External Environment of Nishat Group:

Macro Environment (Societal):

Macro environmental forces may disturb or affect any company in the world.

1. Political factors:
Due to the unsustainable political and legal factors of Pakistan the current situation is not
satisfactory for this industrial giant. Changing in the government after every 2 or 3 years is a big
issue and after that every government implements its own trade policies which are great
problems. Government should apply sustainable policies for the beneficial of the exporters as
well as the investors.

2. Economical situations:
The global economic recession also put the negative impression on the economy of Pakistan and
disturbed it badly. Prices of the commodities have gone up and which minimize the people
purchasing power. The economic condition of Pakistan is not good as well. Inflation rate is
increasing rapidly and the high cost of production not attracting the foreign investors and thus
reduce the profit margin of the investors and the stakeholders as well.

3. Social change:
Rapidly increasing inflation rate has disturbed the lifestyle of the people and hence has affected
the growing demand of the Nishat textile mills (NTM) products. So this is another important
factor which is disturbing the Nishat mills products.

4. Technological situation:
As the advanced technology is being used by every company in the world. It just disturbed a
small portion of the industry but the NTM has very good equipments imported from different
countries. So position from technological point of view is satisfactory as compared to the others.
Micro external environment:
Micro external environment enables an organization to have a good knowledge of the forces
which can cause problems for the organization from outside the organization. Here is a Porters
model which describes micro environment for NTM.

Porter forces model:

"Five forces model is helpful to analysis an industry's competitive environment. In all industries,
the rules and nature of competition are alive in a five forces framework (FFF): 1. the bargaining
power of suppliers, 2. Threat of new entrants, 3. the bargaining power of buyers, 4 the threat of
substitute and 5. The rivalry among the existing competitors"

1. Supplier's bargaining power:

Supplier bargaining power is affecting the Nishat mills profit. Because of inflation the prices
have gone up and the raw material as well. So this powerful bargaining hitting the profit badly of
NTM.

2. New entrance threat:

Any Organizations competitive environment directly impacts the profitability of existing

organizations under the new entrance threats. Keeping them save from this threat they use a scale
of economies so that the cost can be reduced and product differentiation can be maintained.

3. Buyers bargaining power:

Bargaining power of the buyer is helping to reduce the profit ratio of the NTM because they want
discount in the products and insist for the more which is helping to minimize the margin ratio.

Substitute's threat:

Substitute products are products offered to consumers by some other industry fulfilling the same
needs of consumer. Substitute products e.g. Replicas are available in the market and creating the
problems for the nishat textile mills. So such kind of threats are available both at national and
international market.