NISHAT MILLS LTD

Strategic Management Plan

BY
Muhammad Salman Rasheed (Roll #:04)
Zeeshan Tauqir (Roll #:10)
Abdur Razaq (Roll #:01)

Section: B
 TABLE OF CONTENTS

TOPICS Page No.

Company Profile 3
Vision Statement, Mission Statement 4
SWOT Analysis 5-7
THE STRATEGY FORMULATION ANALYTICAL PROCESS 8
STAGE 1ST ----- INPUT STAGE 9

CPM-Competitive Profile Matrix 10-11

External Factor Evaluation (EFE) Matrix 12
Internal Factor Evaluation (IFE) Matrix 13
STAGE 2ND ----MATCHING STAGE 14
SWOT Matrix 15-16
SPACE Matrix 17-18
The Boston Consulting Group (BCG) Matrix 19-20
The Internal-External (IE) Matrix 21-22
Grand Strategy Matrix 23
STAGE 3RD ----DECISION STAGE 24
The Quantitative Strategic Planning Matrix (QSPM) 25-27
Recommendations 28
References 29

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 COMPANY PROFILE

The Nishat Group:

Nishat has grown from a cotton export house into the premier business group of Pakistan
with 5 listed companies, concentrating on 4 core business; Textiles, Cement, Banking and
Power Generation.

Today, Nishat is considered to be at par with multinational operating locally in terms of its
quality products and management skills.

Annual turnover of 17 billion rupees.

14 billion from textiles.
Earn foreign exchange of US $ 236 million.
Pay taxes and levis of 2,080 million rupees annually.

Nishat Mills Ltd:

Flagship Company established in 1951.
Most modern, biggest composite unit of Pakistan.
Professional and client oriented marketing.
Green company.
ISO 9001 and IKO-TEX 100 Certified.
SA 8000certification currently in progress.

NML today has 1, 73,000 spindles, 284 sulzer shuttle less looms and 244 TSUDAKOMA air
jet looms. NML also has the most modern textile processing unit, 2 stitching units and
power generation plant with a capacity of 33.6 MW.

NML total export for the year 2009 is 38.8 billion rupees. Due to the application of prudent
management policies, consolidation of operations, a strong balance sheet and an effective
marketing strategies, this trend is expected to continue in the years to come. The
companys production facilities comprise Spinning, Weaving, Processing, Stitching, and
Power Generation.

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Vision Statement:
To transform the Company into a modern and dynamic yarn, cloth and processed cloth and
finished product manufacturing Company with highly professionals and fully equipped to
play a meaningful role on sustainable basis in the economy of Pakistan.

Mission Statement:
To provide quality products to customers and explore new markets to promote/expand
sales of the Company through good governance and foster a sound and dynamic team, so as
to achieve optimum prices of products of the Company for sustainable and equitable
growth and prosperity of the Company.

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 STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)
ANALYSIS

Strengths Weaknesses

ISO 9001 and IKO-TEX 100 Certified. Relying on international market

Biggest composite unit in Pakistan. only.
Highest credit rating by PACRA. High cost of production.
Self owned power plant. High employees turnover.
Largest dyeing facility in South East Transit time is more as compare
Asia. to foreign competitor.

Opportunities Threats

WTO regime implementation. Export of raw cotton and yarn.

Cost reduction by using modern and
technology.
Local market development.
Entering in Energy sector. (Subject to
Government permission)
WTO regime implantation.
Exchange rate fluctuations.
Instable political and economical
conditions.
Government policies.

INTERPRETATIONS:

A- STRENGTHS

1- ISO 9001 and IKO-TEX 100 Certified: As NML is mainly focusing on international
markets, and with the implementation of WTO regime, these types of certifications are
very helpful to win the customers satisfaction.
2- Biggest Composite Unit in Pakistan: NML is enjoying the status of being the biggest
textile composite unit of Pakistan, this strengths is helpful to create economies of scale
that is key to success in international markets.
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3- Highest Credit Rating by PACRA: NML has been awarded highest investment grade
by Pakistan Credit Rating Agency (PACRA), which will make it easy for the NML to raise
long-term funds.
4- Self Owned Power Plant: Now a days, having your own power plant is of crucial
importance, because it make sure un-interrupted supply of energy at very low cost,
which is helpful to be compatible at international level.
5- Largest dyeing facility in South East Asia: NMLs processing division got the largest
dyeing in South East Asia, making it a candidate to accept those contracts from other
companies that involve out sourcing of dyeing facilities.

