Running Header: Environmental Analysis of Thailand

Title
Course
Institution
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Executive summary
Allerton Swimwear is a manufacturing company situated in Australia that focuses on
sustainable and ethical manufacturing practices. The company creates fabric for construction of
swimsuits through recycling plastics, fish nests and carpets collected in oceans and other
landfills. Cut fabric during the construction process is used in construction of packaging bags.
Allerton focuses on women empowerment through creating swim wear that makes them feel
comfortable, strong and sexy. To further empower women, the company focuses on working
with women. The company retails its products in Australia, UK and U.S.A. with the increased
demand for sustainable fashion, the company intends to diverse to Thailand. This will enable it
to further penetrate other Asian countries. To determine the viability of Thailand as a target
country, a PESTEL analysis is conducted. The major opportunity and threat for Allerton
swimwear in the Thailand market is also identified. Recommendations on how to mitigate the
threat are also discussed.
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Contents
Executive summary.....................................................................................................................................2
1. Introduction.............................................................................................................................................5
2. Environmental analysis of Thailand.........................................................................................................5
2.1 PESTEL analysis of Thailand...............................................................................................................5
2.1.1 Political factors...........................................................................................................................6
2.1.2 Economic factors........................................................................................................................6
2.1.3 Social factors...............................................................................................................................7
2.1.4 Technological factors..................................................................................................................8
2.1.5 Environmental factors................................................................................................................9
2.1.6 Legal factors..............................................................................................................................10
2.2 SWOT analysis..................................................................................................................................10
2.2.1 Opportunities............................................................................................................................10
2.2.2 Threat.......................................................................................................................................11
3. Recommendation..................................................................................................................................12
References.................................................................................................................................................12
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Table of figures

Figure 1: Thailand’s GDP growth over the past four years (Trading Economics, 2019)...............................7
Figure 2; Number of Internet users in Thailand from 2017 to 2023 (in millions) (Statista, 2019)................8
Figure 3; E-commerce market value in Thailand from 2014 to 2020 (Statista, 2019)..................................9
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Environmental analyses of Thailand in relation to Allerton Swim wear

1. Introduction
Allerton swimwear is an Australian based swimwear company, founded by Pirra Griffiths
in 2015, that focuses on ethical and sustainable manufacturing of its products. To enable this,
the company relies on recycling of waste materials such as plastics and fish nets collected in the
oceans, carpets as well as cut fabric, in production of their pieces to create fabric for production
of the swim suits. This means that no new resources or waste are generated in the process.
Waste fabric is also used in creation of products such as packaging bags. It is also committed
towards improving the working conditions in the garment industry which it does by monitoring
its supply chain to ensure that ethical manufacturing is achieved. The pieces are handmade,
with most of the workforce consisting of women. The swim wear line is dedicated towards
empowering women through making products that make them feel beautiful as well as
ensuring that majority of the employees within the company are women. To further empower
the women, the company maintains very close ties with its employees, thereby allowing better
expression of their needs as well as complaints. As a result of these close relationship ties,
customers are able to enjoy benefits such as custom alterations as well as repairs of swim wear
purchased. The company currently distributes its products to retailers in other countries such
as New Zealand, USA and UK. It also has gained recognition from mainstream media such as
Vogue, GQ magazine and has been worn by various pop stars such as Rihanna and Victoria
secrets model (Allerton, 2019). In order to expand company, Allerton therefore intends to
diversify to Thailand as a production site, as well as market for its products.
2. Environmental analysis of Thailand
2.1 PESTEL analysis of Thailand
PESTEL is an acronym for politics, economic, social, technological, environmental and
legal, which are six variables that affect the external environment of any market.
2.1.1 Political factors
The political environment of Thailand has been very tense due to various coups that
have taken place in the country over the years as well as cases of corruption. The country has
had a total of 13 successful military coups and 9 unsuccessful ones, making it the country with
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the most coups in the world. While these coups result to political unrest in the country, they
surprisingly do not result to significant changes in the country’s economy, which has been
attributed to the frequency of the attacks (Chitty, 2019). Research shows that the 2006 and
2014 coups for example had short term impacts in the economy. In the long run, better market
performance was recorded. These coups were actually shows to yield good investment
opportunities (Lumjiak et al., 2018).
There is also a Thailand-Australia Free Trade Agreement in which several trade barriers
for most goods have been eliminated or significantly reduced. Additionally, the agreement
allows for a better environment for bilateral trade and investment. Australian companies have
open access to Thailand’s service markets, they also are provided with investment protection as
well as easier requirements for entry in the country (Australian Government, 2019).
Both countries are also members of ASEAN- Australia-New Zealand Free Trade
Agreement which offers extensive tariff reductions and greater certainty for service suppliers
and investors (Australian Government, 2019).
2.1.2 Economic factors
Thailand is cited as a development story having progressed from a low income country
to an upper-income country in just four decades. Between 1960 and 1996, the country
experienced growth at an annual average growth rate of 7.5%. During the Asian financial crisis
between 1999 to 2005, the annual growth rate reduced to 5 percent (World Bank, 2019). 2015
onwards, the country has marked the slowest growth rate, with the 2 nd quarter of 2019
recording the slowest growth rate of 2.3 percent. This has been attributed to the increased
strength of the Thai baht, which has negatively affected the economy of Thailand.
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Figure 1: Thailand’s GDP growth over the past four years (Trading Economics, 2019).

