Pest Analysis of Textile Industry

Pest Analysis of Textile Industry

A PEST (Political, Economic, Social and Technological) analysis is a major part of the environmental scanning section of strategic management and it is used by companies during market research and strategic analysis.

Using a PEST analysis helps a business to understand various macro environmental factors that they need to take into consideration when determining the decline or growth of a particular market.

What does PEST stand for?

Political – this refers to the ways in which the government can intervene in an economy in terms of environmental and labor laws, tariffs, trade restrictions and tax policies. It also shows how a government can influence education and health and how it will affect the infrastructure of a country.

Economic – this refers to how exchange rates, inflation rates, interest rates and economic growth will impact on a business and how it can grow, develop and make various decisions. For example if a business exports goods these operations can be greatly affected by exchange rates and these are factors that need to be included in a business’s strategic management plan if they are to succeed.

Social – these factors refer to how a society behaviors culturally, how the population rate will grow, how health-conscious people in a country are, how its range is distributed in a country and the various attitudes that people have towards their careers. When social trends change it can greatly affect the need for a business’s products or services. Similarly if a society has an older population the cost of labor will increase and a business will need to change their management strategies in order to cope with these changes.

Technological – this refers to how technology can change and looks at automation, R&D activity and technological incentives that are available. Technology can also have a great impact on efficient production levels and influence decisions on outsourcing. In addition to this there are some changes in technology that can affect the costs that a business needs to meet and can improve the quality of a product or service that a business offers.

Textile Industry in India:
The textile industry is mainly a labor intensive industry as it provides livelihood to the huge population, mainly consists of unskilled workers, and thus plays a pivotal role in the development of any economy. As this particular industry also comes under the basic necessities of human beings, it impacts a lot to the society as a whole. There has been increase in demand of textile products in last few decades globally, mainly due to rapidly changing social and economic structure of the countries worldwide. In past few years, especially after the removal the trade related tariffs and non tariff barriers in 2005, Asian countries such as India, China, Hongkong and Japan have emerged as major players in this particular industry, Indian textile industry contributes about 14% to industrial production, 4% to the country’s gross domestic product (GDP) and 16.63% to export earnings. Nearly 40% of the textiles produced in the country is exported and the textiles sector is the biggest employment generator after agriculture. The sector is expected to generate 12 million new jobs by 2012. The sector targets US$ 6 billion foreign direct investment (FDI) by 2015 to be invested in green field units in textiles machinery, fabric and garment manufacturing, as well as technical textiles. India has made inroads into the markets of its key competitors which include Asian countries such as Sri Lanka, Bangladesh, Vietnam and Cambodia. The Indian textile and apparel industry is taking a new course by entering the Chinese market. Most of the top global apparel retailers, such as JC Penny, Nautica, Docker and…
Continue Reading

Please join StudyMode to read the full document
You May Also Find These Documents Helpful

Sample Industry Analysis of Textile Industry Essay

...Since its introduction in 1979, Porter’s Five Forces has become the de facto framework for industry analysis. The five forces measure the competitiveness of the market deriving its attractiveness. The analyst uses conclusions derived from the analysis to determine the company’s risk from in its industry (current or potential). The five forces are (1) Threat of New Entrants, (2) Threat of Substitute Products or Services, (3) Bargaining Power of Buyers, (4) Bargaining Power of Suppliers, (5) Competitive Rivalry Among Existing Firms. Don’t forget to check out an example of a Porter’s Five Forces analysis of the Coca-Cola company. 1. Threat of New Entrants: Microeconomics teaches that profitable industries attract new competition until the downward pressure on prices has squeezed all the economic profit from the firms. New firms in an industry put downward pressure on prices, upward pressure on costs and an increased necessity for capital expenditures in order to compete. The less threat there is from firms entering the industry, the more stable a firm’s profits are. An attractive, low-risk industry, is one in which there are significant barriers to entry such as: Economies of Scale: The theory behind supply side economies of scale state is that the most efficient level of production in an industry is at the point in which the...
Read More
1657 Words 7 Pages
Indian Textile Industry Analysis Essay

...Analysis of Indian Textiles and Apparels Industry: A Focus on Market Structure and Competitiveness Abstract: The Indian textile industry is one of the oldest and most significant industries in the country. It accounts for around 4 per cent of the gross domestic product (GDP), 14 per cent of industrial production and over 13 per cent of the country's total export earnings. In fact, it is the largest foreign exchange earning sector in the country. Moreover, it provides employment to over 35 million people. The Indian textile industry is estimated to be around US$ 52 billion and is likely to reach US$ 115 billion by 2012. The domestic market is likely to increase from US$ 34.6 billion to US$ 60 billion by 2012. It is expected that India's share of exports to the world would also increase from the current 4 per cent to around 7 per cent during this period. India's textile exports have shot up from US$ 19.14 billion in 2006-07 to US$ 22.13 billion in 2007-08, registering a growth of over 15 per cent. This article tries to investigate the underlying market structure that has developed over the years together with the strengths, weakness, opportunities and threats the industry is currently facing. In the course of the analysis the data shows that the industry operates in a monopolistic setup and all the...
Read More
5430 Words 22 Pages
Essay about Pest Analysis of Textile Industry

