Besides that, government policies significantly impact the operations of every business, and Uniqlo is no exception. Environment factors. In such countries, Uniqlo wouldnt prefer to invest because Uniqlos products mainly attract young people. Retrieved from https://openknowledge.worldbank.org/bitstream/handle/10986/3769/WPS5281.pdf?sequence=1, However, recent increases in the value of the Chinese currency, combined with rapidly rising labor costs, have put Chinese manufacturers in a much less competitive position. The brand focuses on providing casual clothing options to both genders. FSA Practice Essay: Clothing Over Time The production of some of these materials may be in areas of instability or conflict.Such activities could affect the accessibility of these materials and the reliability of the suppliers, which in turn could affect the price of the good. This study alluded to Padgett and Allen (1997), and Cretu and Brodie (2007), and characterized green brand picture as an arrangement of view of a brand in a buyers mindset that is connected to environmental responsibilities and natural concerns. Shannons findings are interesting and some relative information pertinent to my thesis, but overall is not necessary for my essay. Global textile and clothing industry (Lopez & Fan, 2009) with 900 billion Euro in 200 worldwide (Ghemawat & Nueno, 2006). A company may have many messages, but they do not have something in common. According to an estimate by Statista, the worth of an online retail clothing e-commerce business was 102.5 billion dollars, and it would increase by approximately 153.6 billion dollars by the end of 2024. (2006), the textile and clothing industry in South Africa: the future of the textile and clothing in Sub-Saharan Africa. Over the past two decades there has been a decrease in the quantity of woven apparel fabrics made in the, In the article Cotton Clothing Price Tags to Rise, it speaks about how prices for cotton are continuing to go up, so prices for clothing are also going up. Fashion and Role Models What consumers buy is largely influenced by. How to Do a PESTEL Analysis in EdrawMax. PESTLE Analysis of Gucci analyses the brand on its business tactics. If you wish to access remote files, head to https://www.edrawmax.com/online/ and log in using your registered email address. A few companies frequently exaggerate or falsify the natural usefulness of their product, and in this manner clients doubt them any more (Kalafatis and Pollard 1999). Consumers would certainly see a hike in prices on the imported product and in turn could affect the consumers ability to afford neither the domestic made clothing nor foreign made clothing. 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. Environmental and Legal forces. Strategy planning process often requires five steps -. For example, higher wages or R&D costs in manufacturing countries like China can easily weaken Lululemons cost efficiency. Wars & Conflict Velocity Clothing use materials imported from various countries. 1. Government protectionist measures such as subsidies, quotas, and tariffs have limited economic success to a fortunate few. She shares the 8891 Km of land border with the US. Thus, the social and cultural factors that the fashion industry is dependent on are as follows: Today, technology is no more a choice but a need. Since then, the PESTLE analysis has become a popular strategic tool to assess the macro environment of organisations . Premium PEST analysis Government Policy. For example, unprecedented changes in weather will cause the demand for seasonal clothes to fluctuate. Competition within manufacturer is high since it is mass produced. Zara is a brand owned by Inditex, among with several others such as Bershka, Stradivarius, and Oysho. H&M PEST Analysis 2 Introduction H&M is simply a partnership of two individuals, that is Hennes & Mauritz AB. This technological change has benefited a lot of brands, including Uniqlo. Social Demographics Age, sex, level of education these factors about people will contribute to whether that person is going to buy Velocity Clothing products. For example, Uniqlo has manufacturing units in China. These are the contexts that a business should assess itself against to review competitors, markets, and the situation in which an organization finds itself. This is why it is necessary for a clothing brand to be at their toes and catch the . Relocating the garment industry to the global South can arguably be the downfall of workers as they are sacrificing their lives for their job. Environmental. These may include additional quotas, duties, tariffs, or other restrictions or regulation. Many legal factors impact the operations of Uniqlo. Exchange Rates exchange rates vary on an almost day to day basis, but can change large amounts over time. Business Environment Assignment. Moreover, China increased in labor cost and other factors associated with production could increase the cost of product. 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). 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). 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. In fact environmental analysis should be continuous and feed. 2. You go in all the time for a quick, cheap fix. Wars & Conflict - Velocity Clothing use materials imported . As the years go on, producers must find new ways to produce more clothing to make more profit and keep up with demand. A PESTEL analysis or PESTLE analysis (formerly known as PEST analysis) is a framework or tool used to analyse and monitor the macro-environmental factors that may have a profound impact on an organisation's performance. Based on the economic scenario worldwide, the retail industry is predicted to have grown to $28 trillion by 2020. We will now be doing a more detailed analysis on these six Coneen by design ltd). Regular analysis keeps the businessman aware of the potential threats and avoids such possibilities by corrective actions. EdrawMax has thousands of free templates. Organisational analysis tools and techniques: critical reflection on the PESTLE analysis and other related techniques February 2021 DOI: 10.13140/RG.2.2.27060.78727 Abstract. 