Introduction

Pakistan footwear Industry has flourished quite significantly by making effective use of the indigenous raw materials and the conducive infrastructure available. The footwear industry runs in parallel with changing fashion, designs and materials. Footwear has undergone a complete reversal, from being a utility product to a fashion product. Leading players have to make continuous changes in terms of designs, styles, material used, in all the offerings. There is a need to provide innovative solutions in the Pakistan Footwear Industry to remain competitive and retain customers. Manufacturers have to make products that match both fashion and utility requirements of the customers. Comfort is a very important factor in the industry. Cost is also a significant factor for ensuring success. There is a lot of pressure on margins in the Pakistan footwear industry, due to frequent changes in fashion and demand.

PFMA is a Trade Association representing Pakistani footwear manufacturers, exporters, importers and traders. It is an Association duly approved by the Ministry of Commerce, registered with Directorate General Trade Organizations, incorporated under the Companies Ordinance 1984 with Securities and Exchange Commission of Pakistan and a member of Federation of Pakistan Chambers of Commerce and Industry (FPCCI). Pakistan Footwear Manufacturer Association (PFMA) is operating in Pakistan since….. The Association was formed to protect and safeguard the interests of Footwear manufacturers and traders by applications, deputation, delegations, petitions and memoranda to the Government of Pakistan or the Provincial governments. It is to assist the members by investigating problems peculiar to the industry and trade with a view to cause improvements and progress. List of PFMA managing committee members are,

PFMA
Mr. Nasir Anwar Sheikh (Elegant Shoes) Chairman Mr. Waseem Zakria (Footlib Shoes) Member Mr. M. Younas (Starlet Shoes) Vice Chairman Mr. Rizwan Shahid (EPCOT Shoes) Member

Mr. M. Akram (Servis Shoes) Member

Mr. Imtiaz Ali (Modila Shoes) Member

Data:
The basic raw materials, hides and skins for footwear is abundantly available in the country. Pakistan has 44 million large animals and 70 million small animals. The small animals provide 81% of the total skin, while total raw hides and skins available in 1999 were 43.6 million. The break up of hides and skin is: There are about 500 fully organized units in the country who are producing quality shoes and proving their presence nationally and in the world market. This growth is in the interest of Pakistan economy as this industry is labor intensive employing half a million labor force at present with export figure higher by 13% till April 2009. To train the manpower and up-gradation of the skills, an institute is working in Gujranwala i.e. Institute of Leather Technology. Keeping in view the immense need of skilled manpower and institute, PFMA is planning to establish another training institute in Lahore. In Pakistan, on the average each person wear 1.83 ~ 2.0 pair per annum. Some 25% of the total footwear production in the country is done at abut 24% mechanized manufacturing units while 75% demand is met by the cottage industry.

There are around 800 or so cottage units in and around Lahore alone e.g. Chuna Mundi, Kasoor, Okara, Mureedkay, Pattoki, etc. A good trend is also exist in wearing hand made shoes like Khusa in Punjab, Pehsawari Chappal in NWFP, Sindhi Khehri in Sindh.

Estimated Production Capacities
The estimated production capacity of major players in Pakistan (Source: Business Recorder 01-FEB-2002) is given below. Pair Per Annum (300 days Single Shift Basis)

Major Units

Pairs Per Day

000 35000 2500 2000 1500 1000 30m 10.75m 0.76 2003-4 $ 8.45m 0.53 2002-3 $ 8.64 A verage Price Per Pair in $ 12 10 8 6 4 2 Global Perspective 0 The contribution of Pakistan’s leather footwear in the world is about 0.60m 0. (Source SMEDA) Commoditie s Footwear A.89 2004-5 $ 9.50m 0.U.53 8.88 7. Footlib and other. showing the increasing price trend from the year 2001~2005.88 2001-2 $ 7.5% from $ 78 million of the 7.Bata Pakistan Servis Industries East Pak Chrome (EPCOT) Footlib Firhaj Footwear Shafi Group (Urban Sole) 100.P per Pair 2000-1 $ 7.30m The graph shows BATA is at the top in terms of production capacity followed by SERVIS. In 2004-05 exports of leather footwear were increased by 38. The average unit price per pair of shoe is given below.76 8 2001 2002 2003 2004 .28% (2004).

