Transcript
Page 1: Strategic Management Finalproject on Gul Ahmed
Page 2: Strategic Management Finalproject on Gul Ahmed

STRATEGIC MANAGEMENT FINALPROJECT

ORGANIZATION STUDIEDGUL AHMED

PERSON INTERVIEWEDTariq Shamim DurraniDeputy Brand ManagerGul Ahemd Textile Mills

GROUP MEMBERS Muhammad Faizan Maqsood Behzad shami Pehlaj Rai

CLASSMBA 4D

SUBMITTED TOSir Naveed M. Khan

SUBMITTED ONDecember 20, 2010

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Page 3: Strategic Management Finalproject on Gul Ahmed

ContentsCorporate Profile.................................................................................................................4COMPANY HISTORY.......................................................................................................4Corporate Profile – Major Companies.................................................................................4Corporate Profile – Business Activities...............................................................................4TEXTILES...........................................................................................................................4POWER...............................................................................................................................4MANAGEMENT................................................................................................................4Description of products and services of the company.........................................................5Vision and Mission Statement of the company...................................................................6External factor Evaluation Matrix.......................................................................................7Competitive Profile Matrix..................................................................................................8Internal Factor Evaluation Matrix.......................................................................................9SWOT MATRIX...............................................................................................................10Financial Performance at a Glance....................................................................................12Financial Ratios.................................................................................................................14SPACE MATRIX..............................................................................................................16BCG MATRIX..................................................................................................................17BALANCE SCORECARD...............................................................................................18BLUE OCEAN STRATEGY............................................................................................20CONCLUSION..................................................................................................................21

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Corporate Profile COMPANY HISTORY

The story of textiles in the subcontinent is the story of Gul Ahmed. The group began trading in textiles in the early 1900’s. With all it’s know-how and experience, the group decided to enter the field of manufacturing and Gul Ahmed Textile Mills Ltd. was incorporated as a private limited company, in the year 1953. In 1972 it was subsequently listed on the Karachi Stock Exchange. Since then the company has been making rapid progress and is one of the best composite textile houses in the world. The mill is presently a composite unit with an installed capacity of 103,000 spindles, 220 wide width air jet looms, 90 Sulzer’s, 297 conventional looms and a state of the art processing and finishing unit.

Corporate Profile – Major Companies

The following is a list of the major companies which comprise the group:

Gul Ahmed Textile Mills Limited Gul Ahmed Energy Limited

Corporate Profile – Business Activities

TEXTILES

In the textile field, activities start from the spinning of cotton as well as man made fibers and extend to weaving, processing and finishing of all types of cotton and blended fabrics, bed linen, home furnishings, garment manufacturing, etc.

POWER

The group has been a pioneer in the field of power generation. The textile mill runs on self-generation with an installed capacity of more than 20 MW. Gul Ahmed Energy operates a power plant of 136 MW capacity with a project cost of US$140 million located at Korangi, Karachi. The sponsors of this project include the IFC and Tomen Corporation. The project has been in commercial operation since November 1997.

MANAGEMENT

Management of the group is professionally qualified and broadly experienced. The directors have held top positions in various textile bodies, export committees and have also assisted the Government of Pakistan in some of the major trade talks with EC and USA authorities.

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Description of products and services of the company

The products and services of Gul Ahmed Textile Mills can be divided into two broad categories according to their markets

Gul Ahmed’s local Market Gul Ahmed’s export Market

The products in Gul Ahmed’s local market category are

Lawn Pret line (women category) Men’s stitched wear Men’s unstitched Home textile Foot wear Perfumes Accessories

The products in Gul Ahmed’s export market category are

Lawn Pret line (women category) Men’s stitched wear Men’s unstitched Home textile

What make Gul Ahmed stay? First ETP (Effluent Treatment Plant) in textile sector First yarn mercerizing facility Metal free safety packing zones in all sewing units First textile mill to register carbon credits First rotary machine in Pakistan First to install caustic recovery unit in Pakistan’s textile sector First compact spinner in Pakistan Using CAD/CAM machines to apply latest design techniques Largest embroidery facility dedicated to home textiles An extensive chain of retail outlets all over Pakistan

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Vision and Mission Statement of the company

VISIONSetting trends globally in the textile industry. Responsibly delivering products and services to our partners

MISSIONTo deliver value to our partners through innovative technology and teamwork. Fullfilling our social and environmental responsibilities.

