THE INTERNSHIP REPORT ON MARKETING DEPARTMENT OF SHAFI SPINNING MILLS LTD.

Submitted To:

Department of Business Administration ( Specialization in Marketing )

Sessi on 2005-2007

Submitted By: MUHAMMAD SHAHZAD

Roll No.Q575970 RegNo.01-PSP-0197

Allama Iqbal Open University Islamabad

Internship report On Marketing Department of

SHAFI SPINNING MILLS LTD

The Chairman
Master of Business Administration Allama Iqbal Open University Islamabad By MUHAMMAD SHAHZAD ROLL NO Q-575970 REGISTRATION NO. 01-PSP-0197 ADDRESS FF-12 CENTERAL PLAZA NEW GARDEN TOWN LAHORE 2

Presented to

Phone; 042-5886014, 0322-7191120 HUSSAIN_55577@yahoo.com A thesis submitted in partial fulfillment of the requirements for the degree of MBA (Marketing)

TABLE OF CONTENTS Sr.No. 123456Chapter 1 1.1 1.2 1.3 1.4 1.5 Chapter 2 2.1 Subject Title page... List of Contents.. List of tables & illustrations . Acknowledgement Introduction Objective of studying the Organization Overview of the organization Brief History . Nature of the Organization.. Business Volume. Profile of Employees Product Lines Organizational structure Main Offices.. 12 19 21 22 24 29 30 Page 1 3 5 8 9 11

2.2 Chapter 3 3.1

Marketing Operations. Structure of the Marketing Department Number of Employees working in the Marketing Department..

30 33

34 35 37 37 39 40 41 41

3.2 Chapter4 4.1 4.2 4.3 4.4 4.5 Chapter5 5.1 5.2 5.3 5.4 Chapter6 6.1

Marketing Operations. Function of the Marketing Department Marketing strategies. Product Planning & Development.. Pricing strategy Distribution Strategy.. Promotional strategy. Critical Analysis. Critical Analysis

43

Success and failure of different products of the organization in the Market along with reasons. 45 Major Competitors of the Organization. Future prospects of the Organization.. Short-Fall/Weakness of the Marketing Department 45 46 48

Critical analyses of the management patterns of the origination with Reference to marketing operations, weak areas which need to be Improved 49 Conclusions & Recommendations for improvement. Conclusions 50

Chapter7 7.1

7.2 7.3 Chapter8 8.1

Recommendations.. Suggestions.

50 52

Reference & Sources Used.

54

LIST OF TABLES & ILLUSTRATIONS Table No.1 . 15 Table No.2 .. 21 Table No.3 . 26 Table No.4 . 27 Fig No. 1 14 Fig No.2 .. 14 Fig No 3.. 16 Fig No.4. 16 Fig No.5. 16 Fig No. 6. 16 Fig No 7 17 Fig No. 8 17 Fig No. 9 .. 17 Fig No.10 Fig No. 11 17 17

Fig No. 12.. 18

Fig No. 13.. 25 Fig No. 14. Fig No. 15. 25 25

Fig No. 16. 28 Fig No. 17 Fig No. 18. Fig No. 19 Fig No. 20. Fig No. 21 Fig No. 22 28 28 28 29 33 34

I DEDICATE MY SINCERE EFFORTS IN ORDER TO GAIN PRACTICAL KNOWLEDGE DURING THE COURSE OF PRESTIGIOUS DEGREE PROGRAMME OF M.B.A IN MAKETING ALLAMA IQBAL OPEN UNIVERSTY ISLAMABAD TO MY GREAT

MY PARENTS & TEACHERS

WHO HAVE PLAYED A PIVOTAL ROLE IN MAKING ME A USEFUL CITIZEN OF SOCIETY.

ACKNOWLEDGEMENT
First of all, I am grateful to my Almighty Allah who is the only master of my soul and spirit. He awarded me with the right amount of health, strength, vigor and vitality to complete this crucial task successfully. Then comes the turn of my Holy Prophet (P.B.U.H), who is not only the role model for my personality but for every soul living on this land mark. His great words of wisdom are greatly responsible for getting me through this successfully without getting into any kind of my mess. In this professional arena, every new comer got to have some assistance of some experienced professionals for having a better know how of some organizations processing. Similarly, I got the help of some kind professionals in Shafi spinning Mills Ltd for having some proper learning during the internship phase. First of all, the General Manager of marketing a department named Mr.Kashif Mehmood was a very kind and generous person, he kind behavior never allowed me to be hesitant in his department. Then, Mr.Qasim Assistant Manger in Marketing department assisted me a lot in understanding the flow of documentation in his department. Mr.Tahir (Export Officer) made me familiar with the depth of all documents. I am really thankful to these three above mentioned personals for guiding me through the right gate way of success. I am also very much thankful to the all staff members of marketing department, who were found to be very keen to transfer their knowledge to the new comers like me. My parents and teachers always played a very pivotal role in cherishing and nurturing my career, so, I have great regard of those personalities who have some contribution to my personality one way or another. I am grateful to all these personalities from the bottom of heart, who made me the useful citizen of society.

Muhammad Shahzad Roll No. Q575970 Allama Iqbal Open University Islamabad

INTRODUCTION
Spinning is the strongest link of the value chain in Pakistans textile industry. It is the oldest industry and has matured over years with considerable investment, human resources and marketing connects globally to survive under most competitive conditions. It has shown vigor and growth under a less sheltered environment compared to India and China. Most of the investment in past years has gone into the spinning sector. The industry has the technology and the capacity to support high growth levels in the downstream and upstream production of cotton and cotton products and meet the global trade competition. . However, as the emphasis of Pakistans textile industry is upon spinning activity, major portion of yarn produced (of good quality) is exported rather than utilizing large part of it for producing high value-added products like fabrics, or garments. This is a serious structural weakness of Pakistans textile industry. This yarn imported by countries like Japan (major export market for yarn), Hong Kong, and South Korea who have wellflourished textile industry convert it into high value added products and fetch much higher prices in the international market. These countries do not grow cotton, but they have wellestablished textile industry because they have invested in modern manufacturing technology as well as in qualified and well-trained work force. Their efficient methods of production have enabled them to overcome the handicap of imported yarn. Whereas in Pakistan, textile industry continues to suffer due to lack of investment, and well qualified work force, despite having the advantage of cotton and labour An important achievement of the Uruguay Round was the decision to phase out restrictions on imports of textiles and clothing. These restrictions were imposed by certain developed countries. The Agreement on Textiles and Clothing (ATC) of WTO which replaced the Multi Fiber Agreement (MFA), provided for the removal of these restrictions in four phases over a period of 10 years. The phasing out program ended on January 1, 2005. As a consequence the quotas have been completely abolished and the importing countries can no 9

