In the introduction we have given a brief description of what this PESTLE or rather Political Economic Socio- cultural Technological and Legal analysis is. The political background seems to be in favor of the businesses that operate in this industry. As there are tax concessions, institutes are being given grants to expand and to educate more and more workers and make them skilled workers to work in the industry, there are joint ventures being formed with Indian textile firms and currently we can see that there is an improvement in the infrastructure which will make it easier for transporting of your garments.
The economic goal of a certain industry is like an axis in which other objectives and goals are revolving. Knowing the economy helps us to understand where the customer demand lies on, the general economic condition such as booms, and recessions in a country and the supply of the resources. During 2007 to 2011 there is an increase in the disposable income because of this the prices has risen which in turn increased the revenue for the firms.
The Ruble, Russian currency has strengthened which has led to an increase in the total revenue earned as Russia is a main market of the apparel industry. 25-54 aged men and women re the best customer base that you can cater into. As they are in the workforce it’s no doubt that they will not consume your products. Who does not like to wear beautifully to express their elegance and their personality, us Sir Lankan a very eager to try out new designs and be trendy and thus there is a market opportunity for your company here.
There is not much advance technology available in Sir Lankan as we depend much on the labor force, actually our garments are more appreciated and accepted as majority of the production process is done by the hard working workforce, this workforce do to include child labor or sweat shops which proves the ethically of our Sir Lankan products. So if to improve the technology there should be investments done in that area mostly.
The workers in cotton fields are faced with the danger of getting infected from the pesticides that is being sprayed on the cotton where WHO has declared that they are toxic for the workers and those products are unethical. Also in garments the dye that is being used to color the fabrics can cause skin diseases. Just imagine the number of animal fur that has to be abstracted to produce just one coat. So there are a to of ethical issues in this industry.
There has been a Multi-Fiber Agreement (MFC) during 1974 which ended during 2005, this agreement didn’t allow trade between rich countries which in turn caused a boom in the exports of Third world countries like Sir Lankan and this was the main point for our industry to expand its export revenue than tea exports. There was a 200 GARMENT FACTORIES PROGRAMMER (200 GAP) introduced as most of the factories was set up in the western Province of Sir Lankan due to closure of resources. There was quotas implemented according to the location of the factory in the rural areas.
And much more agreements were made in the following years which would be further explained in the rest of this report. We hope you will get a thorough understanding of the Apparel industry of Sir Lankan at the end Of this report. Currently this industry is the world’s fastest growing industry. It grows and it makes sure that the firms in this industry become flexible according to changes in preferences of customers. As there are less barriers to entry in this market there is no doubt about its competitiveness.
It is a great pleasure to know that as a great entrepreneur you have chosen this industry to invest on. Stepping into this industry requires a lot of risks and investments, which is the toughest components to gather. The Sir Lankan industry is the fastest growing industry in the country and is one of the world’s 50 most important suppliers in garments, also it has contributed to the Sir Lankan export revenue by 52% (Which is US $3 billion). Our country has a 3 decades of experience in this industry. The workforce in this industry has a high supply of employees as there are job opportunities up to 600,000.
Ala workers are well educated and trained. Our main largest buyers are from united States of America and united Kingdom. Our inputs were imported in the early stages, but now we are not reliant on imported inputs as we have invested heavily on fabrics, packing materials and accessories. In which has contributed to increase our products value addition by 55%. The competitiveness in this industry is very strong and firms that have established have their own marketing strategies and have become regional players in manufacturing.
They have brought in other markets, catered to niche markets and created a respective brand image. Our firms are now in the stage of producing garments in a more cost effective region and add alee in our country and export which is a great strength for a developing country like Sir Lankan. To get more in depth knowledge of the Apparel Industry of Sir Lankan we have done a Political Economical Socio-cultural Ethical Technological and a Legal analysis (PESTLE analysis).
This will give you a clear image of the current state of affairs of this industry’. Political Backgrounds Political stability of the country With this political stability, Sir Lankan has been built up new relationships with the rest of other countries in the world, and then we can get that advantage or your company to expand your business across the world by exporting our products to the other countries. Offering tax relief, low interest loans Now Sir Lankan government is ready to provide low interest loans, tax relief for new entrepreneurs.
Tax relief have been offered on newly stared businesses therefore it affects for our business positively, we also can get those relief. And also banks in the country have been introduced different loan schemes with low interest; it will be very helpful when we find capital for our business. Modernizing and re constructing apparel institutes in public sector Government has facilitated to the institute such as “Sir Lankan Institute of Textile and Apparel” to modernize their procedures which suit with modern fashion trends to uplift the country’s fashion industry.
Therefore there are no of courses available at this institute for the people who want to learn about fashion designing and textile manufacturing and they are ready to provide knowledge on textile technology with low cost. With this advantage we also can get that opportunity to improve our knowledge on fashion technology and can get new ideas for our business via this institute. Developing infrastructure system in the country Now, the Sir Lankan government is very keen to develop the infrastructure system Of the Country.
