In the end, we hope our readers are now aware of the external factors affecting Uniqlo as well as the framework of PESTLE analysis. Social and cultural changes are major determinants of emerging fashions. Some of the high fashion brands in the beauty industry manufacture clothes from ordinary to luxury mass scale fashion. These external environmental factors are difficult to control or influence whereas the elements explained by SWOT analysis are . 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. These marketing methods can potentially reach out to over 25% of the population. In the United State about 20 million people are supporting environmental groups. Many workers within the fast fashion business . To do that, the brand always looks for ways to increase efficiency by minimizing costs. As the brand is increasing its international presence each year, its revenue is also increasing yearly. The consumers now demand for the products which are environmentally safe and having high packaging. Climate and the environment have a direct or indirect impact on everything. Suppliers of Velocity Clothing may also increase their prices if they are also affected by the price of raw materials going up. It is a Swedish multinational clothing company selling fast fashion for all categories of people. The PEST analysis is often used together with the SWOT Analysis and Porter's Five . After analyzing the brands success, we decided to carry out Its PESTLE analysis. Since Zara produces and sells most of its own product, and their advantages of doing so, both retail chain suppliers and end consumer switching costs should be looked at. The vision of Yani was to provide stylish casual clothing to everyone. Environment Factors affecting a business - Source: Chaffey and Ellis-Chadwick - Digital Marketing . Threat of new entrants low This tool is especially useful when starting a new business or entering a foreign . by Cheryl Chi Yue Leung (214185045) SWOT Analysis of Fashion Business. 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. What Is the Macro Environment in Business Analysis? Labour costs / minimum wages rising will affect the amount of capital needed to pay the staff for the production of the products. 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. 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. The global North consumers demand for fast fashion have effects globally, leaving workers underpaid and exploited. Especially when it comes to business, you require advanced technology. By so doing, it gives ability to differentiate themselves from potential competitors and sustain performance. Economic. The fashion industry is a global industry that involves billions of dollars and work. If political tension arises between China and Japan, Uniqlo might have to shut down its manufacturing units in China. If you wish to access remote files, head to https://www.edrawmax.com/online/ and log in using your registered email address. These 3 quotes have different goals and bring different subconscious effects. These factors are the most important tool to analysis the organization. c) Marketing in the form of advertising and promotion. By continuing well assume you board with our. Now that we are done discussing the PESTLE analysis lets proceed further and carry out Uniqlos PESTLE analysis. Open Document. Moreover, China increased in labor cost and other factors associated with production could increase the cost of product. Detailed PESTEL Analysis of Fashion Industry, Everything in desktop + Templates Community, Join 2023 Edraw Special Sales. 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). Economical Factors Recession any recessions including the current one will be a contributing factor as to how well Velocity Clothings sales do. This brand was established by the father of Tadashi Yanai, the founder of Uniqlo. For example, complying with necessary labour norms in advance to . For example, a PESTLE analysis could help a clothing business to decide . The industry produces world class designs based on creativity and innovation which is functional. We can't deny the fact that the fashion industry plays an important in building up culture, trends, societies, and economies of countries. 350 5th Ave, New York, NY 10118, USA. The fashion industry is one such industry that heavily depends on social trends. PESTLE analysis factors. Download EdrawMax today and start working on different PESTEL analysis diagrams. 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. 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. It is an area which must be looked into carefully and research must be done to weigh the benefits. 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. PESTEL Analysis Definition. York University As the years go on, producers must find new ways to produce more clothing to make more profit and keep up with demand. Moreover, as social media usage increased, Uniqlo started using social media platforms like Instagram and Facebook for marketing. 2. PESTLE analysis is a tool, or a strategic framework, used to identify and assess key external factors on the macro-environmental level.In the most recent decades, it . 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. Following Gap really helped Uniqlo as it increased its sales. We use cookies to give you the best experience possible. Similarly, like any other business, the main objective of Uniqlo is to maximize its profits. In 1981, PILs first container vessel is acquired and developed with container shipping. Political Factors 1.1) Background Since Uniqlo is a business and businesses are an integral part of the economy, all the economic factors significantly impact the operations of Uniqlo. The fashion Industry immensely involves anything that has to do with the trending demand for costumes or accessories and luxury brands. Due to the costs of these materials, it could force wholesalers to increase the prices of clothing anytime they encounter shortages of material. For example, higher wages or R&D costs in manufacturing countries like China can easily weaken Lululemons cost efficiency. This article is for business owners and executives who want . Apple is a renowned brand in the world. [1] PESTEL model (or PESTLE model) involves the collection and portrayal of information about external factors which have, or may have, an impact on business. This critique is a reflection of Strategic Industry Analysis of clothing Industry in United Kingdom, Italy and France. The clothing business has been growing and booming for the past few years and it continues to grow. PESTLE is an acronym , and PESTLE analysis is a technique used to understand the impact of outside factors on a location, business or organisation. 