longer discriminate between exports of textiles and clothing. Moreover, the trade in textiles and clothing has now completely integrated into General Agreement on Tariffs and Trade (GATT) 1994 and will continue to be governed by its rules. Pakistan was the greatest sufferer of the quota regime as it had a high percentage of textiles and clothing exports which were restrained due to quotas by importing countries. Pakistan can, therefore, benefit greatly from the present non-quota regime of WTO in textiles and clothing sector However, there are a number of opportunities and challenges awaiting the textiles and clothing industry of Pakistan in the international market place. For instance, it is being expected that the importing countries would subsequently try to resort to other trade restrictions to take the place of quotas. These can be in form of non-tariff barriers such as importing countries requirements for the industry to comply with environmental, labor, sanitary, phytosanitary or technical regulations. The compliance to quality standards and regulations is a cost factor, which the industry will have to face and prepare for. Moreover, countries like China and India have already began giving a tough competition to Pakistans industry under the present quota free environment. A strategy needs to be made in this regard as well.

1.1 Shafi Spinning Mills;

Shafi Spinning Mills is a spinning mills that has good name in the yarn product. It produces the yarn by using cotton as raw material and it uses the local and important cotton for this purpose. It uses the A+ grade cotton to produce finished goods. It is working under the I.S.O Policies and the audit of I.S.O done by the Moody International and it shows its good performance through the audit whether its matter of quality or on other department.Cureently it is consists on 25 frames of open-end mills and 35 frames on ring spinning yarn that produce 275 bags of yarn (27500 lbs) on daily basis in ring section and 350 bags of open-end with (35000 lbs ). It has a target of 70% sales in the foreign market and 30% sales of their production in the local market.

10

Chairman. Kh Zahid. Managing Director Kh Kashif Elahi.

11

OBJECTIVES OF STUDYING SHAFI SPINNING MILLS PVT LTD

Main objective of studying SSM was to do internship in order to fulfill the compulsory requirements of ALLAMA IQBAL OPEN UNIVERSITY ISLAMABAD for MBA degree. Secondly as SSM is the biggest corporation and business entity of our country and I want to study for my knowledge. I studied SSM in order to understand; The philosophy and goals of the organization in relation to the services it provides. The infrastructure of the organization. The core objective of the organization existence, which are its customers. The role of the organization as a competitor, and as well as a socially responsible business organization. In Addition to above, the objective was also to apply theories in the practical

situation and draw conclusion. For the purpose, the systems and procedures of the organization were studied in order to learn process. To learn Marketing activities of management of SSM. To study the hiring and firing decisions of the management and consider the impact of these decisions on employees. To learn how management of SSM takes decision for promotions of products. To learn the effectiveness of grievances cell in SSM

12

CHAPTER1

OVERVIEW OF THE ORGANIZATION 1.1Brief History:

Role of spinning sector in economy;
Spinning is the process of converting fibres into yarn. The fibres may be natural fibres such as cotton or man-made fibres (MMFs) such as polyester. Sometimes, term spinning is also used for production of man-made filament yarn (yarn that is not made from fibres). Whatsoever is the case, the final product of spinning is yarn Cotton value chain starts from Ginning that adds value to it by separating cotton from seed and impurities but Spinning can rightly be called as the first process of the chain that adds value to cotton by converting into a new product i.e. conversion from ginned cotton into cotton yarn. The importance of spinning cannot be overemphasized. Since spinning is in the beginning of value chain, so all the later value added processes of weaving, knitting, processing, garments and made-ups manufacturing are dependent upon it. If spinning industry produces sub-standard yarn, its effect goes right across the entire value chain The spinning sector forms the heart of the textile industry. This sector produces yarn for downstream sectors, namely weaving, processing and knitting Pakistan is the third largest player in Asia with a spinning capacity of 5% of the total world and 7.6% of the capacity in Asia. Pakistans growth rate has been 6.2% per annum and is second only to Iran amongst the major players. At present, cotton-spinning sector is comprised of 458 textile units (50 composite units and 408 spinning units) with 8.8 million spindles and 77 thousand rotors in operation with capacity utilization of 87 percent and 49 percent respectively, during July-Feb 2005-06

Start as open-end mills 1992;

Shafi Spinning started its business on 5 March 1992 when the Chairman of the SSM come for opening cermoney.It started its production with only 15 frames of open-end machinery that have only 3240 rooters. That time they start to produce yarn as finished goods with use of B grade raw material and mixing with soft waste. The production of bags of SSM was only 210 bags(21000 lbs) on daily basis. That time they have only one sales office in 13

Faisalabad.They sell their products only in local market especially in the Faisalabad area to small traders who manufacture cloth on looms. That time they have no also more staff of professional type and not quality control department.

Use of A+ grade raw material;

After three years in 1995 they want to bring improvement in quality of their product. For this purpose they decided to use grade cotton and they visit various cotton factories and selected for their policy. With the use of this high quality raw material their product of yarn change into high quality and a blended product of that time and they get more and more profit with its sale. Than they decided to purchase more open-end frames for more production.

Purchase of More Open-end frames;

After completing fiver years of its business start the management of that time especially Mr. Tariq mills manger visit for more open-end machinery in Germany. After visit he told the whole situation to Chief of the SSM and Chief Executive of the SSM decided to get more 10 frames of open-end of modern type and which have modern function and features for the purpose of face the increasing demand of yarn. They manage and allocate funds for the purchasing of more 10 frames of open-end.

