Managing Risks in Fashion Designing Industry

INTRODUCTION


1.1 Background to the Study


The fashion industry which is also known as the cutthroats is a competitive, fun and very tasking industry. According to Rutendo Chidawanyika, Fashion is creativity, innovation, style and having fun while at it. It makes the world go round. Fashion designers come up with new styles which become trends, meaning it is a style that will be popular among people. Fashion designers play a big role in the fashion industry, they are the reason we wear what we wear. Many young upcoming fashion designers rush into setting up a business, attracted by the perceived glamour and fun in the industry without doing a proper research of the risks or rather the ups and downs associated with the fashion industry in order to scale through in the cutthroat world.
Risks like trend analysis, marketing strategy, financial knowledge, lack of innovation and so on. And many companies have failed due to the process of lack of risk management. Risk equals expected damage (Campbell, 2005). Risk refers to uncertainty about and severity of the events and consequences (or outcomes) of an activity with respect to something that humans value (Aven & Renn, 2009). However, if a person can design but do not have the business skills, it will be difficult to thrive in the fashion industry. Africa has unique and talented fashion designers and these skills can be improved by going to fashion school. It is all about being well connected in the fashion industry, who you know counts. Getting your work out there let alone your name may be difficult, if you do not have the right connections. There is a growing interest in African fashion and there are African fashion designers based in Europe and America but designers within Africa are still trying to find a sustainable market locally.
Lack of international exposure is also a big challenge. We see our fabrics, our textiles and our prints being showcased in the international market by Western designers. Due to lack of international exposure we cannot do anything about that. African designs i.e. Ankara are more on demand outside of Africa, they are more on a fast track than those in Africa. While African designers can become famous and successful on the continent, those who are most competitive and who are garnering more support are the ones who are able to travel globally, specifically to fashion capitals such as Paris, New York or Seoul.
According to Jessica Bui, Fashion is a constant presence in a person’s life. It is a daily task of choosing what clothing to put on for the day and it is not only used to protect modesty but also used for self-expression. Although, fashion can be tricky ,but there are so many supposed “rules” as to how to dress for different occasions like job interviews, cocktail parties etc. and what is considered in style. With this in mind, it is hard to know the do’s and don’ts of fashion or if there are really don’ts in fashion. However, the circumstances that led the choice of Ankara fabric is that the materials are durable and it is a design that will not go out of trend. The wearer will feel comfortable with it. With this fabric, the wearer will not feel cold or hot because of the texture.
Risk management is a systematic evaluation of risks, how to handle, respond to and even prevent them. These risks can be related to anything financial, or to a project flopping, to accidents and as well straight-out disaster. (Dms Technology, 2016).
For instance, the fashion shows, they are the main struts of the fashion industry and these major events have endless lists of potential risks that can ruin it like lighting for example. Lighting is a small piece that makes a fashion show successful. It is a vital element to any fashion show. The wrong filter can completely alter how a fabric appears to the audience. In order to avoid the risk, one can employ professionals who can manage and make sure everything is in place for the event to go off as flawless as possible because a designer do not want to worry about changing a spotlight in the middle of a show. So, risk management is an essential tool for your business that will keep any and all problems under control.

1.2 Statement of the problems


Fashion is always rapidly changing for a reason. It changes from season to season. According to Luciana Zegheanu, fashion causes changes in social, economic and political landscapes. Thus fashion benefits and stimulates society, in the process promoting creativity. However, the major problems that prompted the research are the impacts of fashion on society. We can argue whether or not the fashion trends have more of a positive or negative effect on people of today. Society comprises of the population including infants, teenagers, adults, working class and retired people. There are various categories including the different levels of population and their mindsets, so the influence or impact of the fashion trends will differ from category to category, group to group, and individual to individual.
The age when the impact of anything is at peak is between ages 10-24 because at this age we cannot differentiate between what is actually good and bad. According to a research, more than 55% of the youth keeps a close track of latest trends of lifestyle, clothing etc.
Fashion also has negative impacts. For instance, it bends generation towards western culture. It diverts peoples' attention from other important activities and affects the self-esteem of people who cannot afford certain clothing. When fashion distracts people, especially youth, from more productive activities, they focus more on acquiring the latest and the most fashionable wear rather than on education or work. People who cannot afford certain fashionable items sometimes have diminished self-esteem and do not feel adequate among their peers. At times people are bullied for not having the latest fashions. Some people believe fashion is harmful since it creates a society in which appearance is often valued more than character.
On the positive side, fashion is an art which stimulates and inspires people to express themselves. Fashion gives a branded modern look to any ordinary man. People often show off their personal identity, talent and culture through their fashion choices. Often people use what they see on fashion runways and in the stores to create their own unique looks, expressing their creativity. People stay fashionable and stylish to attract the opposite sex to get noticed by someone they like. Fashion also promotes creativity as designers endeavor to outdo one another through their unique and intricate designs.

1.3 Purpose of the Study


The purpose of the study is to investigate how fashion designers manage the risks that confront them in their businesses.

1.4. Research Question

 

  1. There are certain questions that should be answered at the end of this study. They are;
  2. What are the risks faced by fashion designers in the fashion designing industry?
  3. What strategies do they use to manage the risks?
  4. What are the skills to create a successful fashion company?