B- WEAKNESSES

1. Relying On International Market only: as mentioned earlier that NML has been
focusing on international markets so there are chances that this strategy may hurt its
sales as there are rapid fluctuations in international markets, competition and buyers
preferences.
2. High Cost of Production: All Pakistani firms including NML is suffering from high cost
of production as compared to the other countries like,; India, China and Bangladesh,
they are cutting our throats by being cost completive day by day while at the same time
producing high quality stuff as compared to Pakistani firms.
3. High employees Turnover: Trends has been seen in workforce data to leave the NML
on permanent basis, this is especially true for the lower level staff.
4. Transit time is more as compare to Foreign Competitor: Foreign countries like
India, Bangladesh and China are very much efficient while completing and consigning
their orders to foreign buyers. NML has more transit time as compared to its
international competitors. The reason may be the contracts with shipping companies or
some internal process problems.

C- OPPORTUNITIES

1. WTO regime implementation: with the abolishment of quota system, now its an
opportunity for the NML to capture the international market share by providing low
priced and high quality goods to international customers. In this regard is cost
competiveness is a special concern.
2. Cost reduction by using modern Technology: As WTO regime has opened the doors
for free trade for the whole world, now the only survival of the firms would on the
minimization of production cost and offering innovative, high quality goods with
competitive price. NML got strong financial support from Nishat Group can do so.

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3. Local market development: Nishat Mills Limited is presently focusing on foreign
markets, so its an opportunity for NML to cash its name in the local market by
introducing a local retail store chain just like Chen One. (Chenab mills ltd.)
4. Entering in Energy Sector: NML may get the privilege of generating and providing
electricity for residential and commercial areas of Faisalabad, by negotiating with the
government of Pakistan. Al though local rules make it difficult but still there is a huge
opportunity to capitalize.

D- THREATS

1. Export of Raw Cotton and Yarn: Recent trends in the Pakistan to export raw cotton
and yarn to foreign countries is hitting like nails on the heads of textile value addition
units, although NML has its own spinning facilities but to some how export of raw
cotton is dangerous for it.
2. WTO regime implantation: Abolishment of quota system presents a opportunity as
well as a biggest threat to the Pakistani firms including NML, as other countries are free
to capture the market, we the Pakistani firms are suffering with high cost of production
may be driven out of the competition.
3. Exchange Rate Fluctuations: NML most of the sales are comprising exports, it is to be
received payment in foreign currency especially American dollars, ultimately these
sales proceeds are to be converted to Pakistani rupees, here come s the magic of
exchange rate whose fluctuation can change a profitable deal into a bad loss. Finally, if
Pakistani rupees got strength against other currencies we will get lower value for our
proceeds.
4. Instable Political and Economical Conditions: Changing Governments, war on terror,
decreasing buying power and altering buying trends and preferences of customers are
posing big threats to NML, in this regard we are confronting with local an well as
international political and economical conditions.
5. Government policies: Government polices like high rates of taxes, VAT, duties on
international trades, high energy cost, re-organizing unions are causing a serious
damage to the performance of over all industry including NML.

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 THE
STRATEGY-
FORMULATION
ANALYTICAL
PROCESS

8
STAGE: 1st ----------- INPUT STAGE

9
 A- COMPETITIVE PROFILE MATRIX (CPM)

Competitive Profile Matrix

Industry: Vertically Integrated Textile Mills

Sample Company: Nishat Mills Ltd.

NISHAT MILLS CRESCENT CHENAB TEXTILE
CRITICAL LTD. TEXTILE MILLS MILLS
SUCCESS WEIGHT Rating Weighted Rating Weighted Rating Weighted
FACTORS Score Score Score
Product design 0.07 4 0.28 3 0.21 3 0.21

Technological 0.11 3 0.33 4 0.44 3 0.33

up-gradation
Research & 0.10 4 0.40 3 0.30 2 0.20
development
Market 0.07 2 0.14 2 0.14 4 0.28
Segmentation
Distribution & 0.07 3 0.21 3 0.21 2 0.14
promotion
Capacity 0.08 3 0.24 3 0.24 2 0.16
utilization
Persistence in 0.09 4 0.36 3 0.27 4 0.36
product quality
Efficient 0.09 3 0.27 3 0.27 3 0.27
procurement of
raw material
Effective 0.08 3 0.24 4 0.32 2 0.16
management
Trained 0.07 4 0.28 3 0.21 3 0.21
manpower
Cost 0.10 2 0.20 2 0.20 1 0.10
competitiveness
Customer 0.07 3 0.21 3 0.21 2 0.14
satisfaction &
loyalty
TOTAL 1.00 3.16 2.98 2.56

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INTERPRETATIONS:

A Nishat mills limited is dominating in the industry as compared to local players. There are
several competitors like Agzard 9, Kohinoor textile mills, etc, but above taken competitors
are the major ones.

