Porter’s 5 Forces- Textile Industry
NAICS code: 313310 SIC code: - 2231
Olga Bosovik
NAICS code: 313310 SIC code: - 2231 Textile Fabric Mills→ Establishments in the textile mills industry are primarily engaged in manufactures a variety of fabrics, thread, yarn, textile bags, canvases and curtains and linens.
I. RIVALRY AMONG EXISTING FIRMS·
Concentration of companies is low in this industry due to strong fragmentation and large number of sub-industries none of which account for more than 30% of total revenues. Industry is highly competitive, and includes a large number of companies all accounting for an insignificant amount of the total market share. The industry is comprised of over 9,000 companies with majority of the market share owned by top 50 companies according to Forbes. Since the industry contains a large number of companies all competing with each other, rivalry among existing firms is considered to be high in this industry. Domestic firms in US compete not only with each other but also with international firms. The firms compete with each other primarily on price, quality, range of products and location. Price-based competition is most important in this industry due to very little differentiation existing between threads, yarns, and basic textiles. Companies that have an ability to invest in automation, which reduces labor and costs in general typically are able to offer lower price
According to IBISWorld key success factor for this industry include:
Access to niche markets: High profit margins are usually more attainable in specialized markets with less competition.
Proximity to key suppliers: Being within a short distance of raw material suppliers (e.g. cotton suppliers or polyester fiber suppliers) can alleviate potential logistical problems and cut down on transportation costs.
Economies of scale: Firms that can reduce the marginal cost of the textiles they produce have a competitive advantage....