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. Sitemap, look into the many factors that influence fashion as we know it today, Political factors: Fashion icons in the White House, Economic factors: a new way to stay fashionable without breaking the bank, Social factors: the impact of musicians and everyday life, Technology: anyone can be a fashion designer, Legal factors: companies still having their clothes sewn in foreign countries to cut costs, Environmental factors: fashion isnt safe for the planet, But the women in the White House are openly discussed, People who are low-income or live in an area with a high unemployment rate, Music has always had a massive impact on fashio. The SWOT analysis of Carter's is presented below: Strengths. 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. EdrawMax gives you ample options to customize your PESTEL Analysis diagram. Moreover, the clothing brand also maneuvered its marketing strategy and started following in the footsteps of Gap. The main focal point of this write-up is the PESTEL Analysis of the Fashion Industry. By so doing, it gives ability to differentiate themselves from potential competitors and sustain performance. Patagonia's product range include clothing for activities, such as surfing. (Lululemon Athletica Annual Report, 2012). 5 to back this up further of the noticeable effects it can have. World Bank Policy Research Working Paper Series, Vol. See quote in Appendix point 1. So much that drastic changes may consider Velocity Clothing to purchase from other suppliers in other countries as to be more economical. PESTLE . To find the origin of Uniqlo, we have to rewind to 1949 because thats when a clothing brand in Ube, Yamaguchi, was established. 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. When utilizing this framework, it becomes evident that there. Suppliers of Velocity Clothing may also increase their prices if they are also affected by the price of raw materials going up. PESTEL factors. Ottawa is the capital of Canada. Nowadays, customers are demanding for convenient shopping experience due to limited time in accessing or going to the market in person. Most of the consumers, distributors, suppliers, and investors are closing business with environmentally weak firms. The reason for conducting a Uniqlo PESTLE analysis is to highlight what external factors affect the brands operations. We Will Write a Custom Case Study SpecificallyFor You For Only $13.90/page! Before We See PESTLE Analysis Examples, Let's Recap on the Basics. Reputation impacts Treating staff fairly, giving reasonable working hours, adhering to fair trade prices, by delivering on stakeholders expectations, all these things can improve of ruin Velocity Clothings reputation. Their market dominance and profitability have benefitted significantly from the political prowess of their government to limit competition. Technological. It is often broadened to incorporate legal and environmental aspects and is referred . The PESTEL Analysis of the Fashion Industry will put forth the ups and downs faced by the company, which simply did not depend on internal factors but external factors as well. In 1980, Porter among other authors scanned the business environment and came up with the current acronym PESTEL meaning political, economic, social, technological, legal, and environmental factors (FME, 2013). Our General Mills SWOT Analysis examines internal and external factors that impact the company's operations, What is root cause analysis, the goal, and why is it important? Italy is a Republic located in south-central of Europe, with 60.4 million inhabitants, it is the sixth most populous country in Europe. Political Environment: Political is the first one of the PESTLE analysis examples for business. This technique identifies the Political, Economic, Social, Technological, Legal, and Environmental factors that impact an organizations operations. 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. If Velocity Clothing was to pay a celebrity to do this then that would be another cost Velocity must consider, but the goal is for the celebrity to wear it voluntarily.Advertising using celebrities is a method of increasing sales but is also another cost. It aids decision-making and strategic planning. 1838 Words. Uniqlos bread and butter are associated with its products sales. Trends What is the latest trend amongst the target audience? 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. By doing so it can boost reputation of Velocity Clothing, ultimately boosting sales. Furthermore, it is noted that customers, particularly from developed nations like UK, France and Italy are more and more concerned about their health and the report on individual health expenditure over the last decade by OECD (2011) has confirmed that. In this article, we will elaborate on the fashion industry in detail and will update you with the PESTLE analysis using EdrawMax's templates. For example is an old aged pensioner more likely to buy a brand new latest fashion luxury garment that is extremely popular with the younger generations? Watch this video if you if you want to understand key concepts of PESTLE analysis. 