Industry Environment Analysis Paper

715 Words 3 Pages
Industry environment analysis
Threat of new entrants
Established businesses are protected from new entrants because of high barriers to enter the market. New entrants will face barriers such as high product differentiation, high capital requirements, economies of scale, switching costs, access to distribution channels, government policies and threat of retaliation (see appendix C) (Gheen et al., 2012).
Bargaining power of suppliers
The suppliers of the apparel industry are reliant on one major and common aspect to all – labor. The industry is labor intensive due to the difficulty of automating, he precise cutting and stitching needed to produce garment. Therefore, in analyzing the power of suppliers (see appendix D), it is important to look at e presence of substitute inputs, the number of suppliers, suppliers switching costs, and government regulation. The first aspect, presence of substitute input, is very important as there is no substitute for labor. However, the supplier power gained by the necessity of labor mentioned earlier is completely undercut by the prevalence of labor suppliers. Clothing production in the U. S. is generally fragmented (MarketLine, 2012). In addition, suppliers are further diluted by the prevalence of moving apparel production overseas where child labor and low wages are common (U.S. Department of Labor, 2012). In terms of supplier switching costs, they are low due to the large number of suppliers out there. Finally, government regulations such as minimum wages and environment regulations provide labor suppliers with some power. One factor that provides power to suppliers is that currently there are no substitute inputs for labor. However, the supplier power is completely
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However, low switching costs and buyer independence are significant factors strengthening buyer power. Overall, the bargaining power of buyers is

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