a case studyPresented By:

Tanush Sharma

Corporate Level

Overlooking high fragmentation in denim industry

Myopic view on NAFTA implications

Business level: Insufficient measures to create product

differentiation

Functional level: Lavish spending in new plant at Santej

Levels of Strategy mismatch Continued……

Environmental factors those influencing Arvind Mills.

Economic

Political/legal

Technological

How do these factors change in Post MFA Regime?

Pre MFA Post MFA

Economic:

•Collapse of global denim market

•Prices of Naphtha more than doubled

Economic:

•No change

•No control on naphtha prices

Political/Legal:

•Foreign trade regulation

Political/Legal:

•Increase in global

Pre – MFA Post - MFA

Technological Technological

1. Under-utilized lab work 1. Maximizing research on denim fabric

2. Domestic cost advantage 2. Domestic cost advantage

CSF for Arvind Mills

Strengths Operational Efficiency and

Fast Machines

Skilled and Comparatively cheap labor

Redefining product portfolio by increasing the no. of brands to 120

Access to Export Market

Weaknesses Business Concentration

leading to increased risks

Wrong Assumptions and Forecasts

High Set-up cost of new plant

Inability to retain skilled

personnel

Continued……….

Opportunities Price Competitiveness Cheap Labor Debt Restructuring Product Diversification Forward Contracts for

Naphtha and Cotton Greater penetration with

industry majors like Levi and Gap

Duty waive-off after post 2005 liberalization scenario

Threats Inability for the organization

to forecast market conditions Low Market Share spread

Increased global competition especially from China

Complacency of management due to earlier successes

Impact of NAFTA agreement on Tariffs

High employee iteration especially senior skilled managers

Is it Proceeding in right direction ?Positives:

Product differentiation

Value chain enhanced….

Direct collaboration with the labels instead of vendors

Forward Contracts for Naphtha and Cotton

Integration/Diversification options for Arvind mills.

Levels of diversification- Moderate to high

Vertically enhancement of value chain

Increased styles in core product

Thank you!!