4 for a graph to support the change in minimum wage prices. This information needs to be considered when selling the products and considering the target audience. Organizations operate in societies where law exists and are bound to abide by those laws if they wish to continue their operations. Definition. Having a celebrity wear the clothing product will boost sales for Velocity Clothing. PEST analysis is one of the most popular management method in differentiate the external factors that affect the organization. Zara. Every organization operates in a political system; this is why political factors highly impact the performance of any organization. EdrawMax gives you ample options to customize your PESTEL Analysis diagram. It's the growth of 50% in the upcoming . Strategy planning process often requires five steps -. Political factors. Also more and more clothing industries are moving overseas like in the New York Times article states Today, most U.S. clothing companies manufacture their merchandise in countries like China, Bangladesh, and Vietnam, where factory owners earn a fraction of what U.S. workers make. Who do their products appeal to more? A 'PESTLE' analysis looks at six key factors - Political, Economic, Social, Technological, Legal, and Environmental. See Appendix point 1. 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. 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. The PEST analysis is a valuable method or framework for assessing and monitoring market growth or fall, as well as a business's position, potential, and direction. 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 These are the changes that have affected today's clothing. This article took a deep look at the history of Uniqlo and highlighted the current operations of the brand. 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. On the manufacturing side, threat from suppliers of inputs is reasonably low., Manufacturing garments and accessories in developing countries can offer fashion-related companies opportunities to cut fixed costs through reductions in the price of production labor. The PEST analysis in some cases is expanded with two additional factors, namely; legal and environmental aspects. Also, economic recessions, in Eurozone, for instance, can be of great impact on Lululemon since its products are relatively high in price and not so rigid in demand, customer will more likely to be more price sensitive during slow economy. 3. 8. The textile and apparel trade holds about 30 percent of the total exports - an enormous potential. The newer generations are all about saving the planet for future generations to thrive. Cultural Influences What is the culture of the area the customer lives in? The environment we live now are not very stable. The PESTEL Analysis of the Fashion Industry works with six significant external factors and helps professionals determine the influence these factors have on a company or industry. COMPANY OVERVIEW. Keeping up to date and providing clothing that is fashionable and attractive to the desired target audience is extremely important. Or a specific sex? Shannons findings are interesting and some relative information pertinent to my thesis, but overall is not necessary for my essay. Income level in countries is a factor worth considering since the price of Lululemon is positioned as, Gereffi, G., & Frederick, S. (2010). Due to limited information from countries' perspective (language barriers), this paper will analyze the European union clothing industry as a whole, in term of the development, the competitiveness and the disparity between top and bottom players in regards to financial performance. But as the years progressed, methods have changed dramatically. The brand focuses on providing casual clothing options to both genders. Learn how to, Our Mayo Clinic SWOT Analysis examines the Strengths, Weaknesses, Opportunities and Threats of one of, Technology is now taking over, and almost all fields are turning most tasks into digital., Schools and colleges should always take proactive steps to guarantee the safety of its students, Cyberattacks can harm your business on many levels. 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. Bargaining power of supplier low A small company cannot achieve its height and become successful if they lack it. These types of consumers are extremely impacted by the current socially acceptable fashion trends. Its smartphones, PCs, tablets, Music players, and TVs are very popular. The Companys Goal Patagonia, Inc. is an outdoor apparel company based in Ventura, California, United States. So much that drastic changes may consider Velocity Clothing to purchase from other suppliers in other countries as to be more economical. When we hear the word fashion, we think of . Global textile and clothing industry (Lopez & Fan, 2009) with 900 billion Euro in 200 worldwide (Ghemawat & Nueno, 2006). (Lululemon Athletica Annual Report, 2012). 