Diverse textile industry, that can supply the entire textile supply chain (Department of
International Trade Promotion, Ministry of Commerce, Royal Thai Government, 2019). This
means that Allerton swimwear does not have to import fabric or other materials needed within
the process, thereby saving on importing costs.
The swim wear market in Thailand as of 2019 amounts to a total revenue of U.S $47
million. It is expected to grow annually by 2.3 percent.
There is cheap labor available in the country as compared to Australia. This will help
reduce production costs as well as increase competitiveness. The minimum wage in Thailand is
300 baht (AUD $14.49) per day as, which is less than the minimum wage per hour in Australia,
compared to AUD $19.49 per hour.
Thailand also has night markets, which tourists love to visit. These could serve as an
additional distribution channel for Allerton products
2.1.3 Social factors
Women in Thailand are more educated than men. As of 2015, there were 8.8 million
women with a high school education as compared to 8 million men. Education means that they
can get better job opportunities and therefore more disposable income. While this has not
always been the case, gender equality is a primary goal for Thailand (Bharadwaj et al., 2017).
There are more women participating in economic activities as compared to past years.
The numbers are also set to increase with the increased fight for the rights of women. In a
study conducted by BCG center for consumer insights, women reported to be feeling more
confident and liberated given that they are now able to earn their own money (Bharadwaj et
al., 2017).
Though there remains gender pay gap between men and women in Thailand, research
shows that the disposable income of women compared to men is higher in Thailand as
compared to other countries in Asia. As a result, there has been a general increase in number of
female shoppers (Bharadwaj et al., 2017).
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Thailand women dress quite modest as compared to women in Western countries.

However there have been efforts to allow women more autonomy on what to wear through a
campaign by the UN ‘Don’t Tell Me What to Wear’. This was launched after the Thai
government advised women not to dress ‘sexily’ during the Thailand’s New Year Water Festival,
to prevent cases of sexual assault (UN Women, 2018).
2.1.4 Technological factors
-there is a gradual increase in the number of people connected to the internet. Currently, there
are 47 million people connected to the internet. The number is set to increase to 57.4 million
by 2023 (Statista, 2019). Increased internet connectivity is good for the fashion industry in
terms of domestic marketing as well as distribution channels.

Figure 2; Number of Internet users in Thailand from 2017 to 2023 (in millions) (Statista, 2019)
There is extensive research and development in the textile industry. Thai researchers in
the industry have been able to design anti-bacterial fabric, they also have eco-friendly finishing,
dyeing and printing that meet the European Union standards as well as those of the U.S. The
dyes used are plant-based, which is in line with the sustainability of Allerton swimwear
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(Department of International Trade Promotion, Ministry of Commerce, Royal Thai Government,

2019).
The growing of e-commerce in Thailand, provides better opportunities for successful
business in Thailand. In 2017, the consumer online economy was worth $1.6 billion. In 2018,
the revenue increased by 25 percent to US $8 billion. Thailand consumers were approximated
to spend over 1 billion in 2019 in online fashion purchases. Online fashion shopping has been
slowly growing due traditions of fashion markets such as Platinum Mall and ChatuChak
Weekend Market (Data Reportal, 2019).

Figure 3; E-commerce market value in Thailand from 2014 to 2020 (Statista, 2019)

2.1.5 Environmental factors

Thailand has been facing pollution issues. The country is very air polluted and has posed
health risks to its inhabitants. The water bodies in the country are also very polluted which acts
in the favor of Allerton, in terms of getting material for recycling to make their fabric.
Greenpeace (2019), ranked Thailand the sixth largest source of plastics in the world, generating
1.03 million tons of plastic per year. According to the Department of Marine Coastal Resources
plastic bags make up the most amount of debris in the sea followed by bottle caps, rope and
cigarettes. Some waste like fish nets take 600 years to decompose. This year, three whales were
found dead in Thailand waters and the cause of death was identified by the Marine and Coastal
Research and Development Centre as plastics and fishing equipment (BBC, 2018).
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2.1.6 Legal factors