4 652.5 1.1 32.6 386.7 China 5520.7 0.0 Export Growth Trend .0 2. Yemen.0 218. UK and Germany.8 0. The major buyers of the product were UAE. Saudi Arabia. (Source Business Recorder 01-Feb-2002) Country China India Brazil Italy Turkey Thailand Mexico Indonesia Vietnam Spain Pakistan Million Pairs 5841 680 527 420 283 272 265 262 240 208 207 Competitive Position of Neighboring Countries The Pakistan’s competitive position with its neighboring countries is given below implying Items Production Imports Export Total Consumptions Per Capita Consumptions Pakistan 226. Both are the critical countries affecting the Pakistan Footwear industry.7 9.5 2.10 2436.0 0.5 India 685.previous year to $ 108 million. Major Footwear Producers Major footwear producers with their production in million pairs is shown below showing china as the leading manufacturer followed by India.

007 3.632 0.29%). footwear with upper of leathers (83%).657 0.57% of the total export market.03 @USD: 51. slippers.003 0. which accounted for nearly 70. $ 58 (2000-2001) Pakistan Leather Footwear Export Breakdown (millions) Leather Boots and Shoes Leather Sandles Leather Slippers Leather Footwear of Embroidary Leather Footwear Footwear Outersole Of Leather Footwear NES. sports footwear (14%) and other footwear (2.477 23.262 1.978 0. leather footwear has not declined significantly. The leading exporter of leather footwear is Italy with a 28.Leather Footwear -Upper of Leather TOTAL 1999-2000 20.826 0.The global export market in leather footwear has been valued at nearly $21 billion.450 0.21% share of total exports in 1999. .322 35.33% of the total export value of leather footwear.578 0.e.8 2000-2001 24.Outersole .631 1. The most popular item in 2000-2001 was leather boots and shoes. (Source SMEDA) Leather Footwear Growth 1995 1996 WORLD 21.322 28. Leather Footwear Export Breakdown Leather footwear are included items such as sandals. Thus even though there has been lower trade in leather as whole.122 0. China is second with 13% of the export market and Portugal has 7.083 Growth % age 7% Trend (in million $) 1997 1998 22. The five year trend shows negative growth (-for leather footwear and in 1999 exports fell by 5% while its share as a sub commodity of leather has increased from 47% to about 51%.771 22.02 @USD: 58 Challenges Pakistan show industry is facing challenges due to which industry is not getting the desired results.053 -1% -3% 1999 21.169 1.054 5.039 2. boots and shoes.049 -5% Leather footwear exports can be further divided into three major classes i.

Footwear industry is facing shortage of training institutes for skill development shoe designs. proper health & safety shoes. Seasonal effect on usage of shoes as people wear different shoe in different industries. local manufacturers rely on copying of foreign made shoe designs instead of designing their own styles and designs.gradation of skills. High Custom duties on Four important shoe items i. old machinery and methods. Foot wear raw material attract 5 ~20% and components required for use in shoes attract 20 ~ 25% duty. Footwear manufacturers are subjected to a variety of local taxes which on the one hand increase the cost of local as well as exportable products and on the other. Instability in Government and frequent changes in Government policies create confusion and uncertainty among the existing and future investors which is detrimental to the healthy growth of not only Footwear industry but to any industry. not getting the return in true sense. manual shoe making. Threat from less expensive shoes from China and India destroying the national footwear industry creating unemployment and decline in the economy & revenue. Insole board and Toe puff and back Counter Thermoplastic Sheets acting as a big hindrance in flourishing shoe import. of Pakistan was helping the Footwear Industry in flourishing by providing 6% grant in the R&D sector. after sales support. Soles. generators.g. But Government discontinued that 6% R&D support on 25th June. introduction. state of the art technology. etc Deteriorating Law and Order situation is another impediment blocking the local as well as foreign investment in the industry. implementation & support of state of the art technology and up. Lasts. Due to lack of Footwear institutes. If shoe are imported.e. these attract a 25% custom duty. Natural Gas) is diverting the footwear manufacturers investments in alternate energy resources e. UPS etc from investing into new product designs/launching. much time is wasted in dealing with government departments.• Govt. • • • • • • • • • • • . supervision. Energy Crisis (Electricity. Most manufacturers are still dependent on usage of old technologies. 2008.

