Investment in the Fashion Industry - Essay Example

Introduction The investment in the fashion industry is considered to be gamble. The return can be above expectations, and it might turn into debt traps. The fashion industry is extremely sensitive industry; this industry is sensitive to customer's emotion, economic condition, climatic changes and time. This industry is itself a revolution which is under transformation after very second, thus it is transitional. The fashion industry of United Kingdom is prosperous outlook; the opportunities are great although level of competition is tough. The area of Southampton has population of less than 2millions, but the potential buyers are more than 80percent of the population. The female population of the area is 52percent, whereas the teenagers comprise of more than 34percent of the entire population, and population of kids below 10yrs consists of 28percent. Significant percentage of the population can be regarded as the potential buyer within this region of Southampton (Yang, 2005). The fashion industry of Southampton has potential based upon financial standing of its population. More than 70percent of the population are working class, whereas 20percent of the population is involved in business related activities, however the remaining population is retired class and their earning is based upon pensions and public funds. The per capita income of this region is relatively better than other parts of United Kingdom, and the local population is attuned to contemporary customs and fashion. The region is therefore considered to be ideal for the investment in fashion industry, however risk does prevail. The risks associated with the investment are mainly related with the ongoing economic recession, the purchasing power of the local population has reduced, and people are reluctant to invest towards non-returnable and non-profitable items. The negative aspect of this investment is the profession itself, the fashion is considered to be commodity which can be sold but never re-sold. The fashion is consumer product, it is not business or commercial commodity which has re-sale in the market, the customer can never expect to make profit by investing in fashion consumables. The ongoing economic turmoil has therefore cautioned the public about their spending and savings. The unemployment in United Kingdom is expected to reach record high level, and it will take years to create more earning opportunities for the public because the government savings and profit returns are restricted (Harald, 2000). PEST Analysis on Industry Political Analysis 1. The deregulation in the European market launched by the European Union created hindrances for the fashion industry. The industry has been accused of excessive profit margins, and labour law violations. 2. The stand of European Union has caused implication for the fashion industry within United Kingdom; the fashion industry therefore found it difficult to continue with the implementation of high tax cuts. 3. The restrictions imposed by the European Union offered opportunities to the remaining companies of the fashion industry, therefore the market shares of the rival fashion units increased significantly. Economic Analysis: 1. Fashion industry worldwide in general has played a central role in stirring the growth of the world economy. 2. In the current scenario the major concern for the industry comes from the rising tax cuts and ongoing economic turmoil. 3. In the midst of such economic crisis, the imposition from the European Union has reduced the profit making figures for the fashion units. 4. The financial penalties have halted the commercial activities of the company; unfortunately the company seldom enjoy enough revenue which can be utilized for such purpose. 5. The banking and financial institutes shall be referred for financial borrowing, and the credit facility shall be thoroughly evaluated with special emphasis upon the interest rate. 6. It is important for the company to evaluate the purchasing power of the customers inside Southampton. The economic power of the population can be evaluated by studying per capita income of every household, the percentage of unemployed and annual local trade revenue of Southampton. 7. The fashion unit shall explore the possibility of launching credit facility for the customers. Special discounts shall be offered to evaluate the financial standing of the customer. Based upon such exercises the prices for the products shall be finalised. Social Analysis: 1. The population of the United Kingdom in particular Southampton is multi-cultural and diversified, the population has different cultural, linguistic and religious affiliation, and therefore the fashion unit has to strictly take care of fashion discipline i.e. no such fashion is promoted or introduced which shall offend any segment of the population. 2. The religious sentiments of the population i.e. the customers shall be respected. Some international brands like Nike and Adidas were strongly opposed by the Muslim population because their religious symbols were exploited in the fashion market. 3. The fashion company shall not promote or encourage any such item, brand, print or colour which shall offend any specific social class. This is serious challenge for the fashion company because Southampton is pluralistic society. Technological Analysis: 1. The fashion company has to secure its financial fortune. This objective is achievable only through investment in manufacturing related machines. 2. It is important for the company to invest in process related units which shall optimise the production process, and shall improve the production figures. 3. The technological revamp of the manufacturing process is must; this is because it will reduce the number of defected items. 