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Preliminary Report

Subject;
Strategic Management

Submitted To;
Mam Nosheen Sarwat

Submitted By;
Muhammad Shakeel

Roll NO#
49

INSTITUTE OF MANAGEMENT SCIENCES BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN


Textile Industry
Textile is a term that comes from “texture” which is a Latin word that means “to weave”. A cloth
is manufactured by weaving or knitting forms a fabric.

Textile Industry In Pakistan


The textile industry is one of the most important sectors of Pakistan. It contributes
significantly to the country’s GDP, exports as well as employment. It is, in fact, the backbone of
the Pakistani economy.
Established capacity
The textile industry of Pakistan has a total established spinning capacity of 1550 million
kgs of yarn, weaving capacity of 4368 million square meters of fabric and finishing capacity
of 4000 million square meters. The industry has a production capacity of 670 million units
of garments, 400 million units of knitwear and 53 million kgs of towels The industry has a total
of 1221 units engaged in ginning and 442 units engaged in spinning. There are around 124 large
units that undertake weaving and 425 small units. There area round 20600 power looms in
operation in the industry. The industry also houses around 10large finishing units and 625 small
units. Pakistanï textile industry has about 50 large and 2500 small garment manufacturing units.
Moreover, it also houses around 600 knitwear-producing units and 400 towel-producing units.
Contribution to exports
According to recent figures, the Pakistan textile industry contributes more than 60% to
the country’s total exports, which amounts to around 5.2 billion US dollars. The industry
contributes around 46% to the total output produced in the country. In Asia, Pakistan is the 8th
largest exporter of textile products.
Contribution to GDP and employment
The contribution of this industry to the total GDP is 8.5%. It provides employment to
38% of the work force in the country, which amounts to a figure of 15 million. However,
the proportion of skilled labor is very less as compared to that of unskilled labor.
History
Pakistan came into existence in 1947 at that time there were Only two textile mills
with80,000 spindles and 3,000 looms only which were capable of producing 8% of the domestic
demand at that time. The organized development of cotton textile mills started in the late50’s.
Pakistan industrial development corporation was formed in 1952 which started its operations in
1953 with the inauguration of the Vatika Textile Mill at Karachi. By mid 60’sthere were about
180 units of textile bleaching, printing and processing units, A number of spinning units
comprising of only 12,500 spindles were set up. Newly established mills were based upon
imported technology but there was lack of technical staff and shortage of capitals. By 1970-1971
there was 113 textile units & the industry had 2,605 spindles and 30 thousands looms. After the
separation of East Pakistan , Cotton Export Corporation of Pakistan was established which meant
that most of the private sector was taken over by the state. The textile industry suffered heavy
looses because the export cotton controlled by CEC , and the import of machinery was made
difficult due to shortages of foreign exchange.
The 80’s decade brought a relief to the textile industry. There was a rapid growth in
spinning sector. Till 1980-81 spinning continued to expand to 4033 thousand spindles in 203
spinning units, and working capacity amounted to 2833 thousand spindles. Machinery for
producing garments and made-ups was also freed from import duty. As a result, a huge
expansion in the spinning sector took place in the first five years of the 1990s. World demand for
good quality, wide width fabrics grew and replacement and a modernization process started.
With these developments, production and export value-added items such as bed-sheets and home
furnishing started. Structural changes with the replacement of obsolete machinery and
modernization in the industry still continued in view of world competition
Main Products
 Main Products of Pakistan Textile Industry are;
 Cotton (Raw)
 Yarn (Raw)
 Fibre
 Greige Fabric
 Finished Fabric Apparel( Fashion wear and work wear)
 Finished Fabric Made Ups
 Garments (Suits,Shirts, Trousers of all sorts)
 Undergarments
 Bed sheets
 Blankets
 Quilts
 Pillows
 Curtains
Topics
1) PESTEL Analysis
2) Porter Five Forces Model
3) Scenario Analysis
4) SWOT analysis

(1) PESTEL ANALYSIS

A PESTEL analysis is a framework or tool used by marketers to analyze and monitor


the macro-environmental factors that have an impact on an organization. The result of which is
used to identify threats and weaknesses which is used in a SWOT analysis.
Political Factors
These are all about how and to what degree a government intervenes in the economy.
This can include – government policy, political stability or instability in overseas markets,
foreign trade policy, tax policy, labor law, environmental law, trade restrictions and so on.
Economic Factors
Economic factors have a significant impact on how an organization does business and
also how profitable they are. Factors include – economic growth, interest rates, exchange rates,
inflation, disposable income of consumers and businesses and so on.

