Purpose of a SWOT analysis
Decision making in organisations demands the development and adoption of a rigorous SWOT analysis. It is a powerful tool that can be used by organisations that are yet to be established or those that are planning to expand to new geographical locations. SWOT analysis entails a detailed description of the possible strengths, weaknesses, opportunities and threats that a business organisation may face in the course of its expansion or when it is being started. Hence, organisations can be in a better position to review their strategies, position and overall performance metrics when they make use of a well prepared framework of a SWOT analysis. Ideas or proposals put forward by businesses can also be measured using a SWOT analysis. When data is subjectively assessed against the prevailing market conditions, it amounts to a SWOT analysis. Hence, most decisions in organisations are made after a SWOT analysis has been presented to the relevant organs for execution.
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In this particular business proposal, SWOT analysis will be used as a practical tool to assess or appraise the current market condition of the clothing industry in the United Arab Emirates. Besides, this section of the paper will discuss all the relevant information to be considered when selecting the most appropriate form of business ownership.
We expect that the XL Ladies Clothing will gain market dominance after a short period due to the projected strengths of the small business portfolio. To begin with, it is pertinent to mention that the clothing industry in the United Arab Emirates has largely ignored the extra large clothing fashion for women. We intend to make an indelible mark in this line of production due to the prevailing demand. In other words, we will be investing in a demand-driven industry that has a wide customer base for clients who prefer extra large clothing fashion. In addition, the fashion industry has a broad taste and preference for customers.
Our new small business will leverage on the strong presence at the local level. It should be understood that our small local business will offer extra large clothing for women. As a result, competition will be greatly suppressed (Sophia par. 1). It will take significant time before similar competitors flood the local market (Marketline par. 4). Stiff market competition is usually a major setback for small and new businesses in the market.
The United Arab Emirates is also well endowed with cheap labour. At the local level, we will be in a position to recruit cheap labour. However, the business will also take a keen interest to hire individuals based on professional skills and working experience. It may not just be enough to seek cheap labour. Our human resource pool is readily available at the local level bearing in mind that the United Arab Emirates has thousands of qualified foreign workers. Cheap labour will consequently cut down the cost of production. Therefore, the small business is in a vantage position to maximise its profit margin.
Our small business portfolio also enjoys the benefit of a strategic and central marketing location. The United Arab Emirates is a centre for global excellence in the clothing fashion industry. As it stands now, the region exports most of its apparels to foreign destinations. As much as our product line initially targets the needs of the local female population, we will be able to export the same products to overseas markets. In any case, most of the clothing exports from the United Arab Emirates are individually purchased and shipped by interested buyers who travel all the way to Dubai and other adjascent locations.
Finally, our small business will significantly benefit from the simple management structure because it is in its start-up phase. As the business continues to expand, better and more versatile management structure will be embraced.
One of the worst projected weaknesses of our small business is the poor distribution sector of the organisation. Since it is a small business investment, it may be cumbersome to meet the needs of the market for extra large clothing materials demanded by women. Our distribution network may be definitely weak bearing in mind that the initial phase of the business may not be well endowed with capital investment. The business may take a relatively long period before it can fully meet the growing needs of the targeted market. As a result, the advocacy and loyalty of our customers can be affected if we fail to meet the demand.
Besides, distribution challenges may also lead to a heavy discount stock. If the latter happens, the anticipated gains in profits may be lowered remarkably. Worse still, our small business entity will obviously be affected by the low volume of sales especially during low seasons. Even though the United Arab Emirates enjoys a wide market for clothing fashion, there are off-peak seasons when the sales may go down.
At the start of the small business investment, obsolete technology may hamper our growth agenda. Fashion industry is highly dynamic. Therefore, it requires an equal input in terms of fashion diversity desired by customers in the targeted market. Therefore, technology is a major weakness on our part because we may not be financially capable to secure the best machines for designing this line of product (Fiber 2 fashion par. 2.
Raw materials should be available throughout the course of production. Although it is not a direct foreseeable weakness for our business, it is highly likely that the rise in the cost of raw materials will be an issue to consider in this type of business. When the price of raw materials rises inconsistently, the profitability of the business will equally decline. Moreover, lack of adequate research and development in the apparel industry may slow down our growth prospects due to the ever-changing nature of the industry.
A powerful run of sales will be one of our most viable opportunities for the small business. In order to achieve this objective, we plan to create a small company website in form of an online store. The e-commerce website will provide an excellent opportunity to market our business easily and sell the same products through. Needless to say, the internet is a crucial platform for marketing products of this nature. In the course of production, we intend to create chain marketing that will permit our independent small-scale designers to market their goods through our online site. In addition, we anticipate to increase traffic flow to the business website by allowing clients to market items that they do not need through the same site. The latter will be our best and most profound marketing initiative (Retail Me par. 2).
Although we earlier mentioned that we might enjoy some degree of monopoly in the market due to the absence of extra large clothing materials for women in Dubai, it is crucial to mention that other competitors may enter the market after some time. Hence, our small business portfolio may suffer from gross competition from well-established firms. For instance, several Chinese and Indian investors may enter the local market. Such investors have advanced engineering technology that can obviously outdo the potential of our products.
The production of substandard goods because of poor technology in place may also prove to be a real threat to our clothing business. It is pertinent to underscore the fact that consumer perception on the quality of products is a major determinant in the success of any type of business. Other threats include uncertainty in the cost of inputs and high rate of taxation on materials used to produce local textile materials (David Communications par. 3).
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Form of Business Ownership
This business ownership will comprise of four people. In other words, it will be a partnership form of business. We opted for a partnership form of business due to a number of reasons. First, it is easy to raise the required capital in a partnership business because the burden is shared out among the partners. Second, the legal structure can be changed easily later. We also considered the borrowing capacity of our business. It is easier to secure funds for a partnership business than in a sole proprietorship. Partners can also be made to be part of the high caliber employees. Finally, our business has limited external regulation.
David Communications. Middle East Fashion Industry to Grow 15% a Year. 2014. Web.
Fiber 2 fashion. Fashion Forward highlights Middle Eastern talents. 2014. Web.
Marketline. Apparel Retail in United Arab Emirates. 2013. Web.
Retail Me. UAE is second-most attractive retail apparel market in the world. 2014. Web.
Sophia, Mary. UAE Ranked World’s 11th Biggest Clothing Importer. 2013. Web.