Inanalyzingthemacroenvironment
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Introduction
In analyzing the macro-environment, it is important to identify the factors that might in
turn aect a number of vital variables that are likely to inuence the organization's
supply and demand levels and its costs. The "radical and ongoing changes occurring in
society create an uncertain environment and have an impact on the function of the
whole organization. A number of checklists have been developed as ways of
cataloguing the vast number of possible issues that might aect an industry.
A PEST analysis is one of them that are merely a framework that categorizes
environmental inuences as political, economic, social and technological forces.
Sometimes two additional factors, environmental and legal, will be added to make a
PESTEL analysis, but these themes can easily be subsumed in the others. The analysis
examines the impact of each of these factors (and their interplay with each other) on
the business. The results can then be used to take advantage of opportunities and to
make contingency plans for threats when preparing business and strategic plans.
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Kotler claims that PEST analysis is a useful strategic tool for understanding market
growth or decline, business position, potential and direction for operations.
Use whatever factors you feel are appropriate. Other variations include:PEST analysis (STEP analysis)- Political, Economic, Sociological, Technological.
PESTLE/ PESTEL analysis - Political, Economic, Sociological, Technological, Legal,
Environmental; PESTEL analysis.
PESTEL analysis - Political, Economic, Sociological, Technological, Environmental,
Labors (Labor) related; PESTEL analysis (rare no references available).
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History of PESTLE
Where did the term PEST or PESTLE derive?
What were the origins?
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The term PESTLE has been used regularly in the last 10+ years and its true history is
di cult to
establish.
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The earliest know reference to tools and techniques for 'Scanning the Business
Environment' appears to be by Francis J. Aguilar (1967) who discusses 'ETPS' - a
mnemonic for the four sectors of his taxonomy of the environment: Economic,
Technical, Political, and Social.
Shortly after its publication, Arnold Brown for the Institute of Life Insurance (in the US)
reorganized it as 'STEP' (Strategic Trend Evaluation Process) as a way to organize the
results of his environmental scanning.
Thereafter, this 'macro external environment analysis', or 'environmental scanning for
change', was modied yet again to become a so-called STEPE analysis (the Social,
Technical, Economic, Political, and Ecological taxonomies).
In the 1980s, several other authors including Fahey, Narayanan, Morrison, Renfro,
Boucher, Mecca and Porter included variations of the taxonomy classications in a
variety of orders: PEST, PESTLE, STEEPLE etc. Why the slightly negative connotations of
PEST have proven to be more popular than STEP is not known. There is no implied
order or priority in any of the formats.
IMPORTANCE
It is important to take into account PESTLE factors for the following main reasons Firstly, by making eective use of PESTLE analysis , you ensure that what you are
doing is aligned positively with the powerful forces of change that are aecting our
environment by taking advantage of change , you are much more likely to be
successful than if your activities oppose it.
Secondly, good use of PESTLE analysis helps you taking action that is likely to lead
to failure for reasons beyond your control.
Thirdly, PESTLE is useful when you start a new product or service. Use of PESTLE
analysis helps you break free of assumptions and helps you quickly adapt to the
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OBJECT
Any organization or industry inuenced by factors as political factors, economical
factors, social factors, technical factors, legal factors, and environmental factors in
addition to government policies, labor factors, competitive market condition locational
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factors, and emerging globalization. So we have dened PESTLE analysis of textile
industry.
Until the economic liberalization
of Indian economy,
theIndiaTextile
Industry
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was primarily unorganized industry. But now the Indian textile industry is the second
largest in the world-second only to China. Indian textiles also account for 38 percent of
the country's total exports and are, therefore, a very important industry. And these
factors aected the textile industry as political factors are most important for this
industry because lack of stability in politics. And Indian economy is largely dependent
on textile manufacturing and exports. India earns around 27% of the foreign exchange
from exports of textiles so economical and environmental factors inuenced.
So we have discussed on these factors and dene the problems of textile industry
which is suered by these factors.
TEXTILE INDUSTRY
The industries in India can be broadly classied into organized and
unorganiased.Textile industry is under unorganized and relatively small. There is some
potential for real growth. Textile Industry is related to clothes. Until the economic
liberalization of Indian economy, theIndia Textile Industry was primarily unorganized
industry. The opening up of Indian economy post 1990s led to a stunning growth of this
industry.