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. Importance of PESTEL Analysis in Strategy Management & Planning Process. A small company cannot achieve its height and become successful if they lack it. The PEST analysis in some cases is expanded with two additional factors, namely; legal and environmental aspects. production and consumption in the outdoor apparel industry. Thesis: How material elements of the modern fast fashion practice reinforce the meanings of unethical production, and thus explain low prices come with low product quality and negative environmental and social impacts By Velocity Clothing being fashionable and perhaps endorsed by celebrities will make a greater public awareness of the clothing product and will also make the product to be viewed in a better light. With free templates and components, this 2D PESTEL analysis software allows you to add different content to your PESTEL analysis diagrams. The environment we live now are not very stable. Choosing the vision, mission and the reason of existence for Patagonia Initiative. Moreover, Uniqlos operations in different countries can be affected since they highly rely on good political relationships. 2022. The top 5 companies that are covered in this article are. In 1981, PILs first container vessel is acquired and developed with container shipping. Preferences in clothing changed drastically as well, going from preferring style over comfort to comfort over style and back again countless times throughout the years. Moreover, as social media usage increased, Uniqlo started using social media platforms like Instagram and Facebook for marketing. 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. Economic. The fashion industry is a global industry that involves billions of dollars and work. If you want to draw the PESTEL analysis diagram from scratch, you can click '+.' Or a specific sex? This will further affect the operations of the clothing brand adversely. PEST. In 1884, Michael Marks started his own business in Kirkgate Market, Leeds by opening a penny bazaar stall. In many countries, strict actions are now being taken if businesses dont filter their waste before disposing of it and dont take measures to mitigate their carbon emissions. However, if you want to find out about internal and external factors affecting Uniqlo, do look at our Uniqlo SWOT analysis. However, before that, we made our readers aware of PESTLE analysis and the need for conducting a Uniqlo PESTLE analysis. 1. However, before proceeding further, lets discuss a little about Uniqlo, so you guys know the brands history and current operations. The fashion industry consists of four components/levels: a) The production of raw materials, principally fibers, textiles, leather and fur. A PEST analysis lets you see how your business is affected by current and future political, economic, social and technological factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand. The political factors that influence the Fashion Industry are as follows: The economy plays a pivotal part in any business, small or large. This section of the PESTLE analysis highlights how environmental factors impact Uniqlo. For example, some countries like Monaco have the highest percentage of the population above the age of 65 years. Uniqlos transition made it one of the most significant clothing brands in the entire world. Part 1- provides an interesting framework for understanding issues with strong economic, political and business ties. A reduction in price however could tarnish the image of a brand like Harvey- given the aspirational target market of SHL., Economic Just like other apparel companies, most of Lululemons products are manufactured in foreign countries, which allows the company to have cost advantages. The industry produces world class designs based on creativity and innovation which is functional. But it shouldn't be at the cost of destroying the nature and polluting the environment. Thus, the environmental factors influencing the fashion industry are as follows: Legal factors are the laws implemented in society for its betterment. Saturated markets, fierce competition, and the turbulent macro-economic environment have condemned retailers to reconsider their retail strategy. Non-profit, environmentally sound business set themselves apart from mainstream for-profit companies by appealing to human need of feeling good about yourself. These stores reinforce social preferences to appeal to this need by promoting environmentally friendly food and brands. 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 race to the bottom would occur more quickly as more poor countries compete to become the producer of the cheapest cotton and T-shirts. 3. If political tension arises between China and Japan, Uniqlo might have to shut down its manufacturing units in China. If a company ensures a healthy environment, it will be in the business for a long time. Available at: https://www.google.com/amp/s/pestleanalysis.com/pestle-analysis-of-the-fashion-industry/ (Accessed 31 August 2022). This, however, makes a company vulnerable to economic factors from abroad. The first factor is political factor which include such as law of land, taxation policies, rules and regulation, trade restriction and so on. Firms can be protect the natural environment demand by the public. Nonetheless, fashion retailing has remained one of the fastest-growing segments in the past decade. The technological factors that impact the fashion industry are as follows: Environment-friendly behavior can take a company a long way and make it a successful business. The native indigenous people populated Canada thousands of years ago, then Western explorers and colonists, most French and . Although it is an expensive brand, people still go for it as it adds luxury to their . Moreover, high