition. It also explores how some companies have adapted to the changing environment more effectively than others, emphasizing the importance of technology, brand image, and adaptability. The analysis concludes by summarizing the key findings and implications for the fashion industry's future, providing valuable insights for business students and professionals alike.

GLOBAL BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION................................................................................................................................3
TASK ...................................................................................................................................................3
A- Analysing impact of pandemic and forces that have shaped business environment of fashion
industry............................................................................................................................................3
B- Critically assess opportunities and challenges that forces have presented to companies that has
operated in fashion sector................................................................................................................5
CONCLUSION....................................................................................................................................7
REFERENCES ....................................................................................................................................9

INTRODUCTION
Global business environment encompasses key elements and factors that affected
environment in varied nations, which directly and indirectly impact atmosphere of many companies
in negative manner. The current assignment will be based on fashion industry, which falls under list
of leading sectors in the world. The study will explain impact of pandemic and major forces that
have shaped venture environment of fashion sector. Furthermore, lastly the report will justify,
challenges and opportunities that these forces have presented to companies in chosen industry and
will also define reason behind why and how some organizations have been capable to adapt better
than others to this changing business environment.
TASK
A- Analysing impact of pandemic and forces that have shaped business environment of fashion
industry
Impact of COVID-19 on fashion industry-
Pandemic as an external factor affected the whole world in negative manner, it has impacted
business environment of fashion sector in term of decreasing customer base, profitability and lower
operational efficiency (Brydges Retamal and Hanlon, 2020). It affects negatively upon this sector as
in many nations governments close down production plants and close stores, in order to slow down
the spread of corona virus, which lead to decrease sales and profit margins of companies. Due to
this factor, many stores and factories are closed from where fashion industry purchase raw material
to manufacture the top quality clothes for everyone. In recent time, just because of pandemic,
customers are less interested to make shopping from outlets as they are highly worried in the
context of virus spread. In this term, it affects customer base of fashion industry.
Forces that have been shaped environment of venture in fashion industry-
Along with above factor, more forces are available in the business world that may play vital
role in shaping business environment of selected sector. Here, PESTEL and Porter's five forces
models used to identify each force.
Political factor-
Political stability is one of those political factors that has shaped business environment of
fashion industry in positive manner, as it may contribute to grow venture in effective and systematic
manner (What is a PESTEL Analysis, 2020). This factor is quite important for companies that has

operated under fashion sector, as it affect customers and investors confidence. It make trade process
easier and drive the attention of organizations towards conducting varied practices such as brand
expansion.
Economic factor-
Due to pandemic, economic growth is getting slower than last certain years, which may put
negative impact on business environment of fashion industry and shape in ineffective manner. Just
because of this force, exports may decline, which may decreased profitability and sales of sector.
Low economic growth, restrict citizens to make purchase of quality products forms brands or other
companies that operates in fashion industry.
Social factor-
Emerging market trends shape business environment of fashion industry, as it put positive
impact on sales and success of sector. Instead of wearing normal clothes, in the recent time people
prefer to wear those apparel, which their favorite stars or celeb wear (Syahchari and Maulana,
2020). They seek to buy clothes from those brands who manufacture individual cloth according to
trend, which is quite beneficial for sector, as they do so since from so longer.
Technology factor-
Technology advancement just like above forces also contributed to shape business
environment of fashion industry in positive manner. It drives the attention of sector towards
conducting marketing activities by using advanced digital marketing tools and channels, which
made it able to gain the attention of new customers and reach at global level in cost effective
manner, which in return provides unexpected results.
Environmental factor-
Customers and government concern to reduce carbon footprint, may shape fashion industry
business environment in positive manner. As it give them change to gain the attention of those
buyers who seeks to purchase items from those sectors who have conducted CSR practices in term
of reducing their carbon footprint that has impacted sustainable environment and contribute to
reduce pollution.
Legal factor-
Fluctuation in rules and regulations of government developed in the context of fashion
industry, may shape its business environment in negative manner. It makes drive the attention of
sector towards make change in existing practices and activities related to operational and functional
management.

Porter's five forces model-
Bargaining power of buyers-
The degree of this force is high and because of this reason, fashion industry business
environment may affect negatively as it shape in form of current demand and situation, which lead
to minimize sales and profitability of sector. Each customer holds strong bargain power that may
utilize to down prices in the context of apparel, which is not beneficial for industry in any case.
Bargaining power of suppliers-
The extent of this force is low, because number of suppliers are available in the world of
business who are capable to delivery quality raw material to fashion sector according to need, which
production department may use to manufacture the best clothes for consumers. It shapes venture
environment of chosen sector in positive manner, as allow them to work with existing suppliers.
Threat of new entrance-
The threat of new companies entrance in fashion industry is low, because when a company
take decision to enter into new market, they may put huge investment to do so, which is not possible
for each firm. It shapes business environment of sector in term of creating positive environment,
due to lack of new entrance.
Threat of substitute products or services-
Degree of this force is also low because of clothing is a stable product that is always in
demand and never get replace by any other substitute items. For every occasion or event, people
prefer to buy apparel, to look graceful. It lead to increase sales and profitability of fashion industry,
which is quite important and beneficial too.
Competitive rivalry between existing players in fashion industry-
In fashion industry, large number of organizations whether they are retailers or wholesalers
available who are selling their clothes. In order to gain competitive advantages and increase
customer base, each company attempts to develop the best strategy, which creates high competitive
environment in sector that may put high pressure on companies to perform better than other firms.
B- Critically assess opportunities and challenges that forces have presented to companies that has
operated in fashion sector
As discussed above, different types of factors are accessible that affect business environment
of fashion industry. These force have presented challenges and opportunities for the key players as
organizations in fashion industry.

