Introduction
All modern organizations depend on other links of their supply chains. Maintaining stable and sufficient supplies has become a matter of survival for modern companies, and the resources dependency theory (RDT) examines this particular issue. It focuses on such aspects as limited amounts of materials and the manner of their distribution among manufacturers. This paper aims to analyze the resources dependency theory (RDT) within the context of clothing manufacturing organizations.
Main body
All businesses exist in a complex environment that comprises several important links. Although the degree of this dependency may vary, no company is capable of remaining completely self-contained. It is vital to ensure stable supplies, as they are a matter of paramount importance for the organizations’ survival. According to Pfeffer and Salancik (2002), three main factors determine the nature of a company’s dependency on other organizations. The first condition consists of the extent to which the resource is necessary for the company’s operations. In other words, it is important to analyze whether the organization’s survival is possible without it. However, it is not the importance of the resource that has the potential to cause problems, but the possibility of its stable supply. Therefore, if it is rare in the given environment and there is significant competition, the stability may be compromised.
The second factor depends on the degree of discretion the interest group has over the resource in question. Ownership is an important component of the supply chain, as it may impose additional difficulties for an organization (Pfeffer & Salancik, 2002). For example, exclusive rights to possess a product or material allow the other party to dictate partnership terms. The third condition considers the range of alternatives the supply channel may have (Pfeffer & Salancik, 2002). In other words, this factor deals with the concentration of a resource or material. Furthermore, it is not the number of alternative supply channels that matters but the way the resource is distributed among them. Overall, the three factors may entail negative consequences for the company’s operations. However, as Heath and Johansen (2018) state, effective communication is capable of resolving potential problems and ensuring stable supplies. Therefore, each company must evaluate its dependency within the context of the discussed theory and perform communication with other links of the supply chain accordingly.
The RDT can be applied to the industry of clothes manufacturing. In general, the nature of dependency in this market may vary depending on the target segment of a particular company, but it is possible to discern general tendencies. First, textiles form the primary resource base for all clothing manufacturers, and they are crucial for all their operations. Therefore, such companies demonstrate an extreme level of dependency on their fabric suppliers, according to the first factor. Nevertheless, these materials are broadly available in the market and are not excessively concentrated. Accordingly, the second and the third factor compensate for the importance of textile, as clothing manufacturers have a wide range of potential suppliers in case of issues. Kumar et al. (2018) emphasize the indispensable nature of risk management in the context of the clothing manufacturing industry in China. However, it is possible to suggest that correct assessment allows for stable supplies in the mass market.
On the other hand, luxury brands, such as Gucci, manufacturing their exclusive clothes may face additional issues. Indeed, the highest-quality fabrics are not as broadly available, which disrupts the balance of factors. In this case, all three-factor groups impose additional limitations on the manufacturers, making them extremely dependent on their suppliers. If the supply chain is broken for some reason, it may have adverse effects on production, as high-quality fabrics are not as easily obtained as mass-market materials. Therefore, Gucci and similar brands that both produce and sell clothing are in a vulnerable position, according to the RDT. Nevertheless, the risks are compensated by their extreme profits from working with the high-end market segment.
On the other hand, while fabrics form the core of operations in the sphere of clothing manufacturing, there are other resources involved in production. Clothing producers’ activities rely on transportation and partner stores to a similar extent. To maintain the balance of costs and profits, clothing manufacturers must ensure a stable exchange with stores and outlets. Mass-market companies described earlier encompass a larger segment of the market, making it possible to sell their products at a variety of locations. Simultaneously, luxurious brands are not as widely represented, meaning that their operations are more concentrated. In this case, potential disruption of the supply cycle will be more damaging for Gucci and similar companies. To maintain the level of product exchange with outlets, clothing manufacturers may opt for exclusive contracts ensuring a stable source of income for them. At the same time, high-end clothing manufacturers demonstrate extreme dependency on human resources. Unique fabrics and designs for wealthy clients require a certain level of expertise on behalf of the company’s employees. Accordingly, such brands must spend considerable resources to prevent valuable specialists from leaving them.
Conclusion
In conclusion, the resource dependency theory suggests that, in each case, the degree of dependency varies according to three factors. The factors exist in an interrelated system and are capable of compensating one another. The grave importance of fabrics for the clothing industry is balanced by their availability in the case of mass production. However, luxurious brands demonstrate a higher level of dependency due to the narrower choice of suppliers. Overall, an in-depth risk analysis is required for each company to ensure stable supply chains.
References
Heath, R. L., & Johansen, W. (2018). The international encyclopedia of strategic communication. Hoboken, NJ: John Wiley & Sons.
Kumar, V., Bak, O., Guo, R., Shaw, S. L., Colicchia, C., Garza-Reyes, J. A., & Kumari, A. (2018). An empirical analysis of supply and manufacturing risk and business performance: A Chinese manufacturing supply chain perspective. Supply Chain Management, 23(6).
Pfeffer, J., & Salancik, G. R. (2002). The external control of organizations. A resource dependency theory. In M. J. Handel (Ed), The sociology of organizations: Classic, contemporary, and critical readings (pp. 233–242). Thousand Oakes, CA: SAGE Publications.