Strategic Managemnt Essay Example | Topics and Well Written Essays - 2000 words

Strategic Managemnt - Essay Example b. Economic factor The effect of the recent financial crisis made consumers skimp on cost particularly on their fashion wear. They are now becoming more sensitive to price and is considering cheaper brands such as those retailed in the supermarkets and discounter stores. c. Social factor The recent financial crisis had a tremendous effect in UK’s consumer behaviour. They begun shopping for clothes in supermarkets and discounter stores to be able to save on cost. Where before quality and brand was a premium among the consumer’s consideration in shopping for clothes, the crisis shifted their preference towards price. d. Technological factor Technology has also contributed to the change in the UK fashion industry. It made retailing cheap through e-commerce that requires very minimal overhead affording retailers to cut their price further to better respond to competition. e. Environmental factor The increasing awareness towards environmental degradation as felt by many and advocated by government and concerned groups has not only made consumers conscious in the kind of materials of the products are made that they buy not only in the fashion industry but also in other industry as well. Furs which used to be fashionable are now considered to be a fashion eye sore and the use of leathers are now regulated. f. Legislative factor The lifting of the lifting of the two trade barriers known as Multifbre Agreement (MFA, 1974 to 1994) and the Agreement on Textile and Clothing (1995 to 2004) also provided an avenue for local retailers to be exempted from from Value Added Tax (VAT) by complying with the four legislative requirement of UK. The four legislative requirement to qualify for VAT exemption are as follows: It must be an article of clothing or footwear; It must not be made of fur; It must be designed for young children, and It must only be suitable for young children† (HM Revenue & Customs 2011). This exemption however is limited because it is only limited to children’s wear and could be a double edged sword because competitors can also avail the same exemption. Government however has also provided incentive to import cheaper textiles provided that the strict regulations on clothing are complied with which are; â€Å"The General Product Safety Regulations 2005. The Children's Clothing (Hood Cords) Regulations 1976. The Nightwear (Safety) Regulations 1985† (The National Archives 2011). II. Porter Five Forces a. s. Threat of rivalry The opening of the UK fashion industry to imports has intensified rivalry among retailers because it now includes foreign competitors as well. In addition, the swelling of cheap textiles from other countries (i.e. China, India) conveniently made it supermarket stores and discounter stores to be an effective cheap retailers of fashion clothings which pose a real threat to traditional modes of retail in the fashion industry. The rivalry posed by supermarkets and discounter stores has sign ificantly depressed the price of fashion clothing that reduced the bottom and middle segments of the market to be intensely competitive (Thame 2010) and making it very difficult for other retailers to compete. b. Threat of substitute products Clothing is a basic necessity and clothing is as basic as food itself. Therefore, clothes cannot be substituted. The threat in the fashion in