inflation also has an inverse relationship with sales. As environmental degradation is taking place, countries have made policies regarding waste management and recycling. Keeping up to date and providing clothing that is fashionable and attractive to the desired target audience is extremely important. A cost benefit analysis must be done. As a result, people got attracted to the brand, and the customer base of Uniqlo began to increase. The film The True Cost directed by Andrew Morgan, goes into great detail on the global world of fast fashion, and how it affects the global apparel industry. The PESTLE / STEEPL / PEST analysis report is a structure to explore the outgrowth of external factors on the macro-environment that influences the business of Giorgio Armani. Every organization operates in a political system; this is why political factors highly impact the performance of any organization. PESTLE Analysis of Mango analyses the brand on its business tactics. Macro-environmental factors are those that affect clothing industry and the industry have no . The report shows that customers are becoming more inquisitive in the type, nature, origin and the processing method of materials in which, apparel and clothing firms uses in producing their product. For example, suppose there are poor or no laws to protect businesses and ensure healthy competition in the market. to monitor the growth of not only retail sector but also that of the organization. Due to the costs of these materials, it could force wholesalers to increase the prices of clothing anytime they encounter shortages of material. Suppose political instability causes protests and political demonstrations in the area where Uniqlos outlets exist. See Appendix point 1. Having a celebrity wear the clothing product will boost sales for Velocity Clothing. For example, recently, Uniqlo was in the line of fire after sacking some of its employees. The PEST is an acronym for Political, Economic, Social and Technological. Therefore, any technological change that increases business efficiency will be embraced by Uniqlo and will impact the brand positively. Annotated Bibliography Tariffs, quotas, foreign exchange risk, and other import restrictions can affect the supply and cost of clothing. The Companys Goal Besides that, other laws, such as consumer protection and intellectual property laws, significantly affect the operations of Uniqlo. For example, if a government imposes a high-income tax on businesses. Conclusion: Pestle Analysis of the Fashion Industry. The vision of Yani was to provide stylish casual clothing to everyone. Many workers within the fast fashion business . Francis Aguilar (1967) is the first known reference to the origin of the PESTEL analysis. The brands and retailers face various challenges in a wide and ever-expanding market. Home Five Best PESTLE Analysis Examples for Business. In order to explicitly analysis the clothing industry, emphasis must be laid on Textile, PESTEL ANALYSIS But these rules and regulations also take part in influencing a company or industry's behavior and return. The move helped the brand to maximize its profits, and thats when Uniqlo decided to open its retail stores overseas. Since Uniqlo operates in different societies, it has to analyze the social factors that impact the brand. Moreover, the clothing brand also has to study the demographics of each country in detail because demographic factors significantly impact Uniqlo. Because the EU textile and clothing industry is a leader in the world market, and its product is required all over the world, the European Union work to ensure a level playing field and inaugurated free trade agreement in the EU-28 through the application of the world trade organization agreement (WTO). However, Uniqlo redeemed itself and penetrated the international markets. Demographics. Therefore, the higher the sales would be, the higher the brands profits. With EdrawMax, you can even add hyperlinks to your PESTEL analysis diagram to provide more information to your readers. LO: - Planning & the Macro Environment - PESTLE analysis - Competition analysis - Product trend analysis - Customer trend analysis. Similarly, businesses are also affected by environmental factors. Fashion: This market segment is the consumers that specifically buy clothes that will be considered by society as fashionable. Again though, doing business the right way is a morally right thing to do. Therefore, the US apparel stores may acquire higher net profi. 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. However, if you want to know more about how PESTLE analysis works, look at some examples of PESTLE analysis. In all six sections; political, economic, social, technological, environmental and legal there are issues that the firm would face. PESTLE is and analytical tool used to assess the external environment. 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. Consequently, many customers have gone green and they are persistently advocating for sustainable and ethical activities of firms (Johansson, 2010; Pookulangara. . Policies made by the government and the political scenario of a country where a business operates significantly affect the success of a business. This tool is very useful which help in overall growth and development of organization after learning from the past mistake and working for future. Presence of well-connected Omni-channel in the United States. Chinas competition is huge, with Vietnam, the Philippines, Malaysia and Sri Lanka also producing material at cheap prices (Plunkett Research, Ltd.). 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 PESTLE analysis is a concept first mentioned by Harvard Business School professor Francis J. Aguilar.