STRATEGIC MANAGEMENT FINALPROJECT

ORGANIZATION STUDIED
GUL AHMED
PERSON INTERVIEWED
Tariq Shamim Durrani
Deputy Brand Manager
Gul Ahemd Textile Mills

GROUP MEMBERS
Muhammad Faizan Maqsood
Behzad shami
Pehlaj Rai
CLASS
MBA 4D
SUBMITTED TO
Sir Naveed M. Khan
SUBMITTED ON
December 20, 2010

Contents
Corporate Profile ................................................................................................................. 4
COMPANY HISTORY ...................................................................................................... 4
Corporate Profile Major Companies ................................................................................ 4
Corporate Profile Business Activities .............................................................................. 4
TEXTILES .......................................................................................................................... 4
POWER............................................................................................................................... 4
MANAGEMENT ................................................................................................................ 4
Description of products and services of the company ........................................................ 5
Vision and Mission Statement of the company .................................................................. 6
External factor Evaluation Matrix ...................................................................................... 7
Competitive Profile Matrix ................................................................................................. 8
Internal Factor Evaluation Matrix ....................................................................................... 9
SWOT MATRIX .............................................................................................................. 10
Financial Performance at a Glance ................................................................................... 11
Financial Ratios ................................................................................................................ 13
SPACE MATRIX ............................................................................................................. 15
BCG MATRIX.................................................................................................................. 16
BALANCE SCORECARD............................................................................................... 17
BLUE OCEAN STRATEGY ........................................................................................... 19
CONCLUSION ................................................................................................................. 20

Corporate Profile
COMPANY HISTORY
The story of textiles in the subcontinent is the story of Gul Ahmed. The group began
trading in textiles in the early 1900s. With all its know-how and experience, the group
decided to enter the field of manufacturing and Gul Ahmed Textile Mills Ltd. was
incorporated as a private limited company, in the year 1953. In 1972 it was subsequently
listed on the Karachi Stock Exchange. Since then the company has been making rapid
progress and is one of the best composite textile houses in the world. The mill is
presently a composite unit with an installed capacity of 103,000 spindles, 220 wide width
air jet looms, 90 Sulzers, 297 conventional looms and a state of the art processing and
finishing unit.

Corporate Profile Major Companies

The following is a list of the major companies which comprise the group:

Gul Ahmed Textile Mills Limited

Gul Ahmed Energy Limited

Corporate Profile Business Activities

TEXTILES
In the textile field, activities start from the spinning of cotton as well as man made fibers
and extend to weaving, processing and finishing of all types of cotton and blended
fabrics, bed linen, home furnishings, garment manufacturing, etc.

POWER
The group has been a pioneer in the field of power generation. The textile mill runs on
self-generation with an installed capacity of more than 20 MW. Gul Ahmed Energy
operates a power plant of 136 MW capacity with a project cost of US$140 million
located at Korangi, Karachi. The sponsors of this project include the IFC and Tomen
Corporation. The project has been in commercial operation since November 1997.

MANAGEMENT
Management of the group is professionally qualified and broadly experienced. The
directors have held top positions in various textile bodies, export committees and have
also assisted the Government of Pakistan in some of the major trade talks with EC and
USA authorities.

Description of products and services of the company

The products and services of Gul Ahmed Textile Mills can be divided into two broad
categories according to their markets
Gul Ahmeds local Market
Gul Ahmeds export Market
The products in Gul Ahmeds local market category are

Lawn
Pret line (women category)
Mens stitched wear
Mens unstitched
Home textile
Foot wear
Perfumes
Accessories

The products in Gul Ahmeds export market category are

Lawn
Pret line (women category)
Mens stitched wear
Mens unstitched
Home textile

What make Gul Ahmed stay?

First ETP (Effluent Treatment Plant) in textile sector

First yarn mercerizing facility
Metal free safety packing zones in all sewing units
First textile mill to register carbon credits
First rotary machine in Pakistan
First to install caustic recovery unit in Pakistans textile sector
First compact spinner in Pakistan
Using CAD/CAM machines to apply latest design techniques
Largest embroidery facility dedicated to home textiles
An extensive chain of retail outlets all over Pakistan

Vision and Mission Statement of the company

VISION
Setting trends globally in the textile industry. Responsibly delivering products and
services to our partners
MISSION
To deliver value to our partners through innovative technology and teamwork. Fullfilling
our social and environmental responsibilities.

