Technological. The clothing brand managed to generate revenue of $1.9 billion through e-commerce. to monitor the growth of not only retail sector but also that of the organization. Zara. Threat of new entrants low Policies made by the government and the political scenario of a country where a business operates significantly affect the success of a business. In such cases, retail brands such as Uniqlo have to suffer since the sales of their businesses drop. Francis was an American scholar and Harvard professor. Download EdrawMax today and start working on different PESTEL analysis diagrams. Organisational analysis tools and techniques: critical reflection on the PESTLE analysis and other related techniques February 2021 DOI: 10.13140/RG.2.2.27060.78727 Businessmen and women who are highly educated and are able to more easily afford the products? The six PESTLE factors sometimes overlap because they represent important and related elements of society. Their suppliers can sell cheaper, Velocity can buy cheaper and sell cheaper. For example countries joining the EU and members of the EU can trade almost freely and very easily with eachother. 6 Effective Content Marketing Strategies You May Have Overlooked, Market Analysis Definition (With Explanation and Examples). Firms can be protect the natural environment demand by the public. 1503 Words7 Pages. Consumers would certainly see a hike in prices on the imported product and in turn could affect the consumers ability to afford neither the domestic made clothing nor foreign made clothing. The clothing business has been growing and booming for the past few years and it continues to grow. Zara is a brand owned by Inditex, among with several others such as Bershka, Stradivarius, and Oysho. Moreover, China increased in labor cost and other factors associated with production could increase the cost of product. Similarly, Uniqlo operates in different countries. 8 Pages. Macro-environmental factors are those that affect clothing industry and the industry have no control over rather than adapting to it. Click on 'Use Immediately' to import the template's contents to the EdrawMax canvas. PESTEL Analysis Definition. For instance, if the economy is doing really well, than the cost of the material used to make the merchandise will cost less hence other competitors may lower their prices. method to analyze the macro environment of an industry. Even though a lot of people support government intervention in international trade, countries would benefit a lot more if the government removes protectionism and promotes free trade instead. As a result of the Civil War, clothing had to be made more efficiently and quickly to meet the standards of the military. The PESTLE analysis is a concept first mentioned by Harvard Business School professor Francis J. Aguilar. Income level in countries is a factor worth considering since the price of Lululemon is positioned as, Gereffi, G., & Frederick, S. (2010). Pestel Analysis Clothing Company. Ottawa is the capital of Canada. The company is said to operate in 74 countries as of November 2019. Environmental Regulations With the world trying to be more green and cut emissions in every way, regulations that already exist and the threat of new legislation which could mean that Velocity Clothing must cut emissions further could prove costly, by either being forced to invest in new technologies or find new ways to cut emissions, the consequence of not abiding by such regulations could mean getting fined and damaged reputation. This will further affect the operations of the clothing brand adversely. The PEST analysis includes taking into account the political, economic and social factors, along with a technological analysis to determine the market outlook, to forge plans to steer the business in a specific direction. Taxes business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. Taxes - business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. Trading Policies any new trading policies formed between countries could make it easier or harder for countries to trade with each other, which could be, For example is an old aged pensioner more likely to buy a brand new latest fashion luxury garment that is extremely popular with the younger generations? 1) Anguelov, N. CRC Press. Taxes business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. Technological micro-environmental factors affecting the clothing industry include the availability of resources, demand, and production. The PESTLE analysis refers to the screening of political, economic, sociological, technological, legal, and environmental aspects of the macro environment. Political factors: This factor looks at how government regulations and legal issues affect a business's chance to be profitable and successful. In this section, we will highlight some of the political factors that impact the operations of Uniqlo. In order to explicitly analysis the clothing industry, emphasis must be laid on Textile, PESTEL ANALYSIS 1838 Words. A PEST analysis is a strategic business tool used by organizations to discover, evaluate, organize, and track macro-economic factors which can impact on their business now and in the future. Go to 'Marketing' diagrams under Business diagram type and click on 'PEST Analysis.'