The men’s outerwear industry is in many ways a typical apparel industry, where competitive advantage is closely related to labor costs. Despite the relative automation of the pre-assembly procedures, such as garment design and cutting, the assembly phases of production remain labour-intensive. Asian producers have capitalized on that characteristic of the industry and are now the dominant force both in terms of production and exports. Nevertheless, European Union countries are still controlling a considerable part of the world trade through a combination of differentiation strategies, investments in technology, and sub-contracting agreements with firms in countries near the EU’s borders.
The men’s outerwear industry appeared in Greece in the early 1950’s with the establishment of small units. Larger firms were formed in the 1960’s and 1970’s and, taking advantage of Greece’s relatively low wages, targeted not only the domestic but also many foreign markets. Export growth continued into the 1980’s mainly through sub-contracting arrangements with German firms. A combination of increased competition, wage increases and stagnant demand caused a reversal in the industry’s position with output now at half its 1980 level, low profitability and exports constantly decreasing. Competitiveness has been declining in the 1990’s and according to the 1995 export data, the industry can now be characterised as uncompetitive.
Factor conditions are not favourable for the industry in the 1990’s. The initial advantage of low wages has been slowly eroded to the point that Greece is now slightly disadvantaged against most other countries including its low-wage neighbours. The quality of human capital is another area of concern as skilled personnel is hard to find and expensive to train. Raw materials and especially fabrics are almost exclusively bought from foreign firms and the Greek industry has no control over their design or quality. Geographic proximity to Western Europe was one of the industry’s initial advantages in basic factors. As, however, competitors emerged among Greece’s close neighbours, location is not as favourable to the industry as it was ten years ago. Capital costs have also increased in the 1990’s, to their highest levels. In terms of advanced factors, a small number of firms are conducting research, mainly on garment design, while some specialised educational institutions exist. Nevertheless, the lack of extensive R&D, the scarcity of educational institutions and the fragmented efforts of other industry-related organisations are disadvantaging the industry and hindering its restructuring efforts.
Demand conditions are not a source of advantage for the Greek industry. Domestic demand had grown in the 1960’s and 1970’s aiding the industry’s expansion. The saturation of the domestic market in the 1980’s initially coincided with a surge in exports. However, demand in the 1990’s remained stagnant or decreased in certain years and the industry was not able to compensate with any further export increases. Moreover, new fashion-related segments were slow to emerge in Greece as the sophistication of its consumers is not considered high.
Related and supporting industries provide a more mixed picture. Initially the men’s outerwear industry was part of a rapidly growing group of apparel industries that pursued exports vigorously. The industry has been among the first to experience losses in competitive position, now shared by many of the other apparel industries and especially the closely related women’s outerwear one. The competitive cotton and yam industries have also had little effect on the industry’s competitive advantage as its direct supplier, the fabrics industry, is suffering from low exports and a shrinking number of establishments.
Firms’ strategy and structure were initially advantageous for the Greek men’s outerwear industry. The successful small-scale structure and low-cost strategy has not been so effective recently, as wage costs have increased and the industry is not able to offer a differentiated, high-priced product. There are few firms that have been able to increase their brand awareness and product image while pursuing alliances in Greece and abroad. However, the low levels of automation, the lack of market research, and the absence of extensive firm networks are major disadvantages for the pursuit of a differentiation strategy. Geographic concentration is relatively high, mostly related to the large Athens and Thessaloniki markets. Domestic rivalry is also intense, although it is usually still based on price competition.
The Greek government’s role was initially a strong one. Although the industry was not subject to substantial intervention, tariffs and export subsidies were present until well into the 1980’s. Protection has decreased to a large extent in the last ten years and the various state and EU assistance schemes have only had a limited impact.
Chance events have also been a source of disadvantage for the industry. The stabilization programs of the 1980’s and 1990’s have restricted domestic demand in a critical stage of the industry’s development. Decreasing demand in the EU countries, which constituted Greece’s major export markets in the early 1990’s, has also disadvantaged the Greek industry.
The rapid and substantial decline in competitiveness of the Greek men’s outerwear industry is related to a decreasing competitive advantage derived from the diamond determinants. Basic factors are not anymore a source of advantage for the industry, while advanced factors have not developed to a great extent. Demand conditions are also unfavorable, while firms’ strategies and structures are not appropriate any more for the Greek industry. Government and chance have also affected the industry in a disadvantageous way since the mid-1980.
One gap in the framework is the presence of some related and supporting industries that are still very competitive, although the direct suppliers to the industry are not and the most closely related industries have experienced competitiveness losses. Domestic rivalry is another major area of concern for the applicability of the diamond framework as it remains intense, although it is mostly focused on price.
