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Towel Manu.

facturing
Company (TMC).
BACKGROUND AND SWOT ANALYSiS

The Towei Maaufactnriag Compay Cfldc) was fouaded n 1g72.ia Karacli Pakistan. The
majoriqy of its shares are owned by the family of lvk. Khali], its managi:rg director. This
faniiy also oms one of Fakistan's lsadirg fahic maodacurring coocerns114C has s'sw! corsisienfly ovel fhe years to'beome Pakistaa's lagest naaufacfi:ra
of toweLs for expcrl It employs abou 400 employe=s, the larga' propordoa of whom are
eagageC in -rl:e pr-ofuciion of wtire nery towels cairyiag ihe tr-ad rame Oceal Breeze. I-s
leariiag export ma-#g wifi a slae of 90 per ceni of its iotal sales, is rhe UEiied $tries. f,
mmber of European cocatdes rna-ke np i'.s oiler mrriceB. f}{C eajoys a :-ryuudotr as a
sr4pplier of qnalifirowels
Ib.e ccmi:a:ry is facing ins-easing coryetition from srnaller iowel Eaudaci,rerswiih
nore raodest overheads. Daad is gr:oEng for dyed iowels- Mr- Khalil is aware rhat sooe
ccmpeitrs are prodnci::g (yeC towels to met fris dernand- Ee is hkewise as.are thai -,i.e
U_nited S'utes-u- clcse to ltassing legislatioa that would redoce imporls of'towels fror:
r2K.Tql2n.

TMC produces solely ior export ldanagemeut is lot ooly fn11y comm'itted to exporiing
but also ha,s a decade of exi:crt experieace behhd ir
TllC has a curreai prof;t EErgrn of 5 per ceai or bleached iowels. A marg:a
i5 per ceai car be e:leted, f it deides io produce uricoioured dyed iowels. Ilovrever,
criel io do f,is, l woeld have'uo Evest iilDees 75 millic,a on dy-ei::,g egu:pmenr
TldJ ir-,--,'3sarear is teeCed :o sar=egr:ard te ccmtraty's reoutaj:oa fol quaiiry, Ile
;:ra:r:oir:g
.._=
cjrlfiol. -re-e15 -lat su-ber1raeras q,.i] acr r=sit in -orodocts ort ec,Istsz-iri,:r::lir.z: -,
fl:e c';:reat Oceal Breze iiae is oepeaiabie, ci:.-able aad is poced compeuuveiy
TMC aas pieary of factory scace aad access io labou and iechttical ass:stance. flis
w:Jl eaabie il to promce cslourni owels soca.ai.er -ihe isstaliadon of cy"ilg equ$meli I-r-s
ccncearallon -oc li-odrc=c,a f,:r expoit is ao-oer aoyaaiage t has sva' gir-niai rcrncarres :=.
= Case

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::r. TC, :qcr: Ha=,-zs

S::=egies

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?'-es: -1 :':e-cock;br =:rr'e.--'3etev1


Now

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leadilg fa}rjc prodacer eiables it to obtail buk
rhe couati-y- I-s links with rhe colnry's
'ai favou:*able
malaial-s al-e aiso mait ava:jable to tt
supplies al lowa pricei; inporied raw

Piices'

's peaknesses follows :


recaPialarioa of the comPanY
operafiag with sma]14 overheads
smafl Pakistad companiss have been

o A srcmber of
o

=
d

it

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E
E

mntet sb,are.
and have eafen iato TMC's
does aot prodoce solid-colouieri
Udike a armbsr of smaLla s6sp*rri=-5, TI49
at**a for this ryFo iin:' This is making
towels ald is thus uaable to Eret o"

itvu]nerabletocompetitionfi"omtheoewer(adsrnallrr)producgscftowe]'s]a
Pakisat
oTheprofitInarFn(5per-ceut)oni.s.cureatpro,tact]ine,whitetowels,isvery

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eltwi[.losefavourwithuni'redStatesimporttrsifitca::lotsEpplydyedtowelsto
complemeat its cment produci iine'
markets' In the'commoawealth of
TMC has started experimentins witl'Euopeaa
ma 5 pa ceat foi white ?*-t and i0 per cent for
adependent s**rlCrSl ptoft margirs
-l*,
g*1o
io fr" p*', b""n fte pr-efmed method of paymeut
the dyed (unicolo*.l4 or-*in flre area
by CIS. This and TMC's Imited marketiag experience
in -rlie area Bov

