Industrial Analysis of Apparel Industry

Topics: Industry, Ralph Lauren, LVMH Pages: 6 (1503 words) Published: February 27, 2011
Industry Analysis 1: Apparel Manufacturing NAICS 315

Part 1.Environmental Analysis

The Apparel Manufacturing industry is a sub-sector of the Manufacturing sector. It is composed of two distinct manufacturing processes (cut and sew using purchased fabric and fabric manufacturers that then cut and sew) and three industry groups (apparel knitting mills, cut and sew apparel manufacturing and apparel accessories and other apparel manufacturing).[1]

The projected global revenue in 2010 for the apparel manufacturing industry is $ 1,781.7 billion[2] while for the US it is about $20 billion[3]. Globally there are about 256,000 companies3, while in the US, there are about 8,000 companies1. The top 5 companies globally are YMK Trading Limited, V.F. Corporation, Louis Vuitton NA, Polo Ralph Lauren, and Levi Strauss Denmark3.

Barriers to entry in the apparel manufacturing industry include the decreasing cost of production due to the moving of companies from industrialized countries to developing countries. It would be very difficult for a new company to begin in an industrialized country and be profitable.

| |Positive |Negative | |Internal Factors |Strengths |Weaknesses | | |Stability due to the inherent need for clothes. Even when |Lack of resources to fully access raw materials in developing | | |there is a downturn, there is always a recovery with improved|countries | | |economics |Lack of resources to build factories to utilize raw materials | | |Willingness to adopt new techniques to improve efficiencies, |in developing countries | | |apply competitive strategies to enhance profits and growth. |It is a mature industry thus there is heavy competition and | | |Willingness to develop new methods to stay agile, like |little room for growth. | | |offering on wholesale prices to survive in the global | | | |competition. | | |External Factors |Opportunities |Threats | | |Demand is great than supply |Legislation that makes it difficult for developing countries | | |Fashion industry has short life cycles and great product |by favoring industrialize countries | | |variety |Unpredictable demand | | | |Industrialized countries can’t compete with low costs of | | | |developing countries |

Table 1. SWOT Analysis of Apparel Manufacturing Sector[4]

Barriers to the overall success of the industry are those that limit its growth. These include:4 ▪ Demand for apparel is greater than supply
▪ Lack of resources in developing countries to harvest raw material and build factories ▪ Industrialized countries have difficulty competing with low costs from developing countries

While there is much opportunity for growth and success in the apparel manufacturing industry, there are also weaknesses in the industry and...
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