UNIVERSITY OF GREENWICH COURSEWORK

COVERSHEET
Student Name: Nega Yehunie Admas

Student ID number: 000541351

Course Code: BUSI 1360

Title of Course: Professional Practice

Title of Assessment: Analysis of the Competitiveness of Bahir Dar

Textile Share Company in International
Business.

Type of Assessment Essay

Reflective Report X

Group work report

Other (Please specify __________________)

Tutor’s Name: Prof. Badeg Bekele

Date Assessment Due: Feb,2011

Electronic copy available at: http://ssrn.com/abstract=1832543

Table of Contents

List of Tables--------------------------------------------------------------------------------------2

List of Figures-------------------------------------------------------------------------------------2

1 Introduction-------------------------------------------------------------------------------------------------3
1.1 Objective and structure of the paper-------------------------------------------------------------3
1.2 Methodology----------------------------------------------------------------------------------------4
1.3 Background of BTSC------------------------------------------------------------------------------5
2 Literature review and Theoretical framework----------------------------------------------------7
2.1 Resource Based View-----------------------------------------------------------------------------7
2.2 The Value Chain Analysis-----------------------------------------------------------------------10
3 Analysis and Discussion------------------------------------------------------------------------------12
3.1 Key resources and Strategic Capabilities in BTSC------------------------------------------12
3.2 Value Chain Analysis of BTSC----------------------------------------------------------------13
3.2.1 Primary activities-----------------------------------------------------------------------15
3.2.1.1 Inbound Logistics---------------------------------------------------------------15
3.2.1.2 Production and Technique department--------------------------------------16
3.2.1.3 Fabric finishing and Garment manufacturing-------------------------------16
3.2.1.4 Marketing and Sales-----------------------------------------------------------17
3.2.1.5 Market development/service--------------------------------------------------18
3.2.2 Support Activities----------------------------------------------------------------------20
3.2.2.1 Procurement---------------------------------------------------------------------20
3.2.2.2 General Administration--------------------------------------------------------21
3.2.2.3 Technology Development-----------------------------------------------------21
3.2.2.4 Human Resource Management (HRM)--------------------------------------22
4 Conclusions and Recommendations----------------------------------------------------------------24
4.1 Conclusion-----------------------------------------------------------------------------------------24
4.2 Recommendations--------------------------------------------------------------------------------25
References------------------------------------------------------------------------------------------------27

Electronic copy available at: http://ssrn.com/abstract=1832543

List of Tables

Table 1 Tangible Resource of BTSC---------------------------------------------------------------13

Table 2 Intangible resource of BTSC---------------------------------------------------------------14

List of Figures

Figure 1 Value Chain Activity Template-----------------------------------------------------------10

Figure 2 Bahir Dar Textile Share company Primary activities-----------------------------------18

Figure 3 Bahir Dar Textile Share company Support activity-------------------------------------22

3
 1. Introduction

The world we are living nowadays is becoming increasingly international and the competition

between players in the market increases very fast. To survive in this competition, firms must be

innovative. But what makes a firm innovative? What kinds of resources make significant

contribution to firm’s innovation capabilities? Does good technological resources and rich

innovation resources result in stronger innovation capabilities? How can a firm build up

technological-innovation-based strategic capabilities by fostering and mobilizing it resources?

Answering these questions is of great practical and theoretical value. The new competitive

landscape emphasizes flexibility and speed in responding to fast-changing environments.

Insightful company Internal and external business environment analysis of the company is an

important condition for identifying the strategic issues that management needs to address and for

tailoring strategy to company resources and competitive capabilities as well as to industry and

competitive conditions (Kaplinsk and Morris, 2001).

1.1 Objective and Structure of the paper

Therefore, the main objectives of this paper are: to analyze and synthesize the Bahir Dar Textile

Share Company (BTSC)1 business environment. Define the current situation of the company in

terms of the key features in its internal and external operating environment. And then, try to

recommend the company to make it competitive in the international business.

1
BTSC= Bahir Dar Share Company

4
The structure of this report is organized as follow. In the first section the introduction, the back

ground of the company and methodology of the paper are presented. The second section deals

with the related literature review. Then the third and final section consists of scanning and

interpretation of external and internal operating environment of the company based on Resource

Based View (RBV) and Value Chain Analysis framework which helps to assess the value chain

of its upstream suppliers and downstream customers or allies engaged in getting its products to

end users. Finally conclusions and recommendation are drawn upon the validity, reliability and

the usefulness of the findings along with discussion about the research process.

