Porters 5 Forces Analysis of Clothing Industry

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It is important for every start-up and well-developed business organization in any given industry to undertake a thorough analysis to determine the level of competitiveness of the sector. To obtain an optimal insight into the nature of competition, Porters 5 Forces analysis is an effective approach that focuses on various aspects of the market that impact the overall performance of the firm (Grant, 2016). The framework examines five key factors: competitive rivalry, buyer power, supplier power, the threat of substitution, and the effects of new entrants. The discussion will use the strategic management tool to analyze the clothing and fashion industry.

Competitive Rivalry

The clothing industry contains several firms that provide similar products to consumers. Most of the companies in this sector base their sales on the brand sold in the market. The value they derive from the branding gives them added advantage, therefore, making it difficult for other enterprises to venture into the business. The competitive rivalry has a large force in the sector; thus, businesses have to formulate ways to thrive in the market.

Bargaining Power of Buyers

In the fashion industry, consumers can lower product prices. Buyers can achieve this by choosing not to purchase from a given firm or shifting to buy from an alternative seller in the market. Therefore, they have a large force in the industry to determine the profitability of business organizations (Guan et al., 2018). Organizations have to find ways of maintaining and attracting new clients to boost their revenue.

Bargaining Power of Suppliers

Suppliers in the clothing and fashion industry generally have little impact because most firms source their raw materials from providers who sell cheaply. Furthermore, a company may choose to switch from one dealer to another, thus making the input cost relatively low.

Threat of Substitution

It is not easy to substitute clothes thus, players in the industry have little to no ability. Therefore, the threat of substitution is insignificant; hence firms in the market are not worried about the effects of replacement of the products with other commodities.

The threat of New Entrants

Entrants of new firms into the clothing and fashion industry have limited effect since they have little uniqueness to induce into the market. However, emerging companies can use social media and other platforms for marketing their products, increasing their brand awareness than the already existing organizations.

References

Grant, RM. (2016). Contemporary Strategy Analysis 9th Edition, Wiley

Guan, Z., Xu, Y., Jiang, H., & Jiang, G. (2018). International competitiveness of Chinese textile and clothing industrya diamond model approach. Journal of Chinese Economic and Foreign Trade Studies. Web.

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