Porter for Textile
Jaypee Business School
A constituent of Jaypee Institute of Information Technology (Declared Deemed to be University u/s 3 of UGC Act) A-10, Sector 62, Noida (UP) India 201 307 www.jbs.ac.in
ECONOMICS OF STRATEGY - 13MCEC05 PORTER FIVE FORCE ANALYSIS – TEXTILE INDUSTRY
SUBMITED BY
Page
Submission date – September 13, 2013
Word count – 3804
1
Five Forces Analysis Template
1) Factors Affecting Rivalry among Existing Competitors To what extent does pricing rivalry or non-price competition (e.g., advertising) erode the profitability of a typical firm in this industry? Characterization Future (Current) Textile industry has high degree of specialization. Developed countries attempt to specialize in high quality products whereas 1. Degree of seller concentration? developing countries are producing lower quality products. Main differentiator is price which significantly differs between these groups. Growing demand of products due to growing population leads 2. Rate of industry growth? to growth of this sector. At the same time we find large number of distributors, importers. The price gap will continue to widen. Majority of the products will be produced in the countries of Southeastern Asia, where labor costs are much less than in developed countries. They will have to close or re-profile to produce exclusive high quality products. Competition between distributors will increase. It will not be feasible to sustain retail growth on the long run. It will lead to disappearance of few distributors and mergers among others.
There is no such significant 3. Significant cost differences among firms? difference in cost among firms as basic cost of raw materials is almost same. Presently this industry is not able to fully utilize its capacity. It is 4. Excess capacity?
This trend will more or less remain the same as commodity market is highly stable.
The abundance of cheap labor force and access to the new
not working at its full capacity. It
A constituent of Jaypee Institute of Information Technology (Declared Deemed to be University u/s 3 of UGC Act) A-10, Sector 62, Noida (UP) India 201 307 www.jbs.ac.in
ECONOMICS OF STRATEGY - 13MCEC05 PORTER FIVE FORCE ANALYSIS – TEXTILE INDUSTRY
SUBMITED BY
Page
Submission date – September 13, 2013
Word count – 3804
1
Five Forces Analysis Template
1) Factors Affecting Rivalry among Existing Competitors To what extent does pricing rivalry or non-price competition (e.g., advertising) erode the profitability of a typical firm in this industry? Characterization Future (Current) Textile industry has high degree of specialization. Developed countries attempt to specialize in high quality products whereas 1. Degree of seller concentration? developing countries are producing lower quality products. Main differentiator is price which significantly differs between these groups. Growing demand of products due to growing population leads 2. Rate of industry growth? to growth of this sector. At the same time we find large number of distributors, importers. The price gap will continue to widen. Majority of the products will be produced in the countries of Southeastern Asia, where labor costs are much less than in developed countries. They will have to close or re-profile to produce exclusive high quality products. Competition between distributors will increase. It will not be feasible to sustain retail growth on the long run. It will lead to disappearance of few distributors and mergers among others.
There is no such significant 3. Significant cost differences among firms? difference in cost among firms as basic cost of raw materials is almost same. Presently this industry is not able to fully utilize its capacity. It is 4. Excess capacity?
This trend will more or less remain the same as commodity market is highly stable.
The abundance of cheap labor force and access to the new
not working at its full capacity. It