Ishaq Textile Mill Pvt.

Ltd Faisalabad

Vision:

We aim at transforming Ishaq Textile Mill into a complete textile unit to further explore

international market of very high valve products. Our emphasis would be on product and

market diversification, value addition and cost effectiveness. We intend to fully equip the

company to acquire pioneering role in the economic development of country.

Mission Statement:

The company should secure and provide a rewarding return on investment to its share

holders and investors, quality products to its customers, a secured and environment

friendly place of work to its employees and present itself as a reliable partner to all

business associates.

History of Ishaq Group:

Hajji Muhammad Ishaq laid down the history of Arshed group in India. After the Indo-

Pak Partition, Hajji Muhammad Ishaq established cotton ginning in eastern Punjab. With

his keen inside and pioneering sprit, he soon established his first yarn trading company in

1954. He began exporting textile goods in 1970 and put up his first mill in 1982. His

unshakeable determination and professional skills accelerated the space of advancement

and achievement, what started off as a small ginning operation; today stand Arshed group

of companies one of the leading textile groups in Pakistan.

Arshed group of companies is the forefront as manufacturing and exporter of yarn, gray

cloth in 100% cotton and blended forms, bleached dyed and printed fabrics and made

ups. The group currently consists of three spinning units, calico cotton mills, Ideal

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spinning and Arshed textiles, one composite spinning and export trading unit Ishaq textile

mills and another export trading firm called Arshed Corporation Pvt. Ltd.

Ishaq textile mills Pvt. Ltd. Composite spinning, waving and trading units situated at

Faisalabad and Sheikpura. Integration of spinning and waving processes gave effective

control over its production and quality.

Past and Present Performance:

Ishaq textile mill started a small industry in 1982 having spinning and weaving project.

Ishaq textile mill’s dyed cloth, yarn, printed fabrics and made ups exports account for

roughly 20% of Pakistani textile exports. The mill is exporting to the USA, Germany and

France. Financial report of last year shows last years net sales Rs.2, 280 million. The

annual increase in net sales is 11.5% as compared to previous year. The export sales have

shown substantial increase over export of previous years.

Past performance shows that company did not use any information system in order to

reduce their operational cost. They were using WEB COLORING technology which is

related to designing of clothes. Now company’s IT manager is thinking to install any

system in order to control their operations effectively.

Structure Analysis:

Basically Ishaq textile mill was a Saith organization. In which all the decisions were

made by owner of the company. There was no role of employees in decision making of

the organization. Owner was solely responsible for the whole organization matters.

Mostly employees were yes man. They were just following instructions come from

owner. Owner gives the instruction to director of the company and then it goes to

department heads and their subordinates. This was the way how information flows in the

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organization. Organization was far behind in information technology while their

competitors are using Management Information system. Forecasting is made entirely on

their experience and the demand of the customers.

In the past couple of years organization changed its policy and they hire some

professional managers who are now playing their role in decision making.

Strategic Vision:

Ishaq Textile Mill of Arshed group of industries is the manufacturer of different types of

high quality of textile products according to the demanded requirements of the

customer’s nationwide and internationally. Our strategy is revolving around the high

quality of our products and efficiency of operations. Company will shift towards

Information technology step by step. Our commitment is always towards the interest of

stakeholders and wealth of country.

Information Needs of the Company:

Operational needs:

Most of the company’s operations are manual so there is a need of integration among the

departments like finance, sales, purchase, design and production. Company is producing

all invoices manually, which leads to errors and wastage of time so there is a need of

automatically generated invoices through a system.

As the company is using manual system so there is another need to interlink purchase

department with their suppliers, so that when the raw material is short then supplier

should automatically know about the prescribed requirement of the company. Company

also needs to create a systematic link with their customers via a system for immediate

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response to their demand and feedback. Operation cost of the firm is quite high as

compared to their competitors.

Managerial needs:

Due to manual system company is facing problems for generating reports that managers

need. So the company need to have a system that provide automatically generated repots

to managers. Managers’ need is to integrate all departments, suppliers and customers.

Mangers also need to have a system that helps them in making timely decisions.

