International Marketing: Fashion Industry - Essay Example

? International Marketing Table of Contents Table of Contents 2 Introduction 3 Findings 4 Part 4 PESTLE Analysis of South African Fashion Industry 4 Part 2 7 Company Profile 7 Strategy to Enter a New International Market 8 Conclusion 10 References 11 Introduction The fashion industry is one of the most popular and essential industries in all over the world. There is no such place left where fashion industry has not established yet. Almost every country has its fashion industry to cater its people, as clothing is one of the most essential and needful elements for day-to-day living. Textile industry manufactures cloths to fulfil the basic needs of the people of their country but fashion industry is the driver which generally satisfies the demand of the fashion conscious people and fashion lovers. There is a certain group of people who love fashion and they love wearing fashionable clothes. Fashion industry depends upon those people who love fashion, who love wearing fashion. There were many fashion designers in past and many of them are now coming up with their new trends and ideas (Institute for Manufacturing University of Cambridge, n.d.). The global textile industry has been evolving from the year 2005, as most of the countries are now importing their required supplies from various chosen countries, based on the price of supply that are being offered. South Africa is one of such countries, which has been doing really well in the fashion industry, in last few years. After 1994, South Africa started enjoying the reduced tariff system on imports and post 2005 the import activity between South Africa and Asia has comparatively increased. Not only Asian nations, few others countries are also in deal with South Africa regarding textile industry (Kearney, 2006). In relation to the study the company which has been selected is Warehouse which is one of the established fashion retailers in the United Kingdom and they are in cloths manufacturing segment and are well distributed in many of the countries except South Africa (Warehouse, 2011). The major objective of the paper is to highlight the macro environment of the South African fashion industry and the scope of entering the country internationally. The paper would also focus on the various strategies to enter an international market of textile industry in South Africa. There would be a summative conclusion for the overall discussion. Findings Part 1 PESTLE Analysis of South African Fashion Industry The fashion industry of South Africa is gaining motion through the active participation of various upcoming designers and fashion concern group of people. Most of the designers are coming up with their boutiques and fashion ideas through different fashion show and fashion galleries to introduce their collections. In recent interviews with the South African fashion designers it has been found that the textile or fashion industry of the country is suffering from customer relationship. The fashion industry is not being able to cope up with the commercialisation and creativity altogether. The South African fashion designers are also willing to have a partnership with certain big fashion retailers or big textile firm or merger with other companies to introduce their work to their customers. They believe it would help them to attain the scope to gain success in the coming future with the help of their collection and creative fashion work. Presently, most of the South African fashion designers are working from their own studios or factories to sell their collections and to establish their existence in the market (Palmi, 2007). PESTLE analysis is the key factors through which macro environment of a country can be analysed. The macro environment of a country and its analysis helps to get the idea for entering into any industry of an international market. PESTLE analysis consists of several factors that include political factors, economic factors, social factors, and technological factors along with legal and environmental factors. These factors come under macro environment of a country which includes various legal activities, taxes, law, rules as well as regulations, demography, barriers to trade and policy of the government of a particular country among others. The macro environment of South Africa also consists of all these factors. An international company has to keep in mind all these factors before entering the market of South Africa. The fashion industry of South Africa also involves these factors (Oxford University Press, 2007). South Africa is the country which was transformed into democratic constitutional republic in the year 1994, which resulted into equality of voting right irrespective of the race of the South African people. The government of the country has helped a lot to establish their cultural industry and textile and fashion industry is one of the parts of the cultural industry. The main problem in developing countries is to manage the cultural industry and the country rules and regulations. Therefore, the government has