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Things have changed within this industry very frequently before. This model is one of the best tools available for analytical evaluation the competitive nature of the industry. Hence we can say that the model will be useful in defining the most important forces those actually define the nature and amount of competitiveness within the industry and will explain that the way these forces can be deemed to be interconnected with each other.
Indian Brand Equity Foundation, According to this model there are five forces which determine the competitiveness of an industry in the long-run.
The five competitive forces are: The bargaining power of buyers The bargaining power of suppliers The threat of substitutes The threat of new entrants The rivalry among existing competitors The bargaining power of buyers The demand forces inside the industry can be evaluated with the help of bargaining power which the buyers of the industry possess.
According to a research done Texsummit the current international textile and clothing industry stands at a value of 52 billion US Dollars. The dominating markets which define the trend in the business in textiles and clothing in the international scenario are US and European markets.
It is expected, that in future demand for local made clothing and apparel will rise at a much increased growth rate since it has achieved a competitive edge over and above its neighbour nations. But due to the fact that India is one of the lowest cost producer countries, most of the foreign buyers will try to hedge their risk factors by the process of outsourcing only from one country www.
The main raw material of textile and clothing industry is cotton. The textile industry in India achieves cost advantage in the segment of apparel as well as home textiles with the help of unending supply of local staple cotton which have been domestically produced. Further, Indian Government and other policy makers have taken definitive steps for improving the amount and quality of cotton yield for making sure that higher productivity can be achieved.
India has now bypassed the United States and has become the second largest producer of cotton in the world in the year The new green revolution Source: The Financial Express The threat of substitutes The factor of threat of substitutes is dependent upon several different factors.
When a number of good substitutes are available in the market, it cuts down the profitability of a particular industry as well as the magnetism of the industry due to the necessity of price restriction in the industry. There are many low cost producing countries like Pakistan and Bangladesh where the labour cost is very cheap in comparison to other first world countries.
Many researchers have put an emphasis to this point in the past. The threat of new entrants: This factor that is threat of new entrants helps in increasing the competitive nature inside the industry to a greater level.
On the other hand the threat is also instrumental in bringing increased amount of capacity in the market.
The seriousness and effectiveness of the threats posed mainly is dependent upon the entry or exit barriers which are present in the industry. It further is dependent upon the way the player who are already existing in the industry react to the new entrant Porter,; Besanko, In the case of a quota free economy, all the players try to achieve expansion of capacity.
But the implied result of it is huge number of domestic and small player entering the local market. This happens due to the fact that they do not possess the capacity to make any impact on the international scenario.
The rivalry among existing competitors The amount of rivalry within the competitors who already exist in the industry is highly dependent on the following factors: These all factors are a major thumbs-down to Indian economy on the global front.
The analysis which was carried out with respect to Porters model, is instrumental in summing up the works done by Porter on the topic of competitiveness which has been immensely helpful in understanding the literatures which are relevant on this industry.
This has proved that despite the structural inefficiency, the Indian textile and clothing industry has vast potential to successfully compete in the international business.
The productivity of a country depends upon the productivity of the companies operating in that country. This happens due to the factor that this is the root of growth of national per capita income.
The income growth of few developing countries in percentage is given below in Table 1. Income growth of few developing countries Source: Dowling,pp 50 The literature discussion based on the topic of productivity can be grouped by three different measures.
First is the output per worker. This helps in understanding the productivity of each person in isolation in active employment Blake and Sinclair, The other way for measuring productivity is the measurement on the production based on time. This calculates the labour productivity according to the number of man hours for which work has been done.Industry is the production of goods or related services within an initiativeblog.com major source of revenue of a group or company is the indicator of its relevant industry.
When a large group has multiple sources of revenue generation, it is considered to be working in different industries. About initiativeblog.com initiativeblog.com is a collaborative research and analysis website that combines the sum of the world's knowledge to produce the highest quality research report.
» Porter’s Five Forces Model is a very important tool to analyze the industrial parameters and to develop business strategy. Here five different factors would be discussed to highlight the attractiveness and productivity of a market. Water rocket launch A water rocket is a type of model rocket using water as its reaction mass.
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Michael Porter’s Five Forces: New Entrants Suppliers Industry competitors and extent of rivalry & advantage Buyers Substitutes Overview of Porter’s Five Forces The Porter’s Five Forces model is an “outside looking in” business unit strategy tool that is used to make an analysis of the attractiveness or value of an industry structure.