006 International Business

8/8/2019 006 International Business

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International BusinessInternational Business

Gul Ahmed Textile Mills Ltd.


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Company HistoryCompany History

y 1900s began trading in textiles in the

y 1953 Manufacturing started

y Gul Ahmed Textile Mills Limited established

y Company has continued to make rapid progress

y Fifty year since its inception, the name Gul Ahmed isstill synonymous with quality, innovation andreliability, not just in Pakistan but all over the world.

y The Company is a composite unit, makingeverything from cotton yarn to finished product.

y Manufacturing takes place in decentralizedproduction units, strictly focusing on specialization,all under recognized and reputed name.


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Vision And Mission StatementVision And Mission Statement

Vision Statement

y Setting trends globally in the textileindustry. Responsibly delivering product

and service to our partners.

Mission Statement

y To deliver value to our partners throughinnovative technology and teamwork.Fulfilling our social and environmentalresponsibilities.


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ProductsProducts

y Bed-Linen

y Curtain

y Fabric

y Yarn


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Focused ProductFocused Product

y Ladies Fabric

Aryana ethnic print collection Aster organza silk collection

Swiss voile 2 pc collection

Blanche-noire Broche de chiffonChantilly de lace Cotton silk

Cotton silk wider Diva de chffon

Essenza Fleur de chiffon

La belleza digital printed silk La chiffon

Le soie premium bamboo silk Lillium bloom normal lawnOmbre silk Pop-art de floret

Regalia Renaissance

Rosaire Rosette

Single collection Single garments collection

Single gold Soie de zarrin pure silk collection


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Countries SelectedCountries Selected

EgyptLocation Africa (North)

Area 1,001,450 sq km

Population 80,471,869

Religion Muslim 90%

Coptic 9%

Christian 1%

Languages Arabic (Official)

English and French

Government Type Republic

Capital Cairo

C

urrency Egyptian Pound (EGP)1 EGP 0.175423 USD

1 EGP 15.0303 PKR


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Countries SelectedCountries Selected

BulgariaLocation Europe (Southeast)

Area 110,879 sq km

Population 7,148,785

Religion Bulgarian Orthodox 82.6%

Muslim 12.2%

Other Christian 1.2%

Other 4%

Languages Bulgarian 84.5%, Turkish 9.6%, Roma

4.1%, other and unspecified 1.8%

Government Type Parliamentary Democracy

Capital SofiaCurrency Leva (BGN)

1 BGN 0.655517 USD

1 BGN 56.1593 PKR


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EgyptEgypt

Reasons to Invest in Egyptian Textile Industry

y Pakistan and Egypt have diplomatic and trade relations and bothcountries are members of the OIC (Organization of the IslamicConference).

y The Textile Sector of Egypt has Investment Opportunities as Egyptis trying to develop it. Egypt has established zones especially forTextile Sector in Sohag and Helwan.

y Advantages of investing in Sohag

Water, Gas supply and Electricity supply.

Availability of labour with a competitive prices.

The availability of an integrated network of transportation and roads. Enjoying Investment incentives allocated for Upper Egypt (financial

subsidy for every job opportunity created.

About 170 km from the Assiut Airport, and 190 kilometers fromQuseer port and 15 km from the Sohag railway


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Business Culture in EgyptBusiness Culture in Egypt

Working practices in Egypt

y Appointments are necessary before doing business in Egypt.

y Punctuality in Egyptian business culture is not seen as a main priority.

y Generally, business hours in Egypt vary according to the time of the year.

Structure and hierarchy in Egyptian companies

y The structure of business in Egypt is hierarchical.

y Rank and status are key in the structure of Egyptian companies.

Working relationships in Egypt

y Egyptian business people place a substantial emphasis on networking

y The concept of honour governs all interpersonal relationships in Egypt


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Egyptian Business EtiquetteEgyptian Business Etiquette

(Dos and Donts)(Dos and Donts)y DO attempt to learn at least a few words or

phrases of Egyptian Arabic, it is appreciated.

y DO wait for your Egyptian counterpart to initiatethe greeting at a first meeting.

y

DO make eye contact when meeting with yourEgyptian business associates, especially with malecolleagues.

y DONT rush or force your Egyptian counterpartsinto making a quick decision as this will prove

ineffective.y DONT be surprised if your Egyptian business

colleagues stand very close to you during businessconversations.