India Textile Industry is one of the largest textile industries in the world. Today, Indian
economy is largely dependent on textile manufacturing and exports. India earns
around 27% of the foreign exchange from exports of textiles. Further, India Textile
Industry contributes about 14% of the total industrial production of India. Furthermore,
its contribution to the gross domestic product of India is around 3% and the numbers
are steadily increasing. India Textile Industry involves around 35 million workers directly
and it accounts for 21% of the total employment generated in the economy.
The Indian textile industry is the second largest in the world--second only to China. An
Indian textile also has account for 38 percent of the country's total exports and is,
therefore, a very important industry. The forecast is that textiles exports will reach USD
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percent of these mills are located in Coimbatore (Tamilnadu).
2. India has 34 million cotton textile spindles for manufacturing cotton yarn. Cotton
yarns account for 70 percent of India's textile exports. (China has 40 million cotton
spindles.)
3. Of the Indian textile yarn exports, almost 80 percent come from coarser yarns
(counts below 40s). Consequently, there is a need to upgrade the technology.
4. For the past two years, there has been a signicant slow-down in the cotton
spinning segment, mainly due to the spiraling price of cotton.
5. The domestic knitting industry is characterized by small scale units which lack
adequate facilities for dyeing, processing and nishing. The industry is
concentrated in Tirupura (Tamilnadu) and Ludhiana (Punjab). Tirupura produces
60 percent of the country's total knitwear exports. Knitted garments account for
almost 32 percent of all exported garments. The major players include Nahar
Spinning, Arun Processors and Jersey India.
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The textile machinery industry sector experienced between 7 and 8 percent nominal
growth in 1997.
Strengths:
Indian Textile Industry is an Independent & Self-Reliant industry.
Abundant Raw Material availability that helps industry to control costs and
reduces the lead-time across the operation.
UK
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Availability of Low Cost and Skilled
Manpower
industry.
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Availability of large varieties of cotton ber and has a fast growing synthetic ber
industry.
India has great advantage in Spinning Sector and has a presence in all process of
operation and value chain.
India is one of the largest exporters of Yarn in international market and
contributes around 25% share of the global trade in Cotton Yarn.
TheApparel Industryis one of largest foreign revenue contributor and holds 12% of
the country's total export.
Industry has large and diversied segments that provide wide variety of products.
Growing Economy and Potential Domestic and International Market.
Industry has Manufacturing Flexibility that helps to increase the productivity.
Weaknesses:
Indian Textile Industry is highly Fragmented Industry.
Industry is highly dependent on Cotton.
Lower Productivity in various segments.
There is Declining in Mill Segment.
Lack of Technological Development that aect the productivity and other activities
in whole value chain.
Infrastructural Bottlenecks and E ciency such as, Transaction Time at Ports and
transportation Time.
Unfavorable labor Laws.
Lack of Trade Membership, which restrict to tap other potential market.
Lacking to generate Economies of Scale.
Higher Indirect Taxes, Power and Interest Rates.
Opportunities:
Growth rate of Domestic Textile Industry is 6-8% per annum.
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Threats:
Competition from other developing countries, especially China.
Continuous Quality Improvement is need of the hour as there are dierent
demand patterns all over the world.
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Elimination of Quota system will lead to uctuations in Export Demand.
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for Traditional Market
for Power loom and
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Threat
Handloom Products
and forcing
them for product diversication.
Geographical Disadvantages.
International labor and Environmental Laws.
To balance the demand and supply.
To make balance between price and quality
Research Methodology
In order to evaluate the PESTLE analysis of Indian textile and clothing exports, the study
has analyzed the political technical, economical, social, legal, and environment factors
of the textile industry.
Information Sources The information has been sourced from various authentic and reliable sources like
books, newspapers, trade journals and white papers, industry portals, government
agencies, trade associations, and monitoring industry.
To assess these factors of the industry, a preliminary interview conducted with a few
industrialists. The interview sought their views and opinions chiey respect of the pestle
factors that they are facing in India. With the help of Internet sites we have found many
key factors of this industry.
Analysis Method Textile industry forecast and analysis is based on various macro- and microeconomic
factors, sector and industry specic databases, and our in-house statistical and
analytical model. This model takes into account the past and current trends in an
economy, and more specically in an industry, to bring out an objective market
analysis.
