SPORTS INDUSTRY OF PAKISTAN

Sports:
Sports are all forms of usually competitive physical activity or games which, through casual or
organized participation, aim to use, maintain or improve physical ability and skills while
providing entertainment to participants, and in some cases, spectators.(Sport, 2016)
OVERVIEW:
At the time of independence, this industry was in an infant stage with a nominal export of
Rs.0.82 million. The Government took immediate steps to develop this industry by providing
loans and subsidies to the manufacturers and arrangements were made to market the
manufactured goods. Since then, the industry has flourished locally and enjoys good reputation
in the international markets as well. (Sports Industry Presentation (Aisha n Mehreen) Documents, n.d.)
In Pakistan almost all sports related items are produced but the famous products are soccer ball,
cricket bat, cricket ball, tennis ball and some other items too. Sports industry of Pakistan has
even manufactured the soccer ball for the FIFA World cup of the year 1994; this shows that how
demanding the sports industry of Pakistan is in the world market of sports goods. The sports
industry of Pakistan lies in the city of Sialkot which is a part of the province of Punjab. All the
items of sports of the best quality are manufactured in the city of Sialkot and sports industry in
Sialkot is the main factor of Sialkots economy as it earns great profit from it due to the high
demand of sports good in international market. (Sports Industry - Dost Pakistan, n.d.)

Porter Diamond Model Analysis of Sports Industry of Pakistan:

Porter Diamonds model attempts to explain the competitive advantage some nations or groups
have due to certain factors available to them. (root, 2010) The four determinants of Porters
diamond model are;

Factor endowment:
A country's factor endowment is commonly understood as the amount of land, labor, capital, and
entrepreneurship that a country possesses and can exploit for manufacturing.(Factor
endowment, 2015)

Raw Materials: The raw materials required for the production of sports goods, are leather,
wood, glue, nylon guts, rubber and chemicals, cotton and synthetic material. While the new
materials like PVC and PU sheets are imported. The industry annually utilizes materials worth
Rs.8 billion, including imported raw material

Labor: The Pakistan sports goods industry is a highly labor intensive industry. The total
number of persons working in the entire sports goods industry is about 300,000. The skilled and
unskilled labor ratio is 70:30

Geographic concentration: Sialkot is the center for the production of sports goods. Major
industries units are located here.

Capital: Since it is a cottage industry investment is made on a small scale. The capital output
ratio is 1: 0.75

Technology: Pakistan needs to adopt new technologies in order to compete with other
countries presently the technology statistics are: Low technology 84% Medium technology 16%
High technology

Tariff Structure: Raw material imported for manufacturing of exportable sports products are
exempted from custom duties and other taxes.

Infrastructure: Inadequate infrastructure has remained a very troublesome issue for this
industry. Transport lags, with high costs becomes a major issue when competing with
international competitors.

Demand Conditions:
Demand conditions in the home market can help companies create a competitive advantage,
when sophisticated home market buyers pressure firms to innovate faster and to create more
advanced products than those of competitors. (Diamond model, 2015)

Demand Patterns: Most of industrys consumers of sports goods are between 15 and 35
years of age. Older consumers tend to purchase local brands, younger ones are highly devoted to
name brand recognition and trend following.

Items Purchased: Cricket Bats, Hockey sticks, Basketball shoes and clothing, in-line skating
apparel, American sports teams baseball style hats, sports sandals, and sport t-shirts are the most
popular items with the younger consumers. Older consumers prefer jogging shoes and golf
apparel.
Consumers: The purchases are not in large volumes. Furthermore, the industry sets and
creates the fads and determines what is "hot". Buyer countries include;
Indonesia
Hong Kong
Thailand
Korea
Vietnam
USA
European countries

Substitutes: The threat of substitute products is basically low. The industry is upgrading the
products frequently to cope with fashion. There are not too many close substitute products.

