The document discusses Porter's five forces model as it applies to the apparel industry. It analyzes the competitive intensity and profitability of the industry by looking at the barriers to entry, power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. The summary is: [1] The apparel industry has high barriers to entry due to economies of scale, significant capital requirements, and intense competition from established brands. [2] Suppliers have bargaining power when materials are unique or undifferentiated, while buyers wield power in bulk purchases or when many supplier options exist. [3] Substitute brands pose a threat if switching costs are low based on quality or status.

1. PORTER’S FIVE FORCES

2. Porter’s five forces:
• Porter's five forces analysis is a framework for
industry analysis and business strategy development
formed by Michael E. Porter.
• It determines the competitive intensity. It also
determines the ultimate profit potential of the
industry

3. Entry
barriers
Powerful
suppliers
Powerful
buyers
Substitute
products
Jockeying for
position
/Intensity of
competitive
rivalry

5. Apparel industry
• Apparel industry primarily concerned with the
production of yarn, and cloth and the subsequent
design or manufacture of clothing and their
distribution. The raw material may be natural or
synthetic using products of the chemical industry.

6. The Industrial processes
• Cotton manufacturing
• Synthetic fibers- rayon nylons and polyesters
• Natural fibers- sheep, goat, rabbit, silk-worm flax,
Hemp, Jute sisal

7. In 2002, textiles and apparel manufacturing grew huge.
The countries with the largest share of their exports being
textiles and apparel were as follows:
• Bangladesh: 85.9%
• Macau: 84.4%
• Cambodia: 72.5%
• Pakistan: 72.1%
• El Salvador: 60.2%
• Mauritius: 56.6%
• Sri Lanka: 54.3%
• Dominican Republic: 50.9%
• Nepal: 48.7%
• Tunisia: 42.4%

8. Michel porter’s five competitive force
model for Apparel industry

9. Entry barriers

10. • Economies of scale apparel industry is high
• Industry will buy raw materials in bulk for further
production when raw materials buy in bulk the
average cost will reduce

11. Product differentiation : High
• Product differentiation will be high for new entering
industry in terms of brand identification, brand
loyalty, quality, consumer service and advertising to
overcome by strong existing one and who are first in
market
Eg :Harpa and calvin klein

12. Capital requirement: High
• Apparel industry need huge capital requirement for
plant & machineries, land, raw material and
advertisement endorsing and startup losses.

13. • Comparatively the Government policies are few for
apparel industry to startup , they required license for
textile mill , import & export etc
Government policy – Less

14. Conclusion for entry barrier
• When the firm’s financial aspects are strong it can
enter apparel industry easily, legal aspects play a role
when the manufacturing is into textiles.
• Over all entry barriers for entering into apparel
industry is not so difficult too.

15. Powerful suppliers:
• Suppliers refer to the firms that provide inputs to the
industry.
• Bargaining power of the suppliers refer to the
potential of the suppliers to increase the prices of
inputs like labour, raw materials, services, etc or the
costs of industry in other ways.

16. The supplier’s power is high
• When it is for unique product
Ex: Fur
• When it is for less product differentiation
Ex: Silk

17. Conclusion
• Suppliers have high bargaining power when the
supply is for unique and un differentiated products.

18. Powerful buyers:
• Buyers refer to the customers who finally consume the
product or the firms who distribute the industry’s
product to the final consumers.
• Bargaining power of buyers refer to the potential of
buyers to bargain down the prices charged by the firms in
the industry or to increase the firms cost in the industry
by demanding better quality and service of product.

19. Power for buyers
• When they buy in bulk
Ex: Manufacturer Whole seller
• When they can find alternative suppliers:
Ex: Levies, Spykar, Pepe jeans etc

20. Conclusion
• Bargaining power of buyers is high when they by in
huge quantity and also when there are more number
of suppliers to the market

21. Substitute product
• These are the alternative products/ brands satisfying the
similar need of the customer
• Substitute products affect when the switching cost is high
Ex: Levis and Pepe jeans
• Switching for quality, durability and status
Ex: Luiviton, Gucci

22. Conclusion
• Substitute product affects when the switching
of brand takes place.
• It also affects for the factors like quality, status
symbol etc

23. Rivalry among current competitors
• Rivalry refers to the competitive struggle for market
share between firms in an industry.
• Extreme rivalry among established firms poses a
strong threat to profitability.
• Competition is high in apparel industry

24. • Competitors include numerous apparel designers,
manufacturers, distributors, importers, and retailers
• Ex: competitors like
• Nike, Puma, Reebok and Adidas
• Biba and Global Desi
• Peter England, Van Heusen, Louis
Philip, Arrow, Allen solly

25. Conclusion
• Apparel industry is facing huge competition
• Due to such intensive competition survival of
a new entrant is hard.

26. Final conclusion
• Apparel industry is one of the booming industry
• The above factors determine that the entry
barrier for a new entrant in apparel industry is
high.
• It is difficult for a new entrant to enter and exit
easily, because it will have to face the initial
losses

27. • It is very difficult to match the service level of
the established competitors of the market for
initials.
• Gaining the customer loyalty is too difficult
and involve huge time, cost to achieve it.