Erection of New frames;

With the purchase and erection of new frames SSM enables to increase of its production. First in 3240 rooters they were producing 210 bags on daily basis. With the erection and working of new 10 frames their rooters increase to 5400 and their production increase towards the 350 bags (35000) lbs on daily basis. Due to increase of these 10 frames with 2160 rooters company need more production staff and sales staff in the sales office Faisalabad.For this purpose the Labour Officer of that time arrange a meeting with the Mills Manger and with the Management Director of the Shafi Spinning Mills Ltd. After this the labour get permission for hiring new production staff and M.D hire new staff in sales office Faisalabad.

Following pictures are on erection and on production stage of open-end section.

14

FIG 01 (While erection)

FIG 02 (While producing yarn)

First Export Dispatch 1998;

15

After the successful erection of new open-end frames the management and sales manger of the company want to export their product for this purpose the Chairman of the company visit various countries of Asia and send sample of his company product and finally the get a contract of 10/1 hard from Hong Kong .They send their first container of 10/1 hard that was consists on 390 bags(39000 lbs) and send it into Hong Kong in 1998. After this they get more and more contract from foreign countries and they increased in ratio of export product and earn a good name in a short time.

At the time of SAFTA implications on Pakistan textile industry.

During the last few years, the textile industry in South Asia has grown at a rapid pace, becoming one of the largest manufacturing sector in terms of contribution to industrial production, foreign exchange earnings and employment generation. The increasing significance and improved performance of the textile industry in the region could be attributed to a number of factors such as the continued steady demand due to availability of quotas, participation of foreign investors particularly from other quota receiving countries in the industry, adoption of liberalized market policies and the availability of low cost labour.

Leading of Textiles: Share in World Exporters

Exporters
European Union China Korea. Rep. Of United States Taipei. Chinese Japan India Pakistan Turkey Indonesia Canada

1973
68.1 2.7 7.4 14.95 4.2 2.7 0.61 0.9 Table 01

1980
49.4 4.6 4.0 6.8 3.2 9.3 2.1 1.6 0.6 0.1 0.6

1990
48.7 6.9 5.8 4.8 5.9 5.6 2.1 2.6 1.4 1.2 0.7

(%) 2001
34.4 11.4 7.4 7.1 6.7 4.2 3.8 3.1 2.7 2.2 1.5

Purchase of ring and back process frames;

16

After this successful meeting as the above mention the management of the SSM decided to purchase more frames of ring and back process for more production. For this purpose the G.M of the SSMvisit to Germen and Switzerland to see and purchase the new frames of ring and back process. At last they purchase 35 ring frames and back process frames for supply of material these ring frames.

Erection of Ring Section;

Than the erection of the new ring section under the high supervision of G.M and M.M of the SSM.However the mills manger was old to this organization he helped out his senior manger in various problem. Both the manger worked hard for this process and technical staff also do hard work. Pictures after the erection of back process in ring section;

FIG 03(Blow Room frame)

FIG 04(Breaker Drawing)

FIG 05(Drawing Finisher) Ring and winding frames after the erection.

FIG 06 (Comber frame)

17

FIG 07(Ring frame)

FIG 08(Ring frame)

FIG 09(Winding frame)

FIG 10(Winding frame)

FIG 11 (Winding frame during production)

New Production Plan and Process Flow;

18

After the erection of these 35 ring frames and back process frames SSM enables to have 35 ring frames with 17640 spindles and in open-end side with 25 frames of 5400 rooters. So with the increase of these 35 ring frames production increase to 275 bags in ring section of 27500 lbs on daily basis and in open-end section toward 350 bags 35000 lbs on daily basis. Total production on daily basis reached to 625 bags (62,500 lbs) on daily basis. Than management increase the export ratio towards 70% and 30% left for local market.The new process flow of SSM is as under.

FIG 12(New Process Flow)

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1.2 Nature of the organization:SSM being a spinning organization is a part of textile industry. It deals in making yarn with the use of cotton as raw material. It gives the products to its customers according to their requirements and needs. It uses the A+ grade raw material for produce the yarn of various specifications. So it completes the order of its customers whether he is local customer or foreign customer in time and give delivery at their expectations. That is the why this organization have earned his name and get lot of reputation in a very short time. Goals and objectives; SSM assigns the following objectives and goals in 2002 To provide and develop safe, efficient, and economical products of yarn for the satisfaction of the customers, give them according to their needs and desires and work under a quality and product policy, keep focus on customer loyalty and requirements.

Vision
To be a competitive and customer focused organization with continuing commitment to excellence and standard.

Mission Statement;
To achieve the higher satisfaction level of the external customer and of the internal customer as well, which helps SSM maintain good customer-supplier chain with in the company. Customer satisfaction defined through quality and quality is defined by the customer as products and services that through out their life meet needs and exceptions at cast that represents value. 20 To be a business house of customers of first class. To be a changed leader. To produce innovative, relevant and cost effective product by setting and maintaining high standards. To earn profits by achieving the optimal level of production by using the state of art technologies. To provide ideal working environment to employees and to take care in their career planning and reward them according to their skills and responsibilities.

Values; P eople R elationship I ntegrity D iversity E nvironment

Quality Certification and Acknowledgement of SSM

The management of the company is committed to achieve the international quality standards in their products. As it has been dealing with international reputable business houses in the world, which demand the highest quality standard from their suppliers. The company tries to achieve its commitment and has achieved the following certifications:

ISO -9001 QUALITY SYSTEM:

According to this system management policy is focused on customer satisfaction which the management ensures through proper planning, continuous improvements, employee satisfaction, environment friendly production, prevention of environmental pollution, resource conservation and implementation of relevant environmental, social and cultural norms and laws.

SA- 800 MANAGEMENT SYSTEMS; ISO -14000 ENVIRONMENTAL SYSTEMS;

Beside these certifications, SSM also won the best export performance trophy award consecutively for the seventh time from the federation of Pakistan chamber of commerce and industries in their 26th FPCCI Export Trophy Award Ceremony for highest export of value added cotton fabrics. The management of the company is also very committed to excel in manufacturing of high quality products in the future as well. Federation of Pakistan Chamber of Commerce and Industries also awarded businessman for the year gold medal for investment to the Chief Executive of the company at 26th trophy award ceremony. It is the forth gold medal award conferred upon the chief executive by the FPCCI.