Social Factors
Also known as socio-cultural factors, are the areas that involve the shared belief and
attitudes of the population. These factors include – population growth, age distribution, health
consciousness, career attitudes and so on. These factors are of particular interest as they have a
direct effect on how marketers understand customers and what drives them.
Technological Factors
We all know how fast the technological landscape changes and how this impacts the way
we market our products. Technological factors affect marketing and the management thereof in
three distinct ways:
 New ways of producing goods and services
 New ways of distributing goods and services
 New ways of communicating with target market
Environmental Factors
These factors have only really come to the forefront in the last fifteen years or so. They
have become important due to the increasing scarcity of raw materials, pollution targets, doing
business as an ethical and sustainable company, carbon footprint targets set by governments (this
is a good example were one factor could be classes as political and environmental at the same
time).
Legal Factors
Legal factors include - health and safety, equal opportunities, advertising standards,
consumer rights and laws, product labeling and product safety. It is clear that companies need to
know what is and what is not legal in order to trade successfully. If an organization trades
globally this becomes a very tricky area to get right as each country has its own set of rules and
regulations.
(2) Porter Five Forces Model
Porter recognized that organizations likely keep a close watch on their rivals, but he
encouraged them to look beyond the actions of their competitors and examine what other factors
could impact the business environment. He identified five forces that make up the competitive
environment, and which can erode your profitability. These are:
1. Competitive Rivalry;
This looks at the number and strength of your competitors. How many rivals do
you have? Who are they, and how does the quality of their products and services compare
with yours?
Where rivalry is intense, companies can attract customers with aggressive price
cuts and high-impact marketing campaigns. Also, in markets with lots of rivals, your
suppliers and buyers can go elsewhere if they feel that they're not getting a good deal
from you.
On the other hand, where competitive rivalry is minimal, and no one else is doing
what you do, then you'll likely have tremendous strength and healthy profits.
2. Supplier Power;
This is determined by how easy it is for your suppliers to increase their prices.
How many potential suppliers do you have? How unique is the product or service that
they provide, and how expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper
alternative. But the fewer suppliers there are, and the more you need their help, the
stronger their position and their ability to charge you more. That can impact your profit.
3. Buyer Power.;
Here, you ask yourself how easy it is for buyers to drive your prices down. How
many buyers are there, and how big are their orders? How much would it cost them to
switch from your products and services to those of a rival? Are your buyers strong
enough to dictate terms to you?
When you deal with only a few savvy customers, they have more power, but your
power increases if you have many customers.
4. Threat of Substitution;
This refers to the likelihood of your customers finding a different way of doing
what you do. For example, if you supply a unique software product that automates an
important process, people may substitute it by doing the process manually or by
outsourcing it. A substitution that is easy and cheap to make can weaken your position
and threaten your profitability.
5. Threat of New Entry.;
Your position can be affected by people's ability to enter your market. So, think
about how easily this could be done. How easy is it to get a foothold in your industry or
market? How much would it cost, and how tightly is your sector regulated?
(3)Scenario Analysis

A technique that develops plausible alternative views of how the environment might
develop in the future. Scenario planners usually avoid presenting alternatives in terms of finely
calculated probabilities. Scenarios tend to extend too far into the future to allow probability
calculations and besides, assigning probabilities directs attention to the most likely scenario
rather than to the whole range.
DEFINE OBJECTIVE AND SCOPE
•Define the issues, decisions or key variables to be evaluated
• Set the scope of study, including the time horizon to be considered
• Agree on approach, select team members and secure senior management
commitment
DEFINE KEY DRIVERS
• Identify key external drivers that are likely to influence scenarios
• Define the major internal variables that need to be addressed
• Establish critical relationships between drivers
COLLECT AND ANALYZE DATA
• Collect quantitative, qualitative and expert opinion data
• Assess the predictability and impact of the key drivers
• Define appropriate measures for the key drivers
DEVELOP SCENARIOS
• Construct scenarios and develop a narrative description for each
• Test the scenarios using the data collected
• Update scenarios and set criteria for evaluating strategies and plans
APPLY SCENARIOS
• Test sensitivity of strategies and plans under each scenario
• Formulate contingency plans and risk mitigation strategies
• Communicate to all constituencies
MAINTAIN AND UPDATE
• Integrate leading indicators and key performance metrics
• Refresh the data and update scenarios as appropriate over time
• Repeat as needed
(4)SWOT Analysis

Strengths
Strengths describe the positive attributes
 What makes you unique in your competitors?
 What advantages do you have over your competition?
 What do you do better than anyone else?
Weaknesses
Weaknesses are aspects of your business that detract from the value you offer or place
you at a competitive disadvantage.
 Does your business have limited resources?
 What could you improve?
 What should you avoid?
 What factors lose you sales?
Opportunities
Opportunities are external attractive factors that represent reasons your business is
likely to prosper.
 What good opportunities can you spot?
 What interesting trends are you aware of?
 Changes in technology and markets on both a broad and narrow scale.
 Changes in government policy related to your field.
Threats
Threats include external factors beyond your control that could place your strategy, or
the business itself, at risk. You have no control over these, but you may benefit by having
contingency plans to address them if they should occur.

 What obstacles do you face?


 What are your competitors doing?
 Are quality standards or specifications for your job, products or services changing?
Is changing technology threatening your position?