4. The fashion unit has to review the spare philosophy, it is important for the fashion unit to evaluate the need for the number of process related machinery items, and then the spares for each specific machine shall be identified. This identification will minimise the production debit, and will secure financial fortunes for the company. Summary of the PEST The fashion unit has to focus on the adoption of the latest technological developments available in the market. The company should focus on the areas on offer community and social services for free, the services which can be regarded as the right of the customer should be necessarily acknowledged and provided. The economic concerns should be nullified through financial collaborations with the banking sector. Porter's 5-Force Industry Analysis Buyers: 1. Buyers do not have much bargaining power in the fashion industry. This is a valid statement, the fashion industry has to ensure that it apply the services provided by the competitors, the cost should be shared with the customers. The reaction of the customers has to be moulded as per the interest of the company. 2. The customers on their behalf can only avail the bargaining power if they have developed long term affiliation with the fashion unit, which is unlikely in this era of competition which has recently nourished. Suppliers: 1. The bargaining power of the suppliers is low, because of the relief which the technology has offered; the customers are at large familiar with the concept of the efficient and cost effective technology and are less likely to agree over the prices which are often exaggerated. 2. The suppliers have competition among themselves, and therefore the supplier has to compromise and offer bargain else the supplier is likely to lose the contract. 3. Suppliers are to develop their worth through extra efforts, which they have failed to reflect, and therefore if noticeable change in their spirit is not observed the suppliers are likely to face the challenge of bargain from their customers. Potential Entrants: 1. The incorporation of the technology is essential and has to be ensured on timely basis. The adoption of technological resources will positively improve the efficiency of the process. 2. There is high rivalry among the competing firms. Several fashion units have already developed their stronghold inside the market. The marketing campaign of these competitors is commendable. These fashion units have offered specific product but in diversified outlook. It is therefore advisable for the company to launch a forum where instead of diversified outlook, diversified items are available. Industry Competitors: 1. The fashion industry and electronic industry have expanded and blossomed to an extreme magnitude. The fashion and electronic worlds are expandable because of the fact that these sectors offer quality and standard to the customer. 2. The electronic industry has emerged as major threat against fashion industry. The lust and cost are the fundamentals which have strongly determined the prospects of electronic industry. The electronic items are mainly Chinese manufactured, and due to low labour charges, the production cost of electronic gadgets is reasonable. 3. The fashion industry has prospered within Europe and North America. This industry has been developed by key players, who have charged extensively for their creativity and innovation. The fashion industry is therefore expensive luxury against electronic gadgets. Substitute Products / Services: 1. The fashion industry shall focus upon investment in different traits relevant to fashion. It is strongly recommended to the fashion unit not to be monotonous about the product; rather wide variety of products shall be assembled and framed under single logo. This will cause ease to the potential buyers. 2. The fashion unit is recommended to launch discount cards concept. This concept is nascent, and has not being adopted within Southampton. The implementation of such innovative concept which in actual is an option of convenience for the customers, will be popular and will be well-received by the customers. Key Factors of Success Demand: 1. As companies get more involved in business internationally when it comes to investments, supply and production chains and customers. 2. Tourism has also evolved over the years all over the world particularly in Southampton, where infrastructure is being developed to attract wealthy tourists from the developed world. The demand of fashionable items is therefore on rise, and is likely to follow the similar trend in years to come. 3. The customers require reliable, efficient and cost effective service. Competition: 1. The competition is extreme and severe. The way out of competition is only quality. The cost is another critical aspect, but this factor has being ignored by the elite customers. 2. The fashion unit has to clearly demarcate between the elite and casual customers. The majority of the Southampton population is middle class; it is therefore advisable that interests of the casual customers shall be primary against the elite customers. 3. The competitors have introduced brands and items for people irrespective of financial, religious, cultural background. The company shall therefore develop strategy to focus people either based upon their financial strength or against their ethnic background. 4. The competition is severe due to the rapid means of communication. The competitors have developed their influence and presence within the market through launch of advertisement and promotion campaigns. It is advisable to the fashion unit to install billboards and posters are specific locations of Southampton i.e. locations are casual and elite customers dwell. The fashion unit should advertise itself among youth population which is possible at educational institutes, dance clubs and malls. SWOT Analysis The company has to practice different tactics; these tactics shall be reinforced keeping in the view the financial strength of the company, and the number of registered customers. It is important to specify that the competitors have reduced the price per customer through cost-optimized solution, and introduced affordable and attractive terminals and service enablers which were responsible for the reduction in the capital and the expenses related