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STRATEGIC MANAGEMENT

PLAN
Nishat Mills Ltd

By
Hira Mustafa (7143-FMS/MBA/F15)
Urooj Khursheed (7151-FMS/MBA/F15)
Kishwar Noreen (7154-FMS/MBA/F15)
Abida Hussain (7150-FMS/MBA/F15)
Marriam Bashir (7148-FMS/MBA/F15)

DECEMBER 18, 2017


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Table of Contents

1. Acknowledgement
2. Introduction
 Mission & Vision
 Over-all strategic objectives
 Objectives
 Financial profile
 Competition review
3. Strategy Formulation Analytical process
a) Stage 1 – Input Stage
 External Factor Evaluation Matrix
 Internal Factor Evaluation Matrix
 Competitive Factor Evaluation Matrix
b) Stage 2 – Matching Stage
 SWOT Matrix
 SPACE Matrix
 BCG Matrix
 IE Matrix
 Grand Strategy Matrix
c) Stage 3 –Decision Matrix
 QSMP Matrix
4. Annexures
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First we would like to thanks Allah Almighty, who is the most Merciful
and the most Beneficent, then we would like to express our special
thanks of gratitude to our instructor Ms. Mehwish Majeed who gave us
the golden opportunity to do this wonderful project on the topic
“Strategic Management Plan of Nishat Mills”, which also helped us in
doing a lot of Research and we came to know about so many new things
we are really thankful to her.
Secondly we would also like to thank our parents and friends who
helped us a lot in finalizing this project within the limited time frame.
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Nishat Mills Limited


Nishat Mills Limited is the flagship company of Nishat Group. It was established in 1951. It is one
of the most modern, largest vertically integrated textile companies in Pakistan. Nishat Mills
Limited has 227,640 spindles, 805 Toyota air jet looms. The Company also has the most modern
textile dyeing and processing units, two stitching units for home textile, two stitching units for
garments and Power Generation facilities with a capacity of 120 MW. The Company’s total export
for the year 2016 was Rs. 35.931 billion (US$ 344.744 million). Due to the application of prudent
management policies, consolidation of operations, a strong balance sheet and an effective
marketing strategy, the growth trend is expected to continue in the years to come. The Company’s
production facilities comprise of spinning, weaving, processing, stitching and power generation.

Background
Nishat group of companies is a premier business house of Pakistan. The group has presence in all
major sectors including Textiles, Cement, Banking, Insurance, Power Generation, Hotel Business,
Agriculture, Dairy and Paper Products. Today, Nishat Group is considered to be at par with
multinationals operating locally in terms of its quality products and management skills. Following
is the list of companies in the group.

Associated Companies – Listed

Adamjee Insurance Limited www.adamjeeinsurance.com


DG Khan Cement Company Limited www.dgcement.com
Lalpir Power Limited www.lalpir.com
MCB Bank Limited www.mcb.com.pk
Nishat Chunian Limited www.nishat.net
Nishat Power Limited www.nishatpower.com
Pakgen Power Limited www.pakgenpower.com
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Associated Companies – Unlisted

Adamjee Life Assurance Limited www.adamjeelife.com


Nishat Dairy (Private) Limited www.nishatdairy.com
Nishat Hospitality (Private) Limited www.nishathospitality.com
Nishat Papers Products Company Limited www.nishatpaper.com
Pakistan Aviators and Aviation (Private) Limited www.pakistanaviators.com
Security General Insurance Company Limited www.sgicl.com
Nishat Linen (Private) Limited
Nishat Hotels and Properties Limited
Nishat (Aziz Avenue) Hotel and Properties Limited
Nishat (Gulberg) Hotel and Properties Limited
Nishat (Raiwind) Hotel and Properties Limited
Nishat Agriculture Farming (Private) Limited
Nishat Automobile (Private) Limited
Nishat Developers (Private) Limited
Nishat Commodities (Private) Limited
Lalpir Solar Power (Private) Limited
Nishat Real Estates Development Company (Private)
Limited
Nishat Farms Supplies (Private) Limited
Nishat International FZE
Nishat Global China Company Limited
Nishat UK (Private) Limited
Nishat Linen Trading LLC
Nishat USA Inc.
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Company’s Profile
Nishat Mills Limited (“the Company”) is the most modern and largest vertically integrated
textile Company in Pakistan. The Company commenced its business as a partnership firm in 1951
and was incorporated as a private limited Company in 1959. Later it was listed on the Karachi,
Lahore and Islamabad Stock Exchanges (now merged as Pakistan Stock Exchange Limited) on 27
November 1961, 11 March 1989 and 10 August 1992 respectively. The Company’s production
facilities comprise of spinning, weaving, printing, dyeing, home textile and garment stitching and
power generation. Overall, the Company has 32 manufacturing units each specializing in a specific
product range located in Faisalabad, Sheikhupura, Ferozewatwan and Lahore. A major portion of
the Company’s earnings is export based. Over the years, the Company has achieved significant
geographical diversification in its export sales mix. The Company has a very broad base of
customers for its products outside Pakistan. It has a long working relationship with the top brands
of the world such as J.K.N. International, Levis, Next, Pincroft Dyeing, Ocean Garments, Gap,
Carreman, Tommy Hilfiger, Tommy Bahamas, Crate & Barrel, Laura Ashley, American Living,
Chaps, Hugo Boss, Revman and John Lewis. Nishat Mills Limited is also called the flagship
company of the Nishat Group. Nishat Group (“the Group”) is a leading business entity in South
Asia. Its net worth makes it the largest business house of Pakistan. The Group has grown from a
cotton export house into the premier business group of the country. Highly diversified, the Group
has a presence in all the major sectors including Textiles, Cement, Banking, Insurance, Power
Generation, Hotel Business, Agriculture, Dairy, Real Estate, Aviation and Paper Products.
Showcasing its varied expertise and acumen in every facet of its operations, the group companies
hold the distinction of being among the leading players in each sector