21

1.3Business Volume: Year ended 30 June 2009

(Rupees in Million)

2008
Net sales Gross profit Capital expenditure Taxes Paid Profit After Tax Current Assests Current Liabilities Long term Loans Share Holders Equity

2007 999,186,448 105,982,880 79,252,075 6,127,362 20,603,443

137,601,356 179,878,072 176.133,567 267,256,736

2006 996,694,710
108,116,486

2005 990,258,034
107,418,998 78,229,135 6,072,610 23,116,523 198,153,355 176,234,995 174,559,693 264.868,614

2004 983,374,415
106,671,565 77,685,345 6,030,397 22,955,823 173,082,180 174,968,218 173,346,269 263,027,422

997,588,565 103,823,222 79,806,840 6,305,452 17,710,930 138,902,448 185,896,365 178,052,132 267,892,685 1:0.74 11.56%
3.92%

78,737,620
6,112,082 23,266,784 136,801,852 177,419,523 175,694,331 266,590,260

Current Ratio
Gross Profit % Net Profit % Earning per share No. of rooters No. of spindles Total Production kg

1:0.76 13.25 %
4.85 % 1.48 5,400 17,640

1:0.77
14.96 % 5.50 % 1.68 5,400 17,640

1:1.12
14.86 % 5.45 % 1.65 5,400 17,640

1:0.98
14.75 % 5.40 % 1.63 5,400 17,640

1.22 5,400 17,640 10,022,453

10,201,306 Table 02

10,203,756

10,215,866

10,211,059

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1.4 Profile of employees: SSM has 925 employees in which 220 are contractual and 705 are permanent employees. Classifications of employees; The permanent employees shall be classified under the following categories; (a) Officers; covering all classes of employees from pay group V and above including employees in special pay groups. (b) Staff; covering all areas of employees in pay group 1 to 1V. SSM has own training institute named SSMTC(Shafi Spinning Mills Training Center) in which they trained the employees according to their job descriptions. Permanent and Contractual Employees:SSM has two categories of employees.1-contractual employees.2-Permanent employees. E.O.A.B.I Fund The Corporation operates a defined contribution provident fund scheme for its entire employees equal monthly @2.5% EOABI fund on basic pay. Social Security Contribution; SSM also contributes social security fund of employees. It deposits this fund in the account of Punjab Social Security Office. With the contribution of this fund employee enables to take medicine in case of illness. Moreover this institution also gives facility to employees to free treatment in big hospitals in case of emergency and in case of serious disaster. Due to this fund marriage grant is also given to the employees on the wedding of their daughter.Scholorship is also given to employees children and with this free education is also another benefit. Free Conveyance; SSM also gives the facility of conveyance to its employees. The employees come on duty by transport of SSM.They also went to their homes on the transport of SSM no any charges of this facility takes this company from its employees.

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PROFILES OF MAIN MARKETING PEOPLES

1. Name Mr. Tanveer Ahmed Designation Director Marketing Qualification M.B.A (Marketing) Oxford University Experience; 5 years as Marketing Manger in Nishat Group. Joined SSM in 2001. 2. Name Rana Amanullaha. Experience; Joined SSM 1995 and later on Promote as Deputy Sales Director in the year 2002 because of good performance. 3. Name Mr.Kashif Mehmood Designation Marketing Manger. Qualification M.B.A (Marketing) Quaid-I-Azam University Experience; 3 Years experience in Sapphire textile group as Assistant Sales Manger. Joined SSM in 2001 as Marketing Manger. Designation Director Sales. Qualification M.A.Eco (P.U)

24

4. Name Mr Irfan Ahmed Experience. Joined SSM in 1997 as Assistant Marketing Manger Promoted in 2002 as Sales manger. 5. Name Designation Qualification M.B.A (Marketing)AIOU Designation Sales Manger Qualification M.B.A (Executive) P.U

Mr. Muhammad Qasim. Asst Marketing Manger Experience;

2 Years experience as Sales Promotion Officer in Bilal Fibres. Joined SSM in 2002.

1.5 PRODUCT LINES: The product of the SSM consists into two main sections and the objective in these two sections is to produce the yarn finished goods product by using the cotton as raw material. These two sections are as under. A. Open-end yarn. B. Ring Spinning Yarn.

A-Open-end Yarn;
Open end yarn consists into two main Categories that are as follows. These two catogeries are produce by cotton and soft waste. Open-end Soft yarn. Open-end hard yarn.

25

Open-end Soft Yarn;

This type of yarn is produced with B grade cotton and with the mixing soft waste using. Mostly this type product sells into local market only. Currently these counts are running in this category. 5/1 soft in local packing 7/1 soft in local packing. 8/1 soft in local packing.

Open-end Hard Yarn;

This category of yarn is produced by using of A+ grade cotton and no any mixing of soft waste in it. Mostly the product is prepared for sell into the foreign market.Now these counts are running in this category. 10/1 hard in export packing. 12/1 hard in export packing. 22/1 hard in local and export packing. Pictures of open-end product.

FIG 13 (Soft yarn Open-end)

FIG 14(Hard yarn Open-end)

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FIG 15 (Export Yarn Packing Open-end)

Last Five Years Products in Open-end Section. Last year Ended June 2009. A
Year 2004 2005 2006 2007 2008 AVG Bags produced (100 lbs each) 126,265 126,314 126,148 126,122 126,087 126,187 Table 03

B
Total lbs A*100=B 12,626,500 12,631,400 12,614,800 12,612,200 12,608,700 12,618,720

C
Total Kg B/2.2046=C 5,727,343 5,729,565 5,722,036 5,720,856 5,719,269 5,723,814

B-Ring Spinning Yarn;

Ring spinning yarn is produced mostly for export and it is produced with the use of 100% Local and Important cotton of A+ grade. It is divided into 4 catogeries. Ring spinning carded hosiery yarn. Ring spinning comber hosiery yarn. Ring spinning Lycra yarn. Ring spinning slub yarn.

Ring Spinning Carded hosiery yarn.

This category consists in following counts. 20/1 carded hosiery in local and export packing. 22/1 carded hosiery in export packing.

