Global competitiveness is determined by several factors including inflation rates and the economic system of the country, its market structure, and export-import policies. Global competitiveness has a great impact on the fashion industry and its potential, market opportunities, and growth. The current literature can be divided into two broad categories: theoretical literature and case study examples which reflect the current state of the global market. Boyd (2006), Dicken (2003), and Usunier (2000) produce a theoretical explanation of global competitiveness and its impact on different industries. Usunier (2000) analyzes the impact of cultural values and traditions on entrepreneur activity and business operations. Finance is a scarce commodity which meant that those who had access to it had an immense competitive advantage. But today, raising finance is perhaps the least difficult of the tasks facing an organization. Boyd (2006) and Dicken (2003) underline that with supply outstripping demand in the world’s financial markets, it has become comparatively easy for an entrepreneur to find the capital he or she needs. Many of the companies in which these investments are made a trade at enormous price/earnings ratios even though they have never sold a thing. What these investments represent is the recognition that an organization’s key asset is not its economies of scale, its track record, its brand — or any of the other trump cards traditionally held by the incumbents in a market. Saloner et al (2001) evaluate the role and impact of strategic management on global competitiveness and entrepreneur activity. The author concludes that what the investors are betting on is the organization’s knowledge — often pure, unadulterated knowledge, untouched by conventional commercial realities — which will potentially stand the accepted way of doing things on its head. An organization can gather information (from itself, from its customers, from the market as a whole) and exploit the knowledge it can distill from this which is the new scarce resource.
One of the main documents which reflect the current state of competitiveness in The Global Competitiveness Report. The report provides businessmen and analysts with competitive indexes and country profiles, including analysis of business community and economic opportunities in different countries of the world. For fashion industry entrepreneurs, this information can help to evaluate market potential and growth opportunities, possible threats, and weaknesses of the market. The report underlines that financial muscle, a large labor force, or a major manufacturing plant is much less valuable; as many companies with large quantities of physical assets are finding, these things are often a hindrance, an impediment to change. All over the world, large organizations are recognizing the importance of information. The purpose of a brand is to generate loyalty for a product that is essentially undifferentiated. Attempts to change their traditional formulae have led to customer resistance even though the companies’ tasting panels showed that people prefer the new formulation. more and more brand-based companies are being forced to provide information because this is what their consumers expect. Technology and the Internet have both meant that the amount of information available to individuals is increasing exponentially: if you are not sure what you are buying from one manufacturer, you can check out the rival products quickly and cheaply. Information is empowering consumers.
The large layer of literature provides an analysis of the fashion industry and its benefits and threats for entrepreneurs. Cumbler (2006), Donald (2001), Fields (2003) find that in the future, entrepreneurs will need to rely far less on the high-level image created by a brand but will be able to make far more informed purchase decisions. Already on the Internet, companies are acting as ‘infomediaries’ who help potential purchasers find the best deal around, whether this applies to used cars or airline tickets. Global competitiveness will be determined by such factors as the global leadership of MNCs and TNCs. To compete on the global scale, fashion retailers should adapt to the new environment and change the balance of power from the corporate manufacturer to the individual purchaser. It means that consumers will be able to specify what they want more precisely rather than accept what the supplier or retailer offers. As home shopping for groceries takes off, we predict that the existing supermarket chains, whose brands at the moment are linked to choice, quality, freshness, and so on, will develop information-based brands that will emphasize different qualities — the amount of information they have on a customer’s previous purchases, being able to recommend recipes based on an individual’s preferences and so on.
Ford (2007), Knutsen (2003), and O’Hara (2004) underline the globalization of the fashion industry. They find that global competitiveness depends upon a country’s image and political stability. This is a trend that will not be confined to retailers: given not only escalating consumer expectations but also the highly automated production lines and just-in-time supply chains of most manufacturers, the days of mass production must be severely limited. One of the key areas of competition is over access to distribution channels to ensure that products could be brought to market. More precise targeting could be made of individual consumers (a topic we cover in-depth later on in the book), leading to higher returns. The question is not whether the marketing budget is apportioned inefficiently, but how inefficiently. Yet we assume that because the information has been distilled into knowledge — because the market research has become an executive report — the most important information has been preserved.
Bibliography
Boyd, Britta. 2006, Globalization and Entrepreneurship: Policy and Strategy Perspective, Edward Elgar Publishing.
Cumbler, J. T. 2006, Slaves to Fashion: Poverty and Abuse in the New Sweatshops. Journal of Social History, 40 (1), 43.
Dicken,Peter. 2003, Global Shift-Reshaping the Global Economic Map in the 21st Century. The Guilford Press; 4th edition.
Donald, B. 2001, Economic Competitiveness and Quality of Life in City Regions: Compatible Concepts? Canadian Journal of Urban Research, 10 (1), 43.
Fields, J., 2003, Fashion and Its Social Agendas: Class, Gender, and Identity in Clothing. Journal of Social History, 37 (1), 43.
Ford, G. S., Koutsky, L. J., Spiwak, L.L., 2007, Competition after Unbundling: Entry, Industry Structure, and Convergence. Communications Law Journal, 59 (1), 43.
The Global Competitiveness Report 2008-2009. Web.
Knutsen, H. M., 2003, Globalisation and the Garment Industry in Sri Lanka. Journal of Contemporary Asia, 33 (1), 223.
O’Hara, Ph. A. 2004, Cultural Contradictions of Global Capitalism. Journal of Economic Issues, 38 (1), 413.
Saloner, Garth, Shepard, Andrea, Podolny, Joel. 2001, Strategic Management. Wiley. Usunier J. C. 2000, Marketing Across Cultures 3rd edn. Prentice Hall; 2 Sub edition.