VALUES Integrity Passion Creativity Teamwork

Analysis of Mission Statement According to our Analysis several components are missing in mission statement and the revised mission statement is as follows

“To serve fashion oriented customers. We ensure that our products are of the highest quality standards by adhering to the most stringent systems and processes while carefully selecting all the best quality inputs from around the globe. Our aim is to ensure that the

end customer always gets a unique blend of quality, comfort and fashion which is passionately woven into all our products. We strive to make difference in communities where we operate by following best social & environmental policies and best human resource practices to ahead of the competition and setting benchmark for industry.”

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External factor Evaluation Matrix

External Factor Evaluation Matrix

Key External FactorsWeight

Rate

Weighted score

Opportunities      Growth in target market audience 0.05 4 0.2Increasing Fashion Awareness 0.08 4 0.32Online shopping 0.08 3 0.24Social Network Marketing 0.07 3 0.21Brand Consciousness 0.09 3 0.27Increasing expenditure on shopping 0.06 3 0.18Fashion Weeks in Major cities 0.04 3 0.12       Threats      Counterfeiting and intellectual property rights violations 0.12 3 0.36Inflation 0.06 2 0.12Exchange rate fluctuations 0.06 3 0.18Law and order situation 0.08 2 0.16Terrorism 0.05 1 0.05Increase in interest Rates 0.08 2 0.16Cotton Yarn and other Raw material Prices 0.08 3 0.24TOTAL 1 2.81

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Competitive Profile Matrix

Competitive Profile Matrix Gul Ahmed Chenab Group Al-Karam

IDEAS ChenOne IDENTITYCritical Success Factors Weight Rating Score Rating Score Rating ScoreAdvertising 0.20 4 0.8 3 0.6 2 0.4Product Quality 0.10 4 0.4 4 0.4 3 0.3Price competitiveness 0.10 3 0.3 3 0.3 3 0.3Management 0.15 3 0.45 4 0.6 2 0.3Financial Position 0.10 4 0.4 3 0.3 3 0.3Customer Loyalty 0.10 3 0.3 4 0.4 2 0.2Global Expansion 0.20 3 0.6 2 0.4 3 0.6Market Share 0.05 4 0.2 2 0.1 3 0.15Total 3.45 3.1 2.55

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Internal Factor Evaluation Matrix

INTERNAL FACTOR EVALUATION MATRIX

KEY INTERNAL FACTORS WeightRating

Weighted Score

STRENGTHS      Highest Market share 0.15 4 0.6Creative designers 0.1 4 0.4Fully vertically integrated from fiber to fashion 0.05 4 0.2Latest technology engaged 0.15 4 0.699.99% design quality assurance 0.05 4 0.2Strong brand image 0.03 4 0.12An extensive chain of retail outlets all over Pakistan 0.03 4 0.12       WEAKNESSES      Debt to equity ratio is high .81 0.1 1 0.1EBITDA Margin to sales decreased from 12.49 to 11.92 0.15 1 0.15Demand is higher than production capacity 0.05 2 0.1Supply Chain Issues 0.04 2 0.08Online shop not fully functional 0.05 2 0.1Small share in export market as compare to other local players 0.05 2 0.1TOTAL 1 2.87

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SWOT MATRIX

STRENGTHS

1.Highest Market share

2.Creative designers

3.Fully vertically integrated from fiber to fashion

4.Latest technology engaged

5.99.99% design quality assurance

6. Strong brand image

7. An extensive chain of retail outlets all over Pakistan

8. Financial Strength

WEAKNESSES

1.Demand for Lawn is so high that sometime it exceed their production capacity

2.Online shop is not fully functional (does not contain all products of Gul Ahmed)

3.Most of designs are out of stock

4.Sometime designs are there in the magazine but are launched late.

5.Perfumes and footwear are not profitable

OPPORTUNITIES

1.Growing Demand

2.Internet and Online shopping

3.Global Trade

4.Fashion Weeks in major cities

5. Dubai shopping festival and other expos

SO STRATEGIES

Launch its brand in other countries (S6, S3, S6, O3)

Follow the global trends in fashion and make presence in international trade expos and shopping festivals (S2,O5)

Collaborate with some designer to make impact in fashion weeks (S6,O4)

WO STRATEGIES

Make use of internet to cover lost sales (W1, O1,O2)

Improve supply chain by integrating department and processes (W3, W4, O1)

THREATS

1.Big players in export markets

2.Small share of export market

3. Foreign exchange risk

4.Volatile law and order situation

5.Other established brands in accessories, perfume foot wear

ST STRATEGIES

Dedicated mills for export market to increase export market share (S3, S8, S6, T1, T2)

