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    STRATEGIC MANAGEMENT

    AT

    GUL AHMED

    TEXTILES MILLS

    Prepared by: Group # 5

    Submitted to:

    Dr. Fazal Khalidi

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    LETTER OF TRANSMITTAL

    December 21, 2014

    Dr. Fazal Khalidi

    Faculty: Strategic Management

    IoBM, Karachi

    Respected Sir,

    In compliance with the fulfillment of the requirement of the subject MAN405: Strategic

    Management, I would like to present report entitled Strategic Management & Its Key

    practices at Gul Ahmed Textile Mills in accordance with your instructions.

    Gul Ahmed Textile Mills that is leading manufacturer of different Textile substrates including

    Yarn, Fabric, Home Textiles, Apparels, Accessories etc.

    We have learned many things from this topic. There were some obstacles which we have

    faced at the time of collecting data about this topic. But we have tried our best to cover this

    topic.

    Sincerely,

    Group # 5

    Fall 2014MAN 405Strategic Managements Class.

    MBA (IM), IoBM

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    ACKNOWLEDGEMENT

    First of all we would like to thank the Almighty ALLAH for giving us the strength, and

    the aptitude to complete this report within due time. I am deeply indebted to my course

    teacher, mentor, and counselor: Dr. Fazal Khalidi for assigning us such an interesting topic

    named in accordance with our course

    Strategic Management & Its Key practices at Gul Ahmed Textile Mills

    We also express the depth of my appreciation to our honorable course teacher for his

    suggestion and guidelines, which helped us in understanding this subject &completion of

    this report.

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    Blue Ocean Strategy ................................................................................................................. 20

    Conclusion ................................................................................................................................ 21

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    COMPANY PROFILE - HISTORY

    The story of textiles in the subcontinent is the story of Gul Ahmed. The group began

    trading in textiles in the early 1900s. With all its know-how and experience, the group

    decided to enter the field of manufacturing and Gul Ahmed Textile Mills Ltd. was

    incorporated as a private limited company, in the year 1953. In 1972 it was subsequently

    listed on the Karachi Stock Exchange. Since then the company has been making rapid

    progress and is one of the best composite textile houses in the world. The mill is presently a

    composite unit with an installed capacity of 103,000 spindles, 220 wide width air jet looms,90 Sulzers, 297 conventional looms and a state of the art processing and finishing unit.

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    Gul Ahmed Textiles

    The products and services of Gul Ahmed Textile Mills can be divided into two broad

    categories according to their markets

    Gul Ahmeds local Market

    Gul Ahmeds export Market

    The products in Gul Ahmeds local market category are

    Lawn

    Pret line (women category)

    Mens stitched wear

    Mens unstitched

    Home textile

    Foot wear

    Perfumes

    Accessories

    The products in Gul Ahmeds export market category are

    Lawn

    Pret line (women category) Mens stitched wear

    Mens unstitched

    Home textile

    What make Gul Ahmed stay?

    First ETP (Effluent Treatment Plant) in textile sector

    First yarn mercerizing facility

    Metal free safety packing zones in all sewing units First textile mill to register carbon credits

    First rotary machine in Pakistan

    First to install caustic recovery unit in Pakistans textile sector

    First compact spinner in Pakistan

    Using CAD/CAM machines to apply latest design techniques

    Largest embroidery facility dedicated to home textiles

    An extensive chain of retail outlets all over Pakistan

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    Operations Management at GulAhmed

    FABRIC FINISHEDSTOCKACCESSORIES

    SAFETY STOCK LEVEL AS PER CUSTOMER`S COMMITMENT

    1. MERCHANDISING

    (DECISION SUPPORT / CUSTOMER HANDLING)

    2. MATERIAL MANAGEMENT 3.1 INDUSTRIAL ENGINEERING

    (SUPPLIER MANAGEMENT) (IMPROVING PRODUCTION EFFIENCY)

    4. COMMERCIAL 3. PRODUCTION

    (VESSEL PLAN NINGS) (MEETING THE TARGET DATES)

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    Buyers / Customers

    International customers are;

    DHL

    Boyd Cooper

    NHS

    Royal Mail

    Skydda

    Mascot

    Juba

    Regular Suppliers

    Carrington

    Dong Jin

    HonFeng

    Lucky Textiles

    Sapphire

    Sarena Thai Taffeta

    WERNERFELT

    3M

    A&E Threads

    Avery Dennison

    HUAMEI Threads

    YKK

    Zhejiang Weixing

    JP Coats

    China Star

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    Vision & Misson Statement of Company

    Vision Statement

    Setting trends globally in the textile industry, responsibly delivering productsand services to our partners.

