Organizational Strategy: External Analysis of Men's Clothing Sales

This report provides an overview of the online men’s clothing sales industry, focusing on its profitability and revenue growth in recent years. It examines the influence of macro environmental factors and the application of Porter's Five Forces and PESTLE analysis to achieve competitive advantage in the Australian market. The analysis covers political, economic, social, technological, environmental, and legal factors impacting the industry, alongside an assessment of supplier power and competitive rivalry. The report also discusses the use of resource-based and capability-based view theories to gain competitive advantages, as well as managerial strategies like differentiation and low-cost leadership. It concludes that external environmental analysis is crucial for the industry's success and sustainability in the Australian market.

Running head: Organizational strategy
Organizational strategy

Organizational strategy
Table of Contents
Introduction.................................................................................................................................................3
Theories of competitive advantage.............................................................................................................3
External environment..................................................................................................................................4
PESTLE analysis........................................................................................................................................4
Porter five forces analysis........................................................................................................................7
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Organizational strategy
Introduction
The main aim of this task is to provide a brief overview about the profitability and
revenue of online men’s clothing sales industry. The online men’s clothing sales industry has
succeed over the past few years. Various macro environmental factors influence the outcomes
and returns of the clothing industry. Furthermore, the paper explains that how the clothing
industry uses porter five forces analysis and pestle analysis to stand out against the rivalries
market as it also describes that how this industry increases and improves performance in the
Australian market. The clothing industry cannot survive its business activities and operations in
Australian market without evaluating the external environment. By using pestle analysis and
porter five forces analysis, the industry has been able to increase the number of customers in
such market. Further detail of the task has been discussed below.
In today’s competitive world, the online men’s clothing sales industry is flourishing and
growing due to the increasing acceptance of online shopping and changing choices, preferences
and tastes towards men’s fashion. On the other hand, traditional retail companies are struggling
with unstable consumer sentiment, whereas online stores are being benefited from the customers
who seek various choices and values. The online retail stores provide wide range of products to
the consumers at suitable prices. In this way, online men’s clothing sales industry is maximizing
profitability and revenue day by day. The online shopping has become more popular in
Australian. Although, this industry is growing rapidly but still few challenges and issues are
faced by the online clothing industry in the international market. SWOT analysis, porter five
forces analysis and PESTLE analysis are done by the industry to analyze and evaluate the risks
and opportunities of the market as well as competitors (Craik, 2015).
Theories of competitive advantage
There are various theories through which online clothing can gain competitive
advantages. Resource based view theory is used by clothing industry to determine and evaluate
the strategic resources with the potential to attain competitive benefits in the Australian market.
These resources can be exploited by the industry to attain long term benefits (Foss and Knudsen,
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2013). This theory focuses on the methods and techniques through which the industry collects
resources from various ways. Along with this, capability based view theory is also implemented
by the clothing industry to determine and analyze the capability of the workers (Freeman III,
Herriges, and Kling, 2014). It shall be noted that clothing industry can also use managerial and
corporate level strategies such as differentiation, focus and low cost leadership strategies to stay
in the competitive market.
External environment
External environment theory is a strategic tool which is used to identify and analyze the
external and internal factors that can influence the industry’s performance and productivity. The
industry cannot control on the external factors (Rothaermel, 2015). External enviornment is also
known as macro environment. External environment encompasses various factors such as
political, economic, social, technology, environmental and legal factors. Pestle analysis for
online men’s clothing sales industry has been stated below.
PESTLE analysis
Political factors
The political factors can be influenced the clothing industry positively as well as
negatively. The political factors refer to the government policy like rules, regulations and degree
of the intervention in the economy (Howes, 2013). The political decisions can direct impact on
several areas for trade and business like education of the employees, health of the country and
quality of the infrastructure. Various geopolitical events also influence the clothing industry in
Australia. Along with this, terrorism is other kind of issue which could influence the clothing
industry in such country (Black et al, 2014).
Economic factors
These factors can have direct impact on the online men’s online sales clothing industry.