FDI in other countries to take low cost advantage (S8, T4,T1)

WT STRATEGIES

Drop perfumes and foot wears unless Gul Ahmed develop as a prestige brand (W5,T5)

Re launch perfumes with some high profile celebrity as brand endorsement (W5, T5)

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Financial Performance at a Glance

Profit and Loss   2010 2009 2008 2007

SalesRs. Million

   19,689 

   13,906 

   11,726 

    9,848 

 

Gross ProfitRs. Million

     3,173 

     2,359 

     1,775 

    1,475 

Operating profitRs. Million

     1,653 

     1,209 

         936 

        745 

Profit before taxRs. Million

         708 

         170 

         202 

        262 

Profit / (loss) after taxRs. Million

         478 

           80 

         103 

        164 

DividendsRs. Million

           79 

            -   

           55 

           -   

Balance Sheet    2010  2009  2008  2007

Property Plan and EquipmentRs. Million

     6,140 

     6,106 

     5,828 

    4,703 

IntangibleRs. Million

           16 

           29 

           28 

          30 

Long term investment, loans, advances and deositsRs. Million

           93 

           90 

           78 

          74 

Net Current AssetsRs. Million

      (224)

      (390)

      (687)

      (278)

Total Assets employedRs. Million

     6,025 

     5,835 

     5,247 

    4,529 

Represented by:  

Share capitalRs. Million

         635 

         635 

         552 

        552 

ReservesRs. Million

     2,961 

     2,483 

     2,210 

    2,107 

Shareholders' equityRs. Million

     3,596 

     3,118 

     2,762 

    2,659 

 

Long term loansRs. Million

     2,223 

     2,567 

     2,354 

    1,772 

Deffered liabilitiesRs. Million

         207 

         149 

         130 

          98 

Total capital employedRs. Million

     6,025 

     6,025 

     5,247 

    4,529 

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Cash Flow Statement    2010  2009  2008  2007

Operating activitiesRs. Million

         454 

         442 

      (399)

        774 

Investing activitiesRs. Million

      (711)

      (931)

   (1,649)

      (713)

Financing ActivitiesRs. Million

      (170)

         398 

         680 

             6 

Cash and cash equivalents at the end of the yearRs. Million

   (5,560)

   (5,233)

      (514)

  (3,832)

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Financial Ratios

Financial Ratios 2010 2009 2008

Profitability ratios  

Gross profit ratio %   16.12 

     16.96 

   15.14 

EBITDA margin to sales %   11.92 

     13.37 

   12.49 

Net profit to sales %     2.43 

       0.58 

     0.88 

 Liquidity ratios  

Current ratio     0.97 

       0.95 

     0.90 

Quick / acid test ratio     0.34 

       0.39 

     0.24 

 Finance gearing  

Debt: equity ratio     0.81 

       0.98 

     1.07 

 Rate of return  

Return on equity %   14.22 

       2.73 

     3.79 

Return on capital employed %   27.87 

     21.82 

   19.14 

Interest cover ratio     1.75 

       1.16 

     1.28 

 Capital efficiency  

Inventory turnover Days   98.00 

   107.00 

   95.00 

Debtor turnover Days   45.00 

     66.00 

   72.00 

Creditor turnover Days   73.00 

     76.00 

   61.00 

Fixed assets turnover ratio     3.21 

       2.72 

     2.00 

Total assets turnover ratio     1.40 

       1.07 

     1.05 

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Financial Ratios 2010 2009 2008

Investor information  

Earnings per share Rupees     7.52 

       1.45 

     1.86 

Price earnings ratio     2.46 

     26.79 

   21.51 

Cash dividend per share  Rupees     1.25 

            -   

     1.00 

Bonus shares issues %          -   

            -   

          -   

Dividend payout ratio %   16.60 

            -   

   53.68 

Dividend cover ratio     6.06 

            -   

     1.87 

Break - up value per share Rupees   56.45 

     49.12 

   50.04 

Market value per share  

at the end of the year Rupees   18.53 

     38.84 

   40.00 

high during the year Rupees   38.84 

     49.00 

   51.40 

low during the year Rupees   17.40 

     28.60 

   37.25 

EBITDARs. Million

   2,347 

     1,860 

   1,465 

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SPACE MATRIX

SPACE MATRIX

INTERNAL STRATEGI POSITION   EXTERNAL STRATEGIC POSITION  SINANCIAL STRANGTH (FS)   ENVIRONMENTAL STABILITY (ES)  Return on Investment 6 Technological change -4Leverage 3 Rate of Inflation -5Liquidity 3 Demand Variability -4

