SG7001 Activity 4 Assignment Sample
A critical analysis of Industry Environment
PEST Analysis
| Environmental factors | Issues in the Industry | Implications for the Industry |
| Political | The political situation of Thailand has a significant impact on the industry due to the constant conflict between the two parties in the country (fibre2fashion.com, 2021). This leads to a slowdown of businesses in the clothing industry, as companies need to adapt to changing rules and regulations. | Due to the intense and volatile political situation in the country, organisations have often faced slowdowns in the market specifically when it comes to infrastructural growth that can support their business. Moreover, the support from the government is also major. |
| Economical | The economic condition of Thailand is quite stable and has attained significant growth in terms of GDP in the past few years (mordorintelligence.com, 2021). This is a significant positive factor for companies in the clothing industry. | Due to the increasing GDP and growth and the markets over the past few years, the companies in the clothing industry have seen a boom in the textile industry due to the increasing amount of exports. |
| Social | In terms of social factors, it has been seen that demand from foreign countries have increased which has again created opportunities for companies in the textile industry that export their products. | Increasing awareness in demand among consumers has allowed companies to expand their production, which has significantly increased the sales of companies in the textile industry. This also allows companies to expand their growth in foreign markets which is a significant factor of growth for companies in the textile industry of Thailand. |
| Technological | There is a lack of technological advancements in the industry however with foreign investments can significantly improve the way textile manufacturers in Thailand can increase their sales and quality of products. | Advancement in technology can not only increase the quality of products but would also help in increasing the production rate. Adoption of technology would also help in increasing the ability of companies to serve their exceeding demands in the market (Mizuno, 2020). |
Porters 5 forces
| Porter’s Forces | Strength | Justification |
| Bargaining power of consumers | High | The bargaining power of consumers in the textile industry of Thailand is quite high due to the presence of numerous companies. The consumer gets many options to choose from while buying clothes and other garments, which increases their bargaining power as competition, is quite high and the market is saturated. |
| Bargaining power of suppliers | Medium | The bargaining power of suppliers is medium as there is not quite a lot of supply is present in the markets of Thailand and most companies need to acquire products from China. This significantly increases the dependency of textile companies in the markets of Thailand over the Chinese suppliers (Candrasa et al. 2020). |
| The threat of new entrants | Low | The threat of new entrants is low as organisations as Atelier Chiang Mai has established their markets in Thailand, which significantly increases their dominance. |
| Threat of substitutes | Medium | The threat of substitutes is low as the products sold by the company are quite imitable and this increases the number of substitutes present in the market. |
| Competitive rivalry | High | The competitive rivalry is quite high due to the presence of national and international brands and companies in the Thailand market (Puriwat and Tripopsakul, 2020). |
| Identification of the Industry in Question | The textile and clothing industry of Thailand mostly deals with casual wear, sportswear, women wear and kids-wear. The industry is able to handle every aspect of product sale and design due to the presence of both suppliers and manufacturers in ample numbers. Apart from that, silk and cotton are the widely produced raw materials that increase the competitiveness of companies in the market. Adding to that, the industry employs more than 200,000 people making it the second most important industry in the country (mordorintelligence.com, 2021). |
| Industry stage in the Life cycle | The industry has reached its maturity level due to the fact that the market is quite saturated. Moreover, it has also been seen that the increasing demand for cotton in the country has forced manufacturers to acquire raw materials from foreign countries. This has significantly reduced the competitiveness of the industry compared to India and China (Leerojanaprapa and Bhundarak, 2017) |
| Implications | The industry needs to focus on the development of raw materials within the country’s boundary to support the textile companies in the market. As a result, government support and foreign investments can play a major role in doing so, this would allow the creation of new opportunities for both existing and new companies. |
| Issue | Survival factor | Success factor |
| Changing demographics | The changing demographics have diversified the pattern of demand among consumers | If companies adopt proper diversification strategies then it is eminent that they would succeed in the highly competitive market |
| Rapid urbanization | Rapid urbanization has significantly increased the purchasing power of consumers | Due to the increasing purchasing power of consumers, companies can modulate their pricing strategy is thereby, achieve the possibility of earning higher revenue. |
References
Candrasa, L., Cen, C.C., Cahyadi, W., Cahyadi, L. and Pratama, I., 2020. Green Supply Chain, Green Communication and Firm Performance: Empirical Evidence from Thailand. Systematic Reviews in Pharmacy, 11(12), pp.398-406.
fibre2fashion.com, 2021. Thailand’s booming textile and apparel industry. Available at https://www.fibre2fashion.com/industry-article/7680/thailands-booming-textile-and-apparel-industry [Accessed on 10 April 2021]
Leerojanaprapa, K. and Bhundarak, K., 2017, June. Relationships between labour demand and resource factors for textile and garment industry in Thailand. In 2017 International Conference on Industrial Engineering, Management Science and Application (ICIMSA) (pp. 1-5). IEEE.
Mizuno, A., 2020. Labour Migration and Relocation of Apparel Production between Thailand and Myanmar. Journal of Southeast Asian Economies, 37(2), pp.181-198.
mordorintelligence.com, 2021. THAILAND TEXTILE MARKET – GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2021 – 2026). Available at https://www.mordorintelligence.com/industry-reports/thailand-textile-market [Accessed on 10 April 2021]
Puriwat, W. and Tripopsakul, S., 2020. Preparing for Industry 4.0–Will Youths Have Enough Essential Skills?: An Evidence from Thailand. International Journal of Instruction, 13(3), pp.89-104.
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