Professional Documents
Culture Documents
CONTENTS
Overview Textile Industry Porters Diamond Introduction- Arvind Group with PEST analysis Competitors Analysis Porter 5 forces Arvind Ltd- Denim Business SWOT/ Strategy Clock New Initiatives Corporate Governance CSR Recommendation
Countries and their positive and negative aspects with regard to textiles
Key Countries/ regions China India, Pakistan Mexico (NAFTA) Turkey ASEAN (Vietnam, Cambodia, Indonesia) AGOA (African) countries Bangladesh Hong kong, Korea, Taiwan USA and EU Key Positives Efficient, low cost, vertical Integration Vertical Integration, Low Cost Proximity to market, duty and quota free Cheap Labor Quota and tariff free, cheap labor Key Negatives Growth at the cost of profits Lacks economies of scale and infrastructure Lack of china and india degree of competitiveness No other cost or locational advantage Lack of integration and china and indias has degree of competitiveness No cost advantage, protected currently by quotas Huge but choosy market
Porters Diamond
Porters Diamond
Firm Strategy, Structure and Rivalry: Dominated by unorganized sector Highly competitive and fragmented Entry of foreign payers Factor Condition: Abundant availability of raw material Low cost Flexibility Skilled labor Ability to produce customized apparel lower lead time Government Regulations / Policy: Support for technology Upgradation Government reimburse 5% of the interest rates A credit linked capital subsidy of 10%, in addition to the existing 5% interest reimbursement for modernizing the processing sector Quality improvement
Related and supporting Industries: Product Development / Design Cheap and abundant raw material Well developed Textile machinery Industry Well developed IT capabilities Demand Condition: Large domestic Potential Favorable Demographics Growing income and purchasing power Growth of organized retailing malls
History
The year 1930 was when the world suffered the great depression. Companies across the globe began closing down. In UK and in India, the textile industry in particular was in trouble. At about this time, Mahatma Gandhi championed the Swadeshi Movement and at his call, people from all across India began boycotting fine and superfine fabrics, which had so far been imported from England. In the midst of this depression one family saw opportunity. The Lalbhais reasoned that the demand for fine and superfine fabrics still existed. And any Indian company that met this demand would surely prosper. The three brothers, Kasturbhai, Narottambhai and Chimanbhai, decided to set up a mill to produce superfine fabric.
History
Arvind Limited started with a share capital of Rs 2,525,000 ($55,000) in the year 1931. With the aim of manufacturing the high-end superfine fabrics Arvind invested in very sophisticated technology. It was one of the few companies in those days to start along with spinning and weaving facilities in addition to full-fledged facilities. Steadily producing high quality fabrics, year after year, In the mid 1980s the textile industry faced another major crisis. With the power loom churning out vast quantities of inexpensive fabric, many large composite mills lost their markets, and were on the verge of closure. Yet that period saw Arvind at its highest level of profitability. The Arvind management coined a new word for it new strategy Reno vision. It simply meant a new way of looking at issues, of seeing more than the obvious and that became the corporate philosophy.
Introduction
1991 Arvind emerges as the third largest manufacturer of denim in the world. 1987-88 Arvind enters the export market for Denims with a dual focus - Denim for leisure and Denim for fashion wear. 1980 Arvind records highest levels of profitability. The new strategy Reno vision, points at changing the business focus from local to global, towards a high-quality premium niche market. 1931 The inception of Arvind Mills Limited at the hands of three brothers - Kasturbhai, Narottambhai and Chimanbhai Lalbhai
Introduction
2010 Arvind launches The Arvind Store, a concept putting the companys best fabrics, brands and bespoke styling and tailoring solutions under one roof. Arvind launches its first major Real Estate projects. Arvind becomes one of Indias largest producers of fire protection fabrics. 2007 Arvind expands its presence in the brands and retail segment by establishing MegaMart One of Indias largest value retail chains. 2005 Arvind creates a unique one-stop shop service on a global scale, offering garment packages to reputed national and international customers. 1997 Indias largest state-of-the-art facility for shirting, gabardine and knits is set up at Santej.
Vision
The underlying theme running across the broad spectrum of all business activities at Arvind is that of enhancing lifestyles of people, across all diversities and demographics. To serve that end, the corporate vision for Arvind states:
We will enable people to experience a better quality of life by providing enriching and inspiring lifestyle solutions. Philosophy WE BELIEVE In people and their unlimited potential. In content and focus in problem solving. In teams for effective performance, in intellect & its power. WE ENDEAVOR To select, train and coach people to obtain higher responsibilities. To nurture talent, and to build leaders for tomorrow's corporation. To reward, celebrate and activate all intellectual business contributions. WE DREAM Of excellence in all endeavors. Of mutual benefit and prosperity. Of making the world a better place to live in. We Make Things Happen.
Corporate Strategy
Enhance innovativeness and change management
capabilities
Improve capital budgeting and allocation process Product portfolio optimization Support strategic planning To become the market leader
Business Involved
Denim Fabric
Woven/Knitting fabric
Garment
Arvind Store
Mega Mart
Agricultural
Engineering
Real Estate
PEST Analysis
Political Environment
Import of capital goods was controlled by rigid licensing and high import tariffs. Government controlled inputs like power, coal, freight, etc. High indirect taxes, excise duty.
Economic Environment
Textiles comprised 33% of India exports. India had the largest area under cotton cultivation i.e. 24% India had the lowest textile yield (12% of global production) Consumers tastes and preferences are transforming to western Larger portion is young population so denim is favorable Increasing shopping habits specially of women
Socio-cultural Environment
Worlds largest democracy with 2nd largest Population Variety of Economic levels Social status Cultural Group Co-existence of poor and middle class
TECHNOLOGICAL ENVIRONMENT STATE OF TECHNOLOGY Mills with obsolete and old machinery. Spinning and weaving became two different split operations ,disturbing the integrated plants. Spinning the capital intensive part was handled by the automatic mills Labor intensive component outsourced by textile companies.