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Our industry experts study the relationship between various industry and economic
variables to ensure the required accuracy and desired check on the quality of data and
information given in the report.
?POLITICAL FACTORS
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The management of business enterprises and their policies are considerably inuenced
by the existing political systems. And India is a democratic country, there are probably
problem of stability in politics.
ECONOMICAL FACTORS
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Economical factors such as per capita income, national income, resources mobilization,
exploitation of natural resources, infrastructure development, capital formation,
employment generation, and industrial development inuence textile industry.
Textile industry provides one of the most fundamental necessities of the people with
huge value-addition at every stage of processing.
Today textile sector accounts for nearly 14% of the total industrial output. Indian fabric
is in demand with its ethnic, earthly colored and many textures. The textile sector
accounts about 30% in the total export. This conveys that it holds potential if one is
ready to innovate.
The textile industry is the largest industry in terms of employment economy, expected
to generate 12 million new jobs by 2010. It generates massive potential for employment
in the sectors from agricultural to industrial. Employment opportunities are created
when cotton is cultivated.
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Scenario
Current
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Textile exports are targeted to reach $50 billion by 2010, $25 billion of which will go to
the US. Other markets include UAE, UK, Germany, France, Italy, Russia, Canada,
Bangladesh and Japan. The name of these countries with their background can give
thousands of insights to a thinking mind. The slant cut that will be producing a
readymade garment will sell at a price of 600 Indian rupees, making the value addition
to be protable by 300 %.
?SOCIAL FACTORS
Managers and policy makers can not disregard social variables like education,
knowledge, rural community norms and beliefs which are predominant in India,
especially in the rural society while cultural dierences are unthinkable for any
international manager or even an urban Indian manager. Textile industry of India based
on cotton and cotton as the agriculture product, which found in rural areas so the social
responsibility of the textile industry. Social stratication plays a vital role in rural
societies.
?TECHNOLOGICAL FACTORS
Technology is considered to be one of the most important factors of textile industry.
That is why the government, in its industrial policy resolutions, industrial licensing
policies, MRTP and FERA regulation, and in liberalization policies, assigned great
importance to sophisticated technology and technology transfer.
The Working Group on Textiles & Jute Industry for the 11th Five Year Plan (2007-2012)
has studied the major problems being faced by the textile industry which include:
1. Structural weaknesses in weaving and processing,
2. Fragmented and technologically backward textile processing sector,
3. Fragmented garment industry,
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?LEGAL FACTORS
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Legal environment plays very vital role in textile industry. Laws relating to industrial
licensing, factory administration, industrial disputes, monopoly control, and foreign
exchange regulation are examples of legal business environment in India.
Textile industry has suered by legal rules as unfavorable labor laws. Government has
created strong labor laws. In India, labor laws are still found to be relatively unfavorable
to the trades, with companies having not more than ideal model to follow a 'hire and
re' policy
And other factors are lack of Trade Membership, which restrict to tap other potential
market. And also lacking to generate Economies of Scale is another legal factor to this
industry. Government has charged higher Indirect taxes, power and Interest rates. The
uneven supply base also leads barriers in attaining integration between the links in
supply chain. This issue creates uncontrollable, unreliable and inconsistent
performance. The liberalization being carried in the 1990's also ushered in a new era
for India's textile industry. It led to the relaxation of many of the constraints previously
imposed on the textile sector. Licensing was removed in the early 90`s by the
Statement of Industrial Policy and the Textile Development and Regulation Order. In
1995, India signed the General Agreement of Taris and Trade bringing some of its
policies at par with those at an international level.
At present, the single biggest factor inuencing the textile industry appears to be the
end of the textile quota regime of quantitative import restrictions under the multi-ber
arrangement (MFA) on 1st January, 2005 under the World Trade Organization (WTO)
Agreement on Textiles and Clothing. The removal of quotas, seen as an opportunity by
many, including the government, is driving investment and liberalization in the textile
space.
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India can also grab opportunities in the export market. The industry has the potential of
attaining $34bn export earnings by the year 2010. The regulatory polices is helping out
to enhance infrastructures of apparel parks, Specialized textile parks, EPZs and EOUs.
? ENVIRONMENTAL FACTORS
Environment protection and preservation is responsibility of the textile industry. The
Government of India is committed to the preservation of ecological balance.
