N5 Entrepreneurship
4. Market conditions Market conditions refer to the level of competition in that particular industry. Competition forces businesses to seek new and innovative ways to manufacture or provide a particular service. It also includes aspects like government protection of local businesses by means of tariffs and quotas. This protects local business against foreign businesses with the same effect as above. The local textile industry is a good example of this.
5. Operations Business can take many steps to increase the productivity of their operations. This includes both manufacturing and service businesses. The following are only a few suggestions: • Design proper work methods. • Evaluate the design of products and services. Unnecessary features should be eliminated.
• Consider the latest technology and equipment. • Consider the layout of the business (Placing of equipment). • Reduce set-up times of equipment. • Do proper maintenance.
Case study
The garment industry could become a major source of employment. But will the recommendations contained in a new report do the job, asks KEVIN DAVIE.
The textile and clothing sector has long been one of South Africa’s more troubled industries, lurching from one government report on how best to restructure it to the next. A report commissioned by the Finance Minister, has been awaited with interest. Its release was preceded by an up-beat speech by Ahmed-Sadek Vahed, a leading industry player, suggesting an exciting growth path. But the report shows that the sharp divisions, which have characterised this industry, have not even been papered over.
The report has been rejected by critics for serving vested interests and providing little new direction. The industry has been identified by the World Bank and others as a major potential source of jobs. The sector is not internationally competitive, the report says, because of an inability to source inputs at world prices. The present situation results from past industrial policies. “These have created an environment of import replacement and employment creation at almost any cost, a non-competitive economic environment and price and supply controls at the input ends of the industries’ pipelines.” This has “led to establishment of industries and activities which are not and may never be able to become internationally competitive.”
The poor performance is reflected in real textile output now being worse than any time in the past 14 years. A National Productivity Institute (NPI) study concluded that the raw-material input costs into the pipeline from farmers to textile mills and on to clothing manufacturers are too high to compete effectively on the international scene. Although this is a key theme of the latest report and clearly a central problem for the industry, little is said about what should be done about it. The sector does not profit from overprotection. Both industries are in “dire financial straits”. “Profits earned by both industries will not sustain long-term growth and viability,” says the report.
The tensions which characterise this industry are a carbon copy of wider divisions in the economy. An overprotected, uncompetitive textile sector using outdated equipment provides expensive inputs for clothing manufacturers. Uncompetitive textiles also have implications for the competitiveness of other downstream industries. Textiles are used by the furnishing,
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