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"";.;;
Emope' TMC's total lack of marketilg expaience in
are a.Cisadvantage. As regads Westm'
flre region i5 n major wealoess'
SiraieEic OPiions
TMChasseva-alafiractiveoptionswhichlvfr'lChaTilcalevaluafe:
ia A'da ard
Stalesly
e Ir can r&ce its dqrendence on the Ilaited
-U:T"1T=tsalket
markea should be its vrhite tenT towel
Europ". rO e* prodoct offer to fiese
thal is not subject to
e Ii can -rr6r*i-u'joht vmme dm 1 Try*y in a coqn-ny
quotis or ',ariff ba::iers il'the United States'
oltcanimplementast.a.Legyofprod:.rctadalltationaldliaeextensron.Byofferhg
towels' it s'dl be much more comPetitive' It
whi're, sohd-colom ald dy"J designeC
that car be gaired from dyed
wrl1 also berefit from the higb; profit marghs

'

towels.

lJo naner what

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as

is

selacted.

TliC's

uLrimate goal is iacreased prof;ts ald

g_

vY

-;=-

t
4:

mm en deo 5-.rai=91'l

ald ior P-rocicr adaptatioa should be aCopieC


siiareE-/ ror maiket deveiopnenr
-',hese are obr, ousi;v fie ar'-as whelo :'ivle :;q':::3s nr

combtlei

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st'a'uegy

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Ad ap*-slail {ttC Dxelog*zr't'

A-s far as ',iis

al'isnadves
aspect is ccncmed' T&IC has several

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Tow'J Manuacilring Comu-any (IMC)

white cceaa Breeze towels. This is a safe


could coatrni1e lo profuce ody its
;u"*
tro
atpraachas i'u rimits
inveatories wrll reqaira T;
:acesiqns or
additions to plaat aad nachinery; aad
U" L necessiqy zu
wilI
tra.e
"=p*i"e
reaclustmeat
ale as
at a reasonably low 1evel- The disadvantages
prices can therefore be mai*ained
.fif!ffilt
poeatial ma*et access: it nay become iagrcasingly
ioilows: TMC may le- iimitiag
p'oducts;
-,.o
riistibutors vrining handre.its sinele iinei of
us";t*
toa
,
co*lrany
the
fo.r
is deaanded; aad it
cut beca,se dre piodnJ is nbt guite what
brtetol"
,ozy
prices
seilJag
r1fficuh to cotrPete effectiveiy with other expcrters'
6ay becoroe eveo as,1s
dyed towels il addtion to its t'aditicaal
Secood, TMC could produce soiid-colomec
ald thus compeie
enable the coryaay to mrJ tbe dmand,
will
Thls
iowels.
white
of
lfue
frorn borh the 1ryar
and potential'm*U-P It will benefit
with s.sppliffs io, bortr its ci:rrsnt
new
*" s,t" or dyed toweis ard ft'om expaaded t'ade' The'LtrgeT
p-rofir marg:=s
"b";i; P*
to obtail rha busiless of distribution chains'
p,roduct lrae ,,rl enable tre compaly
"
and Monscmery Wards and other distributors'
re.railers sgch as Sers & Roebuck
this straregy il3 as follows' It wili require a'huge
The pi-oblems associa:red wim
towels in color:rs
the compary wil itrE the risk of pn-oducing
new.machjaery
ia
investmmt
cois of producilg coloered towels mzy &ve Tlr{C's
that ao one wa,rs; the additional
Ers-L

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iT{lt"flI::
*oar"*i"*t.Ti:f::" *?'Jf#,'*ol"
"otP*

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pl1sqptoaleveluaattractivetoitsmarkets;thelewpr^oductsmayDotm*t.rhestandards
reputatioa for quaIiry
of the middlemen and thu.s dairrege Tlv{C's

A.thbdoptionforTMCistoprodu"-'i,g1--colomed..r.owelswitadesigls.The
towels' A-rthis orooo aie =;-i'lar to ihose of solid-colored
advautages and riisadvaffages of
-o pio&ce -rl:is iype of towel tne ya:n wiil have to be oyec
adriitioaai dsadrzmege is iiat
io
absorpdve czpai'ty- Th:.s:aay aot airpea-1
iowel's
fra
r-rxce
tendt
wiil
flis
firs.
as 'rbeir second
who in a receat strryey raakec absorbency
coBsEEers in lhe udtec statas,
i*pott*, ctitdol for chocsing a towel

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AgajqTMCnur,"noaoptioasasfarasthisaspectisconcsaed-

