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Strategic Analysis of Billabong

Home » Pestel Analysis of Billabong

Billabong is an Australian clothing company that is concerned with the production of clothing related products and its accessories, and the clothing industry analysis is performed as follows:

PEST: The political factors across clothing industry in Australia imply complete support from government and this is evident from redefined tariff barriers and import duties that are effective to Billabong. The economic scenario indicates increasing purchasing power to Australians and there is also the improvement in their standard of living as well. The strong dollar position and strong demands for clothing at global level has been highly promising to Billabong. With respect to social trends, the demand for clothing across Australia implies that eco friendly products are highly preferred and it is positively followed by Billabong (Unlocking Billabongs Group Value, 2012). The technological trend is also significant in clothing industry, and Billabong is making use of technology for achieving higher overall exposure in the industry.

SWOT: The strength point of Billabong is its huge range of loyal customers and the company has a strong market position in the industry. The brand name and status are highly effective, and its diversification strategy is positively contributing towards growth. The weakness as faced by Billabong is mainly in terms of higher transportation cost, and the positioning strategy has also weakened because it is perceived differently by its customers because of its sea side promotions. Its weakness also includes regular changes in management. The opportunity available to Billabong is growing demand for clothing products across the world and the threat to company is from rising competition level as various global brands are competing within such industry (Billabong International, 2012).

Porter Five Forces: The competition level in the clothing industry is very high, as there are big players competing in such industry including Millers, Country Road, Bonds and Yakka. The threats of new entry is higher because it require less investment and efforts in entering into such industry, whereas buyer bargaining power is higher because of wide alternatives available to them. Supplier power is lower because of existence of large number of sellers and finally, the threat of substitute is lower, as consumers have no alternatives to clothing.

Life Cycle: The life cycle analysis indicates about the different phases in which a company belongs and the major phases within such analytical tool are introduction, growth, maturity and decline. An analysis of Billabong’s current position in the industry indicates that it is at growth phase which implies that the company has huge opportunity to grow within the clothing industry in both the domestic as well international markets.

Ansoff: The Ansoff grid indicates about the strategies with respect to the existing products and new products and selling them in either new products or existing products. These strategies are classified as market penetration, market development, product development and diversification. On the basis of analysis of Billabong, it is evaluated that the most suitable strategy is market development whereby the company should look for developing new markets for its clothing products.

Thus, the strategy as proposed for the next 12 months is to perform rapid developments of new market for its clothing products.

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