This industry mainly sells clothes and accessories, from local or foreign brands, small brands, or luxury brands, depending on the consumer's economic condition and needs. If a company ensures a healthy environment, it will be in the business for a long time. 7 to support this. Economical Factors Recession any recessions including the current one will be a contributing factor as to how well Velocity Clothings sales do. This clothing brand was named Mens Shop OS since it only offered clothing for men. Italy today is divided into 20 regions, five of which have special status, with special . Trading Policies any new trading policies formed between countries could make it easier or harder for countries to trade with each other, which could be a potential issue for the accessibility of goods for Velocity Clothing. PESTLE or PESTEL Analysis is a tool which helps companies have a ten thousand foot view of the macro environment it is operating in. Therefore, the significant legal factors that can cause some shifts in the fashion industry are as follows: If you are using the offline version of EdrawMax, open the tool in your system. To do that, the brand always looks for ways to increase efficiency by minimizing costs. A cost benefit analysis must be done. Paying the staff to sell the clothing in store will also be another outgoing affected by any changes in this.Please see Appendix point 1. Ottawa is the capital of Canada. Key Takeaways The main focal point of this write-up is the PESTEL Analysis of the Fashion Industry.This form of analysis is beneficial in the long run as it helps the company and industry analysts to figure out the influence that the six external factors, namely political, economic, social, technological, environmental, and legal, have on the discussed company or industry. These are the changes that have affected today's clothing. This achievement has a dramatic positive impact on the sector to the extent that the sector is consistently experiencing 13% increase rate in its export and 4% increase in the import rate for past few years. Competitive Regulations, Consumer protection, Industry-specific regulations, Employment law all other factors which Velocity Clothing must be aware of as to not break any laws and follow the correct procedures. Here, at ACaseStudy.com, we deliver professionally written papers, and the best grades for you from your professors are guaranteed! Out of which, the company's net income was 0.344 billion US dollars, and it has declined by 75.12%. Moreover, Uniqlos operations in different countries can be affected since they highly rely on good political relationships. Richard M. Johns (2006). The global apparel value chain, trade and the crisis: challenges and opportunities for developing countries. This, however, makes a company vulnerable to economic factors from abroad. Initially, this move didnt prove to be very sensible since the brand experienced losses due to some mistakes related to sizing. Importance of PESTEL Analysis in Strategy Management & Planning Process. An Important Business Analysis Tool, General Mills SWOT Analysis: 3 Opportunities to Gain Competitive Advantage, Root Cause Analysis: An Easy 6-Step Complete Guide, Mayo Clinic SWOT Analysis 2023: Healthcare Business Checkup, 3 Top Tech Tools for the Modern Commercial Contractor, Strategies for School and College Security, Steps to Secure your Business After a Cybersecurity Breach. This information needs to be considered when selling the products and considering the target audience. Zara is a brand owned by Inditex, among with several others such as Bershka, Stradivarius, and Oysho. For example a process which eliminates the needs for three manual workers could save money on labour costs, but there would be the initial capital needed for the new technology.In the short term this could be expensive, but in the longer term the reduced labour costs could prove it to be very beneficial and save a lot of money. By doing so it can boost reputation of Velocity Clothing, ultimately boosting sales. Suppose a country is undergoing a recession. In 2021, Uniqlo was ranked among the top 100 e-commerce stores. EdrawMax lets you share your PESTEL Analysis diagram on social media platforms, like Facebook, Twitter, Line, etc. 6 Effective Content Marketing Strategies You May Have Overlooked, Market Analysis Definition (With Explanation and Examples). He introduced the framework back in 1964 in his book " Scanning the Business Environment ". 1. Any change in trends needs to be noticed so Velocity Clothing can cater for the consumers new needs and desires. Similarly, businesses are also affected by environmental factors. As a result, the brand has to protect the laws of its employees, or else it can face heavy fines, which will be bad for the company financially. Political factors: Fashion icons in the White House. Due to the costs of these materials, it could force wholesalers to increase the prices of clothing anytime they encounter shortages of material. Home Five Best PESTLE Analysis Examples for Business. What Is the PESTEL Model for Business Analysis? Their compensation ranges from uncontrollable seizures to infertility, and from difficulty breathing to watching their children grow up with significant mental and physical disabilities. Environmental Regulations With the world trying to be more green and cut emissions in every way, regulations that already exist and the threat of new legislation which could mean that Velocity Clothing must cut emissions