1.2. Methodology

The main method used in the assessment was direct observation. This method is used especially

in the analysis of the internal operating environment of the company. This method was useful for

analyzing the operating environment since the researcher has been working in the company for

some time and additionally did his professional practice there as well. Most of the active

observation was conducted during the practice in 2010 which enabled a 10 month period for

observing the case company. In this time numerous discussions of the company took place both

with the employees and with the management team and provided useful insights to be used in the

analysis.

5
Collection and interpretation of the data was an interwoven process due to the long period of

observation. Brief notes on the observations were made during the practice period and afterwards

extended after further reflecting on the issues. The Internet searches were used when the analysis

of the external operating environment was conducted, although the general observations and

discussions provided guidance and leads for further searches for information.

For data analysis, we developed an analytical framework combining the theoretical structure of

the RBV with the value chain analysis to measure the effect of the company’s key resources on

its strategic capabilities. We adopted a dynamic perspective of RBV to examine the evolutionary

history of the company’s strategic capabilities.

1.3. Background of Bahir Dar Textile Share Company (BTSC)

Bahir Dar Textile Share Company is established in 1961 in the town of Bahir Dar, 570 km North

West of Addis Ababa. It was first established as a government owned integrated textile mill,

manufacturing 100% cotton products, including yarns and fabrics. And in 1989, the factory

rehabilitated its spinning and weaving section replacing most of the machine and renovating the

rest. The modernization of the processing department was left for a second phase investment

program, which however did not materialize as scheduled.

6
As of September 1999, the factory changed from a public enterprise to a share company and it

was financially restructured. The current name of the company is; Bahir Dar textile Share

Company. Its capital amounts at present to 56,808,379 Ethiopian Birr. Its total land holding is

480,000 square meters of which 39,200 square meters is covered by building. The company

employed approximately 1980 people during 2003e.c.

Mission of the Company

To play a leading role in the domestic and export markets for textile products.

Purpose of the Company

• To manufacture yarn and all kinds of finished cloths from cotton.

• To produce goods for house hold use.

• To sell its products on both domestic and foreign markets

• To engage generally in any other trade or business conducive in order to achieve its
2
objectives.

*Bahir Dar textile Share Company (2004) ,Reports on diagnostic Survey (in press).

7
 2. Literature Review and Theoretical Framework

In this section, the paper would try to discuss the related literatures and theoretical framework. In

order to meet the objective of the paper, making the case company internationally competitive,

we used Resource Based View (RBV) and Value Chain Analysis as the theoretical framework of

the paper.

2.1 Resource Based View (RBV)

The resource-based view (RBV) is a strategic theory for understanding why some firms

outperform others. It provides an explanation of competitive heterogeneity between firms. It is

also a widely-adopted analytical tool of assessing a firm’s internal strengths and weaknesses.

Classical RBV theory was contributed by Penrose (1959) almost half a century ago. She argued

that a firm is more than an administrative unit. It is also a collection of productive resources. The

disposal of the resources between different users over time is determined by administrative

decision. Penrose contributed to our knowledge of the creation of competitive advantage,

sustaining competitive advantage, isolating mechanisms, and competitive advantage and

economic rents (Kor and Mahoney, 2004).

Modern RBV theory of the firm was introduced by Barney (1991), Dierickx and Cool

(1989). their works assumed that each firm is a collection of key resources and capabilities that

determines a firm’s strategy. Above-average returns are earned when the firm uses its core

8
competencies to establish a competitive advantage over its rivals. With the progress in the

research on RBV, it has become clear that the RBV extends beyond the assets of an organization

and reaches into its capabilities which have more relation with process and activities.

Recent research in the RBV focuses on the dynamic aspects of capabilities (Eisenhardt & Martin,

2000). Dynamic capabilities are conceptualized as a firm's ability to build and/or extend basic

capabilities to deal with changing environments (Teece et al., 1997). A shift in focus to dynamic

capabilities reduces if not eliminates the applicability of the valuable, rare, inimitable, and no

substitutable (VRIN) framework (Barney, 1995) because the emphasis of the strategist shifts

from trying to protect sources of current competitive advantages to continuously creating

resources and/or capabilities to yield future competitive advantages (Winter, 2003).

