Analysis of Canadian Apparel Industry for Pestel - myassignmenthelp

Question: Discuss about theAnalysis of Canadian Apparel Industry for Pestel Analysis. Answer: Political- Canada has a system of governance that is strong, based on a federal system. It has a parliamentary system that operates within a multiparty democracy. The Cabinet runs the government together with the Prime Minister who has the responsibility of appointing them. The country offers an environment that is stable for investors with the guarantee of continued peace in the long-term. Having a politically stable neighbor is also another plus for the country when marketing the country to investors. Economic- Canada is relatively wealthy as a nation. It is ranked highly amongst the top richest nations globally. Canada is has a strong trading economy and is a member of the G-8. More than 70% of its GDP is based on the service sector and is the biggest employer in the country (Statistics Canada, 2017). The US is the largest investor in the Canadian economy and enjoys strong economic integration with it. Social- The social perspective focuses on education, income and gender issues in the country. The average income for a family is above $60,000 and shows less disparity on income when compared to the US (Statistics Canada, 2017). Education is a right which is guaranteed and this has resulted in a population that is well educated. Women have lower incomes when compared to men.. The population is relatively young with the median age being between 25-50 years being the majority. Disposable income which is high encourages consumer spending in the country. Technological Canada is technological developed with regards to internet, telephone connections. Production in most sectors is based on technology which is innovative. This extends to the garment industry as well. Technological advances have positioned the country as one of the leading technical textile producers in the world. The use of e-commerce is also well developed in most sectors including the apparel industry. Environmental- There is a substantive department tasked with ensuring that the environment is protected in Canada. This includes resources such as water, flora and fauna as well as those which are renewable such as forests. The department leads compliance at the federal level and works in conjunction with provincial governments. Regulations that govern environmental standards for manufacturers are also set by the relevant department concerned. Legal- The country follows the legal system that is based on the governing law in the UK. The province of Quebec practices a different system for matters pertaining to law that is private in nature. The Supreme Court has final jurisdiction in all the legal matters in the country (Simeon Papillon, 2006). Having strong ties with the United Kingdom, decisions made by the House of the Lords are binding in Canada. There are minor exceptions as set out by the governing law. SWOT analysis Strengths- The industry is strong in manufacturing across clothing knitting mills and clothing accessories. The specialized technical textile is used in the defense, aerospace and transportation sectors. Strong home-grown companies that have global appeal are strength of the industry and reduce reliance of foreign brands dominating the market. Such companies include Lululemon and Guess, Inc (Milstein Co Consulting, 2008). The highly mechanized forms of production that reduce labor costs are strength of the apparel industry in Canada. Other strengths are in the design stages where the industry has shown strong innovation. The industry produces world class designs based on creativity and innovation which is functional. The manufacturing facilities are also superior and can compete with global players. Local production is flexible and fast and this is able to meet with demands of replenishments both locally and for the export market. Weakness- The industry has been shown to not have strong financial fundamentals and knowledge that is necessary for profitability. Most companies are unable to gain access to capital necessary for expansion from the banking industry. Being unable to identify segments which are profitable is the consequence of this shortcoming. Many companies have also been shown to have weal management structures in the industry. Weak marketing and sales capabilities are also prevalent within the industry and reduces global competitiveness. Another weakness is the issue of succession that faces most companies in the garment industry. Many are facing problems of who will take over the running of such companies in the next five to ten years. The lack of clarity in continuity also discourages potential investors in the industry. This creates the difficult situation of having long-term strategic plans. This situation is unhealthy in the short-term and impacts negatively its global competitiveness. Opportunities- The US market is an opportunity that the industry can focus on in order to consolidate its position. An increase of just 1% in market share could lead to offsetting the loss currently being experienced in the industry (Milstein Co Consulting, 2008). Exports to the US account for less than 1% and this creates to room to tap in this market. Similarity in markets makes it easy to have a unified approach to marketing. Overhead costs when selling to the US are less when compared to other markets. Another opportunity for the industry is to consolidate through mergers in order to face the global challenges that are arising. New models of manufacturing are possible when SME merge and consolidate their competencies locally and globally (Milstein Co Consulting, 2008). Specialization that is functional as well as targeting certain niches is an opportunity that the industry can capitalize on. Economies of scale through merging will lead to lean manufacturing that can compete on the global scale. Threats- The major changes that have resulted in increased globalization pose the greatest threat for the industry in Canada. Increased imports from low wage countries that offer cheaper imports have destabilized the dynamics of the local market. China in particular stands out as the one country that has increased exports to Canada and this has led to some companies folding up. Global brands with strong value chains are another threat to the local brands and limit their growth domestically. The threat of being taken over by the global brands is also a serious problem within the industry. References Milstein Co Consulting. (2008). A Canadian Approach to the Apparel Global Value Chain. Retrieved from https://www.ic.gc.ca/eic/site/026.nsf/vwapj/apparel-vetement-gvc-vms_eng.pdf/$file/apparel-vetement-gvc-vms_eng.pdf Simeon, R., Papillon, M. (2006). Canada. In MAJEED A., WATTS R., BROWN D., KINCAID J. (Eds.),Distribution of Powers and Responsibilities in Federal Countries(pp. 92-122). McGill-Queen's University Press. Retrieved from https://www.jstor.org/stable/j.ctt7zsgr.8 Statistics Canada. (2017). Report on the Demographics Situation in Canada. Retrieved from https://www.statcan.gc.ca/pub/91-209-x/91-209-x2013001-eng.htm