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Political EnvironmentPolitical Environment

Environmental lawsy The Egyptian Environmental Affairs Agency (EEAA) was restructured with the new

mandate with Law 4/1994 for the Protection of the Environment.

y The Principal Functions of the Agency Include:

To formulate environmental policies

To prepare required plans for Environmental protection and Environmental

development projects and there implementation EEAA is the National Authority which is charge of promoting environmental

relations between Egypt and other States, as well as Regional and InternationalOrganizations

Foreign tradey

The Egyptian market has opened up after signing an agreement with the EuropeanFree Trade Association (EFTA) in 2006 and has also signed a free trade treaty withthe United States.

y Its three main export partners are the European Union, United States and Syriaand three main import partners are the European Union, the United States andChina.


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Political EnvironmentPolitical Environment (Cont.)(Cont.)

Corporate Tax Exemptions and Deductions

y Profits of companies located in the free zones.

y All tax holidays granted under Investment Law No.8/1997.

y

Taxation of Foreignersy Foreigners having annual salaries starting from EGP 1.00 to EGP 50,000 are subject

to pay 20% income tax if they have been working in the country for more than 183

days. On the other hand if the employee's annual income exceeds LE 50,000 then

they will have to pay 32% income tax.


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Economic EnvironmentEconomic Environment

y Egypt's economy has flourished under formerPresident Anwar EL-SADAT and current PresidentMohamed Hosni MUBARAK.

y

Egypt's GDP growth slowed to 4.5% in 2009 due toglobal economic slump affecting major sectors likemanufacturing and tourism.

y In 2009 the government executed a packagefavouring infrastructure projects and exportsubsidies of $2.7 billion, and additional $3.3 billionin 2010 to lessen the slowdown in economic growth.

y Government is supporting FDI in many sectorsincluding the textile sector.


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Social EnvironmentSocial Environment

y The total population of Egypt is nearly 80.4 millionout which nearly 90% are Muslims and remainingare Christian.

y

Most of the population lives near Nile River andnearly half of the population is urban living in Cairoand Alexandria, the most densely populated cities ofEgypt.

y

Egypt is facing a lot of social problem includingincreasing unemployment rate, poor educationalsector and low literacy and lack of health carefacilities.


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BulgariaBulgaria

Reasons to Invest in Bulgarian Textile Industry

y Pakistan and Bulgaria have diplomatic and trade relation and accordingto a news Pakistan and Bulgaria are keen to enhance bilateral tradeespecially in Textile Sector.

y The textile and clothing sector in one of the Bulgarias most competitive

industries nowadays with considerable investment, and export andemployment opportunities. Bulgarias Textile Sector Zone is ParvomaiIndustrial Zone

y Advantages of investing in Parvomai Industrial Zone

Proximity to large European Markets.

Water, Gas supply and Electricity supply.

Railway Terminals, which serve the particular industrial projects in thezone.

The availability of an integrated network of transportation and roads.

Distance to the capital, the city of Sofia 192 km.


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Business Culture in BulgariaBusiness Culture in Bulgaria

Working practices in Bulgaria

y Appointments are necessary before doing business in Bulgaria

y Punctuality is appreciated.

y Meetings are formal and follow a strict routine of introductions,handshakes and an exchange of business cards.

Structure and Hierarchy in Bulgarian companies

y The structure of business in Bulgaria is hierarchical.

y More senior members in the group have the most authority andcommand a certain level of respect.

Working relationships in Bulgaria

y The Bulgarian business culture is formal and importance is placed onusing the correct titles.

y As a collectivist society, relationships are a vital part of Bulgarianbusiness culture.


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Bulgarian Business EtiquetteBulgarian Business Etiquette

(Dos and Donts)(Dos and Donts)y DO dress formally as Bulgarian business

culture respects and appreciates formality.

y DO ask what language business will beconducted in. English is preferred.

y DO expect business dealings to take a longtime.

y DONT expect to be able to do business withBulgarians during the months of July andAugust.

y DONT underestimate the directness ofBulgarians.


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Political EnvironmentPolitical Environmenty During the era of King Simeon II between 2001 and 2005 market reform were

introduced to meet EU economic targets. The country attained stable growth,declining inflation and reduction in unemployment but yet incomes and livingstandards remained low. Currently, the political climate in Bulgaria is stable.