to the operation (Sunsil, 2004). The weakness associated with the brand has been the expiration of the services with the passage of time fashion is always transitional and therefore the previous trends and designs are under the threat of expiration due to the technological evolution which brings maturity of style, and the interests of the company are unprotected due to the abrupt technological rising i.e. maturity of style. The quality of the brand can be suspected as another weakness for the company, the company might be successful in the launch of highly preferred and admired products for their qualitative features, however unfortunately the concept of black market is common in very part of the world. The local and international communication companies offer products for the same price with wide range of services but inferior quality, and therefore a bulk of regular customers, excluding loyal customers, have shifted to other brands due to the incorporation of wide range of features within a product at competitive price. The threats associated with the company are more relevant to the product launch and activities of the opponent companies, the wide range of inferior qualities launched by competitors in some cases. The company certainly has opportunities available, and it is the brand itself which still dominate, and is respected and preferred by the masses. The company has wide range of opportunities available if it undertakes sophisticated measures which are in lieu with the requirements of the target market (Nell, 2004). Strength The product, style is the strength for the fashion unit. Weaknesses The weakness for the fashion unit shall be its age. It is going to be new brand, and will take to gain acceptance and attention of the customers. Opportunities The number of casual customers is on rise in Southampton, therefore this shall serve as an opportunity for the fashion unit. Threats The ongoing economic recession shall be regarded as the biggest threat for the fashion unit. Segmentation The fashion unit shall focus upon segmentation of market. The market of Southampton is diversified, therefore segmentation exercise is critical. The segmentation of customers and their demands will assist the brand in the achievement of the customer satisfaction. The fashion unit should maintain aggressive pricing strategy with the help of its low cost competitive advantage. Company should emerge as first mover. The relevant advantages associated and earn by first movers are likely to be secure by the fashion unit. The company has competitive resources and has already become dependent on ancillary services. The company is facing reduction in yields and so disciplined cost management is the immediate need for the fashion unit. The company has opportunities in the face of EU expansion and could offer further low rates by advanced cost reductions. Ample growth opportunities are available and the market has still potential for further penetration. Another option is to go for consolidations and acquisition of small fashion units. The city shall be segmented in terms of geography, financial standing, cultural affiliation, religious belief and social status. This segmentation will assist the company in the selection of the outlet at suitable location. The segmentation exercise will further assist the company in planning for the collection offers to attract customers. Positioning The positioning of the customers and opportunities within the market shall be based upon economic consideration and expected profit margins. The outlets of the brand shall be located where potential buyers exist. It is strongly recommended that if within the vicinity of 1km, more than 5000customers are based, it is best to open more than one outlet. This might cause high investment at initial stage, but the return shall be positive and sufficient. The positioning of brand items inside the outlet shall be such that it suits customers, the positioning shall be based upon likeliness and convenience of customers. The positioning of the advertisement items i.e. billboards shall be planned diligently. During marketing, it is not the number of billboards and placards that the company has installed, but it is the location and effectiveness of the placard which is payable. Targeting The brand has two categories of customers i.e. the elite customers and casual customers. The elite customers are relatively more quality and brand cautious, therefore the price is insignificant for this class. The casual customers are equally brand, quality and price cautious. The elite customers are hundreds in number inside Southampton, but the casual customers are in thousands. The fashion unit therefore has reasonable choice to attract the casual customers, who are in great numbers; this will increase the market share and profit margins for the company. The reason why targeting elite customers of Southampton is not preferred is because these are fewer in numbers, and mostly on vacations; this class is more cautious about the brand and will prefer purchasing fashionable items from outside Southampton, therefore the numbers of customers shall be extremely limited, and the profit margins will narrow. Marketing Communication The marketing objective of the company shall be to develop style for the customers at competitive rates, and incorporate quality of international standard into such products. The company has to plan to target the masses, instead of any particular class within the market. Previously, the competitors restricted their services only to the rich class, but later on when the competition within the fashion sector grew stronger; these units realised that they have failed to develop repute and standing in front of public, and drop in the market shares and production sales were associated with such shortcomings. It is learning for new ventures to prevent their financial fortune from trouble by agreeing upon concept of multi-dimensional products for dwellers. The marketing objective of the company shall be simple i.e. to target every specific element of