strategic management of leather organization

8/14/2019 strategic management of leather organization

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ABC LEATHERS

The name of company is ABC LEATHERS. It was started in the year 1989 and goodDivision was started in the year 2004. Its a Leather Export enterprise known for its commitment

to quality and good values. Leather was the first clothing fabric over the past few decades.

Leather is emerging as a hip look on the streets and in the office covering men or women, young

or old from top to bottom.

MISSION

To become a leading transportation, clearing and export company in the

India. To be the recognized industry leader, through total commitment to

customer service, by maintaining our uncompromising integrity, in the

support and development of our People, Communications and Systems in

sustained growth and profitability.

VISSION

To set the standard for excellence in global export through total

commitment to quality in people and customer service, with superior

financial results. To solve reliable export services to the needs of the

business community. Reliable services means on-time delivery, undamaged

goods, and correct documentation in case of deviations. To perform

continuous business improvement in order to meet and exceed customer

expectation, To create sustainable business growth in order to enhance the

prosperity of employee and benefit shareholders. Decisions can impact the

success of the company as much as the performance of the export.


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Quality :-By maintaining high standards of quality in the work culture and

products that is in manufacture /exports and the services that its provides.

Cost:-By always remaining competitive by world standards and maintaining

production levels

Delivery:- By always delivering goods on time with excellent planning and by

cutting down the production lead time.

Development:-By developing cost effective and innovative products without

compromising on quality.

Safety:-By providing a world class,safe and hazard free work environment to

its employees.

Moral :-By always keeping its moral standards high and conducting its

business with dignity according to the established rules and regulations.

OBJECTIVES


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SWOT ANALYSIS

STRENGTHS

Easy availability of low cost of labour.

Presence of qualified leather technologists in the field.

Comfortable availability of raw materials and other inputs.

Massive institutional support for technical services, designing,

manpower development and marketing.

Exporter-friendly government policies.

Tax incentives on machinery by Government.

Well-established linkages with buyers in EU and USA.

Managements with business background become quality and

environment conscious.

WEAKNESSES

Low level of modernization and up gradation of technology and the

integration of developed technology is very slow.

Low level of labour productivity due to inadequate formal training /

unskilled labour.


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Less number of organized product manufacturers.

Lack of modern finishing facilities for leather.

Highly unhygienic environment.

Difficulties in accessing to testing, designing and technical services.

OPPORTUNITIES

Abundant scope to supply finished leather to multinationals setting up

shop in India.

Growing fashion consciousness globally.

Use of information technology and decision support software to help eliminate the length

of the production cycle for different products

Product diversification - There is lot of scope for diversification into

other products, namely, leather garments, goods etc.

Growing international and domestic markets.

THREATS

Entry of multinationals in domestic market.

Stiff competition from other countries. (The performance of global

competitors in leather and leather products indicates that there are at

least 5 countries via, China, Indonesia, Thailand, Vietnam and Brazil,

which are more competitive than India.

Non- tariff barriers - Developing countries are resorting to more and

more non tariff barriers indirectly.


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Improving quality to adapt the stricter international standards.

Fast changing fashion trends are difficult to adapt for this leather firm.

INTERNAL FACTOR EVALUATION MATRIX

IFE matrix means Internal Factor Evaluation Matrix; is a popular strategic management tool

for auditing or evaluating major internal strengths and internal weaknesses in functional areas of

an organization or a business.

IFE MATRIX OF ABC LEATHERS

Sno.

Key Internal Factors Weight Rating Weighted Score

STRENGTHS1 Easy availability of low cost of labour 0.10 3 0.3

2 Presence of qualified leather technologists 0.07 3 0.213 Comfortable availability of raw materials 0.08 4 0.324 Manpower development and marketing 0.05 3 0.155 Export friendly government policies 0.08 3 0.246 Tax incentive on machinery 0.08 3 0.247 Well establish linkage with EU n USA 0.07 3 0.218 Management with business background 0.08 3 0.24

WEAKNESS9 Low level of modernization n technology 0.06 3 0.1810 Low level of labour productivity 0.06 2 0.1211 Less number of organized product manufacture 0.05 2 0.112 Lack of modern finishing facilities 0.07 1 0.0713 Highly unhygienic environment 0.08 2 0.1614 Difficult in accessing techniques , designing 0.07 1 0.07

Total 1.00 2.61

The total weighted score for the organization is 2.61 which is just above average, so the

organization is just above the average score.


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EXTERNAL FACTOR EVALUATION MATRIX

The EFE matrix is similar to IFE matrix the only difference is that IFE matrix evaluate the

internal factors of the company and EFE matrix evaluate the external factor.

EFE MATRIX OF

Sno.

Key external factors Weight Rating Weighted Score

OPPORTUNITIES1 Abundant scope to supply finished leather 0.15 3 0.452 Growing fashion globally 0.11 4 0.443 Use of information technology and software 0.07 3 0.214 Product diversification 0.08 3 0.245 Growing domestic and international market 0.09 3 0.276

THREATS7 Entry of multinational in domestic market 0.10 4 0.48 Stiff competition from other countries 0.12 3 0.369 Non tariff barriers 0.11 2 0.2210 Improving quality to adapt the stricter

international trade 0.09 1 0.0911 Faster changing fashion difficult to adapt 0.08 2 0.16

TOTAL 1.00 2.84

The total weighted score is 2.84 which is above average that indicates the organization is

responding in a steady manner to existing opportunities and threats in its industry.


