BUS 101: PESTLE Analysis of the International Clothing Industry

This report provides a comprehensive PESTLE (Political, Economic, Social, Technological, Legal, and Environmental) analysis of the clothing industry. It examines how various factors within these six categories influence the industry's operations and strategic decisions. The political analysis considers government policies, trade regulations, and political stability, emphasizing taxation and policies related to animal use in clothing manufacturing. Economic factors include market conditions, GDP, consumer income, and revenue of major brands like Zara and H&M. Social analysis delves into consumer tastes, trends, and demographics. Technological analysis highlights advancements in manufacturing and promotion. Legal analysis covers labor laws, consumer rights, and ethical practices. Finally, environmental analysis assesses the industry's impact on pollution, sustainability, and the use of chemicals. The report underscores the importance of adapting to these factors to gain a competitive advantage in the global market.

International Business Environment

BUSINESS ENVIRONMENT 1
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 ENVIRONMENT 2
Political Analysis
Political analysis contain the information about the government intervenes in 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 ENVIRONMENT 3
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

BUSINESS ENVIRONMENT 4
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 ENVIRONMENT 5
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 ENVIRONMENT 6
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:

BUSINESS ENVIRONMENT 7
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].