• • • • • BATA Pakistan Servis Pakistan EPCOT Urban Sole ECS/FootLib/Milli Shoe BATA . • • Operating Companies There are lots of local and international companies operating in Pakistan but we are considering few top companies for our analysis. High inflation rate forcing labor for high demand in labor rate. Shoe industry employs child workers.• Competition from international brands like Pierre Cardin with comparable prices badly affecting the footwear industry as people find high quality and comfort shoes in reasonable prices. violating the Child Labor Act of Pakistan that no child before the age of 13 is legally allowed to work.

There are about 40. 2008 was 9. Brands of Bata Marie Claire shoes are for women with an active lifestyle who seek contemporary modern styles Bubble Gummers Bubble gummers is the leading children’s footwear brand in Pakistan Hush Puppies World's first casual shoe and provided a new alternative in footwear. Weinbrenner. Marie Claire. The total production of the Company during the year ended December 31.48 million pairs. BATA has market share of about 6% in Pakistan and serves about 1million customers a day.000 employees working in about 5000 retail stores. breathable and very comfortable shoe. Its major brands include Power. with footwear as its core business. The Company is engaged in the manufacturing and distributor. It is engaged in the sale of footwear of all kinds along with sale of accessories and hosiery items. Other Brands .Bata Pakistan Limited is a Pakistan-based company. Hush Puppies emerged as a soft. Comfit and Bubblegummers.

The Group has diversified interests in rubber products including tyres and in defense industry products. and has been the largest exporter of footwear from Pakistan for the last 10 years. France and UK. It is the largest manufacturer of footwear and tyres & tubes for two-wheelers.000 people in its facilities located in Gujrat and Muridke. CALZA The unique style and amazing comfort of CALZA have made it Pakistan’s most favorite slipper. Its Group Company. Servis Group employs close to 8000 people in its Group Companies. SERVIS BRAND CHEETAH CHEETAH is the leading brand of sports footwear in Pakistan. It has annual revenue of USD 80 million. Cheetah has developed a cult following among sportsmen and symbolizes the sportsman’s spirit. The company's products are exported primarily to Germany. is the country's largest retailer and wholesaler of footwear. Italy. Servis Industries Limited SIL is a public limited company listed on the stock exchanges of Pakistan. The company employs more than 5.Servis Pakistan Introduction Of Servis Pvt Limited: Servis Group is Pakistan's largest footwear manufacturer and exporter. The Group was set up in 1958 and today has sales of more than PKR 9 billion. SSC PRIVATE LIMITED. Designed to keep you . It also has interests in retailing.

CALZA is perfect all-day casual footwear and ensures comfort in each and every step. The founding purpose of the company was to export goat napa to the American and European market under the brand name “EPCT”. every step is a step towards life with LIZA TOZ TOZ brings kids a colorful world packed full of fun and adventure. Chairman of Ayesha group of Industries in 1947. LIZA When it comes to everyday living for the modern woman. Since 1947 the company has grown 10 fold with sales touching 3 billion Pak Rupees and as a result has become the undisputed market leader. In 1978 company established its own dying unit. Muhammad Usman. In 1985 an in house finishing department was organized thus laying the foundation of a company. Featuring trendy designs and go-anywhere comfort. EPCOT Brands: .light and carefree wherever you go. The company was originally founded by Mr. LIZA is the ladies shoe that stands apart from the rest. The fun never stops with TOZ! SKOOZ SKOOZ puts a whole new spin on student life with comfortable and durable shoes that are perfect for fun on and off the schoolyard EPCOT: Introduction EPCT Private Limited formerly known as (East Pakistan Chrome Tannery) is the largest manufacturer and exporter of both of finished leather and leather shoes in Pakistan. In 1992 the EPCT set up a composite shoe manufacturing unit targeted to the European market soon to dominate world market.

