textile industry
Post on 14-Nov-2014
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IndustrySecond largest market in the worldExports last year US$ 14 Bn Domestic market is US$ 28 BnConsists of
20% of industrial production 9% of excise collection 18% of employment in industrial sector
Structure
Growth DriversCompetitive AdvantageChanging consumer behaviorIncreasing purchasing powerNew product developmentReduced import duties
Value ChainTextile Value Chain
SWOT ANALYSIS
STRENGTHSABUNDANT RAW MATERIAL AVAILIBILITYAllows the industry to reduce costs and lead timesIndia is one of the largest producers of natural
and man made fibresLOW COST SKILLED LABOURProvides a competitive advantage for the industryHourly wage comparisonIndia – 0.69England – 14.24 Italy – 15Japan – 26Spain - 8
GROWING DOMESTIC MARKETLow per capita consumption of textiles so lots of scopefor growth.Global average-6.8U.S – 20Japan – 12 India – 2.8
It is extremely sensitive to fashion trends and fads
Cases :Arvind mills: increasing its cotton shirting production from 27
million meters to 34 million meters, thus making excellent use of abundant raw materials.
Madura garments: small cities are also getting fashion conscious so MADURA GARMENTS have started setting up exclusive retail outlets in second rung cities like thanjavur and trichy
WEAKNESSFRAGMENTED INDUSTRYReduces the ability to expand as few sectors influence thewhole industry.In fabric, large section of the industry is in the power loomAnd handloom sector.Power loom sector- 63%Handloom sector -19%Mill sector -14%Hosiery sector- 11%HISTORICAL REGULATIONSAbsence of a viable exit option for industry players. Certain sectors are reserved for SSI’s like garmenting and
knitting.
LOWER COST COMPETITIVENESSLabor force have a low productivityInterest rates and tax rates are highLabor problemsTECHNOLOGY OBSOLOSENCEInvestments in modern technology is lowDegree of modernization World – 30.2%India – 4%Europe – 77%Pakistan – 70%America - 60%
Case:Abhishek industry whose major business comes from exports has tied up with foreign firms like Gruppo Zambiati and Nautika to share their technology and R&D information
OPPORTUNITIES
Global textile industry is likely to grow from US$ 309 billion to US$ 856 billion by 2014
Market share of India now is only 4% , so huge scope of expansion is present
Indian companies need to increase focus on new products
Increase usage of CAD and Trends forecasting to improve efficiency
Case: Welspun India has ties with 12 of the top 20 retailers in the world namely Wal-Mart,JC Penny, Target thereby exploiting the opportunities
THREATSINCREASED COMPETITIONIncrease in competition due to entry of lower pricedimports , who have a better brand name.
ECOLOGICAL AND SOCIAL AWARENESS
Issues such as polluting dyes, child labor, unhealthyWorking conditions are in the firing line of the industry.
Standards like SA 8000 are being implemented in theindustry, resulting in increased pressure on the
industry.
Porter’s five force model
Threat from new entrants (low)Retailing not allowed for foreign players
Huge investments in infrastructure is required
Availability of skilled labors and technical know-how is low
Availability of substitutes (high)Unorganized retailing
E-retailing
Catalogue sales
Bargaining power of buyers (moderate)Individually, customers have very little
bargaining power within the organized retail stores
Lots of various shopping formats available to shop from
Lots of brand choices available for similar qualities with different price
Bargaining power of suppliers (low)Being bulk purchases done by organized
retailer’s suppliers have very little bargaining power in organized retailing.
Many retailers are doing backward integration and coming out with private labels, thus decreasing dependence on traditional suppliers.
Competitive rivalry (moderate)Very few national level players Growth rate Presence of regional and local players High competition between the national
brands and retailer’s own
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