We choose RBV as the analytical framework because the inherent logic of the RBV is

compatible with the nature and character of our case study. Resources are the fundamental unites

of value generation. It can be specialized and bundled together in highly distinctive

configurations to lend firms special competitive advantages. The resources in a real economy are

in a constant state of flux accounting for observed phenomena of competitive and evolutionary

dynamics (Mathews, 2002). The resource-based approach sees firms with superior systems and

structures being profitable not because they engage in strategic investments that may deter entry

and raise prices above long-run costs, but because they have markedly lower costs, or offer

markedly higher quality of product performance (Teece et al., 1997). This approach assumes that

9
firm’s outstanding performance comes from the rents accruing to the owners of scarce firm-

specific resources rather than the economic profits from product market positioning.

Competitive advantage lies upstream of product markets and rests on the firm’s idiosyncratic and

difficult-to-imitate resources and capabilities.

The limitations of our choice of RBV are mainly in two aspects. First, RBV alone does not

capture all the essences of competitive advantage of the firms. RBV provides no perspective

on why and how some firms rather than others accumulated valuable and inimitable resources, or

indeed what made these resources valuable and inimitable (Lazonick, 2002a). Second, RBV

focuses on the internal factors and ignores the external elements. A complete model of strategic

advantage should adopt both the internal dimension which is based on periodic reviews of the

fitness of the firm’s current resource stock and the external dimension which is oriented towards

an appraisal of the resource endowments of outsiders such as competitors, customers, suppliers,

and so on.

Furthermore, it is also important and relevant to briefly discuss the concept of resource and

capability. Resources in this paper are inputs into a firm’s production process (Hitt, Ireland and

Hoskisson, 2001). A firm’s resources can be classified into two categories: tangible resources

and intangible resources. Tangible resources are assets that can be seen and quantified.

Intangible resources are rooted deeply in the firm’s history and that have accumulated over time.

Barney (1991) and Grant (1991) classified tangible resources into four forms, financial

resources, organizational structure, physical resources and technological resources. Grant (1991)

10
identified three kinds of intangible resources, human resources, innovation resources and

reputation resources.

2.2. The Value Chain Analysis

The dominant paradigm for the analysis of firm-level competitive advantage in the strategy

literature the last 10 years has been the value chain model developed by Michael Porter (1985).

Value chain analysis frame work was first developed by Porter (1985) used to analyze the value

adding activities of the organizations and identify linkages between value activities within the

organization and outside the organization of value net works and to think in terms of process and

holistic manner, rather than function (Thompson & strike land, 1998). As porter (1985) identifies

the activities of business can be grouped under two headings: Primary activities (inbound

logistics, operations, out bound logistics, marketing and sales, and service). Support activities

(general administrations, human resource management, technology development, and

procurement) of firm’s value chain.

The value chain framework is more than an activity template. It includes a couple of important

conceptual distinctions, one being between primary and support activities. Primary activities are

those that create value for the customer. Support activities support the primary activities and

therefore only affect customer value indirectly.

Primary activities are directly involved in creating the value that is purchased by the buyer.

Support activities, on the other hand, are activities that impact value purchased only through their

11
impact on primary activities. Thus while manufacturing operations are a primary activity

category in the textile industry, then activities such as development of new models and

production process innovations impact value indirectly, primarily through their impact on future

manufacturing activities.

Value configuration analysis is designed to assess and understand the current and future

competitive position of the firm. It also serves to determine how activities can and need to be

reconfigured in order to attain a position of competitive advantage in line with the competitive

strategy of the firm. Value configuration analysis needs to be complete and systematic in order to

identify clearly key activities that define value and costs. According to Porter (1985), the generic

value chain framework template is depicted as follow.

Figure 1. Value Chain Activity Template

12
 3. Analysis and Discussion

In the previous section, we have briefly discussed about the theoretical framework, the RBV and

the Value Chain Analysis. In this section we are going to analyze and discuss the case company,

Bahir dar Share Company (BTSC), by developing an analytical framework through combining

the theoretical framework of RBV and Value Chain Analysis framework.

3.1 Current Key Resources and Strategic Capabilities in BTSC

We analyze our case company, BTSC in backward chronology. First, we assess the current

resources and capabilities as a successful incumbent in the Textile sector. We examine the effect

of the key resources on BTSC’s strategic capabilities.