Due to rising in economy, people have more disposable income. Thus, they purchase more
clothing as it also increases online sales for clothing manufacturers, retailers and wholesalers.
Along with this, the economic growth rate is higher than in most OECD countries such as UK
and US. The GDP of the country is AUD $1.69 trillion as of 2017( Tradingeconimics, 2018).
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Organizational strategy
There is low risk in the Australian economy because GDP growth is very high in such country.
Along with this, the country maintains stable interest rates and exchange rates. The repo rate of
the country is 1.5% which has been fixed by RBI. In addition, inflation rate is low in Australia
country which can provide several opportunities for clothing industry in this country. In addition,
unemployment rate is also low in such country. The unemployment rate is around 5% in such
country. Therefore, the industry can gain enormous competitive advantages in the marketplace.
Furthermore, Australians enjoy high standard of living and they take several opportunities which
are being offered by the country (Hartwell, 2017).
Social factors
Social elements refer to a set of custom, belief, values, behavior, policies and attitudes
that exist in the population. There is no official language and religion in the country. Changes in
the attitudes and social trends can direct impact on the demand for an industry’s products and
services. The tastes, preferences, choices and desires of the customers affect the sales of online
clothing industry. The three main social classes present in the international market including
lower class, middle class and the upper class. These three main social classes could have direct
impact on the sale of clothing industry. The upper class people, who maintain high level of
income, can buy the expensive clothes. But the middle class and lower class people, who are
unable to maintain high level of income, they do not prefer online shopping. These factors play a
vital role in the growth and success of online men’s clothing sales industry. Major social changes
may influence the demand of the fashion products in Australia. Let’s talk about Zara; the
company offers good quality of products to the customers but everyone cannot afford Zara
prices. Along with this, many companies do not prefer advertisement and marketing campaigns
as it also affects the growth rate of clothing industry. The industry needs to focus on the prices
and quality of clothes to increase the demand of the online products and services. It will help to
gain competitive advantages and it also help to accomplish the long term goals and objectives
(Gardetti and Torres, 2017).
Technological factors
Technology is a critical factor influencing the growth of the online men’s clothing sales
industry in Australia. Technology affects the sales of the clothing industry positively because
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new and innovative technologies help to create new products in the marketplace. Technology
also reduces costs of the products and improves the quality (Fan, MacGill and Sproul, 2015).
These developments and innovation can provide advantages to the consumers as well as the
organizations also. Due to globalization, internet and IT, the use of mobile devices are being
increased for online shopping. All these factors also affect the sales, consumer choices and
marketing. New and innovative technologies help to improve production and supply chain
management of an industry. In addition, Ecommerce is helping the online men’s clothing sales
industry to increase the sale of the products and services (Lansbury and Bamber, 2013).
Legal factors
Some of the legal factors affect the businesses in the clothing industry. The legal factors
are related to the legal needs and requirements in which an industry operate and manage. The
introduction of age discrimination, an increase in the minimum wage, discrimination legislation
and recent laws are some legal factors which could include the actions and business of an
industry. Legal changes can influence an industry costs and demand. Apart from this,
compliance and ethics are significant focus areas for the big brands and they are actively
working in this direction. The clothing industry provides large employment to the people
therefore; the employees are complied these common laws and policies. In today’s era,
employment and environmental laws also have grown and need to be complied with. The legal
laws and an ethical image can be benefited for an online men’s clothing sales industry. In
Australia, the industry needs to ensure that they have monitored and checked the credentials of
overseas buyers and partners. The industry need to be aware that there are some competitors
working in the same market. In this way, the industry should focus on the legal factors to
conduct business activities successfully.