VALUES
Integrity
Passion
Creativity
Teamwork

Analysis of Mission Statement

According to our Analysis several components are missing in mission statement and the
revised mission statement is as follows
To serve fashion oriented customers. We ensure that our products are of the highest
quality standards by adhering to the most stringent systems and processes while carefully
selecting all the best quality inputs from around the globe. Our aim is to ensure that the
end customer always gets a unique blend of quality, comfort and fashion which is
passionately woven into all our products. We strive to make difference in communities
where we operate by following best social & environmental policies and best human
resource practices to ahead of the competition and setting benchmark for industry.

External factor Evaluation Matrix

External Factor Evaluation Matrix

Key External Factors

Opportunities
Growth in target market audience
Increasing Fashion Awareness
Online shopping
Social Network Marketing
Brand Consciousness
Increasing expenditure on shopping
Fashion Weeks in Major cities
Threats
Counterfeiting and intellectual property rights violations
Inflation
Exchange rate fluctuations
Law and order situation
Terrorism
Increase in interest Rates
Cotton Yarn and other Raw material Prices
TOTAL

Weighted
Weight Rate score
0.05
0.08
0.08
0.07
0.09
0.06
0.04

4
4
3
3
3
3
3

0.2
0.32
0.24
0.21
0.27
0.18
0.12

0.12
0.06
0.06
0.08
0.05
0.08
0.08
1

3
2
3
2
1
2
3

0.36
0.12
0.18
0.16
0.05
0.16
0.24
2.81

Competitive Profile Matrix

Competitive Profile
Matrix
Critical Success Factors
Advertising
Product Quality
Price competitiveness
Management
Financial Position
Customer Loyalty
Global Expansion
Market Share
Total

Weight
0.20
0.10
0.10
0.15
0.10
0.10
0.20
0.05

Gul Ahmed
Chenab Group
Al-Karam
IDEAS
ChenOne
IDENTITY
Rating Score Rating Score Rating Score
4
0.8
3
0.6
2
0.4
4
0.4
4
0.4
3
0.3
3
0.3
3
0.3
3
0.3
3
0.45
4
0.6
2
0.3
4
0.4
3
0.3
3
0.3
3
0.3
4
0.4
2
0.2
3
0.6
2
0.4
3
0.6
4
0.2
2
0.1
3
0.15
3.45
3.1
2.55

Internal Factor Evaluation Matrix

INTERNAL FACTOR EVALUATION MATRIX

KEY INTERNAL FACTORS

STRENGTHS

Weight

Weighted
Rating Score

Highest Market share

Creative designers
Fully vertically integrated from fiber to fashion
Latest technology engaged
99.99% design quality assurance
Strong brand image
An extensive chain of retail outlets all over Pakistan

0.15
0.1
0.05
0.15
0.05
0.03
0.03

4
4
4
4
4
4
4

0.6
0.4
0.2
0.6
0.2
0.12
0.12

WEAKNESSES
Debt to equity ratio is high .81
EBITDA Margin to sales decreased from 12.49 to 11.92
Demand is higher than production capacity
Supply Chain Issues
Online shop not fully functional
Small share in export market as compare to other local players
TOTAL

0.1
0.15
0.05
0.04
0.05
0.05
1

1
1
2
2
2
2

0.1
0.15
0.1
0.08
0.1
0.1
2.87

SWOT MATRIX
STRENGTHS

WEAKNESSES

1.Highest Market share

1.Demand for Lawn is so high

that sometime it exceed their
production capacity

2.Creative designers
3.Fully vertically integrated
from fiber to fashion

2.Online shop is not fully

functional (does not contain
all products of Gul Ahmed)

4.Latest technology engaged

5.99.99% design quality
assurance
6. Strong brand image
7. An extensive chain of retail
outlets all over Pakistan

3.Most of designs are out of

stock
4.Sometime designs are there
in the magazine but are
launched late.
5.Perfumes and footwear are
not profitable

8. Financial Strength
OPPORTUNITIES

SO STRATEGIES

WO STRATEGIES

1.Growing Demand

Launch its brand in other

countries (S6, S3, S6, O3)

Make use of internet to cover

lost sales (W1, O1,O2)

Follow the global trends in

fashion and make presence in
international trade expos and
shopping festivals (S2,O5)

Improve supply chain by

integrating department and
processes (W3, W4, O1)