CPM scores for NML showing aggressiveness as compared to the crescent and Chenab
textile mills.

NML is number one company within the local environment; it is basically leading the
industry in the following aspects:

Product design.
Research & development.
Persistence in product quality.
Trained Manpower.

Moreover, crescent textile mills is resides at the second number and leading industry in
effective management style. Finally Chenab textile comes at number 3rd with leading
position in persistence in quality and market segmentation.

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 B- EXTERNAL FACTOR EVALUATION (EFE) MATRIX

KEY EXTERNAL FACTORS Weight Rating Weighted

Score
OPPORTUNITIES
WTO regime implementation. 4 0.48
0.12
Cost reduction by using modern and 0.13 3 0.39
technology.

Local market development. 0.10 1 0.10

Entering in Energy sector. (Subject to 0.11 2 0.22

Government permission)

THREATS
Export of raw cotton and yarn. 0.12 4 0.48

WTO regime implementation. 0.10 4 0.40

Exchange rate fluctuations. 0.09 2 0.18
Instable political and economical 0.12 4 0.48
conditions.

Government policies. 0.11 1 0.11

TOTAL 1.00 2.84

INTERPRETATIONS:

EFE score of 2.84 indicating that the NML is taking the external opportunities and avoiding
external threats quite well, however there is room for improvement is well.

This score suggest NML to be aggressive but the degree of aggressiveness needs to be little
moderate, it should not go for diversification, rather it should go for penetration in the
existing market, further developing local or foreign market or it may design a new product.

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 C- INTERNAL FACTOR EVALUATION (IFE) MATRIX

KEY INTERNAL FACTORS Weight Rating Weighted

Score
STRENGTHS
ISO 9001 and IKO-TEX 100 Certified. 0.11 3 0.33
Biggest composite unit in Pakistan. 0.10 4 0.40

Highest credit rating by PACRA. 0.13 4 0.52

Self owned power plant. 0.15 4 0.60

Largest dyeing facility in South East 0.12 4 0.48

Asia.

WEAKNESSES
Relying on international market only. 0.10 2 0.20

High cost of production. 0.12 2 0.24

High employees turnover 0.06 2 0.12

Transit time is more as compare to 0.11 1 0.11
foreign competitor.

TOTAL 1.00 3.00

INTERPRETATIONS:

IFE score of 3.00 indicating that the NML is an internally strong organization, it represent
that it is excellent in its overall internal strategies when it come to explore strengths and
weaknesses.

Overall the main strength is financial support by the Nishat Group.

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STAGE: 2ND -----MATCHING STAGE

14
 A- SWOT MATRIX

STRENGTHS WEAKNESSES

1. ISO 9001 certified &

IKO-TEX 100
Certified.
2. Biggest composite
unit in Pakistan
3. Highest credit rating
by PACRA
4. Self owned power
plant
5. Largest dyeing facility
in south east Asia
1. Relying on
international market
only
2. High cost of production
3. High employees
turnover
4. Transit time is more as
compare to foreign
competitor

OPPORTUNITIES S-O STRATEGIES W-O STRATEGIES

1. WTO regime 1. provide electricity to 1. Import modern technology (W1,
residential areas ( S4, O4) W2, O2)
implementation
2. Cost reduction 2. capture local market by 2. Company can enter in new
providing facility of market through retail outlets (W1,
technology by using
outsourcing and introducing W4, O3)
modern and advanced company products through
its retail outlets (S2, S5, O3)
technology
3. Local market
development
4. Diversification in energy
sector (Subject to
Government permission)
THREATS S-T STRATEGIES W-T STRATEGIES
1. Export of raw cotton and 1. Penetration in foreign 1. Focus on local market (W1, W2,
yarn market (S1, T2) W4, T2, T3)
2. WTO regime
implementation 2. Make future contracts to 2. Import modern technology, and
3. Exchange rate fluctuations avoid currency fluctuations do agreements with suppliers to
4. Instable political and (S3, T3) secure your supply of raw material
economical conditions (W2, T1)
5. Government policies

15
INTERPRETATIONS:

Critical Region is WO. Nishat Textiles can import new technology to reduce its cost of
production. Company can thus be able to penetrate in the market and capture more shares
by improving quality of goods and services, and provision of goods at lower prices.