the market, and provide the element with competitive features and requirements at reasonable prices and superior quality. The fashion unit shall emerge with a policy, in accordance to which, every element within the market has to be convinced with the necessity for having style, and for this purpose the fashion unit has offered wide range of products for every class (Sriramesh, 2003). Human Relations has been regarded as "an interdisciplinary study of social relations in the workplace that embraces sociology, social anthropology, and social psychology" (Zahirul, 2006). The movement related to the human relations are the presentation of the counter measures to prevent escalation of the scientific management, which has previously focused upon the maximization of the productivity and income of the "individual manual workers and on the separation of mental and physical work between management and workers". The human relations are based upon the realization that "workers want to feel part of a team with socially supportive relationships and to grow and develop, where motivation, communication, employee participation, and leadership are significant issues" (Kaplan, 1998). The fashion unit has to critically evaluate the application of the discussed facts, and the marketing campaign shall be launched only once distinct human relationship is developed or desired. The human aspects are expected to influence the "operation of accounting and control systems in organizations", which includes decision making process, remuneration system, leadership effects, effect of interpersonal relations among organizational members, and organizational slack practices. The application of the scientific" methodology is not encouraged particularly because the interpretation of the variables is "stable and situation-independent" (Chua, 2003). Evaluation of Marketing Strategies The fashion unit should target the local market of Southampton, and should contradict the public opinion that fashion brands are class oriented and unaffordable for the local class, for this purpose the company should launch wide range of brands for every particular class within the society. In accordance with the features incorporated in each of its brand, the company should launch different product strategies. The promotion campaigns shall be launched in lieu with the understanding and mental approach of the targeted market (Jean, 2004). It is strongly recommended that as far as the company does not compromise over its quality, it will continue to secure and achieve phenomenal market shares, although in between the might be certain fluctuation in the market share due to the contribution of other competitors, but eventually it will the quality of the brand that will reign supreme, and as long as the company adheres by the qualitative standards there is no declination its profitability and growth. It is also recommended that the company should expand the network of its distribution services, and private and unregistered companies should be encouraged to participate and contribute (Sicco, 2003). Communication The implementation of the plan shall be facilitated through the services of the financing corporation and the local electronic media. The company shall hire the services of different private and distribution units for the promotion and marketing of the company. The company needs to develop facilities for research activities, and with the passage of time certain new modalities have to be incorporated into different products as per the aspirations and requirements of the market. It is to be highlighted that the competitors have been successful in their scheme to make realize that effectiveness of the functional modalities introduced, and for this purpose the need of the local market has been created rather than targeted. Based upon stated facts, the opportunities within Southampton are great for fashion industry. Conclusion Southampton shall be regarded as potent for investment in fashion units. The population of the city is on rise, and influx of migrants is extreme. After London and Manchester, this city has highest number of migrants inside UK. The economic opportunities in the city are great, and this confirms that the purchasing power of the local population is healthy if not extravagant. It strongly recommended to the fashion unit to pursue with this investment plan in Southampton, the competition is crucial but outlook is positive. The fashion unit shall focus upon offering multi-items at single stop which will be convenient for the customer. It is strongly recommended that quality of the brand shall be maintained and promoted through aggressive advertisement, but the standards achieved shall be maintained. The political, economic and social indicators are healthy; the marketing plan for the fashion unit has the medium but only requires aggressiveness. The land of opportunities shall await economic remuneration for the fashion unit. References 1. Kaplan, R. and A. Atkinson. Advanced Management Accounting. Prentice Hall. 1998. pp. 243. 2. Chua, W. F. Radical Developments in Accounting Thought. The Accounting Review. 2003. 3. Zahirul Hoque. Methodological Issues in Accounting Research: Theories and Methods. 2006. Spiramus Press Ltd. 4. Sicco Van Gelder. Global Brand Strategy: Unlocking Brand Potential Across Countries, Cultures. 2003. Kogan Page. N.Y. 5. Jean-Noel Kapferer. The New Strategic Brand Management: Creating and Sustaining Brand Equity. 2004. Kogan Page. N.Y. 6. Kai Yang. Design for Six Sigma for Service. 2005. McGraw-Hill Professional. N.Y. 7. Harald A. Benink. Coping With Financial Fragility and Systemic Risk. 2000. Springer. pp. 86. 8. Krishnamurthy Sriramesh, Dejan Vercic. The Global Public Relations Handbook Theory, Research, and Practice. 2003. Lawrence Erlbaum Associates. pp. 187. 9. Nell Minow, Robert A.G. Corporate Governance. Blackwell Publishing. 2004. pp. 207 10. Sunil Mani, Anthony Bartzokas. Financial Systems, Corporate Investment in Innovation, and Venture Capital. Edward Elgar Publishing. 2004. pp.129 Read More