Turkish Textile Industry Porters

The history of textile production In Turkey goes back to the Ottoman period. In the 20th century, between 1923 – 1962 – a great textile production capacity was created in Turkey. Today textile industry of Turkish economy has become one of the most important components with its export value of billion dollars. 2 There are nearly 6000 textile manufacturers in Turkey, mainly in Istanbul, Bursa, Denizen, Cognizant. Turkey is ranked 8 in the world with the annual cotton production about 00 thousand tons and production of synthetic and artificial fibers in substantial amounts. Due to the geographical proximity to main markets, advantage in supply of raw materials are short logistic period, Customs Union agreement with the European Union and free trade agreements with many other countries. Turkish textile industry is compatible because of qualified and well-educated labor force and well-developed textile finishing industry. They give importance to quality, environment and human health and they are sensitive on working conditions of workers. Turkey takes part in any international fairs in textile sector.

The most important export markets for the Turkish textile industry are Russian Federation, Italy, Germany, Romania and Poland, respectively. Turkey exports 49% of textile products to E countries. Turkey is the ninth largest supplier of textile and seventh largest supplier of clothes worldwide in 2011 (European Union excluded). 4 Some developments over the last years improved Turkeys position in the worldwide textile market, for instance the customs union agreement in 1996 between the European Union and Turkey and free read agreements with Hungary and Bulgaria.

In the domestic area, many local Turkish companies negotiate licensing contrasts with companies abroad, In order to compete globally. 5 A major task for managers Is to analyze competitive forces In order to Identify opportunities and threats In their business Industry. Using the method of Porters Five Forces Analysis Is really advisable since It helps to understand the strength of an organization’s current competitive position, and the strength of a position that an organization may look to move In thus they have a chance to Improve their weaknesses. This theory Is based on five forces that determine the power Lies In a business situation.

Porters Five Forces competitive position analysis includes: threat supplier, bargaining power of buyers and rivalry among existing competitor. An industry analysis from 2007, which was about the competition between textile and apparel manufactures, took place in Istanbul. It roughly gave insight in the evaluation of the Turkish textile industry in the framework of Porter’s five forces model. The notice of entrants by established companies in the Istanbul apparel and textile manufacturing industry is low. They do not need to spend high attention towards the threat of new entrants, since the number of competitors in the market is large.

The biggest problem for new entrants might be the heavy reliance on references and the strong and deep relationships between competitors and customers. Without any company awareness among clients, it is difficult to build up customer loyalty. Capital and investments to start up a new company do not need to be very high in this industry, because a high percentage of production cost comes from low labor costs. The access to distribution channels might be a barrier, because sinners do not have much experience in their customers’ wants and needs. A weak bargaining power of suppliers is indicated by the large population of suppliers in the market. The customers are able to ask for best terms and even play suppliers off against each other. The consequences are decreasing prices and similar prices among suppliers. 7 Customers may find many alternative manufacturers and this situation is an indication for a strong existing bargaining power of customers in the Turkish textile industry. Manufacturers should seek for greater differentiation of their products. The orations of contracts are very short and brought quantities are very high.

These circumstances add to a strong bargaining ability of customers. 8 The barrier of substitute products can be seen as less strong, since it is difficult to substitute clothes and other textiles. Some argue that there are possible substitutes, because of new trends. But there is no substitute for apparel. 9 There are thousands of producers in Turkish textile. Many of them are small and medium sized businesses, family owned. Although the population of competitors is very large, the high export rate indicates, that the competition force and intensity of avails between the companies is low.

Turkish producers of textile and apparel have the characteristic to implement the same strategies from their neighbors, it might lower the competition between them. 10 The competition intensity in the Turkish textile market is lower than general, because of strong relationships between companies and consumers. Many companies seem to have fix customers, so they do not run fights with competitors to catch their consumers. For new entrants can be concluded that an entry in this business is especially difficult. This is linked to the Just mentioned strong, on radiation based bonds between consumer and companies.