Nature of Business
Being a vertically integrated textile unit, Nishat Mills Limited has adopted a business
model that helps it to cater the both macro and micro level economic issues. The Company is
engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching,
dyeing, printing, stitching, apparel, buying, selling and otherwise dealing in yarn, linen, cloth,
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other goods and fabrics made from raw cotton, synthetic fiber and cloth. The Company is also
committed to generate, accumulate, distribute, supply and sell electricity. It is fully compliant with
the requirements of all regulatory authorities of Pakistan. The textiles sector occupies a pivotal
position in Pakistan’s economy, contributing around 60% to the Country’s exports. It has the most
intensive backward and forward linkages within the wider economic chain compared to any other
sector, linking agriculture from industry to exports. The textile sector employs 40 percent of the
industrial labour force, which provides livelihood to more than 10 million families. According to
the International Cotton Advisory Committee, Pakistan is the fourth largest producer of cotton and
the third largest consumer of cotton in the world. In addition, Pakistan is the world’s second largest
cotton yarn exporter and third largest cotton cloth manufacturer and exporter. Pakistan is unique
as it has a self-reliant production chain from cotton growing to ginning, spinning, weaving,
processing and finishing and from fabrics to home textiles and apparel; all have links in the textile
and clothing value chains which have been developed by Pakistan’s own industry.

Mission
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.

Vision
To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished
product manufacturing Company that is fully equipped to play a meaningful role on sustainable
basis in the economy of Pakistan. To transform the Company into a modern and dynamic power
generating Company that is fully equipped to play a meaningful role on sustainable basis in the
economy of Pakistan.

Mission Statement Analysis of


Nishat Mills
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Components
Customers Yes
Products/Services Yes
Markets Yes
Technology No
Philosophy No
Self-Concept No
Concern of Employees Yes
Concern of Self-Image No
Concern of Public Growth & profitability Yes

Overall Strategic Objectives


• To enhance the profitability of the Company;
• To increase the overall efficiency and productivity of the Company;
• To become the market leader by outshining the competitors and be an innovative Company by
introducing new ideas;
• To expand sales to the global marketplace by anticipating customer needs and develop and
maintain strong customer base;
• To monitor and improve internal processes to achieve efficiencies, improve organizational
structure and ensure the best use of available resources;
• To follow the latest technology trends and their implementation in the Company to enhance the
overall productivity of the Company.
• To develop and promote the reputation and image of the Company for its stakeholders in specific
and non-stakeholders in general;
• To promote awareness and best practices about environmental sustainability and social
responsibility

Over the Years


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1951 Nishat Mills Limited commenced its business as partnership.


1959 The company incorporated as private limited company.
1961 Nishat Mills Limited was listed on Karachi Stock Exchange.
1989 The Company was listed on Lahore Stock Exchange.
1992 The Company was listed on Islamabad Stock Exchange.
1996 Acquired the operating assets of Nishat Tek Limited and Nishat Fabrics Limited.
2005 Acquired the assets of Umer Fabrics Limited.
2008 Acquired the assets of Nishat Apparel Limited.

