Name :- Aman Deep, GMPE – Batch -5, 2019-20

Roll No :- 2019GMPE0506

Porter Five Force Analysis of Textile Industry

India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. India's
overall textile exports during FY 2017-18 stood at US$ 39.2 billion in FY18 and is expected to increase to US$
82.00 billion by 2021 from US$ 31.65 billion in FY19 (up to Jan 19). The Indian textile industry has the
capacity to produce a wide variety of products suitable to different market segments, both within India and
across the world. It contributed two per cent to the GDP of India and employs more than 45 million people in
2017-18.The sector contributed 15 per cent to the export earnings of India in 2017-18.

Porter five forces analysis is a framework that attempts to analyze the level of competition within an industry
and business strategy development. It draws upon industrial organization (IO) economics to derive five forces
that determine the competitive intensity and therefore attractiveness of an Industry for any business.

Porter’s five forces include - three forces from 'horizontal' competition: the threat of substitute products or
services, the threat of established rivals, and the threat of new entrants; and two forces from 'vertical'
competition: the bargaining power of suppliers and the bargaining power of customers

Bargaining power
of Supplier

Threat of New
Industry Rivalry Threat of Substitute
Entrant

Bargaining power
of Buyer

 Competitive rivalry or competition: - Fixed cost is high, Exit Barrier are high, high exit barrier. Quality
checking with latest technology equipments.
 Bargaining power of buyers: - High information, low product differentiation, high buyer price
sensitivity, buyer concentration is low, backward integration possibility is very low
 Bargaining power of suppliers:- raw material availability, low distribution network, labour issue,
Few Indigenous spinning machine manufacturers, Volume based negotiation, fixed vendors for buying.
 Threat of substitutes or substitution:- Low cost cotton availability from Pakistan and Bangladesh, threat
of finished product from low labour country like china
 Threat of new entrants or new entry:-High capital investment required, Brand Identification in domestic
market, high Labour Intensive industry, Skilled and unskilled labour requirement, Labour union issues,
high electrical power requirement
Impact on Industry
Porter’s Five Force Description
Low Moderate High
Competitive rivalry or competition √
Bargaining power of buyers or customers √
Bargaining power of suppliers √
Threat of substitutes or substitution √
Threat of new entrants or new entry √