further could prove costly, by either being forced to invest in new technologies or find new ways to cut emissions, the consequence of not abiding by such regulations could mean getting fined and damaged reputation. Environment factors. This can be explained further in the Appendix. It evaluates the external environment, political, economic, social, and technological factors. This PESTLE analysis of the fashion industry takes a thorough look into the many factors that influence fashion as we know it today. As the years go on, producers must find new ways to produce more clothing to make more profit and keep up with demand. In the end, we hope our readers are now aware of the external factors affecting Uniqlo as well as the framework of PESTLE analysis. This form of analysis is beneficial in the long run as it helps the company and industry analysts to figure out the influence that the six external factors, namely political, economic, social, technological, environmental, and legal, have on the discussed company or industry. Moreover, the clothing brand also has to study the demographics of each country in detail because demographic factors significantly impact Uniqlo. Definition. PESTEL ANALYSIS Pestel is a strategic analysis tool used by organizations to scan the macro-environment in which they operates, helps to identify external factors that can affect the organization's business activities and performance (Gockeln 2014). c) Marketing in the form of advertising and promotion. Economic. The consumers now demand for the products which are environmentally safe and having high packaging. These factors are the most important tool to analysis the organization. Nordstrom can use the countrys economic factor such as growth rate, inflation & industrys economic indicators such as apparel stores industry growth rate, consumer spending etc. Country Relationships/ Attitudes Countries that have long lasting feuds or discrepancies that have not entirely been solved which could have occurred from past wars or conflicts could affect the willingness of foreign companies to trade with Velocity Clothing. A PESTLE analysis is used within industry and more academic pieces of work as it forms a much more comprehensive analysis of an area that of a traditional SWOT analysis. Taxes business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. The clothing brand managed to generate revenue of $1.9 billion through e-commerce. Taxes business taxes and any other taxes that Velocity clothing must pay are mandatory and must be paid, affecting the amount of outgoings they have, variation in this may cause more or less outgoings but any changes could be quite significant. Technological micro-environmental factors affecting the clothing industry include the availability of resources, demand, and production. Free PESTEL Analysis | Free PESTEL Analysis. Provide a 1 page synopsis of the global markets, apparel and textile industries and the major implications as a result of the WTO major trade decisions. Relocating the garment industry to the global South can arguably be the downfall of workers as they are sacrificing their lives for their job. Recently, the world has observed a boom in the eCommerce industry. Chinas apparel exports to the U.S. were $29.0 billion in 2012, down slightly from 2011s $29.3 billion., Herbert.J. Before We See PESTLE Analysis Examples, Let's Recap on the Basics. Zara. Fashion: This market segment is the consumers that specifically buy clothes that will be considered by society as fashionable. to monitor the growth of not only retail sector but also that of the organization. Copyright 2023 IPL.org All rights reserved. A PEST analysis is a strategic business tool used by organizations to discover, evaluate, organize, and track macro-economic factors which can impact on their business now and in the future. PESTLE Analysis helps to find opportunities, threats, strengths and weaknesses . The Companys Goal If asked, the fundamental way to tell the meaning of PESTEL Analysis is the study of the six most important external factors that influence a company or an industry. This is largely to do with marketing and the target audience of the product. PEST Analysis stands for Political, Economic, Social, and Technology - the four central areas to this method. Moreover, as social media usage increased, Uniqlo started using social media platforms like Instagram and Facebook for marketing. Green Brand Image Suppliers who also are affected by this may put up their prices to cater for the increase in labour costs, which would affect the amount Velocity has to pay. SWOT Analysis of Fashion Business. From ready-made apparel used in the America Civil War to using computers to design clothes during the 21st century, clothing has come a long way from its origins. The brand focuses on providing casual clothing options to both genders. How to secure financing as a small business owner, How to Make a Business Plan for Any Business, 7 Crucial Macro Environment Factors to Include in Your Analysis, Macro Environment Examples in the Real World. If that happens, it will most probably shrink the market share for Airbus. Income level in countries is a factor worth considering since the price of Lululemon is positioned as, Gereffi, G., & Frederick, S. (2010). The first factor is political factor which include such as law of land, taxation policies, rules and regulation, trade restriction and so on. After that, the brand emerged from Japans markets and spread worldwide due to its low prices, comfortable clothing material, and cool outlook in no time. This article is for business owners and executives who want . Threat of new entrants low The SWOT analysis of Carter's is presented below: Strengths. Suppose political instability causes protests and political demonstrations in the area where Uniqlos outlets exist. Today, everybody buys excessive amount of clothes and shoes so companies need to keep up with the people who want their clothes fast like in the article High Price of Cheap Fashion says Fast Fashion is like fast food. PESTLE Analysis of Mango analyses the brand on its business tactics. 