Environmental factors
There are various environmental factors exist in Australia such as climate change and
weather which would influence the clothing industry adversely. The climate changes occur due
to global warming. The environmental issue is becoming a major issue for the clothing
industries. These factors can have negative and positive impact on the clothing industry. Along
with this, sustainability and environment are very important in terms of the online men’s clothing
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sales industry. Even the clothing industry is careful about their carbon footprint and they prefer
marketing for selling their products. The industry is investing huge amount in sustainability and
environment because they are using packaging, raw materials and operations. Moreover,
sustainability has become a key success factor that can influence the buying behavior of the
consumers. The fashion brands Nike, Zara and Adidas are using sustainability policies to attain
long term mission and vision. In this way, the online men’s clothing sales industry is working in
the direction of minimization of carbon footprint and maximization of productivity. Environment
protection act has been made by the Australian government in order to avert the negative impact
of environment. It will help to increase and maximize the revenue and returns of the clothing
industry (Muthu, 2014).
Porter five forces analysis
Porter five forces analysis is done by clothing industry to identify the five competitive
forces that help to shape each and every industry, and market. These forces analyze and identify
the intensity of the rivalries in the marketplace (Rizea, 2015). This analysis helps to make unique
and effective decisions in the rivalry market. The clothing industry plays a vital role in the
Australian market. The porter five forces analysis have been detailed below.
Bargaining power of suppliers: The first important factor is the bargaining power of suppliers
that may affect the targets and goals of the industry. The low buyer price sensitivity is existed in
the Australian market. Furthermore, buyers are not dependent on the distributors (Daidj, 2014).
The individual customers in Australia may have little bargaining power in the online clothing
industry. The bargaining power of suppliers includes the following.
 Low supplier price sensitivity
 Small dependency on distributors
 Furthermore, large number of customers is available in the market.
The industry uses different and unique customer retention strategies to attract more male
customers in Australian market. Special offers and discount are also given to the customers to
increase the sale of online clothing products and services. The industry influences the customers
in the best possible manner to sale the fashion products effectively. Along with this, new and
innovative technologies are utilized to improve and enhance the customer experience in the
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Australian market (Zhang and London, 2013). It will help to make a unique and effective brand
image in the international market. Moreover, the producers of inputs such as semi finished
goods, raw materials, workforce and components etc are considered the suppliers that have a
direct impact on the outputs of the firm. The clothing companies are considered the buyer of
these goods and raw materials. Mutual understanding and reciprocal relationship between buyer
and suppliers helps to grow the clothing industry in the Australian market. The suppliers of
Australia are powerful and strong in terms of raw material and stocks because most of them are
imported. However, still the country is collecting raw material and other stocks from the abroad
at suitable prices. The suppliers of labor are not so strong and effective as compared to the
suppliers of raw materials because labors are talented, skilled and adequate in this country.
Bargaining power of customers: The bargaining power of customers is one of the significant
forces in the clothing industry. The suppliers need to follow the rules and policies made by the
buying brands. Brands such as Zara, Nike and Adidas have purchasing power and can easily
switch from one supplier to another (Pandey, 2017). Along with this, the clothing industry uses
financial clout to affect the prices of the products and services. Therefore, suppliers are unable to
make control on the products. In this way, bargaining power of suppliers in clothing industry is
irrelevant and insignificant. The clothing industry sells their products from third world
manufacturers who get just fractions of the revenue and profit (Smith, 2013). The industry has
been able to maintain quality and price in Australian country because the input cost such as labor
is very low in such country. The bargaining power of supplier forces is discussed below.
 Wide range of substitute inputs
 High and immense rivalries among the suppliers.
 Diverse and unique distribution channel is used by clothing industry.
 Low cost of switching suppliers and the inputs have minor impact on the clothing prices.
Threats of new entry: Threats of new entry is a major force of porter five forces analysis which
may influence the profitability of clothing industry in Australia. Along with this, it is considered
very weak force in the online men’s clothing sales industry therefore; this force should use
significant level of differentiation (Dälken, 2014). Along with this, the industry tries to find
unique and effective way to acquire success and grow business in the Australian market. It is
noted that high investment is also an important barrier in this force. Along with this, the clothing
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industry has to spend money on marketing, human resources and distribution activities. Hence,
threat of new entry is not an effective force in clothing industry (Hubbard, Rice and Galvin,
2014). The threats of new entrants have been detailed below.