Strategic needs:

Manual system need to be automated. Their departments must be integrated in such a

way that information transforms in minimum time. In the current situation they are not

able to generate automated reports that needs for decision. The company also needs an

information system for decision making as their competitors are using Management

Information System.

Industry Analysis :

External Environment

Political environment

Political environment has very strong impact on every sector in Pakistan especially

manufacturing sector. Due to unstable political conditions and day by day changing laws

the textile sector is suffering in Pakistan. Ishaq textile mill is also in export business and

terrorist activities in our country are affecting their export. Consequently they are not

getting that much share of export. Customers do not feel comfortable in placing order in

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Pakistan due to high risk of political instability and extremism, so they shift their orders

in India and Bangladesh.

Economical Factors:

Rising inflation and trade deficit emerged as major economic concerns during recent

years. These problems are affecting sales of industry, ultimately sales of ishaq textile is

reducing. The harvest of cotton crop was around 12.4 million bales in year 2006 as

compared to previous year 2005, 14 million bales. Decrease in production of cotton

caused an upward trend in the cotton prices. Cost of production for Pakistan textile

industry is significantly high compared to the competitive regional markets such as

Bangladesh, India and china due to high input costs, manly electricity, gas and financial

costs.

Social Environment:

Culture of the world as well as Pakistan’s culture is changing day by day. As Pakistan is a

developing country and Ishaq Textiles is targeting markets in foreign countries, the

perception of people of these countries regarding Pakistani products is poor quality and

substandard. Due to rapid changes in fashions and trends Ishaq textile is directly affected

from it.

Technological Environment:

Ishaq textile mill is using latest production machinery as compared to some of its

competitors. Textile mill has reduced its production cost due to the use of latest

technology but company is facing high operational cost due to no use of technology.

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Competitive Forces Modal:

Rivalry:

The rivalry in textile industry in of Pakistan is very high because there are a large number

of mills making textile goods such as Sitara Textile, Crecent Textile, Gulshan Textile,

Nishat Textile etc.

Barriers to Entry:

In textile sector heavy initial investment is a major barrier to entry. Textile industry in

Pakistan has been saturated that’s why profit margin in this sector is low. The regional

market like India, Bangladesh and China are also a major barrier in the form of high

competition for new exporters.

Bargaining Power of Buyer:

Buyers have a very high bargaining power due to a large number of producers producing

homogeneous products. So buyer can switch to any producer due to negligible switching

cost. In international market India, China and Bangladesh are giving low prices due to

low production cost that makes the bargaining power of international customers also

high.

Bargaining Power of Supplier:

Suppliers have a very low bargaining power due to a large number of producers

producing homogeneous products. Because buyers can switch to any producer due to low

switching cost and homogenous goods.

Threat of Substitutes:

The threat of substitutes is very low because of homogenous products available in the

market and textile products are necessity of life.

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SWOT Analysis: (primarily the OT portion)

Opportunities:

Ishaq textile mill has opportunities to avail the value addition machinery scheme, low

markup rates by state bank of Pakistan and tax leverage on exports by govt. By the

implementation of WTO Company can also to approach brands like Nike, Levis etc.

Threats:

Ishaq textile mill is facing tough competition from regional competitors such as India,

Bangladesh and China. The respective Government of these countries is providing

various facilities and subsides to textile industry in order to minimize their cost of

production so they remain competitive in global market. As Pakistan Government is not

offering such facilities so India, China and Bangladesh has become big threat for our

company because they have cost advantage.

SWOT Analysis: (primarily the SW portion)

Strengths:
Company is using latest machinery for production and experienced workers to operate

them. Due to their good will they can take big orders from renowned brands all around

the world.

Weakness:

The main weakness of company is that they are not using any of Information Technology

system for their departments’ like purchase and sales. With the use of Information

Technology Company can perform well in future. Due to no use of IT, operational cost of

the firm is quite high.

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Strategic Grid Matrix

Strategic Value

0 10
6
Operational Value

Cost and Benefits

Program User IT Strategic Operational Costs Benefits

Name Satisfaction Satisfaction Importance Importance
Microsoft
Great Plains 8 9 3 7 m

Oracle 6 7 5 6 30 m

SAP 5 6 6 8 30.5m

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 Value Chain Analysis

Main Activities

INBOUND OUTBOUND MARKETING &

LOGISTICS LOGISTICS SALES SERVICES
OPERATIONS

The Value Chain

PROCUREMENT
INFRASTRUCTURE
I

Support Activities

Inbound Logistics:

They are getting raw material from local suppliers without use of any IT application.