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 B- SPACE MATRIX
Financial Strength Rating Environmental Stability Rating
Leverage 4 Rate of inflation -3
net income 6 Technological changes -3
E.P.S 5 Competitive pressure -3
R.O.E 5 Risk involve in business -2

Average 5 Average -2.75

Y-Axis strength 2.25
Competitive Advantage Rating Industry Strength Rating
Market share -1 Growth potential 5
product quality -2 Financial stability 3
customer loyalty -3 Resource utilization 3
Technological know how -2 Profit potential 2

Average -2 Average 3.25

X-Axis strength 1.25

INTERPRETATIONS:

For the purpose of evaluating financial strength we have compared our concerned
co. with industrial average.
Leverage used by Nishat mills was significantly low as compared to industrial
average that why we have ranked it at point 4.
Net income of Nishat mills was highest in industry thats why it is given 6 points.
Its E.P.S & return on equity was also high as compare to industry thats why they
were ranked 5.
Market share of Nishat mills was highest about 12% that why it is given -1 marks.
There product is of good quality & there customers are loyal but customers cant be
very loyal in this industry thats why they were ranked at -2 & -3.
They have new & advanced technology thats why they are ranked -2.
Rate of inflation is increasing its C.G.S & technological changes its depreciation as
well as there is heavy competitive pressure from china & Bangladesh thats why
they were rankes-3.
There is high risk now a days in this business but due to being as industrial giant in
Pakistan they are not in such a risk that why it is given -2.
There is high growth potential in industry because now recovery period have been
started.

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 Industry is less financial stable as well as most of the companies are producing very
below then their capacity thats why they are ranked at 3.
Due to increase in cost the profit potential has been declined that why this is ranked
at 2.

Directional vector point is :( 1.25, 2.25)

FS
Conservative Aggressive

CA IS

Defensive Competitive

ES

INTERPRETATIONS:

According to our calculations the score of our company is 1.25 on x-axis And 2.25 on
Y-axis
Which is showing that our co. should go for aggressive strategy
Further more it is telling us that our financial strength is the dominating factor in
industry
Our concerned strategies can be
Backward ,forward ,horizontal ,integrations
Market penetration
Market development
Product development
Diversification(related or unrelated)
On the other hand, Nishat Textiles also has the opportunity to enter and capture the
local market. Company can do this through opening retail outlets in the local areas
and provide better goods and services to its domestic customers.

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 C- THE BOSTON CONSULTING GROUP (BCG) MATRIX

Market Share

High Low

Stars Question Mark

High

Industrial
Cash Cow Dogs
Growth

Low

INTERPRETATIONS:

Nishat Textiles is a composite textile unit of Nishat Group. Total number of players in the
industry is 60, and Nishat Textiles is the market leader. It captures 12% market share as a
whole. In 2009, the industrial overall growth rate is 11%, but that of Nishat Textiles is 24%
as compare to the sales of 2008.
Source: KSE (Karachi stock exchange) data for 2008, and 2009.

The industrial growth is high and Nishat Textiles has high market growth as well. So, it lies
in the first quadrant (Stars) of the BCG matrix. It implies that, company has the opportunity
to go for Market penetration to capture more share in the existing market by using new
technology, and increasing promotional activities. It also has a tremendous option of local
market development.
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Other feasible strategies may be the backward integration to secure the supplies in order to
tackle with the threat of exporting of local raw material to foreign markets. Also Nishat
Textiles goes for forward integration to minimize its weakness of transit time of goods and
services to its customers.

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 D- THE INTERNAL-EXTERNAL (IE) MATRIX

E- IFE TOTAL SCORE

F-
G- Strong Moderate Low
H-

I-
I II III

High Grow and Build Grow and Build Hold and Maintain
J-
K-
L-
M-
N-
EFE O-
Medium IV V VI
TOTAL P- Grow and Build Hold and Maintain Harvest
Q-
SCORE
R-
S-
T-
Low
U-
V-
W- VII VIII IX
X-
Y- Hold and Maintain Harvest Divest
Z-
AA-

INTERPRETATIONS:

IFE Total Score (As per IFE Matrix) = 3.00

EFE Total Score (As per EFE Matrix) = 2.84
BB-

It implies that Nishat Textiles is in a much strong position. But, comparatively it is stronger
internally as compare to its external position.

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As per IE Matrix, Nishat Textiles lies in fourth cell, which implies that it should go for
aggressive strategies that is grow and build strategies. The possible strategies for Nishat
Textiles may be the integrations, intensive, and diversifications.