Pollution free technology and recycling of industrial wastes and e uents has become a
corporate concern now. Legislative measures have been adopted for this purpose,
important legislations in this connection areThe water (preservation and control of pollution) Act, 1974 provides for the prevention
and control of water pollution. The Air Act, 1981 aims at preventing, controlling, and
reducing air pollution. The environment (protection) Act, 1986 ensures the protection
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and improvement in the quality of the environment.
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There are many textile companies in India as Reliance Textiles- Reliance Textiles is one of the major textiles Company. That is
in business of fully integrated man made ber. It has capacity of more than 6
million tones per year.
Vardhaman Spinning-Vardhman deals in spinning, weaving and processing
segment of the industry. It is planning to double its fabric processing capacity to
50 million meters.
Welspun India is Asia's largest terry towel manufacturer and fourth largest in the
world. It supplies to leading global retailers, meeting 15 per cent of Wal-Mart's
terry towel requirements, 85 per cent of Tom Hilger.
Alok Industries has the largest processing capacity in India and oers fully
integrated facilities for yarn text rising, weaving, knitting, processing, made-ups
and garments. It has initiated plans to expand capacities across all segments by
investing Rs. 10 billion.
Arvind Mills boasts of a wide product range in value added fabric, from fabric to
garments in denim, shirting and knits.
Gokaldas exports have more than 40 factories spreading in 37 locations in India,
manufacturing more than 2.4 million garments per month.
Other major players like Raymond, Siyaram silk mills, mahavir spinning mills etc. have
also shown strong performance in the past two years.
INTERPRETATION
The textile industry holds signicant status in the India. Textile industry provides one of
the most fundamental necessities of the people. It is an independent industry, from the
basic requirement of raw materials to the nal products, with huge value-addition at
every stage of processing
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The textile industry is the largest industry in terms of employment economy, expected
to generate 12 million new jobs by 2010.
Today textile sector accounts for nearly 14% of the total industrial output.
So I have interpreted that government should take action in favors to textile industry. In
India, there are two issues unemployment and standard of living. Textile industry can
help in employment and raising standard of living.
At this time textile industry is facing very problems due to government policies. Other
problem is recession in country. The textile industry also suered because of the high
cost of raw cotton. The government had increased the minimum support price by 40
per cent in 2008-09. So government should decrease the price of row material as
cotton. And should make easy labor laws.
CONCLUSION
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follow the government rules and regulation, social responsibility, and maintain
pollution environment. In India growth rate is depend upon textile industry. Indian
Textile Industry is an Independent & Self-Reliant industry but government stated strong
labor laws for this industry. Market is gradually shifting towards Branded Readymade
Garment and has opportunity in foreign market and domestic market.
So the government should be introducing measures such as the national technology up
gradation fund and removing the dierential taxation scheme which discriminated
against large units. They have also allowed textile units to build and operate captive
power plants, which should ease the power problem. Although Textiles have historically
formed an important part of India's economy. India's cotton and silk production were
among the highest in the world.
Bibliography
1. www.companiesandmarkets.com/Summary-Company-Prole/Reliance-Ind ..
2. Having lost its Competitive Advantage, Textile Industry Faces Decline article by
Author: Sanjay K Jain Joint MD, TT Textiles Limited
3. www.oxforduniversity.com
4. www.yatsenassociates.com
5. www.oxlearn.com/swot
6. www.Mindjet.com
7. Textile Industry: Problems Faced ByIndia ByHarold Doan and Associates
8. www.csgstrategies.com/search-pest-analysis-of-textile- industry_p24.asp
9. www.oppapers.com/.../pest-analysis-indian-textile- industry-page1.html
10. Findarticles.com/p/articles/mi_hb092/is_3_34/ai_n29024336/
REFERENCES
1. Business Environment, Author - Shaikh Saleem
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2. Cotton: Origin, History, Technology, and Production by C. Wayne Smith, Joe Tom
Cothren. Page viii. Published 1999. John Wiley and Sons. Technology & Industrial
Arts. 864 pages.ISBN 047118045
3. Ramachandran, V. (2001), Export Competitiveness and the Market for Textiles: key
issues, evidence from rm interviews, and policy suggestions, Centre for
International Development, Harvard University, July.
4. Verma, S. (2001), "Impact of WTO Agreement on Indian Textile and Clothing
Industry" in Chadha, G. K. ed., WTO and the Indian Economy, Deep & Deep
Publications, New Delhi
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