PEST of Gul Ahmed

8/8/2019 PEST of Gul Ahmed

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PEST ANALYSIS OF GUL AHMED

PoliticalThe global economic slowdown of 2007-08 initially triggered by thesubprime

mortgage crises in the U.S, as a result was which the U.S. Dollarsuffered huge depreciation against major currencies; coupled with thephenomenal hike in oil and food prices, sent shock waves around theworld,throwing up enormous challenges for most economic managers.Pakistanwas no exception.3 Heavy reliance on imported fuel and foodcommodities like wheat and sugar placed huge pressure on ourbalance of paymentreserves as our import bill soared.As far as the garment production4 in Pakistan is concerned, the highest

value-added product among the textile group, but the price we aregettingfor our products is less compared to other countries. According to oneestimate 70 percent of these units are in the unorganized sector,producingcotton-made articles. These units do not have modern machinery andusethe non-mill made cotton cloth. This may be one of the reasons thatthe pricewe fetch for our apparel exports is low compared to other countries.As apparels/garments provides the highest value added product

among thetextile items. Maximum focus should be towards the units producinggarments. Our producers in this particular industry should try to adopt(justlike in the West) the Demand for Market Oriented Strategy i.e., toincreasetheir market power by producing high price fashion clothing. Theyshould gofor product differentiation through the promotion of brand names andadvertising. And they should also try to increase the efficiency ofdistribution.

With an increase in market power they can easily transfer rising cost toconsumer in the form of rising prices.

Regulations in your industry National Business Environment

Pakistans national business environment is characterized byabundance ofsemi-skilled and low wage labor, moderate natural resources, poor


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infrastructure, high rates of corruption, poor governance, moderatelevel ofuniversity-industry collaboration and low scientific research on thefactorside. The context of firm strategy & rivalry can be described as highly

regulated, bureaucratic business environment, high tariffs, nosubstantialpresence of foreign companies and static corporate culture.The textile industry has been the driving force behind themanufacturingsector growth of Pakistan. This sector accounts for nearly 60% of totalexports for Pakistan, 46% of total manufacturing produce and employs38%of the total manufacturing labor force. Textile trade is classified intotwobroad categories i.e textile which include yarn, fabric and madeups

andclothing which represents ready-made garments.The largest growing sector within the global textiles trade has been theapparel sector trade in this sector in 1999 accounted for 53% of thetotalvalue of global textile trade. Over the last decade, the apparel trade5hassurpassed the trade in textile products such as yarns and fabrics. Inthe year2000 total trade in textiles was $157 billion and trade in clothing was$199

billion. There was a switch in trade patterns after 1985 when clothingbecame more significant as compared to textiles. This sector lies at thepinnacle of the textile value chain, which begins with cotton andsyntheticfibers. South Asian countries have established themselves as the mostimportant players in the textile sector.

Environmental what the government says and what market say

Pakistan is one of the emerging economies of the world. It has showngreat

economic growth due to dynamism in its industrial, agriculture andservicessectors. The services sector alone has continued to perform stronglyand hasaveraged growth of over 8% per annum since 2000.Services sector contribution to real GDP growthPakistans economic growth7 is broad-based and is shared by all themajor


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sectors of the economy. However, a major contribution towards growthhascome from the services sector, which has emerged as a growthpowerhouseover the past few years. The commodity producing sectors (agriculture

andindustry) have contributed two-fifths while the services sectorcontributedthe remaining three-fifths of the 2006-07 real GDP growth of 7.0%.Agriculture and industry contributed 30.2%, or 2.9% percentage points,whilethe remaining 59.8%, or 4.2 percentage points, came from the servicessector. Within the commodity producing sectors, agriculturecontributed 1.1percentage points or 15.1% to overall growth, while industrycontributed 1.8

percentage points or 22.7%. The services sector has contributed thebulk ofGDP growth for some time.source referenced from smeda

Social Related to your industry

Pakistans reliance on agriculture is minimizing with the passage oftime. It isencouraging to note that the contribution of wholesale and retail tradeisincreasing. It contributed 19.4% or 1.4 percentage points to GDP in