Challenges-
 Low economic growth create challenge for key players in fashion sector like Next Plc and
Primark stores limited, in term of retaining potential customers and increasing consumer
base (Niinimäki and et.al., 2020). Low economic progress means low income rate, which
bring issues for buyers as well as firms. For example, shoppers with low disposable income
are unable to buy cloth from brand which they like the most, it may put negative impact on
profitability, productivity and sales of organizations that operates in fashion industry from
longer time period. COVID-19 is the main factor that affect economic growth and
unemployment rate in the whole world.
 Ruining business is quite challenging for each player in fashion industry, because of
pandemic. It makes changes in business regulations and policies that has been formed by
national and international government. Due to COVID, governments in each nation take
initiative to form new guidelines regarding companies and make modifications in laws,
which each of them need to follow. It brings challenge for key players in fashion industry to
make changes in existing plans and strategies as it consumes a lot of time and money as
well, which is not possible to invest during complex business environment.
 High bargaining power of buyers also present challenge to firms in term of retaining
customers in the context of purchase. This force, develop obstacle for companies to retain
existing consumers and gain the attention of new, because high bargaining power give them
change to switch to new store where people may buy apparel according to their budget and
needs.
 Sustaining business for longer period is one of the biggest challenge that fashion industry
faces due to intense competition between companies. It drives the attention of management
towards conducting varied activities in term of creating effective strategies, which they may
use to overcome negative impact of challenges. It is quite challenging for sector to sustain
for long, and gain profitability, which is actually important. Increasing foreign competition
affect Next Plc and other firms, management practices that are running their venture in
industry. In recent time, due to COVID the competition between many firm also increased.
Opportunities-
 Above forces present, growth opportunity for companies like above that are organizing and
managing businesses in fashion sector. For example, technology advancement provide
business progress chance to firms as it strengthen marketing practices, which help to reach
at global level and allow each company to gain the attention of international buyers, who

seek to purchase cloth from well-known brand. In term of increasing sales and productivity,
Next Plc and other may use digital marketing channels to promote their ventures all over the
world, which capture the eye or concentration of individual shopper towards purchasing
their quality products.
 Pandemic create business environment more complex for each brand, but give chance to
build strong brand image in market, which help to increase customer base and generate
revenue. By conducting CSR practices, firms like Next Plc and Primark may enhance their
brand position and reputation in market where they operate from longer. Environmental
factor present this opportunity to these firms in fashion sector, which they may grab in order
to gain unexpected benefits and to achieve strategic aim as well as objectives. Many
companies adapt changes that have occurred due to pandemic in term of recruiting skilled
and talented people who are able to work appropriately by following guidelines given by
government.
 It gives changes to retain buyers, which is quite important for excellent success and growth
of companies in fashion industry. Next Plc and other organization may retain shoppers and
attract more, by making all the arrangements at workplace considering health concerns of
buyers. In recent time, each person prefer to visit those shops where hygienic factor is prior
and everything is sanitized. When firm create hygienic environment at workplace, they may
drive the attention of profitable customers, who may conduct word of mouth promotion
activity after getting appropriate satisfaction.
 Furthermore, along with above opportunities, technology factor may present opportunity to
key players in term of offering online services to people, which is quite valuable for them as
it save time and efforts (Barkova, 2020).
 It can be said that all above chances may bring issues for management in term of consuming
time and occurring financial requirements relate to implement new system or technology,
etc.
Reason behind adaptability of some companies in regard to changes, even better than other
brands of fashion industry-
In fashion sector, Next Plc and Primark are included category of those brands that has been
capable to adapt changes more than other organizations that has operated in sames sector to gain
many benefits. They have adopted each change to be competitive in competitive world, where
competition level is high. These firms may adopt changing business environment, by creating plans
and conducting practices accordingly. They follow terms and policies as well as rules in related to

COVID-19.
CONCLUSION
From above analysis, it has been concluded that organizations has overcome the negative
impact of pandemic, which also consider as an external factor, by developing effective plans and
strategies. By grabbing the key opportunities that are accessible in the world of business, companies
in fashion industry has grown their ventures even better and successfully retained consumers, which
is quite important for each brand to do so. Furthermore, by summing up above discussion, it has
been summarized that by adopting changes in business environment that has been taken place due
to COVID-19, certain firms has gained competitive edges and boosted their brand image in market
place.

REFERENCES
Book and Journals
Barkova, N.Y., 2020. Application of robotic technology in the fashion industry. Vestnik
Universiteta. (2). pp.85-91.
Brydges, T., Retamal, M. and Hanlon, M., 2020. Will COVID-19 support the transition to a more
sustainable fashion industry?. Sustainability: Science, Practice and Policy. 16(1). pp.298-
308.
Niinimäki, K. and et.al., 2020. The environmental price of fast fashion. Nature Reviews Earth &
Environment. 1(4). pp.189-200.
Syahchari, D.H. and Maulana, Y., 2020, April. Strategic planning for developing coffee as a tourist
attraction in Rural Area (Case study: Campakamulya Village, Bandung, West Java,
Indonesia). In IOP Conference Series: Earth and Environmental Science (Vol. 452, No. 1,
p. 012078). IOP Publishing.
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What is a PESTEL Analysis?. 2020. [Online]. Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/>