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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 Post MFA
Economic: Economic:

•Collapse of global •No change


denim market

•Prices of Naphtha more •No control on naphtha


than doubled prices

Political/Legal: Political/Legal:

•Foreign trade regulation •Increase in global


Pre – MFA Post - MFA
Technological Technological
1. Under-utilized lab work 1. Maximizing research on denim
fabric
2. Domestic cost advantage 2. Domestic cost advantage
CSF for Arvind Mills
Strengths Weaknesses
 Operational Efficiency and  Business Concentration leading to
increased risks
Fast Machines
 Wrong Assumptions and Forecasts
 Skilled and Comparatively
cheap labor  High Set-up cost of new plant

 Redefining product portfolio


by increasing the no. of  Inability to retain skilled personnel
brands to 120

 Access to Export Market


Continued……….
Opportunities Threats
 Price Competitiveness  Inability for the organization
 Cheap Labor to forecast market conditions
 Debt Restructuring  Low Market Share spread
 Product Diversification Increased global competition
especially from China
 Forward Contracts for
Naphtha and Cotton
 Complacency of management
due to earlier successes
 Greater penetration with
industry majors like Levi and
 Impact of NAFTA agreement
Gap on Tariffs
 Duty waive-off after post
 High employee iteration
especially senior skilled
2005 liberalization scenario
managers
Is it Proceeding in right
direction ?
Positives:

 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!! 