    Mission Statement

    To deliver value to our partners through innovative technology and

    teamwork, fulfilling our social and environmental responsibilities.

    Values

    Integrity

    Passion

    Creativity

    Teamwork

    Analysis of Mission Statement

    To be done by Owais

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    THE

    STRATEGY-FORMULATION

    ANALYTICAL

    PROCESS

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    STAGE: 1st----------- INPUT STAGE

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    A- Competitive Profile Matrix (C.P.M)

    Competitive Profile Matrix

    Industry:Vertically Integrated Textile MillsCompany:Gul Ahmed Textiles

    Competitive

    profile Matrix Gul Ahmed Chenab Group Al-Karam

    IDEAS ChenOne IDENTITY

    Critical Success Factors Weight Rating Score Rating Score Rating Score

    R & D 0.20 4 0.8 3 0.6 2 0.4

    Product Quality 0.10 4 0.4 4 0.4 3 0.3

    Price competitiveness 0.10 3 0.3 3 0.3 3 0.3

    Management 0.15 3 0.45 4 0.6 2 0.3

    Financial Position 0.10 4 0.4 3 0.3 3 0.3

    Customer Loyalty 0.10 3 0.3 4 0.4 2 0.2

    Global Expansion 0.20 3 0.6 2 0.4 3 0.6

    Market Share 0.05 4 0.2 2 0.1 3 0.15

    Total 3.45 3.1 2.55

    INTERPRETATIONS:

    Gul Ahmed Textiles is dominating in the industry as compared to local players. There are

    several competitors like Agzard 9, Kohinoor textile mills, etc, but above taken competitors

    are the major ones.

    CPM scores for GTM (Gul Ahmed Textiles) showing aggressiveness as compared to the

    crescent and Chenab textile mills.

    GTM is number one company within the local environment; it is basically leading the

    industry in the following aspects:

    Product Quality & design.

    Research & development.

    Persistence in product quality.

    Global Expansion.

    Moreover, Chenab Group is resides at the second number and leading industry in effective

    management style. Finally AL Karam textile comes at number 3rd

    with leading position in

    persistence in quality and market segmentation.

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    B- External Factor Evaluation Matrix (E.F.E)

    Key External Factors Weight Rate

    Weighted

    score

    Opportunities

    Growth in target market audience 0.05 4 0.2

    Increasing Fashion Awareness 0.08 4 0.32

    Online shopping 0.08 3 0.24

    Social Network Marketing 0.07 3 0.21

    Brand Consciousness 0.09 3 0.27

    Increasing expenditure on shopping 0.06 3 0.18

    Fashion Weeks in Major cities 0.04 3 0.12

    Threats

    Counterfeiting and intellectual property rights violations 0.12 3 0.36

    Inflation 0.06 2 0.12

    Exchange rate fluctuations 0.06 3 0.18

    Law and order situation 0.08 2 0.16

    Terrorism 0.05 1 0.05

    Increase in interest Rates 0.08 2 0.16

    Cotton Yarn and other Raw material Prices 0.08 3 0.24

    TOTAL 1 2.81

    INTERPRETATIONS:

    EFE score of 2.84 indicating that the GTM is taking the external opportunities and avoiding

    external threats quite well, however there is room for improvement is well.

    This score suggest GTM to be aggressive but the degree of aggressiveness needs to be little

    moderate, it should not go for diversification, rather it should go for penetration in theexisting market, further developing local or foreign market or it may design a new product.