First, we categorize and analyze the resources and capabilities of BTSC respectively. Second,

we pick out the strategically important resources and capabilities, namely key recourses and

strategic capabilities, from all the resources and capabilities. Then we measure the effect of key

resources on strategic capabilities to see how the bundled resources contribute to capabilities

with synergy.

We divide BTSC’s resources into two categories: tangible resources and intangible resources.

We adopt Barney (1991) and Grant’s (1991) typology of tangible resources to analyze BTSC’s

tangible resources which is shown in Table 1. They classified tangible resources into four

categories: financial resources, physical resources, organizational structure, and technological

13
 resources. We consult Hall (1992) and Grant’s (1991) categorization of intangible resources to

analyze BTSC’s intangible resources which can be seen in Table 2 below. In Hall and Grant’s

typology, intangible resources are classified into two main categories: people-dependent and

people-independent.

We showed these tables to BTSC’s managers in our semi-structure interviews and asked them

two questions. How is each resource important to BTSC’s strategy? How is the situation of each

resource compared with BTSC’s main rivals? Then the resource which is both important to

strategy and superior to rivals is considered to be BTSC’s key resource at present.

Table 1: Tangible Resources of BTSC

Category Content Importance Compared Key

to Strategy with rivals Resources
Financial Borrowing capacity and ability to High Equivalent No
resources generate internal funds.
Physical Sophistication and location of plants, Ordinary Inferior No
resources equipments and access of raw material.
Organizationa Formal reporting structure, and formal High Superior Yes
l structure controlling, planning and coordinating
system.

Technological Stock of technologies, like patents, High Superior Yes

resources trademarks, copyrights, and trade secret.

14
Table 2: Intangible Resources of BTSC

Category Content Importanc Compared Key

e to with Rivals Resourc
Strategy es
People Human Knowledge, skills, ability to High Superior Yes
Dependent Resources learn, managerial capabilities.

Innovation Ideas, scientific capabilities, High Superior Yes

resources capacity of information

People Reputation Reputation with Customers High Equivalent No

Independe resources and suppliers
nt Organizatio Basic pattern of shared High Superior Yes
nal culture assumptions, values and
beliefs

We identify two kinds of capabilities of BTSC according to the value chain analysis. The value

chain is a template that the firm uses to understand its cost position and to identify the multiple

means that might be used to facilitate the implementation of its business level strategy (Dess,

Gupta, Hennart and Hill, 1995). The reason why we introduce value chain analysis into

capability analysis is that capabilities are often developed in specific functional areas or in a part

of a functional area and value chain just gathers up all the functions in value-added process of a

firm. In addition, capabilities are embedded in company’s production process and the concept of

value chain activities is a process view of the firms.

3.2 Value Chain Analysis of BTSC

A firm’s value chain is segmented into primary and support activities. We classify the

capabilities in accordance with these two activities of value chain. One is primary-activities-

15
related capabilities, which are capabilities to implement a product’s physical creation, its sale

and distribution to buyers, and its service after the sale. The other is support-activities-related

capabilities, which are capabilities to facilitate the primary activities to take place.

We set up a two-dimensional criterion for identifying BTSC’s strategic capabilities. First, a

strategic capability should reach some minimum level of functionality that permits repeated,

reliable performance of an activity. Capabilities are embedded in company’s productive

activities, but they are not activities themselves. At a minimum, in order for something to qualify

as a capability, it must have reached some threshold level of practiced or routine activity and

work in a reliable manner (Helfat, 2003). Second, a strategic capability must be honed to a user

need, unique, and difficult to replicate (Teece et al. 1997).

We asked BTSC’s managers three questions to identify each strategic capability. What is the

capability of BTSC in relation to a specific activity (for example marketing)? Does the capability

work in a repeated and reliable manner? Is it valuable, unique and difficult to replicate by the

rivals? According to our investigation and discussion with the managers in BTSC, the responses

on BTSC’s strategic capabilities are summarized and presented as follows.

3.2.1. Primary Activities

3.2.1.1 Inbound Logistics

16
These are activities concerned with receiving the materials from suppliers, storing these

externally sourced materials, and handling them within the firm. Bahir Dar textile Share

Company has performed the following activities: Receiving the raw material (cotton) and

machinery equipments, storing the cotton as a stock, controlling the inventory, Distributing raw

materials (cotton) to the production process and inspection of the raw materials and ensuring

quality. The company has adequate store for handling raw materials and finished products stokes

and enabling location to receive and disseminate input to the production and Technique

department.