introduced various statutory institutions like National Arts Council (NAC) and The Film and Video Foundation (NFVF) in South Africa. All these initiatives help the country to perform well in fashion and textile industry as well (Joffe & Newton, 2008). Any of the industry of a country needs the support of economy as well, and South African economy is one of the largest economies within the region of Southern Africa (real Gross Domestic Product (GDP) US$455.2 billion). In a research report, it has been found that the South African fashion or textile industry is the sixth largest manufacturing hub and the 11th largest export hub among other industries. The fashion industry of South Africa has contributed its 16.2% of the overall GDP, annually. There were certain restrictions and policies before 2005 regarding textile business and its export and import tariffs and quotas, determined by the multi-fibre agreement (MFA), which has been omitted after 2005, and now the textile industry of the country can easily deal with the other countries on low tariffs and with the right to choose the importers based on the price they offer. Essentially, they are in free trade at present in textile and fashion industries (Chaddha & et. al., 2009). Social scenario of South Africa shows that a majority of the population of the country is aged around 24-25 years. Average 60% of the total population of the country settled in urban areas. Many people from other countries are migrating to South Africa in recent times, which would result in mix of culture. Mix of culture would cause benefit to the fashion industry as people from other countries would bring their culture and fashion sense to South Africa. In a recent article, it was observed that the South African people have been facing problem regarding buying fashion apparels, as the upcoming fashion designers tend to cope up with the global market and they are into the process of commercialising their fashion collection with high price, which is a problem for the local public in case of buying fashion garments (Chaddha & et. al., 2009). South Africa is yet not upgraded with several improved technologies to fight the global market regarding fashion industry. The present designers in the country as well as the upcoming designers are working with the existing resources provided by their country, and which are available to enhance the cultural industry. Most of the designers work from their small studios and factories; they do not have the proper exposure yet. They tend to co-operate with big textile firms to attain several benefits like capital, technology and recognition among others. According to the designers in South Africa the country should upgrade certain technologies, which would help them to cope up with the international market and would also help them to manufacture more profitable and admirable fashion products (World Intellectual Property Organisation, 2005). In case of legal and environmental factor of South Africa, it has been observed that the government of South Africa has considered the textile sector as a key factor of the total economy of the country. The South African fashion industry has suffered from the issue of recession and lack of awareness, where at present the industry is providing with its annual sales around R20bn. The fashion industry in South Africa consists of few personalised boutiques and shops like Hubbard’s Cupboard, Cream Clothing, Teenage Millionaire and Ba Sileia Boutique among others. These are the fashion designers or fashion retailers who are welcoming big brands and fashion firms to enter their market to work together (Wise, 2011). Part 2 Company Profile Warehouse is a UK based fashion retailer, who is in existence since 1976. The company started with the objective to make fashion available and adaptable for all. The company has evolved significantly in recent times and still growing with its brilliant fashion ideas and creativity. The company has provided with the scope of exploring to many upcoming designers in the market, and the company itself is doing well with these different influencing fashion ideas. Warehouse produces fashion apparels for them who love fashion and love to wear the present trend in the country or fashion from outside of the country. Warehouse has its stores in many of the countries, excluding South Africa (Warehouse, 2011). Strategy to Enter a New International Market The plan which has been prepared is regarding entry of Warehouse in the market of South Africa to cater the people of the country. To enter in an international market the company would have to face certain problems as well as few specific barriers. Generally, there are certain strategies to enter in an international market like licensing, joint venture, strategic alliances as well as partnership among others. The South African fashion industry is also trying to attract new entrants to their fashion markets. The country arranges various fashion shows, fashion weeks to link with other countries, which comes as invitees. Through these fashion events the South African fashion industry