Nishat Textiles has the opportunity to go for Market penetration to capture more share in
the existing market by using new technology, and increasing promotional activities. It also
has a tremendous option of local market development.

Other feasible strategies may be the backward integration to secure the supplies in order to
tackle with the threat of exporting of local raw material to foreign markets. Also Nishat
Textiles goes for forward integration to minimize its weakness of transit time of goods and
services to its customers.

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 E- THE GRAND STRATEGY MATRIX

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Advantage Quadrant III Quadrant IV Advantege

Slow Market Growth

INTERPRETATIONS:

Total number of players in the industry is 60, and Nishat Textiles is the market leader. It
captures 12% market share as a whole. In 2009, the industrial overall growth rate is 11%,
but that of Nishat Textiles is 24% as compare to the sales of 2008.
As the market growth is high, and Nishat Textiles has strong comparative position in the
market. So, it lies in the first quadrant of Grand strategy matrix, which implies that it should
go for aggressive strategies. The possible strategies for Nishat Textiles may be Market
Development, Market Penetration, Backward and Forward Integrations.

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STAGE: 3RD -----DECISION STAGE

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 THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

Strategy 1 Strategy 2
LOCAL MARKET PENETRATING IN
DEVELOPMENT FOREIGN
MARKET

Weight AS TAS AS TAS

KEY INTERNAL FACTORS
STRENGTHS
ISO 9001and IKO-TEX 100 Certified. 0.10 1 0.10 3 0.30

Biggest Composite Unit in Pakistan. 0.11 4 0.44 2 0.22

Capacity utilization. 0.13 3 0.39 2 0.26

Self-Owned Power Plant. 0.14 2 0.28 3 0.42
Largest Dyeing Facility in South East 0.12 2 0.24 1 0.12
Asia.
WEAKNESSES
Relying on international markets only. 0.10 4 0.40 2 0.20
High Cost of Production. 0.12 3 0.36 4 0.48
Market Segmentation. 0.07 3 0.21 1 0.07
Transit time is more as Compared to 0.11 2 0.22 1 0.11
Foreign Competitors.
SUBTOTAL 1.00 2.64 2.18

Strategy 1 Strategy 2

LOCAL MARKET PENETRATING IN

DEVELOPMENT FOREIGN
MARKET

Weight AS TAS AS TAS

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 KEY INTERNAL FACTORS

OPPORTUNITIES

WTO regime Implementation. 0.12 1 0.12 4 0.48

Cost reduction through introducing 0.13 2 0.26 4 0.52

modern technology.

Local market development. 0.11 3 0.33 1 0.11

Entering in Energy Sector. 0.11 - - - -

THREATS

Export of raw cotton and yarn. 0.12 3 0.36 2 0.24

WTO regime Implementation. 0.1 1 0.10 3 0.30

Exchange rate fluctuations. 0.09 2 0.18 1 0.09

Instable Political and Economic 0.11 3 0.33 2 0.22

Conditions.

Government Policies. 0.11 2 0.22 3 0.33

SUBTOTAL 1.0 1.90 2.29

GRAND TOTAL 4.54 4.47

INTERPRETATIONS:

I.S.O certification will only be helpful in market penetration so thats why it is given
high marks.
Biggest composite unit & less capacity utilization will be helpful or will be used
better by open chain store rather then market penetration so it is given higher
marks.
Increasing sales in foreign will better use energy rather then chain store so it is
given higher marks.
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Largest dying facility has its goodwill so we have ranked it higher in chain store.
Reliance on international market can be decreased by opening chain store thats
why it is given higher marks.
Higher cost of production can be decreased by exporting more quantity but opening
new store will increase expenses for thats why penetration is given higher marks.
Open chain store will increase our segmentation & it will decrease on reliance on
exports so problem of transit time will impact us less thats why these are given
higher marks.
WTO regime will be useful only in penetration so it Is given higher marks.
Local market development will be done only in that case when we will go for chain
store so it is given higher marks.
If we will open chain store we will be able to charge higher prices due to our
goodwill so yarns export problem will not affect us as it is effecting.
WTO regime implementation will be covered only in that case when we will go for
market penetration.
Exchange rate fluctuation will impact us only in that case when we will go for
foreign trade so opening retail store will reduce its impact thats why it is given
higher score.
Due to bankruptcy of foreign customers the political & economical conditions will
have less impact on us if we will go for chain store thats why it is given higher
marks.
Government polices regarding opening a new store can be difficult to meet so it is
given lower marks.

RECOMMENDATIONS

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REFERENCES

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