Strategy Formulation
Analytical Process

1. External Factor Evaluation Matrix

Key External Weight Rating Weighted Score


Factors
Opportunities
Can hire more 0.10 3 0.30
educated n skilled
workforce
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Can reduce the cost 0.10 2 0.20


by proper utilization
of resources
Can reduce cost by 0.05 2 0.10
implementing new
technology
Local Market 0.05 3 0.15
Development
Can expand product 0.05 3 0.15
line
Increased exports by 0.05 2 0.10
following
international
standards
Regionally 0.10 2 0.20
diversified customer
base across the
world provides a
sustainable growth
to export sales
Vertical integration 0.05 2 0.10
makes it possible to
exploit operational
synergies
Threats
Change in the needs 0.10 3 0.30
of buyer
Instable political & 0.05 2 0.10
economic position
Dramatic change in 0.07 3 0.21
technology
Export of cotton 0.07 3 0.21
Increased electricity 0.03 2 0.06
prices
Currency 0.03 3 0.09
fluctuations &
exchange rates
Intense price 0.04 3 0.12
competition
Labor strikes 0.06 2 0.12
Total 1.00 2.26
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Interpretations
EFE score of 2.26 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.

2. Internal Factor Evaluation Matrix

Key Internal Factors Weights Rates Weighted Score


Strengths
Strong Financial 0.10 4 0.40
resources
Have their own 0.10 3 0.30
power generation
plants
Latest machinery 0.08 3 0.24
Largest dying 0.10 4 0.40
facility
Skilled Management 0.09 3 0.27
Strong MIS 0.08 3 0.24
Weaknesses
High employee 0.10 3 0.30
turnover
Weak image in 0.05 2 0.10
international market
High production 0.10 2 0.20
cost
Less Promotional 0.10 2 0.20
activities
Centralized decision 0.10 4 0.40
making
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Total 1.00 3.05

Interpretations
IFE score of 3.05 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.

3. Competitive Factor Evaluation Matrix:

Key Weights Nishat Textile KohiNoor Chenab Textile


Competitive Mill Textile Mill Mill
Factors Rating Score Rating Score Rating Score
Product design 0.07 3 0.21 3 0.21 3 0.21
Technology 0.10 3 0.30 4 0.40 2 0.20
adaptation
Customer 0.10 3 0.30 3 0.30 2 0.20
satisfaction &
loyalty
Global expansion 0.07 3 0.21 4 0.28 2 0.14
Pricing 0.08 4 0.32 3 0.24 3 0.24
Promotional 0.14 3 0.42 2 0.28 1 0.14
activities
Market 0.06 3 0.18 3 0.18 3 0.18
segmentation
Research & 0.10 3 0.30 3 0.30 2 0.20
Development
Capacity 0.10 3 0.30 3 0.30 3 0.30
utilization
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Cost 0.10 2 0.20 2 0.20 2 0.20


competitiveness
Market Share 0.08 3 0.24 3 0.24 2 0.16
Total 1.00 2.98 2.93 2.17

Interpretations

 As we know that competitive profile matrix identifies firm’s major competitors and its
particular strengths and weaknesses in relation to a sample firm’s strategic position.
Comparisons been made on the basis of the strengths and weaknesses encountered by careful
in depth analysis of competing firms. We have grouped the strengths and weaknesses of
existing firm Nishat mills in order to compare the ratings and weighted scores with its rivalry
potential firm Kohinoor textile mills. This comparative analysis provides important internal
strategic information.
 In our case the two most important factors to being successful in industry are gaining and
maintaining Customer Satisfaction and Quality as indicated by weights of 0.30. As
satisfaction of prospective customers plays vital role in enhancing the sales and building
reputation of the firm and Quality provides as a means of excellence in the product or service
that fulfills or exceeds the expectations of the customer.
 Nishat mills is strongest on maintaining quality control standards under the ISO stated
standards and is indicated by the rating of 4 whereas the competitor firm is a step behind in
adapting to ISO quality management systems .
 The company has a diverse customer base with sales in both the local and export markets. The
main international markets include Asia, Europe, USA and Australia. Kohinoor has a
diversified customer base because of its association and partnership with most of the top
leading brands of the world which has strong persuasion and brand image in market place.
Zara, old navy , champion , Dockers ( san Francisco ) , wrangler, Levi Strauses signature,
banana republic, Yakka ,Li & Fung Limited, Jc Penney ( everyday matters ) , Dickies, fruit
of the loom, Payless (shoe source). Kohinoor is strongest in retaining more customers and is
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strongest on customer satisfaction indicated by rating of 4 as compare to Nishat with rating


of 3.
 Overall Nishat is strongest as indicated by the total weighted score of 3.4

