Stuck in the Middle: A Strategic Management Perspective on the Manufacturing Firms in the South African Clothing and Textile Industry

Abstract: The South African Clothing and Textile industry is in a state of crisis, with substantial job losses as a result. This study focuses specifically on the manufacturing firms in the industry and aims to create a broad understanding of their internal and external environment, as well as developing a general strategy in order for them to improve their competitiveness. The research method used is a multiple case study, including interviews at six case companies, complemented with eight interviews with industry informants and secondary evidence. The empirical data has been analyzed using the two main theoretical perspectives within the Strategic Management field, i.e. the Industrial Organization perspectives and the Resource Based Views. The study concludes that the manufacturing firms’ internal environment is highly uncompetitive. The thesis predicts that the future external environment will likely be characterized by poor profit potential in the export markets but with better opportunities for profits in the domestic market. On a general level, the profit potential is expected to be better in high-end segments than in low value added markets in the future. The study further forecasts that effective and flexible production, product development and innovation, quick and reliable distribution, skills in support services, access to local raw material, as well as strategic relationships are factors that will likely determine the future success of the manufacturing firms. In order for the firms to improve their competitiveness this study suggests a general Focused Differentiation strategy for them to pursue and presents specific segments for them to target.