Ex; new highways, roads, airports, harbors. Those will be very helpful to our company; we can utilize those facilities while operating our business especially when transporting materials which needed and when distributing our products across the world with a low cost. Paying attention to set up a joint working group on textile and apparel with India Already the ministry of economic development has been discussed with Indian’s ministry of textiles to set up this joint working group. As a result of this,
India is ready to invest in Sir Lankan as joint ventures in textile industry forming strategically alliance between the two countries. India will provide assistance to set up training and skill development programs. This will be a great advantage for your company because with this joint working group, the textile and apparel industry in the country will be improved, that improvement affects positively to your business. Economic conditions This refers to how exchange rates, inflation rates, interest rates and economic growth will impact on a business and how it can grow, develop and make arioso decisions.
For example if a business exports goods these operations can be greatly affected by exchange rates and these are factors that need to be included in a business’s strategic management plan if they are to succeed. It is important that apparel must also give enough attention to its economic stability. The economic goal of a certain industry is like an axis in which other objectives and goals are revolving. The economic factor involves the context in which an industry belongs, I. E. He configuration of the competition in which a company operates the active demand of the products, general economic condition of the nation or region, conditions in relations with other industries and the situation of the resource markets. All businesses affected by economic factors nationally and globally. A strong economy indicates positive results for businesses and consumers, and weak economy indicates quite the opposite. For the apparel industry in the Sir Lankan, the future does not look promising.
Wage and salary employment in the apparel industry is expected to decline 63% through 2012 A critical factor which may have an impact upon Next in the Sir Lankan is the current state of the economic environment. As a business which makes use of a premium based differentiated strategy, as opposed to being a cost leader, it may be seen that swings within the economic environment have the ability to impact the fortunes of the company to a greater degree than those operating in the necessity and budget sector of the market (Johnson et al, 2008).
From a purely statistical perspective, the years since 2007 have been an economic reallocates for the Sir Lankan. Following the onset of the global financial crisis in 2007, the subsequently saw GAP growth revert to negative figures with -1 % contraction in the economy. This was followed by even worse performance in 2009 with a -3% contraction. Low levels of growth have been seen since in 2010 and 2011 with GAP growth of 1. 6% and 0. 6% respectively (World Bank, 2013).
However, while the statistics show a slight recovery in 201 0 and 2011 others within the business press (BBC News, 2012) indicate that the Sir Lankan economy could continue to flat line or worse result in a “double dip” recession. These headline figures may seem to paint quite a negative picture for retailers such as Next which are highly reliant on the Sir Lankan economy as a source of revenue. However, an analysis of more detailed economic data may highlight a different perspective.
Tutu (2012) presents data which looks at the level of unemployment and household disposable incomes in the Brazil. In this case an alarming pattern is seen. On the one hand, levels of unemployment have been increasing in recent years with a rise from 0. Mm in 2007 to 1 -mm in 2011. However, conversely, the levels of disposable income of individual households during the period has consistently risen from EYE,291 per household in 2007 to E 16,031 per household in 201 1 (Tutu, 2012). For Next and other premium end retailers this ay have a key impact upon strategy.
While there may be few customers able to by the products and services of Next due to rising unemployment, those who have remained in employment have generally become more wealthy. As a result it is likely that such economic patterns may help Next to improve its average spend per customer, even if the total number of customers falls. ; Due to Consumption crisis in 2009;Rising prices especially for cotton clothes: (Global aspects: The global cotton price has been rising for several years: in 2009 it grew by 30%, in 2010 by 60%.
A particularly sharp rise in cotton price darted in mid-2010. Therefore clothes made of natural materials will be transferred to the higher price segment) Increase in the retail sales price of clothing and other finished products Market recovery in 2010, During 2010, total industry sales increased by 14% in current value terms. The Russian apparel market is very attractive to foreign companies; it is not particularly consolidated and is recovering rapidly from the financial crisis.
The strengthening of the local currency (ruble) and increasing quantity of retail volume sales in 2010 clearly indicated the apparel the increase in arching ability in Russia. But the clothing market is already close to saturation, and double-digit annual growth is not expected over 2010-2015. Opportunities in the Russian apparel market are open not only for fast- fashion, but also for foreign brands operating in the premium and luxury segments. Good opportunity to penetrate the market for outlets offering quality and fashionable clothes at reasonable prices.
The economic condition of the world can also affect the industry as increasing inflation rate make the cost of production high and thus reduce the profit margin of the industry. Socio cultural situation The textile and fashion industry in Sir Lankan is mainly a labor intensive industry as it provides livelihood to huge population, mainly consists of unskilled workers, and thus plays a pivotal role in the development of any economy. As the textile industry also comes under the basic necessity of human beings it impacts a lot to the society as well as the fashion industry a whole.
Society and culture are important factors for any business specifically those who are operating in the global arena. Since textile and fashion industry products are Sir Linkman’s one Of the main exporting items it is accessory for have a good consideration about socio cultural sector. Also the company must operate in compliance with the social systems in order to gain good reputation and effective public image. On the other hand cultural aspects are equally essential in order to understand the various needs of different individuals that belong to different cultures.