attains the knowledge of outside fashion trends and lets them know about their own trends in fashion. However, when it comes to enter a new international market a company has to focus on several aspects to avoid failures. As Warehouse would desire to enter South African market, it has to analyse the political, environmental, economic and social scenario of the new market to reduce the risk of loss and raised liabilities. Before entering a new market, the company should keep in mind the tastes of the customers, their income, and capability of buying. Warehouse is a well-established and famous brand. It has a huge recognition in the market, in many countries. If the company enters South African market of fashion, it would be really helpful for the designers who are willing to work, and are looking for a better scope, as Warehouse entertains new talents (Warehouse, 2011). The company can enter the market in various ways such as licensing, joint ventures and strategic alliance among others. Joint venture reflects the process of sharing the rewards and the risks, the market entity, technology implementation, Government’s rules-regulations and the product development between two or more business entities (Sullivan & Coughlan, 2004). Licensing is the process of obtaining the permit of a company in the targeted market or country to be eligible to use the property of the particular country. It includes the patents, trademarks and techniques of production. The Foreign Market Service Strategy (FMSS) also supports the entry of a new industry to an international market. FMSS involves the OLI framework to encourage the entry to a foreign market (Sullivan & Coughlan, 2004). In relation to above discussion, it can be stated that joint venture would be the best way to enter South African fashion industry as the designers themselves have declared that they are looking for exposure and better opportunities. Technology and capital are the two other factors, which would be beneficial in case of joint venture. Joint venture would facilitate the fashion industry of South Africa with the help of the brand image of Warehouse and its sustainability and exposure to the upcoming designers to commercialize their creativity and talents in the global market. Conclusion In relation to the above paper, conclusively, it can be stated that the UK based company, Warehouse would have to focus on the various factors like the features of the target country, the environment of the country, the political and social culture, the target customers and the corporate social responsibility to serve the society and the community of the country to enter the South African fashion industry. The company should also focus on the various modes of entry to enter the foreign market, based on the different international business strategies to avoid risks and failures and to facilitate the new market’s existing fashion trend and people related to the industry. References Chaddha, A. & et. al., 2009. Textiles & Apparel Cluster in South Africa. Introduction. [Online] Available at: http://www.isc.hbs.edu/pdf/Student_Projects/SouthAfrica_Textiles_2009.pdf [Accessed March 02, 2012]. Institute for Manufacturing University of Cambridge, No Date. The Present and Future Sustainability of Clothing and Textiles in the United Kingdom. Executive Summary. [Online] Available at: http://fashioninganethicalindustry.org/!file/Well+dressed.pdf/ [Accessed March 02, 2012]. Joffe, A. & Newton, M., 2008. The Creative Industries in South Africa. Introduction. [Online] Available at: http://www.labour.gov.za/downloads/documents/research-documents/Creative%20Industries_DoL_Report.pdf [Accessed March 02, 2012]. Kearney, A. T., 2006. Emerging Market Priorities for Global Retailers. Industry-Article. [Online] Available at: http://www.fibre2fashion.com/industry-article/pdffiles/emerging-market-priorities-for-global-retailers.pdf [Accessed March 02, 2012]. Oxford University Press, 2007. PESTEL Analysis of the Macro-Environment. Gillespie. [Online] Available at: http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm [Accessed March 02, 2012]. Palmi, R., 2007. South African Fashion Designer’s Swing Success. Inside- Out. [Online] Available at: http://www.fibre2fashion.com/industry-article/pdffiles/south-african-fashion-industry.pdf [Accessed March 02, 2012]. Sullivan, U. Y. & Coughlan, A. T., 2004. Alliance Structure and Success in the Global Airline Industry: An Empirical Investigation. Abstract. [Online] Available at: http://www.business.illinois.edu/working_papers/papers/04-0113.pdf [Accessed March 02, 2012]. Wise, B., 2011. South African Fashion on Growth Path. Johannesburg. [Online] Available at: http://www.savaneskin.co.za/?p=614 [Accessed March 02, 2012]. Warehouse, 2011. About Warehouse. Vision and Culture. [Online] Available at: http://www.warehouse.co.uk/ [Accessed March 02, 2012]. World Intellectual Property Organization, 2005. Intellectual Property in the Fashion Industry. Documents. [Online] Available at: http://www.wipo.int/sme/en/documents/wipo_magazine/5_2005.pdf [Accessed March 02, 2012]. Read More