Trading Partners

y The main trading partners of Bulgaria are the EU, Germany, Italy, and Greece.

y Expansion to other countries and markets is also expected. Last year Bulgariaexports to Russia increased by 80%.

y Another key partner which can improve Bulgarias trade is Turkey.

Visa Free

y One of the main advantages for the Bulgarian economy is that people can movefreely with in the union as Bulgaria is a member of the European Union.

y Romania and Bulgaria have also planned to sign an agreement to attain aSchengen common border by March 2011.


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Economic EnvironmentEconomic Environment

y The former Communist country Bulgariabecame the member of EU on 1 January2007.

y A large number of FDI has helped Bulgaria

in its growth.y Bulgarian government has shown their

commitment to economic reforms andplanning boost up the situation.

y Low inflation and better structural reformshad a significantly healing effect on theBulgarian business environment.


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Social EnvironmentSocial Environment

y In Bulgaria the majority of the population livedin their own houses and apartments even duringcommunist government.

y Even at that time people believed that property

is among the safest investments and will remainprofitable.

y Bulgaria is among the country with themaximum ownership rate. According to official

statistics, 91% of the people do own theirhouses.

y According to EU, Bulgarians have manyopportunities for investment and development.


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Reasons for ExpansionReasons for Expansion

y Opportunistic global marketdevelopment (diversifying markets)

y Pursuing geographic diversification

(climate, topography, space, etc.)y Exploiting different economic growth

rates (gaining scale and scope)

y Pursuing potential abroad

y Pursuing a global logic or imperative

(new markets and profits)


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Market Entry StrategiesMarket Entry Strategies

Foreign Direct Investment

y In starting Gul Ahmed will go with Foreign Direct Investment to operate in Egyptand Bulgaria for its full operations including warehouses, production facilities,management and organization itself. The retail venture in Pakistan will similarly beused in the host countries as well IDEAS.

Foreign Production as an Entry Strategy

y Gul Ahmed has been exporting its product to many countries but exporting intothe market in not sufficient to have a strong local presence. So Gul Ahmed willenter the market by establishing Foreign Production facilities in the zonesmentioned before.

International Strategyy Gul Ahmed will use Multi-Domestic Strategy in which strategy and operating

decisions would be decentralized to strategic business units (SBU) in each country.With this strategy Gul Ahmed products would be tailored according to the localmarkets. It would be easy to focus competition in each market.


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4 Ps4 Ps

Product and Price

y Ladies Fabric

y So far in Pakistan, GulAhmed has followed the

following Pricing Strategies

Market-Penetration Pricing

Product Line Pricing

Optional-Product Pricing

By-product Pricing Product Bundle Pricing

Promotional Pricing


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4 Ps4 Ps (Cont.)(Cont.)

Place

y Gul Ahmed has been using a direct sellingstrategy i.e. from Producer to Ultimate

Consumer. It has its own retail outlet in differentcities of Pakistan with the name of Ideas.

y After visualizing the needs of customers and thegrowing trend towards the retail industry, thecompany decided to diversify into the retail

sector in 2003.y As already discussed Gul Ahmed will have its

own retail outlets in Egypt and Bulgaria usingtheir brand Ideas.


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MarketMarket

Market Segmentation

y Gul Ahmeds will focus on female consumers as they are our primary customers.The segment that is we going to serve would have an age group of 15 to 50. Theincome level would be upper class and middle class.

Target Market and Size of the Market

Competitive Advantage

Strategy - Differentiationy Gul Ahmed has always differentiated itself from its competitors on the base of

three things i.e. Quality, Unlimited range of designs and Wide range of colors. Thefactors would be continued in the upcoming markets as well having moreemphasis on the Quality part.With these attribute Gul Ahmed would be able tocharge premium price for its products.

Market Population Females of Age

Group 15-60

Income Group Upper & Middle Class

having 50% income distribution

Egypt 80,471,869 24,871,255 50% of 24,871,255 = 12435628

Bulgaria 7,148,785 2,480,941 50% of 2,480,941 = 1240471


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Corporate Social ResponsibilityCorporate Social Responsibility

y Gul Ahmed holds long term corporateobjectives towards conservation in the useof electricity, gas and water.

y The Company plans to set up an

environmental management system inorder to meet global environmentalchallenges in all areas.

y Gul Ahmed promotes equal opportunity

employment and provides a congenial,relaxed and healthy work environment. Ahealth and safety manual ensures for staffand workers.

Documents

006 International Business