3.2.1.2 Production and Technique Department

These are the activities related to the production of yarns and semi finished fabrics. This area can

be split into more departments in certain company’s. For BTSC there are three rooms like

openers’ room, spinning room, weaving room. The activity starts from parting the compressed

cotton, removing dirt and short fibers; then spinning the raw cotton, winding and twisting

(warping), sizing, weaving, denting and beaming and prepared the yarn for its various uses.

3.2.1.2 Fabric Finishing and Garment manufacturing

Activities Like dyeing, finishing, printing, and coating are the main process for fabric finishing

and processing of textiles, bed sheet manufacturing, utilities and laboratory testing are some of

the main activities performed in this part of the company. First Yarn that ran end-to-end, called

17
warp, was interlaced with yarn running on the cross, called filling or weft. The first step was the

preparation of the warp, as workers mounted yarn from the winder on a large frame called a

creel. The yarn from several beams was combined, dipped into a bath of hot starch and oil, dried

over steam-heated drums, and wound onto a giant spool known as a loom beam.

The company has a lot of problems within each processing step. The company has tried to make

a lot of renovation and expansion program to improve the quality and productivity of the

processing part. However these innovation and expansion program was not effective. The

incompatibility of the machineries in production capacity and quality is a main problem.

3.2.1.3 Marketing and Sales

These activities are associated with purchases of products and services by end users and the

inducement used to get them to make purchases, and it includes communicating with customers,

advertising, promoting the product, selecting and if possible reconfiguring new distribution

channel, market research and planning and pricing the product (Dess et al.,2007).

Products such as yarn, fabric and blanket are usually distributed to the local market through the

private trading companies. The product group of the company can be classified in to Bed sheets,

fabrics, market yarn and mattresses, among these products bed sheets, dyed and printed fabrics,

market yarn and mattresses are sold on the domestic market. Grey and half bleached fabrics are

sold on the export market. But the company has no appropriate distribution channel and has a

18
poor performance in identification of market segment. Plus to that the company has no an

innovative approach to promotion and advertising.

Therefore it is important for the company reduce its cost by promoting its products and

reconfiguring the new alternative distribution channel. Online Stores, specialty stores, mass

merchandisers (that includes department stores, national and regional stores) are some of the

alternatives for the company’s future market development.

3.2.1.4 Market Development/service

This includes, surveying customers need, collecting feedback and acting on information. The

company has no a well organized structure to solicit customers complaints. Currently the

company has no information of customer’s requirement and problems have a possibility to reach

to the respective bodies/department. What is more, 'every customer interaction teaches someone

in the company more about the customer, the market, the company's image and the product

(Dorfman, 1998). The efficient application of information is also generating value in the service

link of the supply chain. Efficient and effective customer service leads to cost savings and

increased customer loyalty as consumers are more predisposed to a brand if their experience is

positive (Kaplinsk and (Morris, 2001).

19
Integrations among Primary Activities

Fig.2 Bahir Dar Textile Share Company primary activities.

Inbound Production Outbound Marketing Market

Logistics and Logistics and sales development
Technique and service
Department

For company to operate at an efficiency level or to be more profitable, management must be able

to ensure the relationships among the primary activities (Dess etal,2007). Primary activities starts

from the raw material supply and finished with delivering finished products directly to

customers. The factory customers need quality and timely products, but if the qualities of raw

materials are poor and if it is not inspected seriously, it will affect the whole quality and quantity

of products at the end. Therefore, the factory can reduce wastage and costs through conducting

proper testing of raw materials and thereby increase the productivity and lastly the quality of the

end products (fabric).

Yarn preparation and fabric formation also have a forward and backward linkage ,that means it

link with raw material supply so as to ensure the availability of required raw materials and with

the rest of activities of fabric finishing , marketing and sales so as to deliver the required

products to the end customers. It is important to note that, customer’s feedback and complaint

are the backbone for company’s profitability; therefore, strong information system should be

installed to connect all value adding activities vertically and horizontally. Efficient and effective

20
customer service leads to cost savings and increased customer loyalty as consumers are more

predisposed to a brand if their experience is positive.

3.2.1 Support Activities

Support activities in the value chain are involved in an industry and according to Porter (1985)

they can be divided in to four generic categories. As with the primary activity each category of

support actuality is divisible in to a number of distinct value activities that are specific to a

particular industry.