) Ltd. leather and textile industries. Italy. The shoes were designed in all categories starting from male to female in casual.URBAN SOLE Introduction Urban Sole was launched as a National Brand in June 1988 by Shafi (Pvt. Urban Sole is a Brand introduced by Shafi group in recent past with a huge investment and was backed up by company’s total turnover of more than US $ 100 million. Before the launch of Urban Sole in Pakistan. the group was exporting shoes and other leather made manufactured goods to Germany. which was established in 1940 and working in Pakistan since then in chemical. . those who desire quality craftsmanship and incomparable leather quality with best suited styles for their shoes. China and other European Countries and was rated as the top export company of Pakistan generating the highest revenues in Pakistan. So keeping this mind in mind Urban Sole made an entry in the market introducing shoes with ultimate finish. The leather shoe industry was evolving at that time and Urban Sole was introduced as a national brand proving quality products in the market in much affordable prices. Considering this fact that Urban Sole is a part of Shafi Groups Pakistan. France. classically designed and elegantly style. an Urban Shoe Brand for the consumers. The shoe was designed for those who approach life with intensity and passion. formal and rough wearing.

Urban sole Brands DRIVING MOC MARINE CLUB TRAIL RACER SOFT STEP FREE WALK .

His sons. Shafiq Ahmad Ansari. In 1997. 1st flagship outlet was inaugurated in Liberty Market followed by Anarkali outlet in 1983 and the Mall outlet in 1987. In last decade. a number of leather items such as Briefcases. All these four shops have a wide range of Ladies. Iqbal Ahmad Ansari And Riaz Ahmad Ansari also joins the business during 1970’s. Wallets. Gents and Children shoes. Handbag. another outlet was opened adjacent to the Mall outlet to need the ever-rising demand of its customers. Shoe Industry SWOT Analysis . In 1978. and Belts etc have also been added to these shops.MILLI SHOES INTRODUCTION: Milli shoes is a leading name in the shoe industry in Pakistan has vast experience of manufacturing quality shoes since pre-partition under the patronage of Muhammad Ahmad Ansari.

Opportunities Growing fashion consciousness globally • • • • • • Threats Entry of multinational brands in domestic market Energy crisis Instability in Government and it’s policies Meeting domestic and international quality. comfort categories • Can serve from existing sites. etc Easy availability of low cost labor Exposure to export market Spare manufacturing capacity Good quality school shoes Direct delivery capability Presence of technologist Product innovations ongoing. cost standards Use of IT and decision support software’s (ERP. • • • • • • • • • • • • • • Unawareness of international standards by many players Poor infrastructure and access to testing. delivery. Highly unhygienic environment Export of hand made shoe e. safety.g. designing and technical services Environmental problems Import of shoe components Limited budget. Low machine and material productivity Delayed deliveries Weak support infrastructure for export Poor distribution network Lack of coordination among supply chains Shoe production in sports. SAP. Khussa. Lack of after sale support Lack of fresh investment in the sector Lack of training institutes and shoe experts Uneconomical size of manufacturing units High taxes and customs duty No R&D support by Govt.Weaknesses Low labor productivity due to inadequate training and unskilled labor • • • • • • Low level of modernization Low level of up-gradation of technology Strengths Comfortable availability of shoe raw material • • • • • • • • • • • • • Low integration of developed technology Less no of organize product manufacturer Lack of modern finishing facilities for leather • • • • Good Quality Upper Leather Hand Skilled Labor Better shoe life and durability. casual. Khehri. etc) to help eliminate length of the production cycle for different products • Growing international & domestic .

PEST Analysis Political Political instability is effecting badly to the footwear industry • Energy problem (high cost and power failure) is the main issue in these days. • The import of under-priced shoes was badly hitting the domestic footwear industry. because it leads to increase in production cost. One of the in most the important growth is of higher problems footwear industry energy prices. • Economic • Economic crisis hit badly on footwear industry especially raw material to manufacture footwear. . especially Increasing energy and inputs prices leads to an increase in the cost of Production hundreds of cottage industry that influences the expected footwear units working across the production of the industries and the exports country.

