ASSIGNMENT ONE READ THE FOLLOWING CASE AND ANSWER THE QUESTIONS BELOW INTENSE COMPETITION IN SOUTH AFRICA'S FASHION INDUSTRY The general retail outlook for South Africa is anticipated to be challenging and this could make a price war likely among the biggest local players Not only is there increased competition especially in the fashion industry but economic growth in SA is slower and the rand is losing a lot of ground, said Prinsloo The competition in the SA fashion industry is expected to become very fierce as global brands such as Inditex's Zara and Hennes Mauritz expand in a sector whose value rose to more than R200bn at the end of 2014 from R8bn in 2001 International brands enter the SA fashion market with good offerings They are well established organisations and come with a lot of buying power, said Prinsloo They can source on a global scale and focus on the middle and upper class consumers where they can see rich margins The newcomers have to compete with South African stalwarts such as Truworths, Woolworths Holdings Ltd and the Foschini Group Ltd , which operate chains that sell clothing, cosmetics, jewelry, accessories and sporting goods South Africa is quite a sophisticated economy with lots of young emerging professionals who are increasingly becoming aware of fashion, said Truworths Chief Executive Officer Michael Mark The foreign brands will have to still prove to the local market that they can serve them Among the continent's most brand conscious consumers, South African households spent an average of R582 of monthly income on clothing and footwear in 2014, above spending on education at R373, according to the Bureau for Market Research at the University of South Mrica In impoverished shanty towns where the black majority live, the trendiest clothes and latest fashions are common features of township life Woolworths Holdings Chief Executive Officer Ian Moir says he welcomes the competition, since the arrival of companies such as Zara will help raise consumer awareness of fashion His company, which has no relation to other Woolworths in the U S , Britain and Australia, focuses on office attire, casual wear and lingerie If your prices and quality are good, you will see customer loyalty, Moir said Whether I'm competing with Zara, Topshop or Truworths, it makes no difference to me it's about getting the fashion mix right Fast fashion Keen to tap this vibrant market, Zara opened in South Africa four years ago and nowhas six stores Australian no frills chain Cotton On has described the country as its fastest growing market while Britain's Top Shop and Forever 21 arrived recently H M is set to open a vast store next month At 4700 square metres, the outlet in Cape Town's trendy V A Waterfront mall will be one of H M's biggest and the Swedish retailer will open another outlet in Johannesburg in November Inditex, which pioneered the idea of producing a constant supply of new styles from factories close to its biggest markets a concept known as fast fashion flies in clothes twice a week from suppliers in Portugal, Turkey and Spain Inditex says in some cases, depending on the availability of fabrics and the complexity of the garment production, it can race from design to the store in less than two weeks H M, which produces the bulk of its garments in Asia, is expected to adopt a similar approach To defend their market share, South African retailers should take advantage of the faster speeds at which local suppliers can get clothes to market, analysts said The F oschini Group says it is aiming to work more closely with local suppliers, and about 65 of its women's wear is now made in South Africa Some South African factories can get fresh garments into stores within 32 days, and most are aiming to regularly beat a maximum cut off target of 42 days, though not surprisingly that's still slower than the fast fashion pioneer has six stores Australian no frills chain Cotton On has described the country as its fastest growing market while Britain's Top Shop and Forever 21 arrived recently H M is set to open a vast store next month At 4700 square metres, the outlet in Cape Town's trendy QUESTION ONE Using Michael Porter's five forces' model, discuss why there is intense rivalry in the fashion industry in South Africa (15 MARKS) With reference to Michael Porter's business strategies, discuss growth strategies that can be pursued by the South African retailers to minimize the impact of increasing competition from international retailors (15 Marks) QUESTION TWO Explain how you would perform market segmentation for a financial service provider (10 MARKS) Based on your answer to question (a), how would you go about selecting the target market

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ASSIGNMENT ONE READ THE FOLLOWING CASE AND ANSWER THE QUESTIONS BELOW INTENSE COMPETITION IN SOUTH AFRICA'S FASHION INDUSTRY The general retail outlook for South Africa