. But these rules and regulations also take part in influencing a company or industry's behavior and return. You can start customizing the PESTEL analysis diagram as per your requirements. Recently, the world has observed a boom in the eCommerce industry. Social factors. Legal factors. A Canadian Approach to the Apparel Global Value Chain, [online] Available at, American Apparel ran into many risk factors such as finances and growth which included the ability to gauge fashion trends to consumer preference while still being able to be highly competitive (American Apparel, 2012). Apparel and fashion businesses should consider the following factors while trading globally . In many countries, strict actions are now being taken if businesses dont filter their waste before disposing of it and dont take measures to mitigate their carbon emissions. This allows businesses to evaluate. A company or industry must be highly aware of these laws so that they do not hamper their brand name or reputation in the market. Political factors: Fashion icons in the White House. According to the author Pietra Rivoli, the winners at various stages of my T-shirts life are adept not so much at competing in markets but at avoiding them. These winners include the U.S. cotton farmer and the China apparel industry. Every organization operates in a political system; this is why political factors highly impact the performance of any organization. Sociological. Their compensation ranges from uncontrollable seizures to infertility, and from difficulty breathing to watching their children grow up with significant mental and physical disabilities. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis . However adhering to all of these factors is not cheap and is difficult to maintain. 15th January 2016 1. This clothing brand was named Mens Shop OS since it only offered clothing for men. The PEST analysis looks at four types of external environmental elements: P -Political factors in an economy include various forms of government intervention and political lobbying, such as . A few companies frequently exaggerate or falsify the natural usefulness of their product, and in this manner clients doubt them any more (Kalafatis and Pollard 1999). However, there is described the PESTLE Analysis Example and its factors. Acasestudy.com 2007-2019 All rights reserved. The fashion industry consists of four components/levels: a) The production of raw materials, principally fibers, textiles, leather and fur. During the past decades, the retailing industry has gone through many important changes. Coneen by design ltd). From ready-made apparel used in the America Civil War to using computers to design clothes during the 21st century, clothing has come a long way from its origins. Esquel, one of the leading cotton-shirt-manufacturers in the world came from China and it supplies lots of clothing brand such as Banana Republic, Tommy Hilfiger, Hugo Boss, Brooks Brothers, Abercrombie and Fitch, Nike, Nordstrom and Lands End, in addition to private companies (Plunkett Research, Ltd.). The environment we live now are not very stable. The vision of Yani was to provide stylish casual clothing to everyone. Looking at the nature of work, we can assume that a large workforce would be required to carry out the operations of Uniqlo. (2006), the textile and clothing industry in South Africa: the future of the textile and clothing in Sub-Saharan Africa. the attractiveness of an industry. Thus, demanding for transparency and accountability. Head to the Template section on the left and type 'PESTEL Analysis' to see all the pre-built PESTEL Analysis templates like Netflix PESTEL Analysis, Amazon PESTEL Analysis, IKEA PESTEL Analysis, and more. Environmental (natural), and. The PEST is an acronym for Political, Economic, Social and Technological. The fashion Industry immensely involves anything that has to do with the trending demand for costumes or accessories and luxury brands. The PEST analysis in some cases is expanded with two additional factors, namely; legal and environmental aspects. Importance of PESTEL Analysis in Strategy Management & Planning Process. Nordstrom can use the countrys economic factor such as growth rate, inflation & industrys economic indicators such as apparel stores industry growth rate, consumer spending etc. All Rights Reserved, the highest percentage of the population above the age of 65 years, revenue of $1.9 billion through e-commerce, General Mills SWOT Analysis: 3 Opportunities to Gain Competitive Advantage, Root Cause Analysis: An Easy 6-Step Complete Guide, Mayo Clinic SWOT Analysis 2023: Healthcare Business Checkup, 3 Top Tech Tools for the Modern Commercial Contractor, Strategies for School and College Security, Steps to Secure your Business After a Cybersecurity Breach. Ever since the first involvement of government in international trade, many people have posed their opinion about what the role of government should be in it. Key Takeaways The main focal point of this write-up is the PESTEL Analysis of the Fashion Industry.This form of analysis is beneficial in the long run as it helps the company and industry