3.2.1.1 Procurement

This function is responsible for purchasing the materials that are necessary for the company’s

operations. An efficient procurement department should be able to obtain the highest quality

goods at the lowest prices. The company performs activities, purchasing of raw materials

(cotton), contracting with suppliers, creating relationship with suppliers and negotiating with

suppliers, preparing specification and analyzing and selecting alternative suppliers. The main

inputs include cotton, hydrogen peroxide, polyester fiber, import sizing chemicals, packing

material lubricating oils. From the raw materials used by factory, cotton is a widely used material

and it is easily available from the local suppliers. The Company has a location competitive

advantage in this respect, as it receives raw materials from Gondar region, and also has huge

stores to set some raw materials as a stock for reserve.

21
3.2.1.2 General Administration

This chain of activity includes planning and control systems, such as finance, accounting, and

corporate strategy etc. Bahir dar textile Share Company performs Planning, fund raising, creating

customer and stakeholder relationships, coordinating and integrating activities across the “value

system”, creating high visibility culture. As Diagnostic Survey Report (2004) identifies Bahirdar

textile share company business plan is not based on the principles of market oriented strategic

planning, and not any longer on production issues. Therefore, the company should have a strong

market oriented strategic plan and it also be communicated with all employees for action.

Information system with all parts of the company departments should be installed.

3.2.1.3 Technology development

This is an area that is concerned with technological innovation, training and knowledge that is

crucial for most companies today in order to survive.3 In Bahir Dar Textile Share Company in

this chain identifies technology, adopting and creating new technology and installing

management information system throughout the whole parts of accompany. The existing

company’s recording and reporting systems are hardly ever in accordance with modern industry

practices and are not automated and integrated, with the excepted of finance dep’t, in which

appropriate investments have been mad recently. Every value activity embodies technology, the

arrays of technology employed in most firms is very broad, ranging from technologies used to

3
Sarah Rogers ,2008

22
prepare documents and transport goods to those embodied in the process & equipment or the

product itself.5

3.2.1.4 Human Resource Management

This support activity consists of activities associated with recruiting employees, developing,

rewarding and motivating employees, and team creating and also introducing innovative

trainings within and outside the company (Dess et al, 2007). The company at this time has over

staff employees. And workers productivities are too low as compared with other textile factories;

this is because of staff having not got training opportunity and no incentive and over time

allowances at all.

Integrations among Support Activities

Fig3. Bahir Dar textile Share Company support activities

Procurement Technology Human Resource General

Development Management Administrations

As we have seen above the support activity of accompany includes procurement, technology

development and general administration and order to obtain the required these activity should be

integrated in objective. Because of the fact that if there is no strong relationship with suppliers it

will create delay of delivery of raw material. So as to avoid this problem it is important to install
23
management information system (technology development. To create the required technology, it

is also important to recruit the best and talented employees (human resource management).

General administration creates an enabling environment for employees to work safely.

24
 4. Conclusions and Recommendations

4.1 Conclusion

The world we are living nowadays is becoming increasingly international and the competition

between players in the market increases very fast. The new competitive landscape emphasizes

flexibility and speed in responding and adapting to fast-changing environments. As a result

company’s Internal and external business environment analysis is important condition for

identifying the strategic issues that management needs to address and for tailoring strategy to

company resources and competitive capabilities as well as to industry and competitive

conditions. The main aim of this paper, therefore, was analyzing the internal environment of

Bahir Dar Textile Share Company through value chain analysis and resource based view (RBV)

model.

The findings of the paper show that, the competitive power of BTSC is mainly affected by its

weak alignments among each value chain activities and also with suppliers and customers.

Moreover, it is indicated that Most of the plants, equipments and machines are old. The financial

position is low, it operates at loss. The company has no well organized strategic planning and

management unit. The company has the required level of manpower in number. Though

experienced, the workforce is incapable to adopt new skill technology and change, because they

lack education and professionalism. The company’s capabilities are far below the required level.

In general, from the resource based view of the company, its tangible resources and

25
organizational capabilities are not in line with competitive environment. It is at its competitive

disadvantages.

4.2 Recommendation

• To compete in domestic and international markets, the company has to renovate or

replace old machinery. It has to invest on human caption. It has to hire new professionals,

update the existing workforce through short and long term training. The company has to

prepare market oriented plan and implement it in a way that will make productive and

profitable.