5 to back this up further of the noticeable effects it can have. We use cookies to give you the best experience possible. Businessmen and women who are highly educated and are able to more easily afford the products?This is largely to do with marketing and the target audience of the product. For example, a PESTLE analysis could help a clothing business to decide . As garment manufacturing develops in their country, industrialization would occur which would cause their standard of living to increase., During last weeks group discussion, we provided a brief introduction to the book. Legal factors. After that, we proceeded with the PESTLE analysis and highlighted the Political, Economic, Social, Technological, Legal, and Environmental factors that affect Uniqlo. In turn any changes in these prices could affect the price of the product when being bought off the shelf by the consumer. 2. Conclusion: Pestle Analysis of the Fashion Industry. The company's net income for the year was 0.344 billion dollars, down 75.12% from the previous year. d) Wholesale/Retail sales and e- commerce. Experts believe that the faster growth is mainly due to the affordable luxury brands, thanks to . The government of any area, whether local or central, always follows a set of rules and regulations, and abiding by these rules and regulations is the most important thing. Tariffs, quotas, foreign exchange risk, and other import restrictions can affect the supply and cost of clothing. The Market Environment Analysing PESTEL for Monitoring the Business in Italy.PESTEL stand for political economic social technological Environmental and Legal factors. When we hear the word fashion, we think of . Are the shops located in an area of high or low levels of education? These are the contexts that a business should assess itself against to review competitors, markets, and the situation in which an organization finds itself. Choosing the vision, mission and the reason of existence for Patagonia Initiative. It's the growth of 50% in the upcoming . Technological New Technology New technological advancements could mean there are new more efficient processes for making clothing which could increase productivity and reduce or increase costs in some areas depending on the new process. Where Velocity Clothing products are being sold also needs to be considered alongside this information. If you visit Japan, youll see a Uniqlo store after every corner. In this section, we will highlight some of the political factors that impact the operations of Uniqlo. Consequently, many customers have gone green and they are persistently advocating for sustainable and ethical activities of firms (Johansson, 2010; Pookulangara. Where Velocity Clothing products are being sold also needs to be considered alongside this information. If you have an interest in clothing and like to dress up casually, then Japan will always remind you of the famous clothing brand Uniqlo. The new introduction of new clothing styles by any competitor can shift demand away from past or older fashions, hence a small clothing manufacturer or distributor may need to discontinue certain clothing styles and produce new ones that meet the need of consumers. The operations of every business are significantly impacted by the technological changes that occur every day. For example, intellectual property laws provide security to the brand and make it easier for it to function. Patagonia, Inc. is an outdoor apparel company based in Ventura, California, United States. The PEST analysis is often used together with the SWOT Analysis and Porter's Five . The. It is an area which must be looked into carefully and research must be done to weigh the benefits. The PESTLE analysis is a strategic tool that aims to identify factors that are limiting profitability, or areas that can enhance profitability. PESTLE Analysis of Gucci analyses the brand on its business tactics. Economic growth means that people are going to spend more on shopping. Based on the economic scenario worldwide, the retail industry is predicted to have grown to $28 trillion by 2020. These types of consumers are extremely impacted by the current socially acceptable fashion trends. Use the PEST symbols from the left side and add the content to your PESTEL analysis diagram. 1. 