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. Purchasing typically requires long lead times, limiting a company 's ability to react quickly to fashion trends, started outsourcing more, consuming more, using more resources, and paying less (The True Cost). Macro-environmental factors are those that affect clothing industry and the industry have no control over rather than adapting to it. The producers in the new T-shirt value chain do not operate in a free market system. Technological. The PEST analysis looks at four types of external environmental elements: P -Political factors in an economy include various forms of government intervention and political lobbying, such as . Looking at Uniqlos success story, today we have decided to conduct a Uniqlo PESTLE analysis. Uniqlo is a famous clothing brand that has its origins in Japan. Fashion: This market segment is the consumers that specifically buy clothes that will be considered by society as fashionable. Will the culture they live in mean new fashionable luxury garments as Velocity Clothing have to offer going to be a very big thing? Social norms, regulations, and ideologies play an essential role in the case of some of the industries. Welcome to the world of case studies that can bring you high grades! Growing international business in over 100 countries. Many legal factors impact the operations of Uniqlo. For the past hundred years the need for clothing increased since the number of people of keeps growing. What is PESTLE Analysis. See quote in Appendix point 1. The company's net income for the year was 0.344 billion dollars, down 75.12% from the previous year. 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. 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. Check the template that resonates closely with your business model. Saturated markets, fierce competition, and the turbulent macro-economic environment have condemned retailers to reconsider their retail strategy. Trade policy is how a country carries out trade with other countries (Commercial Policy, n.d). Legal. These may include additional quotas, duties, tariffs, or other restrictions or regulation. Suppose political instability causes protests and political demonstrations in the area where Uniqlos outlets exist. The latter has provided people with faster and wider access to more ideas and influences from other cultures and societies, driving demand for wider choice in fashion products. Click on 'Use Immediately' to import the template's contents to the EdrawMax canvas. This information needs to be considered when selling the products and considering the target audience. (Photo: Public Domain) This PESTEL/PESTLE analysis of Nike Inc. evaluates trends in the company's . 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. 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, due to the high demand of the US apparel stores for Chinese products, the low cost, which was the main reason why raw materials are being purchased from China, have increased. 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. Conclusion: Pestle Analysis of the Fashion Industry. One is about Being a Hero, another is about gaining more experience. Relocating the garment industry to the global South can arguably be the downfall of workers as they are sacrificing their lives for their job. The fashion industry consists of four components/levels: a) The production of raw materials, principally fibers, textiles, leather and fur. Wars & Conflict - Velocity Clothing use materials imported . Moreover, sudden climatic changes can affect the sales of Uniqlo, which will impact the operations of Uniqlo negatively. A luxury good such as what Velocity Clothing supply will be lower on the agenda for people who have been made redundant or have much less money available due to the recession.This can be supported in Appendix point 1. Besides that, other laws, such as consumer protection and intellectual property laws, significantly affect the operations of Uniqlo. 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. Their market dominance and profitability have benefitted significantly from the political prowess of their government to limit competition. PESTLE is and analytical tool used to assess the external environment. In 1984, Tadashi Yani changed the brands name to Uniqlo and started offering womens clothing as well. Pet Industry PEST Analysis. 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. 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 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. Available at: https://www.google.com/amp/s/pestleanalysis.com/pestle-analysis-of-the-fashion-industry/ (Accessed 31 August 2022). Pestle Analysis Examples: Apple. 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). 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. Shannon focuses on the specifics of dietary options and the individuals who believe in purchasing environmentally friendly foods- this topic is not relevant to the thesis as a whole but provides. The native indigenous people populated Canada thousands of years ago, then Western explorers and colonists, most French and . To achieve such aims, data were collected, reviewed and analyzed within the industry. Regular analysis keeps the businessman aware of the potential threats and avoids such possibilities by corrective actions. Get 22% Off before it's gone >>, https://freepestelanalysis.com/pestel-analysis-of-fashion-industry/, https://www.google.com/amp/s/pestleanalysis.com/pestle-analysis-of-the-fashion-industry/, 4. As a result, many businesses are trying to cut back on the amount of cotton they use in their clothes. For example, intellectual property laws provide security to the brand and make it easier for it to function. With free templates and components, this 2D PESTEL analysis software allows you to add different content to your PESTEL analysis diagrams. Richard M. Johns (2006). We all wear clothes depending on the type of occasions, sometimes they can be less flashy and sometimes they are jazzy, but each outfit is a result of the fashion industry. The expansion of the fast fashion market, nonetheless, has gotten hampered by unsuitable working conditions and low living wages (Wang, 2018). This is largely to do with marketing and the target audience of the product. The PESTLE analysis is a concept first mentioned by Harvard Business School professor Francis J. Aguilar. LO: - Planning & the Macro Environment - PESTLE analysis - Competition analysis - Product trend analysis - Customer trend analysis. This, however, makes a company vulnerable to economic factors from abroad. 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. Wars & Conflict Velocity Clothing use materials imported from various countries. 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