Ring Spinning Comber Hosiery yarn;

This category consists on following counts. 18/1 comber in local packing. 20/1 comber in local packing.

27

 26/1 comber in export packing. 30/1 comber in export packing.

Ring Spinning Lycra Yarn;

This category is use for making socks especially. This category consists in following counts. 12/1 Lycra in export packing 16/1 Lycra in local packing.

Ring Spinning Slub Yarn;

This is that product of yarn that is use for making winter season cloth. Currently only one counts are running in this category. 8/1 slub in local packing.

Last Five Years Products in Ring Section. Last year Ended June 2009. A
Year 2004 2005 2006 2007 2008 AVG Bags produced (100 lbs each) 98,848 98,905 98,804 98,776 94,868 98,040 Table 04

B
Total lbs A*100=B 9,884,800 9,890,500 9,880,400 9,877,600 9,486,800 9,804,020

C
Total Kg B/2.2046=C 4,483,716 4,486,301 4,481,720 4,480,450 4,303,184 4,447,074

Pictures of yarn product in Ring Section;

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FIG 16 (Carded Hosiery yarn Ring)

FIG 17 (Comber Hosiery yarn Ring)

FIG 18 (Lycra yarn Ring)

FIG 19 (Slub yarn Ring)

CHAPTER 2

ORGANIZATIONAL STRUCTURE
29

Chairman

DIRECTORS D

Production Unit

Head Office

Production

Purchase

Marketing

Accounts

Finance

MIS

HRD

Technical Director Staff

GM Purchase Staff

GM Marketing Staff FIG 20

CFO & Manager Accounts Staff

GM Finance Staff

GM MIS

G.M HRM

Staff

Staff

2.1Main Offices
Mills Site:
72 KM Faisalabad Sheikhupura Road Ferozewatton. 30

Tel 056-3731001-2 Fax 056-3731003 LAHORE (Head Office) 3-Mehmood Ghaznavi (Abbot)Road Lahore 54000 Pakistan Tel 042-6362615,6311127-28 Fax 042-6311126 E-Mail; Shafi@wol.net.pk KARACHI (Sales Office) Room No. 315 3Rd floor Cotton Exchange Building. I.I Chandrigur Road Karachi. Tel 021-2413204-5 Fax 021-2413205 FAISALABAD (Sales Office) 24-Chenab Market Medina Town Faisalabad Pakistan Tel 041-644001-2 Fax 041-644000

2.2 Marketing Operations;

The SSM Marketing Operations consists on the customers needs and requirements. They keep in mind the needs of the customers and the satisfaction of the customers while launching any new product or while making new policy or the strategies. All their planning of product or planning of quality or planning of packing or on the basis of their customers needs. That is why they have good name in the yarn market. While selecting new sector management considers the following.

a- How many Counts we can manage:It is very big issue for the management of the SSM when they have to manage for a new yarn counts. Because they have already full frames that are manufacturing yarn for their

31

buyers. So for matter they have to think and they have to make policy for manage new order. In this connection management think and make a policy for handle it.

b-What are other competitors doing;

The most important challenge for the management of SSM is that they have to see from other competitors and they have to follow them from seeking them. They visit and see the problem they are facing. If the problem is launching new product ,problem of getting new contract from the buyer or getting of new product contract from old customers.

c- While launching new product of yarn;

This is very big and serious matter for the management of the SSM when they have got a new contract from the customers for a new product. To complete this contract SSM has to make a policy for old contract and to complete. It depends on management that they delay in the local customers or they stop any extra production of yarn that have in special times to launch new product. So the management makes such a production plan in which whole the matter handled with that production plan and that production policy.

d-Corporate clients visiting.

The most important operation of SSM Marketing Department is to evaluate the corporate the customers and then visit on prior basis to create a positive image in the minds of business people. Through this Marketing Department also evaluate the product image of yarn. Details of domestic as well as international marketing operations of SSM are as under:

1-

Domestic Operations: 32

The SSM has following domestic operation in the city of Pakistan and in these cities they have own godown for the distribution of yarn.

SINDH
1- Karachi 2-Sanghar.

PUNJAB
1-Rawalipindi. 3-Faisalabad. 5-Multan. 2-Lahore. 4-Kasur. 6-Muzaffargarh.

2- International Operations;
Shafi Spinning Mills Limited is manufacturing encyclopedic range of alluring, captivating, charming & elegant yarn which command unstinting appreciation and is acknowledged in such intensely competitive markets like 1. Scandinavian countries 2. Germany 3. France 4. New Zealand 5. Canada 6. United State of America 7. United Kingdom 8. Middle east 9. Ireland 10. Austria 11. South Africa

CHAPTER 3

33

STRUCTURE OF THE MARKETING DEPARTMENT

Significance of marketing department for an organization is like its soul. Because this department puts all of its efforts to increase the sales of the organization. SSM is a company that has an energetic Marketing department. All people working here are aggressive and action oriented. Marketing department is responsible for that how product is distributed and prompted and priced. Basically the concentration of marketing department is on customer needs. SSM is an export-oriented firm so the demand of its products is not only in local market but also in the foreign market. The marketing functions are divided into two parts geographically: Local and Foreign. Director Marketing

Director Sales

Sales Promotion Manger (Fsd)

GM Marketing(Lhr)

GM Sales (Karachi)

Staff

Asst Manger Marketing (Lhr)

Staff

FIG 21

Structure of SSM Marketing Lahore Office

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Director Marketing.

Marketing Manager

Asst Marketing Manager

Export Officer

Sales Promotion Officers

Dispatch Officer

Staff

Staff

Staff

FIG 22

3.1 Number of Employees Working In the Marketing Department;

The most important department in any business concern is marketing. It is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods& service to create exchanges that satisfy individual and organizational goals. It is the art of choosing target markets and getting, keeping and growing customers throughcreating, delivering and communicating superior customer value. Marketing people are actually the communicators who materialize the needs of the customers by producing the products needed. They not only sell their products but also try their level best to satisfy customer needs. Presently about 95 employees are working in the marketing department of Shafi Spinning Mills Ltd. Whole the marketing department working under kind control of Director Marketing Mr.Tanveer Ahmed.

