<p align="justify">If we attempt to provide a through picture of the leather sector, we have to cover various aspects; the availability of raw material, the tanning industry, and the manufacture of footwear and other leather products. </p>
<p align="justify">In five years review 2004-2008, leather goods industry showed an upward trend and generated revenue in 2008. The industry has been hit by the recession in 2009, but from mid of 2010 onwards situation is expected to be controlled. (ResearchandMarkets.com)</p>
<p align="justify">The future development of the world leather and leather products industry would cover demand, technology, production, and trade. It also contains other important aspects such as trade statistics, the geographic distribution of production, physical infrastructure, environmental conditions, and social aspects involved in the production of leather. With the help of the Porter’s Five Forces Model, it will be easier to comprehend the particulars of leather industry and realize the solution that was devised to survive the recession.
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<h2 align="justify">1. Competition In The Industry<br />
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<p>In recent years, demand for leather goods industry has grown, so as competition in the market. The structure of the industry is oligopoly, which means there are numerous and equally balanced competitors in producing luxury leather goods. At the same time, a significant process of reorganization and consolidation in the global chemical industry generated more competition. (Organization, 2011)</p>
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There is also evidence that footwear manufacturers are finding it increasingly difficult to recruit and, more importantly, retain labor in the face of increasing competition from other industries. The industry has to abide by all the rules and regulations as described in Code of Fair Competition for Leather Industry. (NRA 1933)</p>
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2. Potential For New Entrants into the Industry:<br />
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<p align="justify">The shift of much of the leather industry to Asia has increased the cost of technical support, which led to substantial reductions in their profit margins. Current data on agriculture indicates that these trends will remain stable up to 2030, but also highlights evidence of potential serious discontinuities, mostly related to land availability and other aspects of livestock development. (UNIDO 2010)</p>
<p align="justify">The new entrants must analyze trend of the market and take care of future growth. They will be facing challenges in profit margins and be more conscious about availability of raw skins and hides. The barriers of the entrances are strong, there already exist top brands in the industry. Also the large amount of capital is needed to enter the industry to make up with the brand equity.</p>
<h2 align="justify">3. Power Of Suppliers:<br />
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<p align="justify">Over the last decade, China has become the largest hide producer in the world, followed by India, Brazil and then USA. Hide and skin supply is likely to continue to grow at slightly less than 3% per annum. The bargaining power of suppliers is strong when the resources are special and only from some specific areas.</p>
<h2 align="justify">4. Power Of Buyers:<br />
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<p align="justify">Leather goods consumption is linked to living standards; therefore, currently, most consumers of leather goods are in the industrialized countries. Because of the products of the leather industry are unique designed and most of them are done in-house. So, the buyer has poor information about demand, actual market prices and even supplier cost. This makes the bargaining power a little bit week for them. </p>
<h2 align="justify">5. Threat Of Substitute Products:<br />
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<p align="justify">The threat of substitutes in leather industry is very high, as alternately consumers have choices in luxury items such as luxury sedans and apparels, which make strong bargaining power for them. Also there are a lot of top brands in the market, and brand conscious customers are hard to capture.</p>
<h2 align="justify">Conclusion<br />
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<p align="justify">The leather industry has a very competitive environment and has limited number of buyers in the market. As the target market is squeezed the industry has to focus on quality with strategic market pricing. The complexity of an industry whose raw material comes from farms and homesteads throughout the world, makes leather production in the world a rather daunting task. Nevertheless, looking at the next fifteen years, it seems unlikely that the basic structure of the industry will change dramatically in terms of processing, end uses or raw material.</p>