Related and supporting industries

For many firms, the presence of related and supporting industries is of critical importance to the
growth of that particular industry. A critical concept here is that national competitive strengths
tend to be associated with "clusters" of industries(National Diamond, 2016)

Suppliers: Since there are few companies so the bargaining power of suppliers is medium to
high. The product is unique, and the switching costs are high. Presently, Pakistan is competing
with India, Japan, Taiwan and South Korea in international market. Since the entry of Japan,
Taiwan and Korea, the industry is tilting towards mechanization and the use of modern
equipment.
Supporting industries include:
Plastic Industry
Leather Industry
Paint Industry
Textile Industry

Rubber Industry

Diversification of sports goods: The following new sports items can be manufactured
through the existing sports manufacturing facilities at Sialkot:

Cycle Sports Products industries involve composite material units, Shoe Factories,
Engineering, Clothing and Rubber units. Swimming Sports product industries
involves plastic, rubber and clothing units.

Water Sports Industries involves rubber, clothing and shoes units.

Snow Sports Industries involves composite material, clothing and Shoes Industries.
Golf Sport Products Industries involves leather, shoes, and engineering and rubber
industries.
Tennis, Badminton, Squash involve composite material, shoes, clothing, plastic and
rubber industries. Industries.
Baseball Sports involves, metal, rubber, leather, clothing and shoe industries

Firm strategy, structure and rivalry:

The way in which companies are created, set goals and are managed is important for success. But
the presence of intense rivalry in the home base is also important; it creates pressure to innovate
in order to upgrade competitiveness. (Porters diamond model, 10:13:23 UTC)
Foreign companies are becoming more reluctant to do business with Pakistani
manufacturers, because of the negative effects on production schedules related to political
and social unrest

 The industry is tilting towards use of mechanization and use of modern equipment, which
has resulted in tougher competition for manufacturers and exporters of sports goods of
Sialkot that it continues to compete in the global market without a fully mechanized
industry, relying mostly on old and traditional production techniques.
Local production is not at a good pace, so as a proportion of the total sports apparel
industry, local production plays an increasingly minor role.

The process through which sports goods pass:

INPUT: First stage is input so the basic raw materials required for the production of
sports goods, are leather, wood, glue, nylon guts, rubber and chemicals, cotton and
synthetic mat. . As the sports goods are manufactured mainly in Sialkot so the raw
materials like wood is obtained from the nearby artificial jungle known as Changa Manga
situated near Sialkot. Inputs like leather are taken from the industries situated in Sialkot,
Gujranwala.
PROCESSING: Second step is processing which includes weaving, stitching, crafting,
cutting, polishing, knitting with the use of manual work and machine work.
OUTPUT: Finally comes the output which includes Cricket Bats, Hockey Sticks, Base
Ball Bats, Wickets, Cricket Ball, Hockey Ball, Foot Ball, Sports Gloves, Boxing Gloves,
Tennis Ball, Volley Ball, Indoor Ball, Track Suits etc.

Competitive analysis:
Lower priced local or no-name brands have not increased market share. Sources predict
the retail segment of the market may soon see consolidation.
Foreign companies are becoming more reluctant to do business with Pakistani
manufacturers, because of the negative effects on production schedules related to
political and social unrest. The stability of the macro-environment in the U.S., therefore,
provides an attractive alternative for Pakistani importers and retailers.
Local production is not at a good pace, thus as a proportion of the total sports apparel
industry, local production plays an increasingly minor role.
There is perfect competition & therefore the market share exists more or less equally
with the major companies.

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Factor endowment. (2015, August 16). In Wikipedia, the free encyclopedia. Retrieved
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National Diamond. (2016, January 26). In Wikipedia, the free encyclopedia. Retrieved
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Porters diamond model. (10:13:23 UTC). Retrieved from
http://www.slideshare.net/SuroviDaini/porters-diamond-model?related=1
root. (2010, May 27). Porter Diamond Definition. Retrieved February 13, 2016, from
http://www.investopedia.com/terms/p/porter-diamond.asp
Sport. (2016, February 11). In Wikipedia, the free encyclopedia. Retrieved from
https://en.wikipedia.org/w/index.php?title=Sport&oldid=704358237
Sports Industry - Dost Pakistan. (n.d.). Retrieved from
http://www.dostpakistan.pk/sports-industry/
Sports Industry Presentation (Aisha n Mehreen) - Documents. (n.d.). Retrieved February
13, 2016, from http://documents.mx/documents/sports-industry-presentation-aisha-nmehreen.html