Industry Analysis

Topics: Clothing, Economic growth, Competition Pages: 7 (1681 words) Published: December 2, 2013
Kates Jastin Aguilar
Rachel Ann Rabulan
I. Cover Page

II. Executive Summary

III. Industry Analysis

A. Environmental Analysis

The competition between businesses within the textile and clothing industry has always been steep. The change in lifestyle combined with the fast changing trends has left entrepreneurs with the challenge of keeping pace with the demand of the consumers. With KRaze-Zip’s fresh, unique, and high in quality yet economical products, it is in the best position to answer such growing needs.

The Clothing Accessories Industry Today

Since KRaze-Zip will be selling clothing accessories, it will be penetrating the clothing and textile industry. The clothing and textile industry has been a declining industry in the Philippines since 2005. This decline is due to the MFA (Multi-fiber Agreement) phase out and lowered of trade quotas which greatly affected the Philippines due to its inability to compete with countries with lower wage costs. Aside from this, the global crisis in 2008 has also led to the decline of the industry not only in the Philippines, but also worldwide. However, the textile and clothing industry remains to be Philippines’ second largest industry based on the number of establishments according to the survey released by the National Statistics (August 29, 2012). Out of 4, 643 manufacturing firms employing 20, 7.5% or a total number of 347 establishments came from the wearing apparel industry. Meanwhile, the industry generated 85, 805 jobs in 2010 (latest data) or 9.8% of the 55.7% of total employment provided by manufacturing companies employing 20 placing it in rank 2 after the electronic component.

Despite the decline in the clothing and textile industry, clothing accessories was seen with a better spending pattern. According to an article released by reportlinker.com, more consumers opted to buy accessories because of its relatively cheaper price compared to other clothing items. Also, the growth of the clothing accessories market is perceived to increase in the coming years and is expected to reach $9 billion by 2015 for the handbag sector alone (Global Industry Analyst).

The clothing and textile industry is expected to resume its growth by the end of 2012 and will grow even more in 2015 due to global recovery from the recession period. This is also evident with the Philippines GDP continuously rising in a steady rate, it is now considered as one of the leading economies in the South East Asia region. More foreign investors are also investing their money here because of the country’s growing economy and political stability. With these, more businesses will yield higher profit and more jobs will be generated. All these will give the people higher standard of living and higher purchasing power which will soon lead to an increase in the industry growth.

The industry also depends on technology for its improved production. It plays an important role in the purchasing and manufacturing of raw materials, the transportation, production process, and advertisements.

As for the political and legal environment, KRaze-Zip might be faced with issues relating to patent. This shall be discussed in the SWOT analysis portion of the paper.
B. Industry Analysis

i. Demand
Since bags are used on a day to day basis, there is always a demand for it in the market. Bags are not only used as a fashion statement but mainly because of its functionality as well. It is used by men and women, kids and adults. It serves different purposes and occasions like going to school, to work, to parties and formal events, and for travelling. The demand for it as a means for carrying luggage and as clothing accessories even increase a bit more during special seasons like Christmas and Birthdays since they serve as perfect gifts, and reaches its peak during back-to-school season.

The determination of demand are measured through market tools and research, use of break even analysis and...
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