And also encourage the investors invest Government should take measures to check the inflow of foreign footwear into Pakistani market through the tactics of under-invoicing and missdeclaration • Pakistan footwear exports for the year 2006 were exports. Countries provide services to other countries by the using of labor of that country. import to and export in policies. that manufacturing cost of the products come down (cost reduction). like the electricity bills. taxes etc. other factory overheads. Out of total footwear leather for leather footwear for 43. one has to fulfill certain rules and regulations. as China is providing the services to the Pakistan .15%. So To establish a plant for this industry is not so much easy. • Its share in Pakistan’s total exports is about to touch the figure of$200 million.Main advantage of it is. • Pakistan’s pair manufactures around 120 million annually Consumption and it exports 2 million pair per annum roughly and the average price charged for each pair stands around $10. so this is the reason that Pakistan prefer to outsource mostly products from China even in the finished form extremely significant. • Social The overall political trend is negative for industry. accounts makes about US$ 135 footwear which Footwear industry local million. Technological . and also the huge investment is required economic downward trend is badly affecting the industry.• From the previous some years Government of the Pakistan are encouraging foreign Pakistan.

For processing of raw material like leather new techniques are being implemented by multinationals. polyurethane soul which are light weight and other artificial leather etc. . About 130 different chemicals are used in leather processing. • Pakistan is among the top ten most populous countries of the world. people having jobs and trend to play sports and healthy physical activities so this social trend has direct positive impact on demand of footwear industry. being used regarding technical Especially it is a race between ladies to have more and matching shoes with her dresses which are more trendy and fashionable. And ladies wear new trendy and fashionable shoes at every occasion. New technologies like water proof souls.In Pakistan the life style of people is New technology trends also effecting changing with a fast pace. has become more money and time Multinational competitors are oriented. increase in population also increase in demand for the products and it also increase demand for footwear • aspects on that particular sport. Their life footwear industry in Pakistan. Eid and on the seasonal base like in summer season shoes are different and the winter season shoes are different. • Everyone wants that he or she wear • In sports footwear new technology is new shoes at every occasion. As cities are growing and more people shifting from ruler areas to urban areas therefore increase students. introducing innovative techniques to major shift in the values of the people of manufacture footwear Pakistan. The process of leather includes a number of different steps during which large quantities of water and chemicals are applied to the skins. increased demand for foot wear products especially in young generation In Pakistan people mostly purchase foot wear on the time of occasion like marriages. People now prefer western life style rather than the traditional one. depending on the trends is now in leverage technology to gain competitive advantage.

Government is also trying for minimizing the trade deficit and encouraging for foreign investment as well as exports of the local industry. Future Trends in Economical Environment The economy is expected to perform well in the near future as petrol prices decreases and electricity problem will resolve then it will decrease our trade deficit. summer and Eid events. As per capita income is increasing people will mostly prefer to buy comfort and leather shoes.industry. People are becoming health conscious day by day and people think more as compared to past on confront and quality of footwear’s. Future Trends in Technological Environment . Shoes industry is also having some peak seasons sale like marriages. It is still hoped that national economy will continue to grow and rising prosperity will bring expanding opportunities for the shoes Industry. Government is getting aid from IMF and some other countries are also helping the Pakistan economy. Fashion industry is growing rapidly in Pakistan now people think footwear in terms of fashion like their other fashionable items Future Trends in Political Environment Government is developing a frame work so that in future the exports of shoes industry will increase for this purpose Government has decided to give relief regarding to decrease the exports duty for machinery. Future Trends in Social Environment People will buy the walking shoes and other formal shoes with the changing the fashion and special events.

So service is moving in right direction to maintain its leadership of overall strategies though still weak in diverse retailing. In future companies having diverse strategies regarding in inertial outlets in their value chain will have the tendency to capture more market share. Though behavior of customers is changing towards quality but bad economic situation is resulting lower income level in coming five years.High tech technology will used in shoes for the comforts of customers. The basis of competition will be on price with more diverse retail strategy. By using a laser foot scanner to create a 3D computer model of a person’s feet. In mass production the company which will give differentiation to their product on reasonable prices will have the tendency to gain success. allowing shoe comfort to be improved efficiently and at relatively low cost. Multinationals are currently missing to capture those customers which are price conscious and living in rural areas. Porter’s five forces . the ERGOSHOE system bridges the design gap between shoe manufacturers and customers. Forecast: In coming five years competition will be among two major competitor segments local versus multinational rather than among multinationals because majority of customers in Pakistan are price conscious instead of quality and brand.