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F}St,itC,nkeryfurnai.ketsastheyT-"oI,a-efr"UoitedStatesabsorbiag95yer
ceutoffuexports*atn"CommonwealthoflndependentStates5Pe'celtThe2fyarrtages
concent-atiotr on the wealthiest and
ia regard to the udted States in particuiar ilcluile
beilg berrer able 1c cats' io its besi customec beiag
largest market for toweis il rne *oiO;
ir has 'rle ncsl exberierce ala wif which ii T -it'
able to i-emain with a *rrket:a wldch
projects qiin one mai<et in nrind- Tha
at ease; and being abie to piaa all' long-eerm

cisacvaotag-.*"ioa-tae-..o]]ovrh5limillgT}IC'spoteanaltoolernajcrraark=;Elackoi
--:re Uaiic S.g::s; fr.r-:al]y-a.c
:ccoo,-nic .jo.Ev-ctrm ,:
arrernaive ;natkets anliag pe,r.ocs oi
ar'd iome) oa
-nis :-s pdaps i.e c,iggeslt oisaiva::'aie cir'iiis sEaregJ-luo-'as i;ofr ':iEelr
fiwtt iano lte umled stgies *'::t lot ihir sa]es aad iaise the Inres
iiapor+s of Paftisi:ai
cf -rne lim-ii.j. qnandties 'rhat caa be

:apore{

i S-ees ald. ro
-fteqe.ondaiteraaiveforT}ICistopuuback-oE.treU--'j-'ac
r''rj':/ rwvls

Com-tnw"-al-rh of bdependeni Sues and'Westera


ccncetrilaie ca ofrer mai-:r3rs such asrae
il
r @. -o
- a. oec.cds of recgssio[
Euope. Tae advaatages iaciad-e halo.g otoel lars=-a.ic
lll i-l'ienadcl''l
dtC 'ta nore haacs-on
=xDe3-Dce
C,Ee or tne ci-ter c.arket; pro-v:aiag

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marketilg aad g?at1y bcreasing TMC's potanriaJ' customer aad sales base. Amoag
ihe disadvan'rages are the fonowing: the possibility of over-ex-r.ending TVC's resotrces; 'sfog
possibiliry sf meking the company more 'irulnerable to ss.al] compan'iss specialising in

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soecii.c cormtries; T\4C's inexperience in d.ealin.g with markets otler tian the United States;
and ie lack of ability to research poteilial in a large numba of counties. Whfe dre hitial
mrrket analysis aad preiiminary screeuing cao be car-ied otrt oB the basis of secoadary dat:,
tbe aaalysis of TMC's market poiemiai will require primziy riata, which is expensive to
obtrrn aod which rcguires rasearch qpecialists. A rtid al-rmaiiva for TMC is to fiad ways
around quotu jn ihe Uuired States whf,.e developiag ottra. markea. This has advaatages and
disadvaauges similar to those of the secood alteraative. Aa added disadvan'rage is the
consequence of r'aflure io circuuvent United Stiies qtrotas-

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Expor-t

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Ilarketing Plan

iras decided not to gve Ep the United Staies marksl he is also of the vi'ew
ftat it would be tasound to remril dependent on ody one martet.
The rationa-le for retainiLg -fie Unied States as a majcr market is.obvioos. First, much
of TMC's experience is -widr ftis marlel Second, 'Jre Ilnited States is'the world's largest
and wealthi# market for towels. Thiid" TMC's iowels are exactly what American
cox.sgmers want in 'rerms of qualiry, price and maierial (teET)- FiaaJIy, TMC has estabiished
aa excellent repu'ration foi its Ocean Breeze brand over the years- The quotas aad heavy rlrrries sad tariffi irnposed on Pakistani prodncts are the geaiest
disadvantages of th'is ma*et. To circumvent thern, TMC could do one of rhe two things.
The first is to use the t'aditional rnethods of entry which have enabled rhe comPany to sen
95 per cent of its goods to this markel In order 'ro widen access thou''l ihese meftoCs,
fMC should carafnlly go tlroogL -rhe Uuited Siares' regula-tions and ideutify new
opporrr::rities to obtail lower ''rif,s and dlties and higher quotas.
Tne secood is io find a raore basic way of going round these bariers. TMC could set
up a smaii bralc! of factory il tsangladesh, w-he:e ihg towels cal be cut and stitched before
shipmmi to:the Uaitea Staies--Towqls from ftiS coraty are subject to less resnic'tive'tariff
Wh:Le