2.Internet and Online shopping

3.Global Trade
4.Fashion Weeks in major
cities
5. Dubai shopping festival and
other expos

Collaborate with some

designer to make impact in
fashion weeks (S6,O4)

THREATS

ST STRATEGIES

1.Big players in export markets Dedicated mills for export

market to increase export
2.Small share of export market market share (S3, S8, S6, T1,
T2)
3. Foreign exchange risk
FDI in other countries to take
4.Volatile law and order
low cost advantage (S8,
situation
T4,T1)

WT STRATEGIES
Drop perfumes and foot wears
unless Gul Ahmed develop as
a prestige brand (W5,T5)
Re launch perfumes with some
high profile celebrity as brand
endorsement (W5, T5)

5.Other established brands in

accessories, perfume foot wear

10

Financial Performance at a Glance

Profit and Loss
Sales

Gross Profit
Operating profit
Profit before tax
Profit / (loss) after tax
Dividends

Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million

Balance Sheet
Property Plan and Equipment
Intangible
Long term investment, loans, advances and deosits
Net Current Assets
Total Assets employed
Represented by:
Share capital
Reserves
Shareholders' equity

Long term loans

Deffered liabilities
Total capital employed

Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million

2010

2009

2008

19,689

13,906

11,726

9,848

3,173

2,359

1,775

1,475

1,653

1,209

936

745

708

170

202

262

478

80

103

164

79

55

2010

2009

2008

2007

6,140

6,106

5,828

4,703

16

29

28

30

93

90

78

74

(224)

(390)

(687)

(278)

6,025

5,835

5,247

4,529

635

635

552

552

2,961

2,483

2,210

2,107

3,596

3,118

2,762

2,659

2,223

2,567

2,354

1,772

207

149

130

98

6,025

6,025

5,247

4,529

11

2007

Cash Flow Statement

Operating activities
Investing activities
Financing Activities
Cash and cash equivalents at the end of the year

Rs.
Million
Rs.
Million
Rs.
Million
Rs.
Million

2010

2009

2008

2007

454

442

(399)

774

(711)

(931)

(1,649) (713)

(170)

398

680

(5,560) (5,233) (514)

(3,832)

12

Financial Ratios
Financial Ratios

2010

2009

2008

Profitability ratios
Gross profit ratio

16.12

16.96

15.14

EBITDA margin to sales

11.92

13.37

12.49

Net profit to sales

2.43

0.58

0.88

Current ratio

0.97

0.95

0.90

Quick / acid test ratio

0.34

0.39

0.24

0.81

0.98

1.07

Liquidity ratios

Finance gearing
Debt: equity ratio
Rate of return
Return on equity

14.22

2.73

3.79

Return on capital employed

27.87

21.82

19.14

1.75

1.16

1.28

Interest cover ratio

Capital efficiency
Inventory turnover

Days

98.00

107.00

95.00

Debtor turnover

Days

45.00

66.00

72.00

Creditor turnover

Days

73.00

76.00

61.00

Fixed assets turnover ratio

3.21

2.72

2.00

Total assets turnover ratio

1.40

1.07

1.05

13

Financial Ratios

2010

2009

2008

Investor information
Earnings per share

Rupees

Price earnings ratio

7.52

1.45

1.86

2.46

26.79

21.51

Cash dividend per share

Rupees

1.25

1.00

Bonus shares issues

Dividend payout ratio

16.60

53.68

6.06

1.87

Dividend cover ratio

Break - up value per share
Market value per share

Rupees

56.45

49.12

50.04

at the end of the year

Rupees

18.53

38.84

40.00

high during the year

Rupees

38.84

49.00

51.40

low during the year

Rupees
Rs.
Million

17.40

28.60

37.25

2,347

1,860

1,465

EBITDA

14

SPACE MATRIX
SPACE MATRIX
INTERNAL STRATEGI POSITION
SINANCIAL STRANGTH (FS)
Return on Investment
Leverage
Liquidity
Working capital
Cash flow
Inventory Turnover
Earnings per Share
Price Earnings Ratio

6
3
3
4
3
5
6
5

EXTERNAL STRATEGIC POSITION

ENVIRONMENTAL STABILITY (ES)
Technological change
Rate of Inflation
Demand Variability
Price Range of Competing Products
Barriers to entry in market
Competitive Pressure
Ease of exit from marker
Risk involved in business

