Textile and Apparel Industry

Strategic Management – 1Group A

Presented by:Abhishek Kumar Pandey

Introduction• India is the world's second-largest producer of textiles and

garments.

• Textile plays a major role in the Indian economy. It contributes 14 per cent to industrial production and four per cent to gross domestic product (GDP).

• The fundamental strength of the textile industry in India is its strong production base of wide range of fibre/yarns from natural fibres like cotton, jute, silk and wool to synthetic /man-made fibres like polyester, viscose, nylon and acrylic.

Evolution of Indian Textile Industry

Advantages in India

Segment of Textile Industry

INDUSTRY & MARKET ANALYSIS

MARKET PENETRATION STRATEGY

To improve technical skills in apparel industry government established 75 apparel training and design centers across India.

National institute of fashion technologies playing as the role of pioneer towards the growth of apparel industry and its exports.

To promote apparel exports 12 locations has been approved by the government to set up apparel parks.

MARKET SHARE

TEXTILEAPPAREL

69%

31%

KEY PLAYERS IN THE INDUSTRYCompany Business areas

Welspun India Ltd Home textiles, Bathrobes, Terry towels

Vardhman Group Yarn, Fabric, Sewing threads, Acrylic fibre

Alok Industries Ltd Home textiles, Woven and Knitted apparel fabric,

Garments and Polyester yarn

Raymond Ltd Worsted suiting, Tailored clothing, Denim, Shirting,

Woollen outerwear

Arvind Mills Ltd Spinning, Weaving, Processing and Garment

production (Denims, Shirting, Khakis and Knitwear)

Bombay Dyeing & Manufacturing

Company Ltd

Bed linen, Towels, Furnishings, Fabric for suits,

Shirts, Dresses and Saris in cotton and Polyester

blends

Garden Silk Mills Ltd Dyed and Printed fabric

Macro Environment AnalysisSocial and Cultural Factors

• A small apparel manufacturer create styles that appeal to those of different cultures. • Manufacturers avoid creating too many items that styles were prevalent long ago. • Demographical factor like average age of the population also affects the styles in demand.

Authority Factor

• Government Introduced Integrated textile park in the 12th five year plan• The scheme would facilitate textile units to meet international environmental and social

standards.

Natural and Environment Factors

• Pollutants released by the global textile industry are continuously doing unimaginable harm to the environment. It pollutes land and makes them useless and barren in the long run. 

• The industry is moving towards long-term sustainable options with new products like organic clothing

• Many textile manufacturers are moving towards sustainable growth.

Security Factors

• Have a high competition of eating up of market share from creation of counterfeit and duplicate products.

Technological Factors

• Institutions like NIFT , NID encouraging development of new technological processes in fibre and apparel manufacturing.

• Development and Implementation of new human resource programs.

Economic Factor• Economic factors can have both positive and negative impacts on the clothing industry. During economic boom

periods, people have more disposable income. Hence, they may buy more clothing, increasing sales for clothing manufacturers, wholesalers and retailers. However, recessions have the opposite effect. Sales for these various clothing entities may be significantly lower. Consequently, retailers may be stuck with large amounts of inventory.

• The middle class which currently forms up to be around 40% of the population is growing both in its income and also size which is good for apparel industry as they the major target customer for this industry.

• As the labour cost raising in China major companies looking for alternate solution in other countries, which may prove to be favourable for the India because it will make Indian industry more competitive in global market.

Political Factors:-

• Political and legal sectors includes the policies and the regulations of the government which the organizations need to follow to be considered legal.

• Tax Policy• Employment laws• Trade restrictions

Porter’s 5 force model1. Threats of new entrants2. Bargain power of buyers3. Bargain power of suppliers4. Threats of substitute product5. Intensity of rivalry

Threat of new entrants• Economics of scale – High - Large existing firms buy raw material in bulk so it reduces the average cost and they achieve

economics of scale - So difficult for new entrants to enter the market

• Capital requirement – High - Huge initial requirement in plant and machinery, land, raw material, advertisement

• Product Differentiation - High - Must be high for new entrants in terms of brand identification, quality - So competitive advantage must be high to overcame the threat

Bargaining power of buyers and suppliers

Buyer• When customer buys in bulk bargaining power of buyer is high

• Low buyer to supplier ratio – high bargaining power of buyer

Supplier• Many small suppliers are present in the market so bargain power of

supplier is low

• Suppliers have high bargaining power when the supply is for unique product Ex. Fur

Threat of substitute product

• Low cost substitute product from countries like China, Bangladesh

• Low cost incurred by buyer while switching to substitute due to preference for small local stores and traditional wear.

• High propensity of buyers to substitute due to low prices, good performance of the product

• Overall threat of substitute product is high.

Intensity of Rivalry• Extreme rivalry among established brand create the great threat to profitability

• Competitors include numerous apparel designers, manufacturers, distributors, importers, and

retailers

• Competition is high in textile and apparel industry due to high growth rate• Like: Louies Philip, Allen solly, Peter England, Van Heusen

Strategic Group Analysis

•Strategic Group Analysis (SGA) aims to identify organizations with similar strategic characteristics, following similar strategies or competing on similar bases.

•Such groups can usually be identified using two or perhaps three sets of characteristics as the bases of competition.

Strategic Group Mapping•Strategic group mapping is analytical tool used for

showing competitive positions that rival firm occupy in the industry.

•Identification of close and distant rivals.•Identification of attractive and unattractive positions of

the firms in industry.•Identifying a strategic group a firm should consider

entering in.

Tren

dy

Price

Mango

ZARA

New Look GAPU.S Polo

Lifestyle

Big Bazaar

Pantaloons

Tommy Hilfiger

High

High