They order raw material as per their requirement by making a call or sending their

employee.

Operation:

They are converting material into final product by using WEB COLORING technology.

Their all invoices are manually generated and their forecasting is on the basis of

experience without any use of IT.

Outbound Logistics:

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Ishaq Textile mill is shipping final product to local customers as well as international

buyers.

Marketing and sales:

They are marketing their products in order to inform buyers about their products, which

lead to enhance their sale.

Services:

After sale services are clearly defined at the time of contract. If there is any complain

regarding their product then they make sure that product is up to the mark.

Procurement:

It includes acquisition of inputs and resources for the firm.

Infrastructure:

Infrastructure of the firm is major supporting activity of the company. All the

departments are bound together like finance, quality insurance, accounting and general

management.

Ch 3

Strategic alternatives and Options:

Alternatives:

1) To implement Oracle application

2) To implement Sap application

3) To implement Microsoft great plains

1. Comparative analysis of the alternatives and options

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First alternative is not feasible for the firm because its cost is quite high. Cost of oracle is

almost RS. 30 million and company is not willing to invest such a heavy amount. Oracle

is quite complex for end user and company does not have such specialist that can operate

it. If they purchase it even then they are not in a position to operate it. They have to invest

a lot on hiring and training of employees.

Second alternative is feasible as compared to first alternative because its cost is less then

oracle. Cost of SAP is almost Rs. 20 million. So its feasible then first alternative but

complexity of the software is still there. Company does not have trained people so right

now they can’t go for it because of complexity.

Third alternative is feasible for the company because cost of 1 module is almost Rs2.5 to

3 million and also it provides user friendly environment. After training and hiring firm

can easily over come their problems and can get competitive advantage. It provides

comprehensive business-management solution built on the highly scalable and affordable

platform of Microsoft technologies. It offers a cost-effective solution for managing and

integrating finances, e-commerce, supply chain, manufacturing, project accounting, field

service, customer relationships, and human resources.

Options:

The company has two options in house development or purchases from any other

supplier.

First option is not feasible for the firm because company does not have IT professionals.

Second option is best for the firm because suppliers can help them for installation,

implementation and training.

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Strategic implementation and control mechanisms

Change in Value Chain Analysis after Implementation of System:

After implementing Microsoft Dynamic Great Plains, firm is adding value at two steps of

value chain. At “Inbound Logistics” the company is directly connected with their

supplier.. Suppliers know the current stock of the warehouse and they are supplying raw

material automatically. Now firm is using “Just in Time” concept which is reducing their

cost of placing order.

Secondly firm is adding value in its operation by generating all the reports and invoices

automatically. Which is reducing their cost and errors as well as it’s saving their time.

The new system is also adding value with regards to their decisions.

2. Tactical plans:

Strategic plans are fundamentals for any organization’s performance. The fixed cost

associated to these plans is usually high but provide long term benefit so managers

should carefully pursue the human and capital resources. While implementing of

tactical or strategic plans firms should consider about the installation of software,

hardware and also the training of IT people. Training people is essential and crucial

for the success and better management of previous process to new process and

establishing measurement systems. They also provide what kind of training is

required to over come resistance of new technology.

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5)Operational plans:

Operational plans is concerned with setting broad policies and plans for using the

resources of a firm to best support its long term competitive strategy. Operational

plans direct activities on day-to-day, week-to-week and on yearly basis.

Implementation of Operational plans include, identification of hardware and software

vendors, setting vendor criteria, developing space alternatives and developing system

analysis of current procedures.

6 Portfolio Management

7 Change man agement:

Change management is a management technique for planning, coordinating, handling

and reporting system changes that could negatively impact service delivery. Changes

can involve modification of hardware, software, operating system changes, equipment

relocation, network and environmental changes. The objective of change management

process is to ensure that system changes are implemented with minimum or

acceptable risk level. IT and client organization must follow a planned approach to

change implementation that minimize problems and achieve desired service level

during transition.

8 Conclusion

9 References

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