Athabasca University APRJ-699 Hand Knitting Yarn Industry with Reference to Unique Sources of Supply from Canada
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Athabasca University APRJ-699 Hand Knitting Yarn Industry with Reference to Unique Sources of Supply from Canada. Prepared By: Igor Pustylnick Coach: Lucien Cortis Date: 04/08/2006 Word Count: 15520 Executive Summary ..............................................................................................4 Introduction ...........................................................................................................7 Goals of Research ................................................................................................8 Industry Composition ............................................................................................9 Sources of Fiber..............................................................................................10 Industrial Fiber Growers...............................................................................10 Small Fiber Growers ....................................................................................12 Artificial Fiber Manufacturers .......................................................................12 Commodity Traders.........................................................................................13 Yarn Mills.........................................................................................................13 Cottage Mills................................................................................................13 Yarn Designers................................................................................................14 Yarn Distributors..............................................................................................14 Knitting Pattern Designers...............................................................................14 Yarn Retail.......................................................................................................15 Knitting Pattern Retail ..................................................................................16 Trade Shows ...................................................................................................16 Individual Consumer........................................................................................16 Value Chain Analysis..........................................................................................17 Yarn Mill Value Chain......................................................................................17 Inbound Logistics.........................................................................................18 Operations ...................................................................................................18 Outbound Logistics......................................................................................18 Sales and Marketing....................................................................................19 Service.........................................................................................................19 Secondary Operations .................................................................................19 Distributor Value Chain ...................................................................................19 Inbound Logistics.........................................................................................20 Operations ...................................................................................................20 Outbound Logistics......................................................................................20 Sales and Marketing....................................................................................20 Service.........................................................................................................21 Secondary Activities ....................................................................................21 Relationship between Chains..........................................................................21 Five Forces Analysis...........................................................................................22 Internal Rivalry ................................................................................................22 Threat of Entry.................................................................................................25 Presence of Substitutes ..................................................................................27 Power of Suppliers ..........................................................................................29 Power of Buyers..............................................................................................30 Conclusion.......................................................................................................32 Industry Issues....................................................................................................33 Child Labor......................................................................................................33 Knowledge Gap...............................................................................................34 Vertical Integration ..........................................................................................34 Gender Conflict ...............................................................................................34 Conclusion.......................................................................................................35 Organizational Concepts.....................................................................................35 Descriptive Elements.......................................................................................35 Competitive Strategies.................................................................................36 Types of Stategies.......................................................................................36 Environmental Uncertainties........................................................................36 Population Ecology......................................................................................37 Internal Framework......................................................................................38 Internal structure..........................................................................................39 Organizational Lifecycle ..................................................................................39 Organizational Culture.....................................................................................39 Conclusion ..........................................................................................................41 Industry Outlook Predictions............................................................................42 Executive Summary Yarn craft is one of the very old crafts. First use of flax yarns was dated sometimes around 3000 B.C. Other natural fibers are also in use for at least 4000 years for the yarn creation. During the industrial revolution yarn industry has obtain its first mechanical spinning tools, making creation of wool and cotton yarns into another successful industry. In the second part of the 20th century yarns from the artificial fibers have become very popular. Their use in hand and machine knitting reshaped the outlook of the industry and involved different participants, such as artificial fiber manufactures. The ease of the machine knitting and inexpensiveness of the finished garments have turned people away from hand knitting. The craft has become stagnant with no new advancements and models. Beginning of the 21st century constitutes the latest surge in knitting. Being preceded with the decades of non-development this surge has shown the areas where North American knitting craft has voids, such as new model creation, teaching of knitting and even the image of knitter itself. Yarn industry, described in the research consists of several major building blocks: • Sources of fiber include industrial growers, who grow natural fiber sources animals or plants for profit, artificial filament manufacturers and small hobby fiber growers • Yarn mills, which produce yarns from all types of fibers • Yarn distributors and agents, who work with the mills to produce and resell yarns • Creative forces, including yarn and pattern creators • Yarn retail, including specialized and non-specialized yarn retailers • Trade shows, which act as retail complement and alternative, creating convenience for retailers and consumers alike. Examination of the industry value chain shows that it is presently broken into two disjointed chains, one for the yarn mill and one for the distributor. The main reason for this is time and financial separation between a mill and a distributor, forcing distributor to become a customer of the mill rather than a part of the outbound logistics. Five forces analysis of the industry shows that this is at the present time a buyer industry. It is driven solely by consumer demand and power of buyer is the strongest. Analysis of distribution component of the industry also showed that distribution in the present shape is very ineffective for both retail and manufacture components. It is predicted that larger number of the smaller dedicated distributors will soon appear. These distributors will be tied to specific manufacturers and will become part of their value chain. The industry will also become a two-tier one. Seller analysis shows that value driven sellers will move their operations into the area of cheap labor in order to achieve internal economies. Driven by the economic approach