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    C- Internal Factor Evaluation Matrix (I.F.E)

    KEY INTERNAL FACTORS Weight Rating

    Weighted

    Score

    STRENGTHS

    Highest Market share 0.15 4 0.6

    Creative designers 0.1 4 0.4

    Fully vertically integrated from fiber to fashion 0.05 4 0.2

    Latest technology engaged 0.15 4 0.6

    99.99% design quality assurance 0.05 4 0.2

    Strong brand image 0.03 4 0.12

    An extensive chain of retail outlets all over Pakistan 0.03 4 0.12

    WEAKNESSES

    Debt to equity ratio is high .81 0.1 1 0.1

    EBITDA Margin to sales decreased from 12.49 to 11.92 0.15 1 0.15

    Demand is higher than production capacity 0.05 2 0.1

    Supply Chain Issues 0.04 2 0.08

    Online shop not fully functional 0.05 2 0.1

    Small share in export market as compare to other local players 0.05 2 0.1TOTAL 1 2.87

    INTERPRETATIONS:

    IFE score of 2.87 indicating that the GTM is an internally strong organization, it

    represent that it is excellent in its overall internal strategies when it come to explore

    strengths and weaknesses.

    Overall the main strength is Latest Technology owned by GTM.

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    A-SWOT MATRIX

    STRENGTHS WEAKNESSES

    1.

    ISO 9001 certified &IKO-TEX 100

    Certified.

    2. Biggest composite

    unit in Pakistan

    3. Highest credit

    rating by PACRA

    4. Self owned power

    plant

    5. Largest dyeing

    facility in south east

    Asia

    1. Relying on

    international market

    only

    2. High cost of

    production

    3. High employees

    turnover

    4. Transit time is more

    as compare to foreign

    competitor

    OPPORTUNITIES S-O STRATEGIES W-O STRATEGIES

    1. WTO regime

    implementation

    2. Cost reduction

    technology by using

    modern and advancedtechnology

    3. Local market

    development

    4. Diversification in

    energy sector (Subject

    to Government

    permission)

    1. provide electricity to

    residential areas ( S4, O4)

    2. capture local market by

    providing facility of

    outsourcing and

    introducing company

    products through its retail

    outlets (S2, S5, O3)

    1. Import modern technology

    (W1, W2, O2)

    2. Company can enter in new

    market through retail outlets

    (W1, W4, O3)

    THREATS S-T STRATEGIES W-T STRATEGIES

    1.

    Export of raw cottonand yarn

    2. WTO regime

    implementation

    3. Exchange rate

    fluctuations

    4. Instable political and

    economical conditions

    5. Government policies

    1. Penetration in foreign

    market (S1, T2)

    2. Make future contracts to

    avoid currency fluctuations

    (S3, T3)

    1. Focus on local market (W1,

    W2, W4, T2, T3)

    2. Import modern technology,

    and do agreements with

    suppliers to secure your supply

    of raw material (W2, T1)

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    INTERPRETATIONS:

    To be done by Ghazanfar

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    B- Boston Consulting Group (B.C.G) Matrix

    STARS

    PRET LINE

    QUESTION MARK

    MENS STITCHED WEAR

    ACCESSORIES

    CASH COWS

    LAWN

    MENS UNSTITCHED

    HOME TEXTILE

    DOGS

    FOOT WEAR

    PERFUMES

    INTERPRETATIONS:

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    C- Balance Scorecard

    OBJECTIVES MEASUREMENT TARGETS STRATEGIC

    INITIATIVES

    CUSTOMERS

    Target Market:

    LSM : 8 & above

    SEC: A+ & A

    B2B customers

    Attract new

    customers

    Retain customers

    Design Accuracy

    Quality

    Market share

    Customer retention

    Customersatisfaction level

    70 % market share

    100% customer

    retention ratio

    95% customer

    satisfaction level

    Market development

    Customer loyalty

    programs

    On time delivery foronline buyers

    Product availability

    Product quality

    leadership

    INTERNAL PROCESS

    Superior R&D

    Finest Designers

    Engraving for Color

    Differentiation

    Laboratory Color

    Testing

    Color Development

    Printing Quality

    Superior Production

    Facility

    New product

    development cycle

    Design quality

    Color matching and

    quality

    Nominal wastages

    Product delivery

    Technology

    Asset utilization

    CO2 emission

    new seasonal

    collections twice a

    year

    99.9% design

    matching

    99.9% color

    matching

    1% wastages

    Fulfill 100% online

    orders

    Cover up lost sales

    Following global

    trends in fashion and

    setting benchmark in

    local markets

    Investment in new

    technology to

    maintain edge on

    design and color

    quality

    Reduction in scrap

    sale

    Continuous

    improvement in

    plant efficiency in

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    Supply chain

    Environmental

    Friendly

    Socially Responsible

    Community building

    and empowerment

    of women and

    disadvantaged

    by increasing sales

    growth by 20%

    1000 women in work

    force at variouspositions

    order to reduce

    wastages, carbon

    emission and

    increase energy

    efficiency.