3.2 Marketing Operations

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Marketing department always plays a key role in the success of any organization. Marketing team is considered as assets for any factor who nourishes it through getting continuous orders. He is responsible for negotiating with the buyer, developing and getting approval about lab dips, fabric and samples from the buyer and forwarding buyer requirements/specifications production planning department, so that an order can get delivered on time with all specialization and quality parameters required by the buyers.SSM is one of the few leading finish fabric producer in Pakistan. Most of the finish fabric exported to different countries in which includes USA, European countries, South Africa, Australia and some Asian countries as well. In order to cater the needs of this international clientele adequately, the role of marketing becomes vital. The Marketing Manager is head of Marketing Department at Sapphire. The following sections come under it and they work in close association with the marketing department. Customer contract Pre/Post contract activities. Sample Development.

The business process is a set of activities to perform business dealing with customers. The business dealing can be done through different ways. The following are the sources to contact with customers are as under. Through the agent of the foreign buyer. Direct contacts. New customers inquires. The business process has two phases: 1. 2. Pre- Contract Phase. Post-Contract Phase.

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PRE-CONTRACT PHASE;
In Pre- Contract phase inquiries are made by customer for information, price quotation from supplier. If the customer satisfies from the price quote by the supplier (SSM) then the customer places a purchase order regarding the required quantity and quality of the product (Yarn). The supplier prepare a contract note against the purchase order of customer Pre-Contract phase includes the following: Inquiry from customer. Price Quote from Supplier. Purchase order from customer. Contract note from supplier.

POST CONTRACT PHASE;

When the pre-contract phase end then post contract phase start. In post contract phase production order is prepared against contract note. The set of activities which process the contract into the production to the production department. Then handling the shipping documents after opening the Letter of credit. At last shipment reach to the destination and contract come to an end. consists of the following steps as under: Production order. Letter of credit. E-Form. Shipment and shipping documents. These business/marketing prices repeat again and again. The post contract phase

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CHAPTER 4

FUNCTIONS OF THE MARKETING DEPARTMENT

4.1 Marketing strategy

In order to reduce their dependence on a few markets especially Europe, USA, and Asian new markets were developed for finish product of yarn.. This diversification not only reduced their dependence on Hong Kong but also gave those better profit margins at times when Hong Kong market was very depressed. Under this market diversification, they started business with South Africa, Australia etc. Contacting Old Customers The business with some of the old buyers in Europe was also revived during this period after intensive efforts. This revival gave profit margins. New and Innovative Product Development They have developed fancy and special verities of finish fabric such as comber and lycra yarn which are being sold at premium prices. They keep on modernizing their equipment in order to maintain the high quality of their products. More Quality Conscious With the increase of competition, they have become more quality conscious. In order to achieve their quality standards, they maintaining better quality by getting yarn from pre-approved sources, tighter fabrics inspection in folding and providing service to their customers. Marketing strategies includes, 38 good volumes and better

1 2 3 4 5

Meeting with buyers. Company profile. Buyer Visits. Free Sample. Contacts with agents.

Meeting with buyers; Marketing manager meets with buyer, introducing SSM products to prospective buyer. This strategy helps manager to understand the needs and requirements of buyers as well as marketing people are aware of current trends of market. Through negotiation you win the sympathy of buyers and business for company. Company Profile; SSM has also published it profile introducing its key products to customers. This booklet is send to various agencies dealing in purchase of cotton, fabrics and made-ups. This strategy helps to introduce the company in out side world. Various broachers are also published. Buyers Visit; Sometimes buyers visit are arranged to familiarize them with products, SSM is offering for their valuable customers. These visits are crucial for the growth of the company because they help in introducing products to others and also win a lop of business for the company. The Marketing department frequently invites buyer to show them excellent production process and quality productions. Free Samples; This strategy is widely too used to boost up exports. Free samples are

delivered to customers. When new product is made, free samples are sent to loyal customer show firms concern for them. Customer satisfaction is a

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important aspect because customer is a person who gives meaning to company. Contacts with Agents; SSM is an export oriented organization. More than 70% of its sales constitute exports. So to capitalize foreign market, SSM has long list of agents working in foreign market. This strategy is useful when company is not able to communicate with buyers; it can hire services of agents who for commission introduce their products in market. Relationships with distributors or agents are recognized as critical success factors so a lot importance is paid to agents who are valuable asset of firm.

4.2 Product Planning & Development:Product planning and development is key to success. Some organization feel that they cannot survive without R & D. SSM is one of age of sales of method or financing as possible. Following are some research and development techniques. Through Internet; SSM has recognized the importance of information technology in business field and very quick to capitalize this opportunity. It has launched its website which tells buyers about SSM products. APTAMA buyer dictionary; All Pakistan textile mills publish a directory, which includes prospective buyers. This dictionary is published regularly. Marketing department carefully analyses it and find buyers for its quality products. these organizations. Organizations finances research and development projects using either %

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4.3 Pricing Strategy: Pricing is the most important strategy in the overall strategy adopted by SSM because it is directly related to incentives offered and price fixation. The most common factors that effect prices are: 1-Change in price of cotton; Change in price of cotton directly effect on yarn prices in situation of increase or decrease. Because the cotton is raw material that spinning Mills are using for produce of yarn. So the change in cotton prices effects on yarn prices. 2- Government Rules & regulations; Yarn prices of SSM also effects by the rules and regulation of Govt of Pakistan and due to International Govt in case of increase in taxes or due to new duty or tariff. 3-Competition; SSM has to facing domestic as well as international competition. There are so many domestic and international spinning groups that are providing yarn product from all over the Pakistan. So competitive analyses is also carried out before fixing fares. 4-Price Adjustment; Before setting prices of products various elements are kept into mind such ass total manufacturing cost, commission of the agent and L/C terms includes shipment terms and transportation cost etc. Customer is of utmost important. If customer is old, his track record is good and enjoys a favorable repute so profit margin my be reduced. Prices area determined on cost basis by adding certain percentage of profit. This is highly sensitive area. In 2005 all quota barriers has lifted, so pricing has become a crucial factor

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4.4 Distribution Strategy: As mentioned earlier, Shafi Spinning mills limited has its agents in each exporting.Country.Plac includes, channels from producers to final consumers. More ever SSM has following strategies for distribution of its yarn products. Brokers on domestic levels. Sales Agents on International levels. Finished goods godowns in domestic operations. Own transport for delivery of order.