...Profile of the Industry 　 Overview The textile manufacturing sector includes companies engaged in various textile products such as yarn, thread, twine, and knit fabrics, textile dying, coating, and waterproofing. Finished textile products include apparel, leather, curtains and drapes, canvas sheeting, and other fabric items. Pakistan exports are high dependent on the textile industry. Pakistan has become one of the leading cotton producing country. Size, concentration, structure Pakistan is the fourth largest cotton producing country in the world. Pakistan’s main share of textile products is more than 50% yarn only. Today Pakistan’s textile industry is based on 60% on spinning sector, 22% on weaving sector, and 18% on the finishing sector. Share of the textile sector in Pakistan’s economy, along with its contribution to exports, employment, foreign exchange earnings, investment and value added in industry, makes it the single largest determinant of the growth in the manufacturing sector. It has 46% share in overall manufacturing activity, 68% share in export earnings with the value of $7 billion. The value addition in this sector accounts for 9% of GDP and its share in the overall employment is 38%. Trends Textile industry is concentrating towards value added products...
Read More
397 Words 2 Pages
Pest Analysis of Textile Sector in Pakistan Essay

...of 4%-6% on local supplies. Textile exports stood at $12.5 billion fromJuly 2010 to May 2011. During the current fiscal year, the tax department collected Rs. 10.5billion as 1.0% withholding tax. Similarly, textile industry contributed Rs. 2.5 billion at the rateof 0.25% as Export Development Fund (EDF). Break-up shows that the applicability of lower rateof 4%-6% sales tax on local supplies would contribute an additional amount of Rs. 11billion,annually, to the national exchequer. Moreover, the collection of withholding tax amounted toRs. 10.5 billion during ongoing fiscal year.c. Economic Stability Growth in Textile sector has immensely contributed towards economic stability of the country.This sector alone employs 15 million work force of the country. Moreover, when the finishedgoods are domestically available, it helps keep prices down and fluctuations due tointernational market influences are less likely to strike populace.d. Improvement in Balance of Payments Textile industry has brought structural changes in the pattern of foreign trade of the country.Today, the Textile sector account for about US$ 10.2 billion export of the country. On one hand,this sector helps reduce import bills of textile products and on the other hand, it contributes inearning foreign exchange thereby helping towards keeping balance of payment in control.Following table presents...
Read More
1014 Words 5 Pages
Pest Analysis Research Paper

...PEST Analysis A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: * Political * Economic * Social * Technological The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram: Environmental Scan | / |   \ | External Analysis    |     Internal Analysis     | /                       \ |   | Macroenvironment | Microenvironment  |   |   | |P.E.S.T. |   |   |   | Political Factors Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include: * tax policy * employment laws * environmental regulations * trade restrictions and tariffs * political stability Economic Factors Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macroeconomy: * economic growth * interest rates * exchange rates * inflation rate Social Factors Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of...
Read More
543 Words 3 Pages
Pest Analysis Essay

...PEST ANALYSIS What is PEST Analysis? A PEST analysis is used to identify the external forces affecting an organization .This is a simple analysis of an organization’s Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis. It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up of: 1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors. 1 2 PESTEL analysis of the macro-environment There are many factors in the macro-environment that will effect the decisions of the managers of any organisation. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise...
Read More
1119 Words 5 Pages
textile industry Essay

...A BRIEF REPORT ON TEXTILE INDUSTRY IN INDIA March, 2013 A brief report on Textile Industry in India   1. OVERVIEW OF INDIAN TEXTILE INDUSTRY 1.1 Background India Textile Industry is one of the leading textile industries in the world. Though was predominantly unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. India textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns about 27% of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also contributes around 3% to the GDP of the country. India textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scopes for the other ancillary sectors. India...
Read More
3658 Words 15 Pages
Automobile Industry Pest Analysis Essay

...Automobile Industry PEST Analysis 1. Political Factors A) Environment Concerns: Leading to the quest for eco-friendly cars, people would prone to buy hybrid or even pure electric cars in the future. B) Government Regulations: Limitation on high emission car purchase, and the restrictive passage of autos in downtown area, as well as the limitation on license plate (number plate) in huge cosmopolitans. C) Some pioneering states in the US have started to set the rules to govern robotized motoring (autonomous driving). 2. Economic Factors A) Economic growth has shifted from traditional strong western countries (US, West Europe, specifically) to other parts of the world, especially, East and Southeast Asia, Africa, and South America. B) Auto Markets in developed countries are saturated: High rate of auto owning, stable population and household quantity. The auto market there is typically of substitution of old car with new ones. C) Public Transportation Infrastructure including high speed rail network, intercity light-rail network, etc, will be perfected in developing countries. D) Fuel cost is on the wing, driving demand for mini-car, A-Class, Compact car. 3. Social Factors A) In developing countries, owning a car is not only means of transportation but also a need of social status. B) People’s awareness of environment protection is growing. 4. Technological Factors A) Technology...
Read More
1077 Words 5 Pages

Popular Essays

Adaptive Cruise Control
Unit 9
Literature Essay
Drinking culture Essay
Communication Essay
Nokia Essay
Youth Essay
Love Essay