ASSIGNMENT ONE READ THE FOLLOWING CASE AND ANSWER THE QUESTIONS BELOW INTENSE COMPETITION IN SOUTH AFRICA'S FASHION INDUSTRY The general retail outlook for South Africa is anticipated to be challenging and this could make a price war likely among the biggest local players. "Not only is there increased competition - especially in the fashion industry - but economic growth in SA is slower and the rand is losing a lot of ground," said Prinsloo. The competition in the SA fashion industry is expected to become very fierce as global brands such as Inditex's Zara and Hennes & Mauritz expand in a sector whose value rose to more than R200bn at the end of 2014 from R8bn in 2001. "International brands enter the SA fashion market with good offerings. They are well-established organisations and come with a lot of buying power," said Prinsloo. "They can source on a global scale and focus on the middle- and upper class consumers where they can see rich margins. " The newcomers have to compete with South African stalwarts such as Truworths, Woolworths Holdings Ltd. and the Foschini Group Ltd., which operate chains that sell clothing, cosmetics, jewelry, accessories and sporting goods. "South Africa is quite a sophisticated economy with lots of young emerging professionals who are increasingly becoming aware of fashion," said Truworths Chief Executive Officer Michael Mark. The foreign brands "will have to still prove to the local market that they can serve them." Among the continent's most brand-conscious consumers, South African households spent an average of R582 of monthly income on clothing and footwear in 2014, above spending on education at R373, according to the Bureau for Market Research at the University of South Mrica. In impoverished shanty towns where the black majority live, the trendiest clothes and latest fashions are common features of township life. Woolworths Holdings Chief Executive Officer Ian Moir says he welcomes the competition, since the arrival of companies such as Zara will help raise consumer awareness of fashion. His company, which has no relation to other Woolworths in the U.S., Britain and Australia, focuses on office attire, casual wear and lingerie. "If your prices and quality are good, you will see customer loyalty," Moir said. "Whether I'm competing with Zara, Topshop or Truworths, it makes no difference to me -- it's about getting the fashion mix right." Fast fashion Keen to tap this vibrant market, Zara opened in South Africa four years ago and nowhas six stores. Australian no-frills chain Cotton On has described the country as its fastest growing market while Britain's Top Shop and Forever 21 arrived recently. H&M is set to open a vast store next month. At 4700 square metres, the outlet in Cape Town's trendy. V&A Waterfront mall will be one of H&M's biggest and the Swedish retailer will open another outlet in Johannesburg in November. Inditex, which pioneered the idea of producing a constant supply of new styles from factories close to its biggest markets - a concept known as "fast fashion" - flies in clothes twice a week from suppliers in Portugal, Turkey and Spain. Inditex says in some cases, depending on the availability of fabrics and the complexity of the garment production, it can race from design. to the store in less than two weeks. H&M, which produces the bulk of its garments in Asia, is expected to adopt a similar approach. To defend their market share, South African retailers should take advantage of the faster speeds at which local suppliers can get clothes to market, analysts said. The F oschini Group says it is aiming to work more closely with local suppliers, and about 65% of its women's wear is now made in South Africa. Some South African factories can get fresh garments into stores within 32 days, and most are aiming to regularly beat a maximum cut-off target of 42 days, though not surprisingly that's still slower. than the fast fashion pioneer. has six stores. Australian no-frills chain Cotton On has described the country as its fastest growing market while Britain's Top Shop and Forever 21 arrived recently. H&M is set to open a vast store next month. At 4700 square metres, the outlet in Cape Town's trendy. QUESTION ONE Using Michael Porter's five forces' model, discuss why there is intense rivalry in the fashion industry in South Africa. (15 MARKS) With reference to Michael Porter's business strategies, discuss growth strategies that can be pursued by the South African retailers to minimize the impact of increasing .competition from international retailors. (15 Marks) QUESTION TWO Explain how you would perform market segmentation for a financial service provider? (10 MARKS) Based on your answer to question (a), how would you go about selecting the target market?

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Question 1 Using Michael Porters five forces model discuss why there is intense rivalry in the fashion industry in South Africa In the 21 st century the fashion industry in South Africa has increasingly and rapidly expanded to a high level of competition Numerous brands are providing relatively similar products The market is growing densely populated and new brands with new concepts are continuously entering the market South Africas fashion retail market is influenced by factors such as technology global economy fluctuations in the global economy and demand for fast fashion Anastasiu Gavri Maier 2020 During this century power is in customers hands and thus brands must focus on establishing the best consumer experience Globally the fashion retail industry is known for its intense level of competitive rivalry As mentioned earlier the competitive rivalry has been increased by the presence of many brands offering similar products Chen Cheng 2019 South Africas fashion brands drive loyalty depending on quality and features For instance brands having strong reputations are more expensive However in the race to win customers creating little space for new entrants is challenging Most fashionbased firms overcome the force of competitive rivalry through discounts offers and effective marketing styles In South Africa the fashion industrys rivalry structure and strategy are defined by the governments policies which control and govern how firms should be organized created and managed Thus the nature of domestic or local rivalry depends on the national style of governance and how firms are created controlled organized and managed Pooe Mugobo 2019 contend that the structures of firms hugely depend on management styles that vary among industries Usually different countries are oriented toward specific management styles Therefore a successful management style in a country is more competitive within industries that it dominates Innovation and creativity are often spurred by rivalry They are required to enhance sustainable and feasible competition The local producers in South Africa suffer from the threats posed by dumping illegal foreign products As a result the government legislated the China Restraint Arrangement in 2007 to reduce the effects of Chinese imported products On the other hand the fashion industry in South Africa has developed an effective value chain system which ensures a faster and more coordinated system of processing product movement and delivery Also the value chain system consistently lowers costs while improving product quality and safety An effective value chain management system is one of the pivotal ways to improve the competitive advantage of an industry Chen Cheng 2019 The rivalry in South Africas fashion industry is triggered by the availability of an efficacious supply chain management system that functions efficiently and productively In addition improving working relationships in the value chain system through the culture of good communication between the key players has intensely led to the rise of rivalry Consequently a proper communication system prevents the delay in the delivery of products amongst the stakeholders thus increasing ... blur-text-image