I&. malil

bariers. or, TMC could form a jofut venture with a firrn i:r Balgladesh or aay otha
couaty entided to be*uer ftade coudiions.
Althougtr the Unted Staies is and wrll be a key ma*et ior TMC, the coinpary should
for a ni:mber of reasons not remajn too fupendent on one markel In the irnmediafe future,
TI4C sbou-ld stzrt pursuieg tade opoortmities :a fhe Comrronwealii of Independent States
aad -Wesiern Er:rope. The ic-rner rs a good second.nerkei for a auraber of i-easons" Flrst,
ll,IC has 5669 tade expenelce -&a:, a-Lthougi aot enougtr ro gaia a foofrold- Second, ihis
3;rt3n:c ias S:C,-+: t.l ItiC ;r-- 3i'iri- a 5 rer csrl rrlit -.iar-gl:r ,x ',i.:cheC ro;=s

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ir T]IC

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.''.,ovos

dyJ;;,; #;;;d;;"'"#

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:;t-ii,o r,. imrcsed

a: a reasonabie sace.
One major problern nf lsalirg wi-tn CIS cci:nLrles is iirejr Eadrdon of barier tl-aoe"
C,..,;-.=aty, ry1C-,lo.s nct ca*ze a bar'er s;ecidls.u L,.\{C cculd siiter tail' irs emoloye'-s in
-oe rlicaaes of baiter zad ,:ounteirade, or hira a spesliisi ia carl out 'frese raasaci.ons.
IMC's short-im. gcals ar-e -.o .Eci?ase ic saies ia ne f6imr-::onvea-iih of Iaciependeai
!tzi35 ,:o 20 Der ceni ja -,-re-le:r -,hr* -rears. Gnce rhis 15 3gcorDlishei a siow aad- nefrociic

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Tow=J M=nutuciudn-t

eryunY (-N9

iom
ffi
#;;",T-.MC.:;r:.?r"l#Jff
rlangers
,n?-[ffi-";H::ijffi"r",-"r:-#J:#i
*ru
,*" de safeiy from the
ecoaooic

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H"j

earr'arkets,ro*1Hi-Y,*tffi
4;.
io oo" of ,T *r,kJ;. it

rtre sffects of an

designed oved iowels'


ffi;"
#ilr."*
1ffi-,iHiffiHffiffi#H:"1,T
As regrds rt
*:o ;;*'; ae mrch larger thaa
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l'i"'I*J"*;'*
Tne tuan:C,al*
:ff;l ffi"'#S:
'**"tt
i.i *-*
ffil
those

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u,

lqi"**A
ror"f,r#"ot

UEited Sutes sho'


,"we1 is
additioo
iB
^a.Jpe
This,
woo.ld make
to Tlr4c co's,Gds,

*"##'"ia"sora ;;;i;

aad be'sce less appeaiing


urprofita,e for T,IC h the

75 ri,iiliol' CIarketnnicolouc towels "o't' 'op.*


l-warctheequiprorent'*r:-"."**:r*yJ#".YuTl;;;;;";r*"rv*+o+i"at'al:

f-omre'-

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.ino

-'he ie131neai
would make
33 Eiifio+ **"?;;*
TMC wiil se]I rqrees
ls per cer,L
t--t.$*-,.-i.n'lorn-ed

r-;
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within five years'

'*tft
towels,

a profit' rnargn

certaia steps'

JiE#ir#-#;'*d"o.oourv
vhat
to
r#fqffi"j.i,.ts"ffi
pw
*a**t"
*.TJff
ir*rra
To u"ri",
sltair tuis
research

see

cis ,ra w"=ilTJpe.


it **rJl*rv ;: + ry:T"" 'o
,;:;;;ro**.
x',Hr*"iv,
be
colours wirl
,uorra uo" u sloa la1 ":^:H""#-T-ffi
conracts;rh*"
rerair.
io asce:
infmadoa frorn*al
a oua.ba sf rnagazines

iB

looking for- or,

tou#

#;;"rld ,olr"ol;

,"oFrrek
secondarv
'iatzo

a major retetr
to become a supplier fo1

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in the T-lurtad

iJ,*-*FeffiHHJtrf **ffi,fJT* :;
*nt -=
Ir not
trdftrflJ"#:htreq'fi' f'&LT?t
secoad,

states.

wbile n

*,

these chaim are mbstmg

aad its marke's'

fatme maY be bleak-

irs

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