• Modern management information systems should be studied and implemented, for and in

almost all areas and departments. More over the existing suppliers and customers’

relation systems of accompany should be automated and integrated in accordance with

modern industry practices.

• The company’s business plan should be based on the principles of market oriented

strategic planning. This transition of the management thinking into market oriented

system requires ongoing training programs for all staffs in the areas of marketing and

sales, production, logistic, quality control and assurance and general administration and

management.

26
• The company should study the possibilities of delivering its products to the export market

and has to reconfigure its value chain by creating an organized sales and distribution

organization. And the company also should structure a new marketing and sales

department so as to use the available large geographic area market opportunity.

27
References

Agridev consult (2000) Cotton-textile- Apparel value chain report for Ethiopia: regional

agricultural trade expansion support program.

Bahir Dar Textile Share Company (2008). Project Proposal. Bahir Dar. (Unpublished)

Bahir Dar Textile Share Company (2004). Reports of Diagnostic Survey on Bahir Dar Textile

Share Company, Ethiopia. Bahir Dar (Unpublished)

Barney, J.B. (1991). Firm Resources and Sustained Competitive Advantage, Journal of

Management, 17, 1, 99-120

Dess, G.G., Gupta, A., Hennart, J.F. and Hill, D.W.L. (1995). Conducting and Integrating

Strategy Research at the international Corporate and Business levels: Issues and Directions,

Journal of Management, 21, 376

Dess.G.G etal (2007) Strategic Management: texts and cases. Boston.McGraw-Hill Irwin.

Dierickx, I. and Cool, K. (1989). Asset Stock Accumulation and Sustainability of Competitive

28
Advantage. Management Science, 35: 1504-1511.

Don .F and Peter (2007) Factory level Value Chain Analysis of Cambodia’s Apparel Industry

(USAID).Nathan Associates Inc.

Dorfman, P. (1998) How do you manage knowledge? [On line]. Available WWW:

http://www.supportmanagement.com/back/sep-oct/knowledge.html.

Eisenhardt, K. M., and Martin, J.A. (2000). Dynamic Capabilities: What are they? Strategic

Management Journal Special Issue, 21,1105-1121

Evans, P. and Wurster, T (1997) Strategy and the new economics of information. Harvard

Business Review, Sept-Oct: 71-82

Grant, R.M. (1991). Contemporary Strategy Analysis. UK, Blackwell Business, Cambridge

Hall, R. (1992). The Strategic Analysis of Intangible Resources, Strategic Management Journal,

13, 136-139

29
Helfat, C. E. and Peteraf, M. A. (2003) The Dynamic Resource-based View: Capability

Lifecycles. Strategic Management Journal, 24, 997-1010.

Hitt, M. A., Ireland, R.D. and Hoskisson, R.E. (2001). Strategic Management: Competitiveness

and Globalization, 4th ed. South-Western College Publishing, IL: Cincinnati

Kor, Y. Y. and Mahoney, J. T. (2004). Edith Penrose’s (1959) Contributions to the Resource-

based View of Strategic Management, Journal of Management Studies, 41, 1 183-191

Laan w.J (2001) supply chain integration: article published in “Executive out Look” The

Netherlands.

Lazonick, W. (2002a), Innovative Enterprise and Historical Transformation, Enterprise &

Society, 3, 1, 35-54

Mathews J.A. (2002). A Resource-based View of Schumpeterian Economic Dynamics. Journal

of Economics, 12, 29-54.

Penrose, E.T. (1959). The Theory of the Growth of the Firm, UK: Basil Blackwell, Oxford

30
Porter M. E (1985) Competitive Advantage: Creating and Sustaining Superior Performance, N.

York: The Free Press.

Raphael. K and M. Morris (2001) Hand book for value chain research. Pre pared for IDRC.

Rogers.S (2008) Victoria Fabric and Textile Industry Analysis. Deloitte Growth Solution Inc.

Swolfs,M (2004), Reports of Diagnostic Survey on Bahir Dar Textile Share Company, Ethiopia,

Bahir Dar(In press).

Teece, D. J., Pisano, G. and Shuen, A. (1997). Dynamic Capabilities and Strategic Fit, Strategic

Management Journal, 18,510-533

Winter, S. G. (2003). Understanding dynamic capabilities, Strategic Management Journal, 24,

10, 991-995

31