• Switching Cost: In terms of switching cost for new entrants threat is high.• Brand Identity: In Pakistan industry there is no heavy spending is required for brand identification for new entrant. Capital Requirements: • High capital is required to compete at highest level but on small scale competition Bargaining Powers of Buyers • Concentration: Buyer is fragmented throughout the country and they are large in numbers that’s why bargaining powers of buyer becomes low regarding concentration. .

So the bargaining power of supplier in terms of concentration is low.g.• Product Cost Vs Total Purchases: Servis is providing reliable products to its buyers in terms of usage in all types of brands and buyers bargaining power is low. . Impact on Quality/ Performance Servis is offering high quality product so the bargaining power is low. Buyers have less information and have low bargaining power. • Switching Cost: Buyers perceive Servis shoes as quality product giving value against cost and Servis has better brand image so in this case buyer switching cost is high and bargaining power is low. • Presence of Substitute Inputs: Servis company suppliers are readily available in terms of raw material especially for the manufacturing of leather shoes so bargaining power of supplier is low. • Profits: Buyers consider themselves self on profit side when he uses Servis footwear. • Buyer Information Buyers have no such information regarding processes of Servis shoes. • Product Differentiation: Servis is offering relatively differentiated products in terms other brands of and comforts and set high standard therefore buyers bargaining power is low. Because Servis doesn’t use such channels which provide confidential information to buyers. Bargaining Powers of Suppliers • Concentration: Suppliers are fragmented for raw material like leather throughout the country but chemicals used in manufacturing and equipment are imports from outside the country e. PU material for sole is imported from France and large pool products China and Germany.

Rivalry among the Firms • Industry growth: Shoe industry in Pakistan is growing rapidly and a lot of companies is competing for market share so the rivalry among the firms is intense. • Intermittent Overcapacity Industry is producing more than its demand in the total production of industry. . • Fixed Costs: Servis Company is currently using unique ways and methods to innovate its products using new technology it makes fixed cost high as well as prices. • Impact on Quality/ Performance: Servis requires high quality raw material from its suppliers to manufacture quality product so supplier bargaining strength increases with respect to this aspects. In these aspects competitors can cut their cost to reduce their price. For supplier Servis is relatively powerful customer therefore in this sense supplier bargaining power become low. • Product Differentiation As Servis use high quality raw material for its products to gain competitive edge so Servis demand raw material from its supplier which is not just commodity. So supplier’s products have direct impact on the quality of Servis product. So there is threat of price war.• Importance Relative to Customer: Servis has unique brand image and leading in footwear industry of Pakistan. • Switching Cost: Servis can easily switch for raw material like leather and small scale equipment therefore switching cost is low. because there are local manufacturers and imports of shoes from China. • Forward Integration: Pakistan leather industry growing and supplier on small scale can do forward integration for local competition therefore threat of forward integration is high.

Threats of New Entrants • Economies of Scale and Experience: . • Brand Identity In case of brand identity service has low treat from its local except multinationals r because service is perceived as company giving reliable products to customers and has brand loyalty. But lots of companies are fulfilling the needs of buyers on low prices ultimately switching cost low.• Product Differentiation .19 million in past recent years. • Exit Barrier: Exit barrier are high because Servis has assets including new equipment and has large setup in Pakistan footwear industry. Servis is trying to increase its profits in market but lagging behind its strategies. • Corporate Stakes: Servis has 15% of market share and revenue averaging 3405. Servis shoe company is using direct inject technology by which shoe is made as a single piece and ultimately there is no any kind of stitches in the shoes. • Diversity of Competitors Servis has threat from its competitor’s especially local competitors because they are implementing more diverse strategies on distribution and retail channel. This gives differentiation to its product over the competitor’s products. • Switching Costs: Using good quality and reliable products of Servis Company it is difficult for consumer to switch another company. • Concentration and Balance: In these aspects there is intense rivalry among competitor because many companies trying to chase same customers.