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COMPETITIVE PROFILE MATRIX

Competitive profile matrix is an essential strategic management tool to compare the firm with the

major players of the industry. Competitive profile matrix show the clear picture to the firm about

their strong points and weak points relative to their competitors.

CPM FOR ABC LEATHERS

ABC Leathers Supreme leathers Vision exportCritical success factors Weights Rating Weighted

scoreRating Weighted

scoreRating Weighted

scoreMarket share 0.06 1 0.06 2 0.12 1 0.06Financial position 0.09 2 0.18 3 0.27 4 0.36Product quality 0.13 4 0.52 4 0.52 3 0.39Distribution channels 0.12 4 0.48 4 0.48 3 0.36Global expansion 0.15 3 0.45 3 0.45 4 0.06Production capacity 0.10 4 0.4 3 0.3 3 0.3Price competitiveness 0.13 2 0.26 4 0.52 3 0.39

Customer loyalty 0.12 3 0.36 4 0.48 3 0.36Product diversity 0.10 3 0.3 4 0.4 3 0.3Totals 1.00 3.01 3.54 2.58

The total weighted score of the three organizations are calculated above, by using the numbers

above we can interpret that Supreme leathers is relatively stronger internally and externally as

compared to other two firms.


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TOWS MATRIX

SO STRATEGIES

1. More number of qualified leathertechnologist in the field as thefashion growing globally.

2. Used more advanced technologiesand machineries for designing andcreativity.

3. Increase promotion in the marketsof USA and Europe as there arelarge numbers of buyers.

WO STRATEGIES

1.


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SPACE MATRIX

The SPACE matrix is a management tool used to analyze a company. It is used to determine

what type of a strategy a company should undertake. The Strategic Position & Action

Evaluation matrix or short a space matrix is a strategic management tool that focuses on

strategy formulation especially as related to the competitive position of an organization .


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To explain how the SPACE matrix works, it is best to reverse-engineer it. The SPACE matrix is

broken down to four quadrants where each quadrant suggests a different type or a nature of a

strategy:

Aggressive

Conservative

Defensive

Competitive

Internal strategic position

Financial strength Rating

Return on investment 5.0

The company primary capital ratio is 7.02 percent 3.0

The company revenues increased 4% 3.0

Average 3.66

Competitive advantage(CA) RATING

Market share increases 1% -4.0

Technological know how -2.0

Product quality and life cycle -1.0

Average -2.33


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External strategic position

Environment stabilities (ES) RATING

Technological changes -2.0

Price range of competitive products -4.0

Competitive pressure -4.0

Average -3.33

Industry strength (IS) RATING

Growth potential 5.0

Maximum resource utilization 4.0

Financial stability 4.0

Average 4.33

Conclusion

Y axis: - financial strength: 3.66

Environmental stability: -3.33

Y coordinate: 3.66+ (-3.33) = 0.33

X axis: - competitive advantage: -2.33


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Industry strength: 4.33

X coordinate: -2.33+4.3= 2

Therefore the company should pursue in Aggressive advantage.


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QSPM

Quantitative Strategic Planning Matrix (QSPM ) is a high-level strategic management

approach for evaluating possible strategies. Quantitative Strategic Planning Matrix or a QSPM

provides an analytical method for comparing feasible alternative actions. The QSPM

method falls within so-called stage 3 of the strategy formulation analytical framework .

Key factors Weight Keep expanding

in foreign markets

Focus on specific us

customer

External 1 to 4 1 to 4

OPPORTUNITIES Abundant scope to supply

finished leather

0.05 3 0.15 4 0.2

Growing fashion globally 0.06 3 0.18 2

0.12


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Use of information

technology and software

0.05 3 0.15 3 0.15

Product diversification 0.04 4 0.16 4

0.16 Growing domestic and

international market0.06 3 0.18 4 0.24

THREATS

Entry of multinational indomestic market

0.06 1 0.06 2 0.12

Stiff competition from other countries 0.07 3 0.21 1 0.07

Non tariff barriers 0.04 1 0.04 2 0.08 Improving quality to adapt the

stricter international trade0.03 1 0.03 2 0.06

Faster changing fashiondifficult to adapt

0.04 3

0.12

1 0.04

0.5

Internal 1 to 4 1 to 4

STRENGTHS

Easy availability of low costof labour

0.05 2 0.1 3 0.15

Presence of qualified leather technologists

0.04 3 0.12 3 0.12

Comfortable availability of raw materials

0.04 1 0.04 4 0.16

Manpower development andmarketing

0.05 1 0.05 2 0.10

Export friendly government policies

0.03 2 0.06 1 0.03


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Tax incentive on machinery 0.04 2 0.08 2 0.08 Well establish linkage with

EU n USA0.03 4 0.12 1 0.03

Management with business background 0.04 3 0.12 3 0.12

WEAKNESS

Low level of modernization ntechnology

0.04 2 0.08 2 0.08

Low level of labour productivity

0.03 1 0.03 4 0.12

Less number of organized

product manufacture

0.04 1 0.04 3 0.12

Lack of modern finishingfacilities

0.02 2 0.04 1 0.02

Highly unhygienicenvironment

0.02 1 0.02 2 0.04

Difficult in accessingtechniques , designing

0.03 3

0.09

1

0.03

0.5 2.27 2.4

4

T

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strategic management of leather organization