Working capital 4Price Range of Competing Products -5

Cash flow 3 Barriers to entry in market -3Inventory Turnover 5 Competitive Pressure -3Earnings per Share 6 Ease of exit from marker -1Price Earnings Ratio 5 Risk involved in business -4

4.375

-3.62

5 0.75 

COPETITIVE ADVANTAGE (CA)   INDUSTRY STRENGTH (IS)  Market Share -1 Growth Potential 6Product Quality -5 Profit Potential 4Product life Cycle -3 Financial stability 4Customer loyalty -4 Technological know how 5Competition's capacity utilization -4 Resource utilization 5Technological know how -5 Ease of entry in market 3Control over suppliers and distributors -1 Productivity capacity utilization 5

-3.28

64.57

11.28

6

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BCG MATRIX

STARS

PRET LINE

QUESTION MARK

MEN’S STITCHED WEARACCESSORIES

CASH COWS

LAWNMEN’S UNSTITCHED

HOME TEXTILE

DOGS

FOOT WEARPERFUMES

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BALANCE SCORECARD

OBJECTIVES MEASUREMENT TARGETS STRATEGIC INITIATIVES

CUSTOMERSTarget Market:LSM : 8 & aboveSEC: A+ & A

B2B customers

Attract new customers

Retain customers

Design AccuracyQuality

Market share

Customer retention

Customer satisfaction level

70 % market share

100% customer retention ratio

95% customer satisfaction level

Market development

Customer loyalty programs

On time delivery for online buyers

Product availability

Product quality leadership

INTERNAL PROCESSSuperior R&D

Finest Designers

Engraving for Color Differentiation

Laboratory Color Testing

Color Development

Printing Quality

Superior Production Facility

Supply chain

Environmental Friendly

Socially Responsible

New product development cycle

Design quality

Color matching and quality

Nominal wastages

Product delivery

Technology

Asset utilization

CO2 emission

Community building and empowerment of women and disadvantaged

new seasonal collections twice a year

99.9% design matching

99.9% color matching

1% wastages

Fulfill 100% online orders

Cover up lost sales by increasing sales growth by 20%

1000 women in work force at various positions

Following global trends in fashion and setting benchmark in local markets

Investment in new technology to maintain edge on design and color quality

Reduction in scrap sale

Continuous improvement in plant efficiency in order to reduce wastages, carbon emission and increase energy efficiency.

Training program for disadvantaged and special people

Separate unit for womenChild care facility for women

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LEARNING & GROWTHCultivate culture of learning, creativity, target orientation and adopting positive values

Attract and develop high caliber human resource

New designs, ideas and concepts

Low employee turnover

lead position in terms of new designs

reduce employee turnover by 5% year on year basis

Continuous investment for learning and development of employees to maintain an edge

Confidentiality policy to ensure business secrets are not leaked

FINANCIALSProfitability

Increase in gross margin

Sales growth by segment

Customer and product line profitability

20% sales growth targets

Cost reduction by 5%

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BLUE OCEAN STRATEGY

Blue Ocean Strategy on which Gul Ahmed is working are

A dedicated Gul Ahmed Fashion magazine to promote their new collection twice a year

First one to launch online shop in Pakistan www.gulahmedshop.com , currently no other player in the industry has online shop

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CONCLUSIONGul Ahmed has launched its online shop www.gulahmedshop.com for online shopping but the problem is not all of their products are currently available one internet. Mostly it happens on the first day of launch of their new collection, which is done twice a year (one in winter and other in summer), the customers (mostly ladies) rush into ideas and Gul Ahmed shop and start purchasing whole lot of a design and as a result that design get short in the market. And customers who come become frustrated when they can’t find a print.Gul Ahmed is facing serious supply chain issue in this area, they can’t meet the demand. One thing that can be done in this is the use of online shop to make sure availability of all their hot designs for a sustainable period of time. This will be a one good strategy to retain their customers.Gul Ahmed can also use nontraditional communication channels like facebook and twitter to interact with their customers and to get feedback. This online medium is one very effective way of analyzing consumer choices. Google analytics and facebook page analyzer can provide very useful information about user preferences. For instance it can tell you which are the most favorite design liked by the audience, based on that information Gul Ahmed can start producing more of that particular design and meet that customer demand.

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