2022. The company is said to operate in 74 countries as of November 2019. (September 2015) The dirty side of the garment Industry: fast fashion and its negative impact on environment and society. Pestle analysis of Canada. Before people would either have to ride all the way into town to have tailors make their clothes, or have someone at home make the clothing for them. The economic factors that can play the role of an influencer in the fashion industry are as follows: Society is a big part of any market. method to analyze the macro environment of an industry. Exchange Rates exchange rates vary on an almost day to day basis, but can change large amounts over time. Any change in trends needs to be noticed so Velocity Clothing can cater for the consumers new needs and desires. Several economic factors influence a company's past, present, and future, and analysts do nothing but study these factors to make proper financial decisions for a company or an industry. PESTLE . SWOT Analysis examples #3: Zara. Will the culture they live in mean new fashionable luxury garments as Velocity Clothing have to offer going to be a very big thing? As of 2021, the brand employs more than 50,000 workers. The political factors that influence the Fashion Industry are as follows: The economy plays a pivotal part in any business, small or large. In fact, when the direct, indirect, induced, and 'spill over . See quote in Appendix point 1. The fashion industry is one such industry that heavily depends on social trends. PESTLE analysis is include of political, economic, social, technological, legal and environmental factors. This is why it is necessary for a clothing brand to be at their toes and catch the . SWOT analysis to PESTLE analysis. Choosing the vision, mission and the reason of existence for Woolworths Africa. 3. Therefore, fashion or clothing firms with quality and easy to navigate web page will attract more customer (Chaturvedi, Martich, Ruwadi & Ulker, 2013). Regular analysis keeps the businessman aware of the potential threats and avoids such possibilities by corrective actions. This PESTEL/PESTLE analysis of Nike Inc. enumerates opportunities for international growth and brand image improvement, considering the remote or macro-environment of the global athletic and leisure footwear, apparel, and equipment industry. If you are a picture lover, you can click to browse or download this template to learn more about the information you want to know. The top 5 companies that are covered in this article are. Green Issues Carbon emissions, recycling, this is beneficial to the environment and is morally a good, right thing to do. By understanding what's going on around your business, you can make strategic management decisions that can minimise risks and help your company to grow. In 2015, it achieved global sales of $20.8 trillion. Presence of well-connected Omni-channel in the United States. Consumers seeing lower prices could boost further sales. When the central bank increases the interest rate, people increase their savings and avoid spending. Some of the high fashion brands in the beauty industry manufacture clothes from ordinary to luxury mass scale fashion. Different factors are involved when it comes to deciding what this should be. Moreover, sudden climatic changes can affect the sales of Uniqlo, which will impact the operations of Uniqlo negatively. Frue, K., 2022. Apple is a renowned brand in the world. An environmental analysis, or environmental scanning, is a strategic tool you can use to find all internal and external elements that may affect an organization's performance. As a result of the Civil War, clothing had to be made more efficiently and quickly to meet the standards of the military. As a result, Uniqlo moved abroad in 2002. Having a celebrity wear the clothing product will boost sales for Velocity Clothing. Overseas employers pay lower wages based on local standards of living, abusive practices toward their workers or both. Political factors: these are examined from the political stability point of view, which covers government policy intervention in the economy, deregulation, taxation changes, as well as the attitude of political parties on the government policy. This section of the PESTLE analysis highlights how environmental factors impact Uniqlo. Available at: https://www.google.com/amp/s/pestleanalysis.com/pestle-analysis-of-the-fashion-industry/ (Accessed 31 August 2022). 8 Pages. Vienna: United Nations Indistrial Development Organization., In the case of SHL it could result in people postponing the purchase of new clothes or buying the cheaper alternative, unless SHL is willing to decrease their price. This PESTLE analysis of the fashion industry takes a thorough look into the many factors that influence fashion as we know it today. Other strengths are in the design stages where the industry has shown strong innovation. A Canadian Approach to the Apparel Global Value Chain, [online] Available at, American Apparel ran into many risk factors such as finances and growth which included the ability to gauge fashion trends to consumer preference while still being able to be highly competitive (American Apparel, 2012). Bargaining power of supplier low 15th January 2016 The pandemic of covid-19 has reduced total sales, annual revenue, and the company's net income. Political factors. This is an example, If government intervention was removed from all segments of the new T-shirt value chain, the current leading producers would gradually lose their dominance as global competition intensifies. The company was established by Yvon Chouinard in 1973. Environmental and Legal forces. Macro-environmental factors are those that affect clothing industry and the industry have no . H&M PEST Analysis 2 Introduction H&M is simply a partnership of two individuals, that is Hennes & Mauritz AB. Wars & Conflict - Velocity Clothing use materials imported . Trends What is the latest trend amongst the target audience? This article highlighted the external factors affecting the operations of Uniqlo. 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