1.5 Significance of Study


The study will be useful for upcoming fashion designers. They will be aware of the risks in fashion designing and how to manage them in order to improve customer’s service, avoid operational disruption and so on and they will be aware that when they choose a better fabric and style for their outfit and well sewn, it will come off better. It will also serve as a data base for students carrying out further research on the related topic in the future i.e. it will also serve to inform future researchers on the risk management in fashion designing. Private investors, as well as government bodies stand to benefit from this study as it would help increase revenue by guiding the private investors on investment decision within the industry and also increased revenue for private investors would result in increased revenue for the government.

1.6. Scope of the Study


The scope of the study is to analyze the risks faced fashion designers. Therefore the information gathered is based on personal experience and websites.

1.7. Definition of terms


Risk is a predetermined aspect of everyday living. The fact that an individual is breathing ensures that they would come across some form of risk. According to the Business Dictionary, risk is defined as “A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action. Ogwo et al (2000) defined risk as the chance of loss, the possibility of an unfortunate occurrence, the uncertainty as to the occurrence of an economic loss, a dispersion of actual from expected results, a combination of hazards and the objective doubt concerning an outcome in a given situation. In other words, risk is an unexpected event or occurrence.
In general, there are several types of risk that befall a business. Okereke (1993) identified the following types of risks. These include:
Business Risk: - This refers to the inherent variability or uncertainty of business earnings which arise from general economic depression. In this situation, the earning is always below projected outcomes and it is called a loss for failure.
Financial Risk: This refers to the variability of a firm's returns to shareholders which arises from high level of debt financing.
Market Risk: This is the portion of the variability of an individual's investment returns that is caused by market conditions. Such conditions include changes in purchasing power, changes in interest rates, changes in investors’ expectations in overall economic performance of a company and market reaction to unanticipated events, e.g. the death of a president or war or strike or some other related situations.
Default Risk: This risk is as a result of a borrower's inability to service borrowed funds and pay the principal sum as at when due.
Industry Risk: This arises from unpredicted variations in profit performance caused by particular factors affecting the industry, e.g. commodity prices.
Management Risk: This refers to the variability of a firm's earnings arising, 'from ineffective and inefficient management due to judgmental errors or fraud.
Natural Risk: This is the risk of a firm's earnings arising from natural disasters, e.g. flood, weather, fire outbreak, earthquakes, etc.
Liquidity Risk: This results from poor synchronization (either unanticipated or due to the inefficient management) of a business cash flows.
Operational Risk: This is the risk of a change in value that occurs due to the fact that real losses acquired for inadequate failed internal processes, people and systems, or from external dealings, differ from the expected losses (CEA, 2007). Operational risks can also include other categories of risk such as fraud, privacy protection, legal risk, security, physical (i.e. infrastructure shutdown) and environmental risks. Unlike other categories of risk, operational risks are usually not intentionally incurred or revenue driven.

1.8 Definition of Operational Terms


Design: A plan or drawing produced to show the look and function or workings of a garment, building or other objects before it.
Fashion Design: Fashion design is a form of art dedicated to the creation of clothing and other lifestyle accessories.
Fashion Designers: Fashion designers are those that are responsible for designing and making clothing, footwear, and/or accessories. They conduct research on fashion trends and interpret them for their audience.
Trend: A general direction in which something is developing or changing.
Fabric: It is a cloth or other materials produced by weaving cotton, nylon, and wool, silk or other threads together.
Fashion School: Fashion school is a place where people are taught how to sew and get educated about fashion trends, customer service etc.
Fashion industry: Fashion Industry is a multibillion-dollar global enterprise devoted to the business of making and selling clothes.
Ankara: Ankara is a type of cotton cloth featuring brightly colored patterns produced by means of a wax-resist dye technique, associated especially with West African fashion.
Creativity: Creativity is the use of imagination or original ideas to create something.
Cutthroat: Cutthroat is one in which anything goes in the fashion industry or the competition is very tough.
Fashion Show: Fashion show is an event in which collections of newly designed clothings are modeled for an audience

REFERENCE

 

  • Ogwo, S. A.; Enwereuzor, C.O. R; Nwite, S.c.; Ibeabuchi, H. I; and Eche, A. U. (2000). What is risk and meaning. Introduction to Insurance: Enugu; Immaculate Pub. Ltd.
  • Okereke, E. I. (1993). Identified different types of risks. Financial System: Monograph; University of Port Harcourt, Unpublished.
  • Aven, T., Renn, O., (2009). On risk defined as an event where the outcome is uncertain. Journal of Risk Research, 12, 1–11.
  • Campbell, S., (2005). Determining overall risk. Journal of Risk Research, 8, 569–581
  • BusinessDictionary.com, (2014). What is risk? definition and meaning. [online]. Available at: http://www.businessdictionary.com/definition/risk.html [Accessed 19 Jun. 2015].
  • CEA, (2007).Solvency II Glossary.Insurers of Europe. [online] Available at: http://ec.europa.eu/internal_market/insurance/docs/solvency/impactassess/annex-c08d_en.pdf [Accessed 19 Jun. 2015].
  • Dms Technology. In Blog. (2016, August 25). Luxury Risk Management: What the fashion industry is facing. Retrieved from https://www.dmstechnology.com/luxury-risk-management-what-the-fashion-industry-is-facing/Jessica Bui (2016). Why fashion is important. Available at: https://thetab.com/us/2016/06/01/fashion-student-tells-us-fashion-important-4877
  • Rutendo Chidawanyika. The Sunday News. (2016, July 10). Challenges faced by upcoming fashion designers. Available at: https://www.sundaynews.co.zw/challenges-faced-by-upcoming-fashion-designers/