The men’s outerwear industry is in many ways a typical apparel industry, where competitive advantage is closely related to labor costs. Despite the relative automation of the pre-assembly procedures, such as garment design and cutting, the assembly phases of production remain labour-intensive. Asian producers have capitalized on that characteristic of the industry and are now the dominant force both in terms of production and exports. Nevertheless, European Union countries are still controlling a considerable part of the world trade through a combination of differentiation strategies, investments in technology, and sub-contracting agreements with firms in countries near the EU’s borders.The men’s outerwear industry appeared in Greece in the early 1950’s with the establishment of small units. Larger firms were formed in the 1960’s and 1970’s and, taking advantage of Greece’s relatively low wages, targeted not only the domestic but also many foreign markets. Export growth continued into the 1980’s mainly through sub-contracting arrangements with German firms. A combination of increased competition, wage increases and stagnant demand caused a reversal in the industry’s position with output now at half its 1980 level, low profitability and exports constantly decreasing. Competitiveness has been declining in the 1990’s and according to the 1995 export data, the industry can now be characterised as uncompetitive.Factor conditions are not favourable for the industry in the 1990’s. The initial advantage of low wages has been slowly eroded to the point that Greece is now slightly disadvantaged against most other countries including its low-wage neighbours. The quality of human capital is another area of concern as skilled personnel is hard to find and expensive to train. Raw materials and especially fabrics are almost exclusively bought from foreign firms and the Greek industry has no control over their design or quality. Geographic proximity to Western Europe was one of the industry’s initial advantages in basic factors. As, however, competitors emerged among Greece’s close neighbours, location is not as favourable to the industry as it was ten years ago. Capital costs have also increased in the 1990’s, to their highest levels. In terms of advanced factors, a small number of firms are conducting research, mainly on garment design, while some specialised educational institutions exist. Nevertheless, the lack of extensive R&D, the scarcity of educational institutions and the fragmented efforts of other industry-related organisations are disadvantaging the industry and hindering its restructuring efforts.Demand conditions are not a source of advantage for the Greek industry. Domestic demand had grown in the 1960’s and 1970’s aiding the industry’s expansion. The saturation of the domestic market in the 1980’s initially coincided with a surge in exports. However, demand in the 1990’s remained stagnant or decreased in certain years and the industry was not able to compensate with any further export increases. Moreover, new fashion-related segments were slow to emerge in Greece as the sophistication of its consumers is not considered high.Related and supporting industries provide a more mixed picture. Initially the men’s outerwear industry was part of a rapidly growing group of apparel industries that pursued exports vigorously. The industry has been among the first to experience losses in competitive position, now shared by many of the other apparel industries and especially the closely related women’s outerwear one. The competitive cotton and yam industries have also had little effect on the industry’s competitive advantage as its direct supplier, the fabrics industry, is suffering from low exports and a shrinking number of establishments.Firms’ strategy and structure were initially advantageous for the Greek men’s outerwear industry. The successful small-scale structure and low-cost strategy has not been so effective recently, as wage costs have increased and the industry is not able to offer a differentiated, high-priced product. There are few firms that have been able to increase their brand awareness and product image while pursuing alliances in Greece and abroad. However, the low levels of automation, the lack of market research, and the absence of extensive firm networks are major disadvantages for the pursuit of a differentiation strategy. Geographic concentration is relatively high, mostly related to the large Athens and Thessaloniki markets. Domestic rivalry is also intense, although it is usually still based on price competition.The Greek government’s role was initially a strong one. Although the industry was not subject to substantial intervention, tariffs and export subsidies were present until well into the 1980’s. Protection has decreased to a large extent in the last ten years and the various state and EU assistance schemes have only had a limited impact.
Chance events have also been a source of disadvantage for the industry. The stabilization programs of the 1980’s and 1990’s have restricted domestic demand in a critical stage of the industry’s development. Decreasing demand in the EU countries, which constituted Greece’s major export markets in the early 1990’s, has also disadvantaged the Greek industry.
The rapid and substantial decline in competitiveness of the Greek men’s outerwear industry is related to a decreasing competitive advantage derived from the diamond determinants. Basic factors are not anymore a source of advantage for the industry, while advanced factors have not developed to a great extent. Demand conditions are also unfavorable, while firms’ strategies and structures are not appropriate any more for the Greek industry. Government and chance have also affected the industry in a disadvantageous way since the mid-1980.
One gap in the framework is the presence of some related and supporting industries that are still very competitive, although the direct suppliers to the industry are not and the most closely related industries have experienced competitiveness losses. Domestic rivalry is another major area of concern for the applicability of the diamond framework as it remains intense, although it is mostly focused on price.
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