Nature of Impact
Impact of Each Factor a. Protected Domestic Market. b. Emerging competitive power loom sector.
Technological
Economical
Regulatory
Political
Socio - Cultural
International
COMPETITIVE RIVALRY
THREAT OF SUBSTITUTES
Organization Structure :
MD
CEO
CFO
Operation Head
Marketing Head
Finance Head
HR Head
Engineering Head
Inspection Head
Logistic Head
SWOT ANALYSIS
STRENGTHS
Strong portfolio of domestic and international brands
Economies of scale through complete integration Latest manufacturing tools Wide geographical presence
WEAKNESS
Less productive machines in process Presence in only big cities Not doing enough to build brand equity
OPPORTUNITIES
Competition from global players like Raymond, Bombay Dyeing, Madura Garments Decline in exports Cheap imports from China, Thailand, Bangladesh Rise in raw material price
THREATS
Ruf n Tuf
1997 15-30 299-699
Excalibur
1995 18 & Above 500-1000 ----
Hike in exise to Hike in exise to Distribution 8% 8% hurdle own outlet Abhishek Bachchan Who Needs Phoren? own outlet Saif Ali Khan The Measure of Success Big Bazaar Akshay kumar ----
-------
International Brands
Arrow Licensed Lee Wrangler VF corporation Tommy Hilfiger JV with Murjani group
18 & Above Introduced mens sportswear, mens Jeanswear, junior Jeanswear
17-25 &25-40 Fashion conscious Love wearing denim on weekend Retail ambience was given importance
Denim
3. Hybrid Perceived added value
2. Low price
1. no frills
Low
Price
High
GROWTH STRATEGY
As on 2005, Arvind was in a comfortable position. Focus on retail------Company want to achieve 80% of its sales through apparel. Change from Centralization to Decentralization
Clustering of Brands
GROWTH STRATEGY(Cont..)
Globalization Strategy
Acquiring rights of Reds in North and south America Exclusive stores in Gulf to showcase its brands
Launching of Spectrumplaza.com
Tie ups with Indiatimes.com and rediff.com
OTHER CONCEPTS
Brand Extension: when different products are manufactured under same brand name. Ex. Arrow started off as a shirts-only brand then diversified into casuals, jeans and accessories like belts, wallets etc.
Forward Integration: Arvind Mills, which manufactured fabrics, integrated vertically forward by launching its in-house brands and retail stores.
Brand Endorsement: associating a popular figure as the brand ambassador to give the brand a personality and strengthen its positioning ex. Action star Akshay Kumar was roped in to endorse Ruf n Tuf to give it a tough & rugged look.
Best Quality, Lowest Cost, Shortest Lead time, Best safety, High Morale
Right Part, Right Time, Right Amount Continuous flow Pull system Integrated Logistics
Corporate Governance
Companys Philosophy on Corporate Governance is to attain the highest level of transparency, accountability & integrity
The objective extends not merely to meet the statutory requirements but also to go beyond them by putting into place, procedures & systems
It is responsive to aspirations of all the stakeholders-customers, suppliers, lenders, employees, the shareholders & expectation of society Board of Directors supports the principles of CG Lays strong emphasis on its trusteeship to role to align & direct the actions of the organization to achieve its avowed objectives
Board Agenda
Agenda papers are circulated to the board members 4-5 days in advance Possible subjects for meetings: Annual budgets & updates Capital expenditures & review of their implementation Legal proceeding involving Company Minutes of meetings of various committees Quarterly, half-yearly & annual Results Product-wise business performance Business presentation covering production, raw material, marketing, sales, etc. New projects & joint ventures Sales of materials nature of investments, subsidiaries, assets, etc. which are not in the normal course of business Performance of subsidiaries Business restructuring
Committees
The Board of Directors has constituted 4 Committees of the Board Audit Committee Remuneration Committee Investors Grievance Committee Management Committee
Audit Committee Oversight of companys financial reporting process & disclosure of financial information to ensure that the financial statement is correct, sufficient & credible Recommending the appointment & removal of external & internal auditors, fixation of audit fees & also approval for payment of any other services Reviewing with the management , external & internal auditors, the adequacy of internal control systems
Remuneration Committee To frame Companys policies for compensation & benefits for Executive Directors To review & recommend compensation payable to the Executive Directors To administer the Employee Stock Option Schemes (ESOS) including framing of policies related to ESOS & reviewing grant of ESOS To review HR policies & initiatives
Investors Grievance Committee To specifically look into the redressal of Investors Grievance pertaining to : 1. Transfer of shares & debentures 2. Dividend, interest & redemption proceeds of debentures 3. Dematerialization of shares & debentures 4. Replacement of stolen, lost & mutilated share & debenture certificates 5. Non receipt of rights, bonus & split share certificates To look into other related issues towards strengthening investors relations To consider & approve issuance of share/debenture certificates including duplicate share/debenture certificates To look into the reasons for any defaults in the payment to the depositors, debenture holders & creditors
Management Committee The Management Committees primary role is to look after the day-to-day business activity of the Company within Board approved direction/framework The committee meets frequently, as and when need arises to transact matter within the purview of its terms of reference
Promoting Biogas
Participation in National Aids Control Program
Recommendation
Vertical integration, diversification and huge capacity setup. Process innovation and cost player strategy to defend its Foreign Market. Improving its supply chain and inventory management through further tying up with farmers, usage of ERP system and increase in the plant efficiency with the use of technology . Alliance with establish brands. Explore the rural market with affordable brands like Newport .