    Training program for

    disadvantaged and

    special people

    Separate unit for

    women

    Child care facility for

    women

    LEARNING &

    GROWTH

    Cultivate culture of

    learning, creativity,

    target orientation

    and adopting

    positive values

    Attract and develop

    high caliber human

    resource

    New designs, ideas

    and concepts

    Low employee

    turnover

    lead position in

    terms of new

    designs

    reduce employee

    turnover by 5% year

    on year basis

    Continuous

    investment for

    learning and

    development of

    employees to

    maintain an edge

    Confidentiality policy

    to ensure business

    secrets are not

    leaked

    FINANCIALS

    Profitability

    Increase in gross

    margin

    Sales growth by

    segment

    Customer and

    product line

    profitability

    20% sales growth

    targets

    Cost reduction by 5%

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    D- Internal External Matrix (I.E. Matrix)

    B-THE INTERNAL-EXTERNAL (IE) MATRIX

    C- IFE TOTAL SCORE

    D-

    E- Strong Moderate Low

    F-

    G-

    H-

    I-

    J-

    K-

    L-

    M-

    N-

    O-

    P-

    Q-

    R-

    S-

    T-

    U-

    V-

    W-

    X-

    Y-

    I

    Grow and Build

    II

    Grow and Build

    III

    Hold and Maintain

    IV

    Grow and Build

    V

    Hold and Maintain

    VI

    Harvest

    VII

    Hold and Maintain

    VIII

    Harvest

    IX

    Divest

    EFE

    TOTAL

    SCORE

    High

    Mediu

    Low

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    INTERPRETATIONS:

    IFE Total Score (As per IFE Matrix) = 2.87

    EFE Total Score (As per EFE Matrix) = 2.81

    Z-

    It implies that Gul Ahmed Textiles is in a much strong position. But, comparatively it is

    stronger internally as compare to its external position.

    As per IE Matrix, GTM Textiles lies in fourth cell, which implies that it should go for

    aggressive strategies that is grow and build strategies. The possible strategies for GTM

    Textiles may be the integrations, intensive, and diversifications.

    GTM Textiles has the opportunity to go for Market penetration to capture more share in the

    existing market by using new technology, and increasing promotional activities. It also has atremendous option of local market development.

    Other feasible strategies may be the backward integration to secure the supplies in order to

    tackle with the threat of exporting of local raw material to foreign markets. Also GTM

    Textiles goes for forward integration to minimize its weakness of transit time of goods and

    services to its customers.

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    Blue Ocean Strategy

    Blue Ocean Strategy on which Gul Ahmed is working are

    A dedicated Gul Ahmed Fashion magazine to promote their new collection twice

    a year

    First one to launch online shop in Pakistanwww.gulahmedshop.com, currently

    no other player in the industry has online shop

    http://www.gulahmedshop.com/http://www.gulahmedshop.com/http://www.gulahmedshop.com/http://www.gulahmedshop.com/
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    Conclusion

    Gul Ahmed has launched its online shop www.gulahmedshop.comfor online shopping but

    the problem is not all of their products are currently available one internet.

    Mostly it happens on the first day of launch of their new collection, which is done twice a

    year (one in winter and other in summer), the customers (mostly ladies) rush into ideas and

    Gul Ahmed shop and start purchasing whole lot of a design and as a result that design get

    short in the market. And customers who come become frustrated when they cant find a

    print.

    Gul Ahmed is facing serious supply chain issue in this area, they cant meet the demand.

    One thing that can be done in this is the use of online shop to make sure availability of alltheir hot designs for a sustainable period of time. This will be a one good strategy to retain

    their customers.

    Gul Ahmed can also use nontraditional communication channels like facebook and twitter to

    interact with their customers and to get feedback. This online medium is one very effective

    way of analyzing consumer choices. Google analytics and facebook page analyzer can

    provide very useful information about user preferences. For instance it can tell you which

    are the most favorite design liked by the audience, based on that information Gul Ahmed

    can start producing more of that particular design and meet that customer demand.

    http://www.gulahmedshop.com/http://www.gulahmedshop.com/http://www.gulahmedshop.com/