FREE ESSAY ON EXTERNAL FACTORS AFFECTING A BUSINESS

EXTERNAL FACTORS AFFECTING A BUSINESS

INTRODUCTION
EXTERNAL FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS
There are many factors that affect the Company's business and the results of its
operations, some of which are beyond the control of the Company. The following is a
description of some of the important factors that may cause the actual results of the
Company's operations in future periods to differ materially from those currently expected
or desired. 
OBJECTIVE 
The objective of this paper is to introduce the external factors affecting the jeans
industry from a business view.
1. GENERAL ECONOMIC AND INDUSTRY CONDITIONS 
Any general economic, business or industry conditions that cause customers or potential
customers to reduce or delay their investments in the jeans industry could have a
negative effect on the Company's strength and profitability. For example, a softening of
demand for jeans ware may result in decreased revenues (or at least declining revenue
growth rates) for jeans manufacturers in general and the Company in particular and may
result in pricing pressures for products that the Company sells. 
2. COMPETITION 
The jeans industry is highly competitive. The intense competition inherent in the
industry could result in the loss of customers or pricing pressures. 
3. INTERNATIONAL ACTIVITIES 
The Company's future growth rates and success are in-part dependent on continued growth
and success in international markets. As is the case with most international operations,
the success and profitability of the Company's international operations are subject to
numerous risks and uncertainties such as local economic and labour conditions, political
instability, tax laws, local and national government regulations.
4. PRODUCT, CUSTOMER AND GEOGRAPHIC MIX 
The profit margins realised by the Company vary somewhat among its products, its customer
business units and its geographic markets. Consequently, the overall profitability of the
Company's operations in any given period is partially dependent on the product, customer
and geographic mix reflected in that period's revenues. 
5. SEASONAL TRENDS 
The Company experiences some seasonal trends in the sale of its products. For example,
sales to the European region are often stronger than the Asian region. Social and
cultural elements are strong contributing factors. 
6. TECHNOLOGICAL CHANGES AND PRODUCT TRANSITIONS 
The jeans industry is characterised by continuing improvements in fashion and design
which result in frequent introduction of new products, short product life cycles and
continual improvement in product price/design characteristics. The Company must
effectively manage a product transition and incorporate technology that will improve
customer service and demand. 
7. INVENTORY MANAGEMENT/SUPPLIES/RAW MATERIALS
The Company's ability to manage its inventory has been enhanced by favourable supply
conditions in the industry. The Company's manufacturing process requires a high volume of
quality components that are procured from third party suppliers. Reliance on suppliers,
as well as industry supply conditions, generally involves several risks, including the
possibility of defective parts, shortage of components and reduced control over delivery
schedules and increases in component costs.
8. RISK ON FINANCIAL INSTRUMENTS 
The Company regularly utilises derivative instruments to hedge its exposure to
fluctuations in foreign currency exchange rates and interest rates. 
SUMMARY
The eight external factors highlighted in this paper are identified as primary factors in
this industry.