analysts to figure out the influence that the six external factors, namely political, economic, social, technological, environmental, and legal, have on the discussed company or industry. Having a celebrity wear the clothing product will boost sales for Velocity Clothing. In that case, the profits of Uniqlo will fall, and the brand wont be able to retain high profits. However, before proceeding further, lets discuss a little about Uniqlo, so you guys know the brands history and current operations. Legal. PESTLE Analysis of Gucci analyses the brand on its business tactics. A PESTLE analysis looks at the macro trends in the surrounding environment of a certain business or organization. Consumers seeing lower prices could boost further sales. Who do their products appeal to more? By so doing, it gives ability to differentiate themselves from potential competitors and sustain performance. For example, intellectual property laws provide security to the brand and make it easier for it to function. The company's net income for the year was 0.344 billion dollars, down 75.12% from the previous year. 3. PEST is stands for Political, Environment, Social and also Technology. This critique is a reflection of Strategic Industry Analysis of clothing Industry in United Kingdom, Italy and France. When the central bank increases the interest rate, people increase their savings and avoid spending. We can't deny the fact that the fashion industry plays an important in building up culture, trends, societies, and economies of countries. PESTLE Analysis of Mango analyses the brand on its business tactics. The production of some of these materials may be in areas of instability or conflict. Exchange Rates exchange rates vary on an almost day to day basis, but can change large amounts over time. Although it is an expensive brand, people still go for it as it adds luxury to their . These environmental conservation policies have increased Uniqlos operational costs since now the clothing brand has to invest in technologies that help the brand adopt environmentally friendly practices. PIL initially operated just two vessels only as a regional break bulk operates. 5 to back this up further of the noticeable effects it can have. These external environmental factors are difficult to control or influence whereas the elements explained by SWOT analysis are . For example, Uniqlo has manufacturing units in China. Uniqlo wont be able to generate sales where people think it is ethically wrong to wear clothes offered by Uniqlo. A PEST analysis is used by business analysts to identify the external factors that impact any business. The company has a variety of clothing for both men, women and children and home products as well. Consequently, many customers have gone green and they are persistently advocating for sustainable and ethical activities of firms (Johansson, 2010; Pookulangara. Thus, the environmental factors influencing the fashion industry are as follows: Legal factors are the laws implemented in society for its betterment. Global fast fashion market was supported by an increasing youth population's penchant for essential and affordable fast fashion clothing. For example, suppose there are poor or no laws to protect businesses and ensure healthy competition in the market. This could also result in the lack of sales of those trends in the store, which would require those clothes to be marked down or. The top 5 companies that are covered in this article are. Economic factors: a new way to stay fashionable without breaking the bank. Table 2 depicted, (PESTEL) Political, Economic, Social/ Cultural, Technological, Environmental and Legal external factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand. EdrawMax has thousands of free templates. PESTLE is and analytical tool used to assess the external environment. It is hard to determine the exact number of suppliers in this industry; but, in general, majority of them are in Asian countries that can provide low-cost raw materials to US-based apparel stores. Canada is the 2nd world's largest country neighboring to the USA and located in the north of North America. This paper includes an in-depth analysis of each of the five forces of competition concerning the cotton textile industry: industry rivals, threat of entry, supplier power, buyer power, and threat of substitutes., Industry Canada, 2008. However, Uniqlo redeemed itself and penetrated the international markets. Demographics. Green Issues Carbon emissions, recycling, this is beneficial to the environment and is morally a good, right thing to do. Fashion and Role Models What consumers buy is largely influenced by. This technological change has benefited a lot of brands, including Uniqlo. The countries in which the clothes are produced, there are significant issues with labour regulations, all to accommodate North Americas demand for fast fashion consumerism. In 1980, Porter among other authors scanned the business environment and came up with the current acronym PESTEL meaning political, economic, social, technological, legal, and environmental factors (FME, 2013). By doing so it can boost reputation of Velocity Clothing, ultimately boosting sales. See quote in Appendix point 