1. SWOT Matrix

Strengths Weaknesses
1) Strong Financial 1) High employee
resources turnover
2) Have their own 2) Weak image in
power generation international
plant market
3) Latest machinery 3) High production
4) Largest dying cost
facility 4) Less promotional
5) Skilled activities
Management 5) Centralized
6) Strong MIS decision making
Opportunities SO Strategies WO Strategies
1) Can hire more
educated n skilled
workforce
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2) Can reduce the cost


by proper
utilization of
resources
3) Can reduce cost by
implementing new
technology
4) Local Market
Development
5) Can expand product
line
6) Increased exports
by following
international
standards
7) Regionally
diversified
customer base
across the world
provides a
sustainable growth
to export sales
8) Vertical integration
makes it possible to
exploit operational
synergies;
Threats ST Strategies WT Strategies
1) Change in the needs
of buyer
2) Instable political &
economic position
3) Dramatic change in
technology
4) Export of cotton
5) Labor strikes
6) Increased electricity
prices
7) Currency
fluctuations &
exchange rates
8) Intense price
competition
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2. The Strategic Position And Action Evaluation Matrix (SPACE Matrix)

Financial Position (FP) Industry Position (IP)


1) Return on Investment 3 1) Resource Utilization 2
2) Liquidity 4 2) Financial Stability 4
3) Leverage 4 3) Growth Potential 3
4) Working Capital 2 4) Profit Potential 3
Stability Position (SP) Competitive Position (CP)
1) Entry barriers to new market -2 1) Product Quality -2
2) Change in technology -2 2) Market Share -1
3) Range of price among competing firm -3 3) Customer Loyalty -3
4) Competitive pressure -3 4) Technical Adaptation -4

Conclusions
SP average is
-10/4 = -2.5

IP average is
+12/4 = 3

CP average is
-10/4 = -2.5

FP average is
+13/4 = 3.25

Directional Vector Coordinates:


x-axis: 3 + (-2.5) = 0.5
y-axis: 3.25 + (-2.5) = 0.75
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FP

Conservative Aggressive

IP
CP

Defensive Competitive

SP
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Interpretations

This graph shows that Nishat textile is in the third quadrant which is aggressive strategy quadrant.
Nishat textile directional vector is located in the aggressive quadrant (upper-right quadrant) of the
SPACE matrix, Nishat is in an excellent position to use its internal strengths to
(1) Take advantage of external opportunities,
(2) Overcome internal weaknesses, and
(3) Avoid external threats.
Therefore, market penetration, market development, product development, backward integration,
forward integration, horizontal integration, or diversification can be feasible.
3. The Boston Consulting Group (BCG) Matrix

No. of Name of Revenues %age Profits %age Market Relative Growth


Divisions Division Revenues Profit Share Market Share Rate

1 Nishat 47999 52.40 4923 29.72 78% 0.78


Textile 53.99%
2 Nishat 13896 15.17 2851 17.24 40.3% 0.40
Power 14%
Plant
3 DG Khan 29704 32.43 8789 53.15 70.3% 0.70
Cement -88%
Total 91599 16536
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Market Growth Rate


1 0.5 0
+20%
Industry Growth Rate
0%
-20%

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 2011,

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 2011, and 2012.

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 shares 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.

4. Internal- External Evaluation Matrix:

IFE Total Score


4.0-3.0 2.9-2 1.9-1.0
Strong Moderate Low

I II III
3.0-4.0
High
EFE Total Score

Medium

IV V VI
2-2.9

VII VIII IX
1.0-1.9
Low

IFE Total Score (As reported in IFE Matrix) = 3.05


EFE Total Score (As reported in EFE Matrix) = 2.26

Interpretations
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As per IE Matrix, Nishat Textiles lies in forth cell, which implies that it should go for aggressive
strategies that are 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 intensive strategies to capture more shares in the
existing market by market penetration, market development and product 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.

5. The Grand Strategy Matrix

Rapid Market Growth

Weak Strong
Competitive Competitive
Advantage Advantage

Slow Market Growth


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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 2011, the industrial overall growth rate is 9%, but that of Nishat
Textiles is 24% as compare to the sales of 2008.NML got the edge of having their own power plant
due to that they are not suffering from industrial power crisis. And sustaining their position in
Market.
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. And Nishat is also implementing these
strategies by developing their market in a combination with forward integrations by opening their
retail stores named “Nishat Linen”. They are also going in cotton production which is also a
competitive edge as they are controlling the whole supply chain. And implying with quality
sustainability to cope up with ISO standards.