 If the new competitors are entering in the market, the industry needs to monitor on the
distribution strategies. It will help to distribute the products and services.
 Strong and unique brand name is also an important factor in threats of new entry.
 Geographic factors also play a vital role in this force.
Threats of substitutes: Threats of substitutes exist in the industry already. Since the competition
is high and intense, no brand can ensure and judge their profitability and success. Every industry
faces competition while conducting business activities and operations globally. As the same way,
clothing industry also faces various challenges and issues in the Australian market. One of the
significant issues is threat of substitute which could influence the brand image of clothing
industry across the world. The industry needs to focus and identify the substitute’s products in
order to increase the profitability and returns in the foreign market. In addition, it is also
important to destroy the competitors in the marketplace (Chapman and Freeman, 2013).
Competitive rivalry in the industry: The online men’s clothing sales industry is remarkable
and significant for the high level of competitive rivalry. There are various brands that are
rendering similar clothing products and services in the marketplace. It increases competition in
the Australia. However, some brands provide good quality of products with unique feature. In
this way, they are able to build loyalty and trust among the customers globally. The brands that
have a strong image and goodwill in the market are able to charge higher prices in the Australian
market. The clothing industry can attain success and growth if unique and best quality of
products are offered by the industry at affordable prices. It will help to overcome the rivalries in
the competitive market as it also improves the performance and productivity of the industry.
Now it is assumed that porter five force model provide various competitive benefits to the
online men’s clothing sales industry. This model helps in earning attractive profits in the
Australian market. Along with this, it also increases suppliers profit if customers and suppliers
maintain weak and low bargaining power (Fleisher and Bensoussan, 2015). This model also
helps to increase the attractiveness of the industry. By using porter five force analysis, planning
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can be done effectively because the clothing industry can analyze and predict the rivalries in the
international market. Simultaneously, the model also helps in making unique and effective
decisions related to leaving and entering industry (Bruzzi and Gibson, 2013). It shall be noted
that the industry can analyze and understand about the power and intensity of the competitors.
Furthermore, it also helps in improving competitive position of the clothing industry in the
global market. In this way, clothing industry can be benefited by using porter five forces model.
On the other hand, pestle analysis is also an important tool to evaluate and identify the threats
and opportunities of the market. The pestle analysis helps to look at various influential elements
that could influence the success of industry products. It also encourages and improves the
development of strategic thinking for a deeper understanding of strategic planning (Mohan
Kathuria, 2013). By using PESTLE analysis, the clothing industry can find unique opportunities
to create a financial position in the Australian market. Marketing plans, policies and strategies
can be initiated by using pestle analysis. It is observed that pestle analysis increases awareness in
terms of new and innovative development. This analysis permits an industry to examine and
analyze the changes to develop and build a plan which can maximize profits and returns. This
analysis helps in understanding the marketing trends and choices of the potential customers
(Nayak and Padhye, 2015).
Conclusion
On the above mentioned study, it can be concluded that online men’s clothing sales
industry is one of the biggest industries in the world. The clothing industry provides several
products such as apparel, dress materials, cotton fabric, textile fabric, shirts, T-shirts and paints.
In today’s modern world, the online clothing industry is growing day by day because people
prefer online shopping. Online shopping helps in saving the time and extra money of customers.
The industry uses various strategies and models to beat the competitors in the Australian market.
Pestle analysis is a strategic and effective tool that is used to evaluate and analyze the key
elements influencing the performance and productivity of an industry. The management of
clothing industry uses this analysis and model to guide and direct the strategic decision making
process. In addition, porter fiver forces analysis is also done by clothing industry to know and
understand the competitive position in the Australian market. In this way, the industry has been
able to reach its long term targets and goals in the competitive market. Now it is recommended
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that online men’s clothing sales industry should focus on the packaging strategies to attract and
retain more male clients. Apart from this, it is noted that online clothing industry should provide
special discount and offers to the customers to meet its long term mission and vision. In addition,
effective and unique communication must be maintained by the employees to collect feedback of
the customers in the Australian market.
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