a case study Presented By: Tanush Sharma

Corporate Level

Overlooking high fragmentation in denim industry Myopic view on NAFTA implications

Levels of Strategy mismatch Continued

Business level: Insufficient measures to create product differentiation Functional level: Lavish spending in new plant at Santej

Environmental factors those influencing Arvind Mills.

Economic
Political/legal Technological

How do these factors change in Post MFA Regime?

Pre MFA
Economic: Collapse of global denim market

Post MFA
Economic: No change

Prices of Naphtha more No control on naphtha than doubled prices

Political/Legal:
Foreign trade regulation

Political/Legal:
Increase in global

Pre MFA Technological 1. Under-utilized lab work 2. Domestic cost advantage

Post - MFA Technological 1. Maximizing research on denim fabric 2. Domestic cost advantage

Strengths

Weaknesses

Operational Efficiency and Fast Machines Skilled and Comparatively cheap labor Redefining product portfolio by increasing the no. of brands to 120 Access to Export Market

Business Concentration leading to increased risks Wrong Assumptions and Forecasts High Set-up cost of new plant

Inability to retain skilled personnel

Opportunities

Threats

Price Competitiveness Cheap Labor Debt Restructuring Product Diversification Forward Contracts for Naphtha and Cotton Greater penetration with industry majors like Levi and Gap Duty waive-off after post 2005 liberalization scenario

Inability for the organization to forecast market conditions Low Market Share spread Increased global competition especially from China Complacency of management due to earlier successes Impact of NAFTA agreement on Tariffs High employee iteration especially senior skilled managers

Product differentiation Value chain enhanced. Direct collaboration with the labels instead of vendors

Forward Contracts for Naphtha and Cotton

Integration/Diversification options for Arvind mills.

Levels of diversification- Moderate to high

Vertically enhancement of value chain Increased styles in core product

Thank you!!