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SWOT Analysis of the Fashion Industry

Paper Type: Free Essay Subject: English Language
Wordcount: 1638 words Published: 1st Jan 2015

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Conducting a SWOT analysis, that is, reviewing the strengths of an organization, its weaknesses, opportunities it can capitalize on for maximum profits, and the threats to achieving its full potential provides very invaluable information to the organization about the market and understanding the industry, as well. The analysis is used to define both the unfavorable and favorable factors and their impacts on goals of the business. The fashion industry, which is very volatile, is not an exception, it too has its own share of strengths and opportunities which once utilized by an organization can help it grow substantially and weaknesses and threats which the organization must strive to minimize to the lowest possible levels.

One of the strengths of Oakley as a company in the fashion industry is the growing income levels. The growth in individual incomes increases the amount of disposable income and hence many people are able to purchase their products.

Growth of sports through funding by international sponsors is also a major strength as it has led to a significant increase in the number of sportspersons who are the highest consumers of Oakley Inc products like prescription eyewear, watches, shoes and electronics.

Despite the downturns, the fashion industry has continued to grow over time and is one of those industries that are far away from reaching their peak. This can be partly attributed to the ever growing population and the increase in the propensity of people to don fashion attire. With efficient management, Oakley Inc has the potential to be the leading multi-national company in the distribution of apparel, sunglasses and footwear.

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Oakley Inc has built a reputation and a name for itself as being a producer of high quality products and the owner of about 575 patents a figure of about 1100 trademarks. It has successfully worked on creating a large customer base and trade connections. It also has in its possession a large talent of labor which has led to the production of high quality products. This has established it as a market leader enjoying many industrial advantages over its competitors guaranteeing a higher volume of sales compared to other companies in the industry.

One of the greatest weaknesses facing the company is the development of some products which do not command a large following. This leads to these products staying in the distribution outlets for a long time leading to stagnation of capital. Losses are incurred as the limited sales made are not able to meet the production costs of the product. To avert this, the company should produce a limited number of products in each line and test its appeal in the market by monitoring the quantity of sales made per unit time and then deciding whether the product is viable to the company.

Another weakness in the fashion industry is infrastructural development. The development of infrastructure has been very slow thus unable to keep up the pace of growth of the sector. It is therefore, a bottleneck in the industry as it hinders efficient distribution of company products to some areas.

Curving out a niche for itself in the fashion industry has not been an easy ride for Oakley Inc. Building a reputation for itself has been a major weakness as a lot of investment has had to be done in advertisements and market research to determine the best market places and consumer needs.

The company has also had a hard time competing with other companies in the same industry due to the low prices attached on these companies¿½ products. To survive this, the company has had to lower its prices while ensuring that they are in balance with the returns to avoid losses. Extensive advertising campaigns on quality have also given it an edge over those companies offering their products at lower prices.

Oakley, Inc has had to maintain a huge and expensive work force which is spread over an outsized ecological area and which requires constant communication and monitoring. For this to work to its advantage, extensive evaluation of the personnel is required to ensure competence and also the ability of the workers to work under minimum supervision (Montgomery pp.1-2).

There are many opportunities that the company can capitalize on to reap maximum profits. Expected investment is one of the opportunities that can benefit the company. The fashion industry is ever growing, and there is an increasing number of stakeholders in the industry willing to invest fashion. The company can take this opportunity to increase its capital base so as to be able to enjoy large economies of scale.

The company should monitor international barriers to trade and make a move into new areas once these barriers come down. Abolition of these barriers can also help the company acquire high quality and less costly fabrics.

Development of new products and services can lead to a remarkable growth on the profits of the company. Continued introduction of new products and various designs to the market can help ensure a growth in sales. Introducing special price packages for regular buyers of Oakley products would help in retaining these customers and increasing the appeal of the business to customers.

Technological advancement and investment in information technology is an opportunity that can greatly help the company to minimize its operation cost. Oakley, Inc can rely on information technology to offer more customers friendly services like informing regular customers of a new design or product. Relying on e-commerce to sell its products online can help grow its geographical market area to cover the entire globe hence higher sales.

The Company should evaluate end user response to its services to gain information on what areas of its services to improve. This would go a long way in helping the organization acquire new customers as well as retain its old ones who are satisfied with the services being offered (Johnson pp.D1).

The organization should also take the opportunity to expand and cover a larger geographical area. It should grow into the untapped markets and offer its products and services in these regions. Having a large customer base would increase its profits.

Acquiring better supply deals, for example, a less expensive textiles supplier would greatly minimize the operation cost of the company. The company can also retain its suppliers but negotiate for better deals with the aim of increasing its profit margin.

Linking up with other companies in the industry is an opportunity that should not be ruled out. Linking up with another fashion company would increase the customer volume greatly.

There are many threats facing organizations in the fashion industry. Shopping for products like expensive sunglasses and footwear is greatly impacted by the global economy. A downturn in the global economy means that less people are likely to purchase these products. This leads to low income to the company during this period. To minimize the effect of this, the company should devise a mechanism of lowering its operation cost to the minimum possible levels to avert possible losses due to its operating costs exceeding income.

Trade barriers are a threat to the company as it has been unable to venture into some markets due to strict market regulations. It has also hindered the company from acquiring low cost raw materials for manufacture of its products which would have increased its profit margin.

Shifting trends is also a major threat to the company. A change in the fashion trend may render some of the company products useless and obsolete. The company therefore has to ensure continued development of new products to maintain its sales.

Some government legislation can also be a major threat to investors in the fashion industry. Intervention by the government can come with it rules which are very costly to adhere to and also competition from unexpected quarters, for example, from multi-national fashion companies due to liberalization of the market (Leibowitz pp.22).

The international sports calendar has a huge impact on the sale of Oakley products which are mainly composed of athletics products. The company should devise a mechanism of maintaining the sales even in off peak seasons. This can be achieved through having a line of brands which are not sports related.

Over the next few years, huge investments are expected to be made in the fashion industry. New companies are likely to crop up and this will lead to a strain on the available labor force. This will be a limiting factor to the continued growth of the company. To prevent this, the company should start training its own fashion staff. This would in future give it an advantage over the other companies which would be experiencing a shortage of the same. The company can therefore, transform this threat into an opportunity by selling some of its staff to the other businesses for a profit.

The organization also faces the threat of being vulnerable to attacks by its major competitors. It should therefore, have all the mechanisms of counteracting this in standby so that it does not fall to accusations from other fashion companies.

The rising fuel prices have become a major hurdle for almost every business in the world. A huge upward surge in fuel prices can destabilize an investment. To counter this, the company should ensure that it has its own fuel reserve so that it is not immediately affected by the changes in fuel prices as it will have time to adjust while relying on its fuel reserves. With its own reserve, it can benefit from this threat by providing that much needed resource to its competitors at a large profit margin.


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