4.5 Promotional Strategy: Shafi Spinning Mill Ltd run advertising and promotion campaign on large scale. The promotion of products can be classified in two ways, I. II. Direct Marketing. Indirect Marketing.

Direct Marketing;
Promotional activities include presentations, free samples. Presentations. These are given to customer in Perl continental Hotel and other different Places etc. Free Samples. Free samples are also provided so that customer may get an idea about the quality and excellence of SSM. 42

Agents.

Direct marketing is done through agents. In each country a display center has been established names as CMD Company ( concept marketing design). In Germany, products of Shafi Spinng mills limited are displayed in an exhibition ( Frankfurt) Sales Promotion ManagersTours. Sales Promotion Manager Tour is also arranged. arranged to find new buyers in foreign market. These tours are

Indirect Marketing;
Agents. Indirect marketing is done through agents. SSM has direct contact

with agents who deal with customers on behalf of SSM. The agents make arrangement between both the parties buyers and sellers. The agents received commission for their services. ADVERTISING Sign Board. Print Media. Calendar and diary. Magazines. E-mail and post mail.

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CHAPTER 5

CRITICAL ANALYSIS;
I have gained the practical exposure in a real working environment. I have learned that two things are most important in Marketing department that is Communication and Responsiveness in their assignment. I have learned interpersonal and communication skill and build confidence.

Internal Environment Analyses:Internal Environment Analysis includes strength and weakness within SSM, which are explained below.

Strengths;
Export- oriented organizations. Highly skilled labor. Talented marketing managers. Qualified finance staff. Professionalism in the employees. Corporate culture. Sound policies. Strong group. Successful History. Computer information system. Leads towards Paperless organization. Availability of raw material at cheaper rate. Products are technology competitive. Innovative products. 44

Customer orientation. Efficient production system.

Weaknesses;
Work over load on staff. Time miss management. To much centralized operation. Rules violation. Excessive emphasis on cost effectiveness. Below average marketing skills. De motivated staff.

External environment Analysis: External Environment Analyses means environment prevailing outside SSM like competitors, stakeholders, and economical and technological environment. Major factors of external environment is an opportunities available in the market for the SSM & Threats being posted by the External Environment to SSM, which are as under.

Opportunities;
As far opportunities are concerned that are Rapidly growing economy. Increasing government incentives for exports sector. Enter new markets or segments. Computer technology improvement ( online shipment tracking). Vertical market integration. Faster market growth. Untapped market of Russia and Europe .

Threats;

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Intensive competition. WTO. Child labor propaganda by various organization. Political instability in Pakistan.

Globalization. Labour law modification.

5.1 Successes and Failure of Different Products With Reasons;

During my internship in SSM evaluate different products / services and their success and failure. Those are listed below.

Successful Products;
8/1 soft in local packing due to high quality. 10/1 soft in local packing due to high quality. 10/1 hard in export and local packing due to good packing. 20/1 comber hosiery in local packing due to high demand. 30/1 comber hosiery in local packing due to blended quality and less cvb.

Failure Products;
o 5/1 soft yarn in local packing due to shade. o 10/1 slub yarn in local packing due to low demand. o 8/1 Lycra yarn in local packing due to shade in color.

5.2 Major Competitors of the Organization;

SSM has to face domestic as well as international competitors. Details of which is given below.

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Domestic Competitors;
Fahed Spinning Mills Ltd. Quality Spinning Mills Ltd.

MGM Spinning Mills Ltd. Neelum Textile Mills Ltd.

International Competitors;
Sapphire Mills Ltd. Nishat Group. Shadman Group. Bhenero and Blessed Group. Ghulshan and Ghulstan Group. Raiz Textile Mills. Kohinoor Mills.

5.3 Future Prospects of the Organization:SSM has very bright future. After the incident of 05 March 1992, when lot of spinning has been bankrupted, SSM remains its operations all over the world.

New Planning, New Directions, New Management;

After the SAFTA role on Pakistans textile sector. The management of the SSM decided to move their organization towards new planning, new directions and towards new strategies. For this purpose the Chairman of the company and the M.D of the company arrange for a meeting they also invite the Mills Mange of the organization in this meeting in which they discussed on these points. To hire new professional staff. To work under a quality policy. To work under the I.S.O term and conditions. 47

To start the ring spinning production and ring comber production. For the establishing the Lahore Office and a sales office in the Karachi. For the appointment of new marketing staff and hiring of sales and quality control staff. To purchase new and modern quality control instruments. To come in the list of competitors and compete with them. To increase the ratio of the export product and get more and more contract form the foreign contractors. To start a employee training programme and establishing own training school. To get I.S.O certification and work under his permission.

After these points of meeting the management of the SSM worked under these points and they complete following work They appointed Mr. Zafar (Bsc textile from German)as General Manger and Mr. Tariq stet his duty as mills manger under the control of new G.M. They established a office in Lahore office and a sales office in Karachi. They get registration from I.S.O and start work under its rules. They appointed new marketing sales and accounts.Finance staff They manage funds for the purchase of new ring back process frames. They establish own training center for the training of the workers. Replacing & Up-grading Machinery; SSM gradually replacing its frames, the ring section is consists on new Rieter frames. Similarly they are replacing the old machinery in open-end section for more excellence quality and for the statisfaction of customers. Organizational Restructuring; Management of SSM works hard to improve the image of product lots of steps are planned in restructuring of the organization like.

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Sale of old machinery and scrape. Rationalization of international route network. Closure of less productive parts. Adding additional capacity. Improvement on crew utilization and layover patters.

