arvind mills case : business strategy
TRANSCRIPT
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a case studyPresented By:
Tanush Sharma
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Corporate Level
Overlooking high fragmentation in denim industry
Myopic view on NAFTA implications
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Business level: Insufficient measures to create product
differentiation
Functional level: Lavish spending in new plant at Santej
Levels of Strategy mismatch Continued……
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Environmental factors those influencing Arvind Mills.
Economic
Political/legal
Technological
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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
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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
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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
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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
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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
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Integration/Diversification options for Arvind mills.
Levels of diversification- Moderate to high
Vertically enhancement of value chain
Increased styles in core product
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Thank you!!