• Government Policy: There is no such restriction from the government for new entrants though government is considering rules and regulation regarding environmental issues for manufacturing sites especially leather is processed to manufacture the product. So ultimately threat of new entrants is high.small financial resources are required. • Cost Advantages: Established companies have little bit cost advantage in the beginning over the new entrants but it can be cashable after some time because to access raw material. • Product Differences: In Pakistan there is low budget is required for customer service or to differentiate the product in footwear industry in Pakistan. The more common distribution channel is wholesale which is easily accessible. • Expected Retaliation: Existing firms has less responsive in their overall straggles except few multinational and have low expected retaliation for new entrants. So in this aspects threat of new entrants is high. Basically abundance of Chinese shoes in Pakistan market has changed industry competition.There is no lot hurdles for mass production to achieve economy of scale producing low quality products for such entrants who are focusing on price conscious buyers. In future the whole Pakistan shoe industry wills mainly rely on Chinese . Therefore threat of new entrants is high in this industry. Analysis Pakistan shoe industry is in monopolistic competition and entering into the price war in future. facilities is easy in Pakistan footwear industry. • Access to Distribution: New entrants can easily distribute their products through various channels.

leather footwear has not declined significantly.977 5. automotive) Declining (eg.665 5.330 . micro-processors) Export Growth Trend The five year trend shows negative growth (-3% for the last 3 years) for leather footwear and in 1999 exports fell by 5% while its share as a sub commodity of leather has increased from 47% to about 51%. 5. Porter is also known for his simple identification of five generic descriptions of industries: 1.609 1. space travel) Mature (eg. If Servis will shift their processes for Chinese outsourced shoes. shoe repairs. 4. gift shops) Emerging (eg. Servis is also better in creating good brand image than Bata. But Servis is doing better with respect to quality in the local manufacture shoes with better marketing strategy as compared to Bata.562 1.971 3. Fragmented (eg. Thus even though there has been lower trade in leather as whole.773 1.171 Italy China Spain Portugal Brazil 1999 5.617 2.737 1.737 2. 2.743 1.713 1.535 1. So the overall behavior of the buyers and the industry competition will heavily rely on Chinese shoes.365 1.626 3. technology.535 1.593 1.593 1.459 1. 3. Servis is potential leader having current marketing and customer relationship strategy in future.330 1. Though Servis is not as keen for Chinese shoes as Bata. Another reason is buyers are recognizing and also accepting Chinese outsourced shoes with the brand of large firm like Bata.shoes.497 1.670 1.938 6. but in future Servis should relay on Chinese outsource shoes to even survive in Pakistan market because in Pakistan the energy cost is high like electricity. solid fuels) Global (eg. Leather Footwear Export Trend (in millions) 1995 1996 1997 1998 5. For this purpose local manufacturer and retailer will try to achieve high margin to cut the cost.938 2. It is because low prices of Chinese shoes.

670 1.938 2.Germany 1.61% of the total leather exports for Pakistan.562 1.971 1.459 1. Pakistan’s export growth rate increased by 7%. In 1999 the value of export earnings for leather footwear was $28 million which is 4.609 1.737 2.330 1.535 1. The five-year trend shows that there are a lot of inconsistencies in the growth rate with high fluctuations.617 3.002 962 946 989 1.002 In 1999 the value of export earnings for leather footwear was $28 million which is 4.593 1.665 2.626 3. However in 1999 while the global export growth rates declined by 5%. The five-year trend shows that there are a lot of inconsistencies in the growth rate with high fluctuations.002 962 Trend (in million $) 1997 1998 5.002 .171 946 989 Italy China Spain Portugal Brazil Germany 1999 5.977 5. Pakistan’s export growth rate increased by 7%.743 1.593 1.938 6.330 1.497 1.713 1.61% of the total leather exports for Pakistan. Leather Footwear Exports 1995 1996 5. However in 1999 while the global export growth rates declined by 5%.737 1.773 1.535 1.365 1.

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