CHAPTER 6

Short-falls/Weaknesses of the Marketing Department;

1- Lack Of Communication; Communication is the most important aspect in the marketing terminologies. But here in SSM Marketing Department relationship building is very weak with Sales Agents etc. and in spinning industry Business relationships are very important for customer retention. 2- Targets are not given; Targets are very important in marketing fields. Although there are SPOs in SSM Marketing department but they are not given any specific target. 3- Modern Marketing Tools; During my internship in SSM marketing department, I noted that beside of all efforts made by marketing management there is still need of modern marketing tools and techniques. 4-Lack of promotion; Advertising is one of the most effective tools of promotions but it is not being undertaken effectively by SSM marketing for unknown reasons. 5 Marketing Information Systems; Although SPOs (Sales Promotion Officers) obtain market information system through various sources. However, there should be systematic and organized Marketing Information Department to evaluate the tools and techniques of other spinning mills before going to launch any feature etc.

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6- Training System of Marketing Personnel; Training is the most impotent concern for the marketing personnel but there in SSM although training module and criteria is available for them but that should be improved on the ground of new market changes. 7- Application Of Marketing Strategies; Although there are well defined Marketing Strategies by SSM but due to lack of Check and balance methods strategies are not being adopted by the concerns due to bureaucratic behavior. 8- Customer Contact; Another shortfall of SSM Marketing Department is there lack of P.R. We know that feedback is very important in todays customer driven environment. So SSM should think on this effective marketing tool.

6.1 Weak areas, which need to be improved

There are many weak areas for improvement in this company to attract more and more customers. To understand Customer is a king. To find the more opportunities of the business. There should be conducted regularly training programs. Top management should take interest for the implementing the marketing concept in the company. The commitment should be honor with clients. To provide the proper facility to employees. To develop a proper vision and mission statement for company. There should be proper workload on employees. 50

There is need of improvement for sales promotion policy. There should be developed a marketing plan properly.

CHAPTER-7 Conclusions & Recommendation for Improvement 7.1 Conclusions;

This internship is proved to be very helpful for me. I got a lot of knowledge and also the practical aspect of the life. It is my first experience which is obviously very tough but it will be very beneficial for us in the future. Besides the above mentioned I think that Sapphire is one of the best group of textiles in Pakistan and have good repute in the industry of textile as well as Asia. SSM is an export oriented organization more than 70% of their Open-end and Ring yarn exporting in different countries. Marketing department of SSM is very efficient with strong communication and negotiation skills and all the members of marketing team behavior leads towards responsiveness. All departments run smoothly with proper planning, control, and quick decision making. At the end I would like to express my thanks to the Accounts, Finance, and Marketing departments for giving time and sharing valuable information. This information gave me good understanding of some basic concept being practiced. SSM is one of the great, strong, reputed, thrilling brilliant, successful and developed from every point of view.

7.2 Recommendations
As far as my recommendations my suggeastation are as follow. 1- Targets achievements; Targets can be achieved properly and thoroughly as assigned by the Head Office. The local sales staff, agents by providing better facilities like better conveyance and good working

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environment in which no one feel boring and tied himself with the duty but that environment in which every employee work free with out any pressure in this way he can give good performance. Incentives for example performance award and good increment rate and bonus as well and more ever allowance on Eid days to the customers, in the result they should achieve these targets. . 2- Complaints cell; Complaints regarding Customer Services and other problems should be solving after to know whole the problem and reason of that problem and also as well as to know about responsible person of that complaint on prior bases to avoid hard image. 3- Staff Allocation; They should appoint high level management on experience basis and middle ,lower management staff on the basis of qualification regarding to department and duties and than they should trained them for better performance. 4- Proper Monitoring; There should be proper monitoring of every department and on every activity regarding sales, purchase, marketing etc at all level to achieve the organizations objective i.e. to gain maximum business/profit and provide better services to the customers 6- Check & Balance; There should be check & balance system in the marketing department on expenditure and employees punctuality, to cover malpractices, irregularity etc. 7- Time factor; Time factor is very important in any spinning mill so while choosing schedule there should be keep in view competitors and customers requirements etc. 8- Proper job description; Proper job description should be resorted by SSM for its employees so that they are clear about their jobs. Excerpt of it beside of depending daily wages and contractual employees SSM should concentrate on regular employees, so that they can be satisfied and can work efficiently.

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7.3 Suggestions.
i. The Company must improve production efficiency through increased

automation, re-engineering of system, backward and forward integration of operations, moving up the value chain, strategic collaboration in the scenario of WTO. ii. They should active participate in regain textile exhibitions like one that will take place in Dubai. In which leading manufacturers and decision makers will participate from south Asia, and the middle east. iii. iv. v. vi. vii. They should adopt proactive approach in order to avoid complaints, delays In order to retain and increase customer base, there is need Focus on creativity and innovation in all respects. The threats of new competitors should be considered in all types of Funds are arranged by taking short term loan facilities from different for sound and problems. promotional activity.

decision making banks to finance Cotton procurement. However if a reserve is created on monthly basis and maintained in reserve account for financing such a big arrangements then financing cost can reduced by talk short- term loans. viii. Directors of the firm should delegate signing authorities for routine documents to Chief Financial Officer or Manager Accounts and GM finance, like signing cheques upon specific limit so that finance matters can handled easily and on time by finance officials ix. Duplication of work. there should be a reasonable modification in the Accounting software. Gate Entries and Dispatch advices for cotton received

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returned should be prepared in Accounting software at mill with unique series of GE and DA numbers. On the basis of these documents, inventory record and reports are maintained in system then data and hard copies of GE and DA should be received at Head office. x. I also observe that some times a lot of confusion is created due to complicated procedures. So try to adopt simplicity in the documentation and by resolving the communication gap with the other departments xi. In the department of Telemarketing, only female members are serving. Their duty is dealing with farmer and dealers. Mostly farmers hesitate interact with female staff, so there should be male staff in telemarketing department. xii. Sales and marketing manager is always overburden, whole company depends upon him when he is away from the head office a number of works go pending, There is need to appoint another manager, who could work in his absence. xiii. Purchase and audit manager is same person. It is very strange a person whose audit should be done is himself auditor. So these posts should not be unified in same personality.

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8.1 REFERENCE & SOURCES USED;

Product information Employees Profile Business Volume data www.shafi.net.pk APTMA magazine on all Pakistan Textile Mills that provides knowledge and history of textile sector. by Marketing & Production Department by HRM & ADMIN. by Account and Finance Department.

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