2006-07.This sector is highly labor-intensive and this higher growth may havecontributed to the rise in employment and income levels of peopleattachedto the sector. A view of the services market

While dealing with a service giver, I am constantly gripped by a fearofbeing cheated. I have to play extra vigilant; as the fear is not justabout theconscious wrong doing on the part of a service giver but also about his

skilland ability to deliver the right quality stuff.These issues are reflected below: Lack of standardization

Services are not standardized. Legislation protecting consumers is stillat avery early stage and there are no strong traditions to supportcustomers


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seeking recompense or damages from a services deliverer.Internationalquality certifications are systems-based requiring a lot ofdocumentation,besides being expensive. There is a need for a simple but effective

mechanism, at the level of the sectoral or professional associations, tocertifythe quality of services and thereby ensure adherence to a consistentset ofquality standards. Free entry and unemployment

With rising unemployment, services businesses requiring a minimumlevel ofskill, a small capital outlay and virtually no registration are an easyoption forinvestment to earn a living. With scores of people entering the lower

end ofthe market, competition is high and the range of pricing limited.Therefore,livelihoods are squeezed from the thin margin left after meeting allcosts andoverheads. Expecting such a market to be quality conscious is anillusion. Deficiency of trained HR

Apart from a few organized sub sectors, like banking, medicine andengineering, there are no credible training institutions offering coursesin the

skills required for the services sector. Resultantly, most of the artisansintrades like electricians, mechanics, drivers, tailors, barbers, cooks,masons,etc, are trained on the job. The level and quality of skill acquired bythem isinconsistent and uneven depending on the source and environment oflearning.

Socio Cultural:The product made by Gul Ahmed is in sync with the socio culturalaspects of

the region. The dresses usually worn by the women and men here areof thatmaterial. Gul Ahmed however is not catering to the changing socialtrendsfor example the move towards more westernized clothing like Bareezeisdoing with Leisure club. This change in the social and cultural trendscan


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affect Gul Ahmed and it will have to keep re inventing itself to keep upwiththe times. Plus there is a change towards more acceptability of workingwomen in the society. The firm will have to keep in mind that toobecause not even ladies have time to get the clothes elaborately

stitched now. Westernization

Due to media proliferation and exposure to the western culture theyounger generations in Pakistan is becoming more and morewesternized.This change in the society has worked in favor of fashion store likeChen Oneand Bareeze that sell trendy western and eastern outfits for both menandwomen but for Ideas by Gul Ahmed, this is a territory yet to enter. Brand Consciousness

People are becoming more and more brand conscious. Reliance onforeignbrands is increasing. Therefore the Pakistani brands by portraying a hipanda trendy image like the west can capture the interest of people.

Technological:On the national level, Gul Ahmed is enjoying technological edge overall theothers players in the industry. The technology that is in use in theindustryhas a lot of room to be improved. It is necessary that the industry

undertakesan up gradation in the technology being used. Also, there is lack ofefficientR&D and training.The textile machinery used in Pakistan is imported mainly fromcountries likeJapan, Switzerland, Germany, China and Belgium.Gul Ahmed unlike the other mills and factories of Pakistan is equippedwithfar better technology which helps them to be far more efficient andmaintain

good quality. But, on the Global scenario the costs of inputs in Pakistanaremore than any of the competing countries like India and china. GulAhmedhas to be more efficient in production and if possible, install moretechnologyin order to meet its aim of becoming international brand.


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Whereas in IDEAS; they have incorporated Management Informationsystemwith incorporation of oracle based inventory management system. Thishelpsthem retain, analyze and forecast the inventory in store and demand

that isin market for a particular product.

Research and developmentTo facilitate the textile industry, government has granted 6 percentResearch and Development support to garment exports (both knits andwoven). Research and Development support to export of dyed/printedandWhite, Home Textile at 3 percent and dyed/printed textile at 5 percentof theFOB. The scheme has been discontinued from June 30, 2008. As perthe

estimates provided by the State Bank of Pakistan, the government hasdoledout Rs 40 billion to textile exporters of the country

Documents

PEST of Gul Ahmed