Thailand has been facing some legal issues over the years for example, child labor. The
government has since then implemented strategies such as increasing labor inspectorate
budget and opening child advocacy centers to curb child labor (U.S Department of Labor, 2018).
Illegal underpayment of employees in the garment industries has also been reported. An
investigation carried out by Thomas Reuters foundation revealed that migrant workers were
being paid less than the daily minimum wage. These garment companies have since then been
forced to compensate these workers (Wongsamuth, 2019). As a result the government has also
increased the wage increase of Thailand labor workers, most of who are females. The Labor
minister, MR Chatu Mongol Sonakul, proposed an increase on the minimum wage increase to the
cabinet, a bill that is still being reviewed (Bangkok Post, 2019).
2.2 SWOT analysis
2.2.1 Opportunities
Allerton swimwear has the opportunity to grow its market potential. As earlier
mentioned, the company only distributes its products to retail stores in Australia, UK and U.S.A.
Having a production base in Thailand allows the company to penetrate the Asian region. Sports
and swim wear in Asia generates a revenue of US $42,556 as of 2019, which is not far off form
the USA which generates the highest revenue in swim wear, US $47,303 million (Statista, 2019).
In a report released by the Global Market Review for Swimwear and Beachwear (2019), the
market is estimated to generate revenue of 24.3 billion by 2024, due to the increased need for
adopting active hand healthy lifestyles as well as a strong preference for beach side vacations.
While currently the largest markets for swim wear are in America and Europe, Asia-Pacific is
said to be the fastest growing market with a CAGR of 7.1 percent. This is as a result of rise of
affluent Chinese who love to spend their time in spas, hot springs and in door fitness activities.
The rise is also attributed to the increased number of low cost idyllic beaches, thereby
attracting large numbers of tourists as well as an increase in demand of modest swimwear due
to the conservative culture of Asian countries. The brand also has the advantage of celebrities
purchasing its products. Research shows that celebrity endorsements greatly influence
purchasing intentions especially among consumers (Sathyanarayana, Gargesa & Bhavya, 2019).
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There is also an increase in demand for sustainable fashion, which serves to the advantage of
Allerton Swimwear. Research shows that both fashion conscious and pro-environmental
attitude consumers are significantly associated with consumption of sustainable fashion (Razaq
et al., 2018).
2.2.2 Threat
Competition is a major threat of Allerton swimwear. While competition has been shown
to sometimes yield positive effects on businesses, it also has been shown to be very strenuous
especially on small companies competing with larger companies or in industries with little
product differentiation (Burke & Hassels, 2013). Allerton faces competition from international
brands for example Zoggs, an Australian based swim wear company that is also considering
Thailand as a production base and market for its new products. The company not only focuses
on production of swimwear but also other accessories like goggles, pool games and swimming
equipment (Zoggs, 2019). Allerton also faces competition from other small-medium-enterprises
that have a similar business model of producing sustainable swimwear. For example, Zula
(2019), which is Austro-Thai Company that focuses on sustainable production of swimsuits as
well as Bullet by Army of Interns (2019), which is an equally successful enterprise in Thailand.
Those are some but a few of the competitors. Research shows that the size of the firm plays a
big role on the extent of the threat of competition. Small and medium enterprises limited
resources compared to bigger firms and sometimes have lower managerial skills. For large firms
on the other hand, industry competitiveness is not a threat to performance but rather a catalyst
to the development of its capabilities (Jeng & Pak, 2014). Research shows that product or
service differentiation is also very important in surviving a highly competitive market.
Compared to other swimwear SME’s in Thailand that focus on sustainable and ethical
manufacturing, Allerton has very little product and service differentiation and stands the risk of
business failure. Even then, Allerton has the advantage that it is ahead in terms of technology in
the swim wear industry and therefore has the chance of surviving the market. Research shows
that the relationship between size of entry and survival is influenced by factors such as
technology and the industry life cycle, where SME’s are unable to withstand competition in
industries that are technologically advanced or that are very mature (Jeng & Pak, 2014).
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3. Recommendation
It is with no doubt that Allerton swimwear has put a lot of effort in establishing a unique
brand that is sustainable and focuses on empowerment of women. However, the market is
equally competitive with competition from International brands with more leverage as well as
from smaller brands that are equally innovative. It is therefore recommended that Allerton
swimwear invests in proper marketing and innovation in order to penetrate markets. The
company should take advantage of the advanced technology of the textile industry in Thailand
in order to establish innovative fabrics that help their products stand out. It should also take
advantage of the low wages in the country to help gain higher profitability of its products. In a
study investigating 692 small, medium and large enterprises it was evidenced that investing in
either of the two alone, was not enough for a small or medium enterprise to survive in a highly
competitive market. Innovation on its own was shown not to lead to increased profits, but
marketing did (Jeng & Pak, 2014). In the marketing of their products, it is essential that the
company includes their sustainability efforts as well as commitment towards empowerment of
women in the marketing message. While research that marketing of green products increases
purchasing intentions of consumers especially with the increase of environmentally aware
consumers, research also shows that corporate social responsibility partially mediates the link
between green marketing and purchase intentions of customers (Suki, Suki & Azman, 2016).
The company should also strive to make sure that their unique services such as custom
alterations and repairs of the swim suits is part of the marketing message. SME’s often do not
have enough resources to carry out intensive marketing like bigger companies would and as
such customer service and eventually customer satisfaction, is part of their strategy of creating
a competitive edge (Krajňáková, Navikaitė & Navickas, 2015).

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Australian Government. (2019). ASEAN-Australia-New Zealand FTA. Retrieved December 8

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