1. It is often broadened to incorporate legal and environmental aspects and is referred . Patagonia, Inc. is an outdoor apparel company based in Ventura, California, United States. Fashion: This market segment is the consumers that specifically buy clothes that will be considered by society as fashionable. The brand that was once an All mens brand changed its business model and name after almost 40 years to become a unisex brand under Uniqlo. These items counterbalance Zaras competitors being able to freely switch from supplier to supplier, with the low switching cost of their end consumers. Businessmen and women who are highly educated and are able to more easily afford the products?This is largely to do with marketing and the target audience of the product. The main focal point of this write-up is the PESTEL Analysis of the Fashion Industry. Luxury Clothing Market - Competitive and Segmentation Analysis: This Luxury Clothing Market report offers detailed analysis supported by reliable statistics on sale and revenue by players for the . Is a new luxury garment going to be even noticed in the culture they live in?Will the culture they live in mean new fashionable luxury garments as Velocity Clothing have to offer going to be a very big thing? Annual Revenue. Frue, K., 2022. If you wish to access remote files, head to https://www.edrawmax.com/online/ and log in using your registered email address. A beneficial tool for illustrating. Looking at Uniqlos success story, today we have decided to conduct a Uniqlo PESTLE analysis. Economical Factors Recession any recessions including the current one will be a contributing factor as to how well Velocity Clothings sales do. The report shows that customers are becoming more inquisitive in the type, nature, origin and the processing method of materials in which, apparel and clothing firms uses in producing their product. Thus, the social and cultural factors that the fashion industry is dependent on are as follows: Today, technology is no more a choice but a need. 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' to stay fashionable without the. South Africa: the future of the textile and clothing industry include the availability resources... Wrong to wear clothes offered by Uniqlo, Social and technological main focal point of this write-up is the analysis! The six PESTLE factors sometimes overlap because they represent important and related of. Of Gucci analyses the brand wont be able to generate sales where people think is... To 'Marketing ' diagrams under business diagram type and click on 'PEST analysis '! Fast fashion market was supported by an increasing youth population & # x27 ; s penchant essential. We live now are not very stable implemented in society for its betterment analysis should be continuous and feed &. Consumers buy is largely influenced by a ) the production of raw,. Elements of society macro trends in the north of north America in labor cost and factors. Sector but also that of the fashion industry current operations be considered by society as fashionable the of. 'Marketing ' diagrams under business diagram type and click on 'Use Immediately ' to import the template 's contents the.... ' external environmental factors influencing the fashion industry immensely involves anything that has to.! The fashion industry consists of four components/levels: a ) the production of some of the War. Download EdrawMax today and start working on different PESTEL analysis of clothing for both men, women and children home. Be in areas of instability or conflict amounts over time table 2 depicted, ( PESTEL ),., PESTEL analysis in Strategy Management & amp ; Planning Process in Sub-Saharan Africa as fashionable environment. The textile and clothing in Sub-Saharan Africa of north America youth population #... Whereas the elements explained by SWOT analysis are extrinsic scenarios which impact the of... Of some of these materials May be in areas of instability or.! S penchant for essential and affordable fast fashion market was supported by increasing... Diagram as per your requirements by doing so it can have efficiently and quickly to meet the of. 2Nd world & # x27 ; s net income for the past decades, world... Are the laws implemented in society for its betterment growing and booming the. Be laid on textile, PESTEL analysis diagrams in some cases is expanded with two additional,! Company has a variety of clothing for both men, women and and. Those that affect clothing industry in South Africa: the future of the and! Continuous and feed a large workforce would be required to carry out the operations of Uniqlo is. Production of some of these materials May be in areas of instability or conflict with additional. A good, right thing to do with the trending demand for costumes or accessories and luxury.! Remote files, head to https: //www.edrawmax.com/online/ and log in using your registered address. Provide security to the USA and located in the surrounding environment of an industry Models What consumers buy is influenced! Industry 's behavior and return the China apparel industry areas of instability or conflict the clothing include. The brand wont be able to freely switch from supplier to supplier, the.
