SWOT ANALYSIS

Strengths:
Easy availability of low cost of labor.
Existence of more than sufficient productive
capacity.
Exposure to export markets.
Existing distribution networks
Barriers of market entry
High profits.
Massive institutional support for technical services,
designing,manpower development and marketing.
Exporter-friendly government policies.
Tax incentives on machinery by Government.

SWOT ANALYSIS
Weakness:
Low level of modernization and up gradation of technology,
and the integration of developed technology is very slow.
Low level of labor productivity due to inadequate formal
training /unskilled labor.
Less number of organized product manufacturers.
Difficulties in accessing to testing, designing and
technicalservices.
Non availability of quality footwear components
Lack of fresh investment in the sector.
Uneconomical size of manufacturing units.
Little brand image.
Poor labor productivity.
Lack of awareness about consistent inplant training and
retraining

SWOT ANALYSIS
Opportunities:
Abundant scope to supply finished leather to multinationals
setting upshop in Nepal.
Growing fashion consciousness globally.
Use of information technology and decision support software
to helpeliminate the length of the production cycle for
different products
Product diversification - There is lot of scope for
diversification into other products, namely, leather garments,
goods etc.
Growing international and domestic markets.
Exposure to newer markets through Fairs
Income level is at a constant increase
Growing demand
Retain customers through quality supplies and timely
deliveries

SWOT ANALYSIS
Threats:
Entry of multinationals in domestic market.
Stiff competition from other countries. (The performance of
globalcompetitors in leather and leather products indicates
that there areat least 5 countries via, China, Indonesia,
Thailand, Vietnam and Brazil, which are more competitive
than Nepal.)
Non- tariff barriers - Developing countries are resorting to
more andmore non tariff barriers indirectly.
Rising cost of raw-materials.
Improving quality to adapt the stricter international
standards.
Fast changing fashion trends are difficult to adapt for the
Nepalese leather industries.
Increasing rates of interest
Increase in labor costs

Porters Five Forces Model

Bargaining Power of Buyers: (HIGH)
Buyers affect an industry through their ability to force
down prices, bargain for higher quality or more services,
and play competitors against each other.
Buyers have veryhighcontrol in this market. Because of
so much substitutes and competitors, buyers have a lot
of options in where to purchase their products.
A buyer or a group of buyers is powerful if some of the
following factors hold true:
A buyer purchases a large proportion of the sellers product
or service
A buyer has the potential to integrate backward by
producing the product itself
Alternative suppliers are plentiful because the product is
standard or undifferentiated
Changing suppliers costs very little

Porters Five Forces Model

Bargaining Power of Suppliers: (MODERATE)
Suppliers can affect an industry through their ability
to raise prices or reduce the quality of purchased
goods and services. In this industry, Suppliers may
have very little power.
A supplier or supplier group is powerful if some of
the following factors apply:
The supplier industry is dominated by a few
companies, but it sells to many
Its product or service is unique and/or it has built up
switching costs
Substitutes are not readily available
Suppliers are able to integrate forward and compete
directly with their present customers

Porters Five Forces Model

Threat of Substitutes: (Moderate)
A customer can easily deviate and switch to a new
shoe just as quick, depending on if the price is right,
its uniqueness and its quality.
The substitute product affect when switching cost is
high.
Different customer switch for quality, durability and
status.

Porters Five Forces Model

Rivalry among existing firms: (HIGH)
Number of competitors:When competitors are few
and roughly equal in size, they watch each other
carefully to make sure that they match any move by
another firm with an equal countermove.
Capacity:If the only way a manufacturer can
increase capacity is in a large increment by building a
new plant, it will run that new plant at full capacity to
keep its unit costs as low as possible, thus producing
so much that the selling price falls throughout the
industry.
Diversity of rivals:Rivals that have very different
ideas of how to compete are likely to cross paths
often and unknowingly challenge each others
position.

Porters Five Forces Model

Threat of New Entrants: (HIGH)
Economies of scale:Scale economies in the
production and sale of shoes, gave the companies a
significant cost advantage over any new rival. So the
economy of scale of shoe industry is high.
Product differentiation:Some of the corporations
create high entry barriers through their high levels
of advertising and promotion. So the product
differentiation will be high for new entering
industries in terms of brand identity, loyalty quality
and customer service.
Government policy:Governments can limit entry
into an industry through licensing requirements by
restricting access to raw materials, in protected
areas. However, the government policies, rules and
regulations are very few for shoe industry.