4.375
COPETITIVE ADVANTAGE (CA)
Market Share
Product Quality
Product life Cycle
Customer loyalty
Competition's capacity utilization
Technological know how
Control over suppliers and distributors

-1
-5
-3
-4
-4
-5
-1
3.286

INDUSTRY STRENGTH (IS)

Growth Potential
Profit Potential
Financial stability
Technological know how
Resource utilization
Ease of entry in market
Productivity capacity utilization

-4
-5
-4
-5
-3
-3
-1
-4
3.625

0.75

6
4
4
5
5
3
5
4.571 1.286

15

BCG MATRIX

STARS

QUESTION MARK

PRET LINE

MENS STITCHED WEAR

ACCESSORIES

CASH COWS
DOGS
LAWN
MENS UNSTITCHED
HOME TEXTILE

FOOT WEAR
PERFUMES

16

BALANCE SCORECARD
OBJECTIVES
CUSTOMERS
Target Market:
LSM : 8 & above
SEC: A+ & A

MEASUREMENT

TARGETS

STRATEGIC
INITIATIVES

Market share

70 % market share

Market development

Customer retention

100% customer
retention ratio

B2B customers
Attract new customers

Customer satisfaction
level

95% customer
satisfaction level

Customer loyalty
programs
On time delivery for
online buyers

Retain customers

Product availability

Design Accuracy
Quality

Product quality
leadership

INTERNAL
PROCESS
Superior R&D

New product
development cycle

Finest Designers

new seasonal
collections twice a
year

Design quality
Engraving for Color
Differentiation

Color matching and

quality

99.9% design
matching

Laboratory Color
Testing

Nominal wastages

99.9% color
matching

Color Development

Product delivery

1% wastages

Printing Quality

Technology

Superior Production
Facility

Asset utilization
CO2 emission

Supply chain
Environmental
Friendly
Socially Responsible

Community building
and empowerment of
women and
disadvantaged

Fulfill 100% online

orders

Cover up lost sales

by increasing sales
growth by 20%
1000 women in work
force at various
positions

Following global
trends in fashion and
setting benchmark in
local markets
Investment in new
technology to
maintain edge on
design and color
quality
Reduction in scrap
sale
Continuous
improvement in plant
efficiency in order to
reduce wastages,
carbon emission and
increase energy
efficiency.
Training program for
disadvantaged and
special people
Separate unit for
women
Child care facility for
women

17

LEARNING &
GROWTH
Cultivate culture of
learning, creativity,
target orientation and
adopting positive
values
Attract and develop
high caliber human
resource

FINANCIALS
Profitability

Increase in gross
margin

New designs, ideas and

concepts

lead position in
terms of new designs

Low employee
turnover

reduce employee
turnover by 5% year
on year basis

Sales growth by
segment

20% sales growth

targets

Customer and product

line profitability

Cost reduction by 5%

Continuous
investment for
learning and
development of
employees to maintain
an edge
Confidentiality policy
to ensure business
secrets are not leaked

18

BLUE OCEAN STRATEGY

Blue Ocean Strategy on which Gul Ahmed is working are

A dedicated Gul Ahmed Fashion magazine to promote their new collection

twice a year
First one to launch online shop in Pakistan www.gulahmedshop.com ,
currently no other player in the industry has online shop

19

CONCLUSION
Gul Ahmed has launched its online shop www.gulahmedshop.com for online shopping
but the problem is not all of their products are currently available one internet.
Mostly it happens on the first day of launch of their new collection, which is done twice a
year (one in winter and other in summer), the customers (mostly ladies) rush into ideas
and Gul Ahmed shop and start purchasing whole lot of a design and as a result that
design get short in the market. And customers who come become frustrated when they
cant find a print.
Gul Ahmed is facing serious supply chain issue in this area, they cant meet the demand.
One thing that can be done in this is the use of online shop to make sure availability of all
their hot designs for a sustainable period of time. This will be a one good strategy to
retain their customers.
Gul Ahmed can also use nontraditional communication channels like facebook and
twitter to interact with their customers and to get feedback. This online medium is one
very effective way of analyzing consumer choices. Google analytics and facebook page
analyzer can provide very useful information about user preferences. For instance it can
tell you which are the most favorite design liked by the audience, based on that
information Gul Ahmed can start producing more of that particular design and meet that
customer demand.

20