International economics

Case study
Submitted to, DR. MADAN LAL

Parminder singh saluja M.B.A.-I.B.(10-12) ROLL No. 29

.000 to 4. a member of the Ahmadabad based Lalbhai group. This was installed. was established at Bangalore in 1993 with an investment of Rs. a division of Cluett Peabody & co. area and capacity to make 3. In march 2003 . and a conducive factory ambience.AS a result. Next. What this brought to India was not just another premium dree shirt brand but new manufacturing philosophy to its garment industry which combined high productivity. and plenty of ventilation. crowded. It employed a computer system for translating the designed shirt’s dimensions to automatically mark the master pattern for initial cutting of the fabric layers.. ft. The over two-dozen quality checkpoints during the conversion of fabric to finished shirt was unique to the industry. high ceilings. Arvind clothing Ltd. not to save labour but to ensure cutting accuracy and low wastage of cloth. It is among the very few plants in the world that makes shirt with 2 ply 140s and 3ply 100s cotton fabrics using 16 to 18 stiches per inch. ample elbow room for each worker. The conditions inside-with good lighting on the workbenches. 18 crore. the Banglore plant could produce stain repellant shirts based on nanotechnology. . The reputation of this plant had spread far and wide and now it is loaded mostly with export orders from renowned global brands such as GAP. signed up with the 150-year old Arrow company. and the like. Arrow’s first plant.000 shirts a day. and confined sweatshops characterizing the usual Indian apparel factory inthose days. were a decided contrast to the poky.000 sq. for licensed manufacture of Arrow shirts in India. a subsidiary of Arvind Brands ltd.. Recently the plant was identified by Tommy Hilfiger to make its brand of shirts for the Indian market. US. incc. Espiri. with a 55. stringent in-line quality control.ARROW AND THE APPAREL INDUSTRY (case study) Ten years ago.

the demand pressure from global brands which want to outsource from arvind brands. threat trimming and bottom hemming. which is hooked to every machine. has cost Rs 16 crore and can turn out 8. and many others. there will be a surge in demand for high quality garments from India and arvind is already considering setting up two more such high tech export. foam finishers which use air and steam to remove creases in the finished garment. with the lifting of the country-wise quota regime in 2005. when the new factory goes on full stream. A continuous monitoring of the production process in the entire factory is done through a computerized apparel production management system.000 shirts per day.Arvind Brands has had to take over four other factories in Banglore on wet lease to make the arrow brand of garments for the domestic market. Exports of garments made for global brands fetched arvind brands over Rs 60 crore in 2002. The stitching machines in this plant can deliver up to 25 stitches per inch. In fact. It is not just in the area of manufacture but also retailing that the arrow brand brought a wind of change on the Indian scene. Prior to its coming. The new unit of 75. What arvind brands did was to set up exclusive showrooms for arrow shirts in which the functional was combined . and this can double in the next few years. is so great that the company has had to set up another large factory for export jobs on the outskirts of Banglore. automatic collar and cuff stitching machines. Because of the use of such technology.000 to 9. Among the cutting edge technologies deployed here are a Gerber make CNC fabric cutting machine. a special machine to attach and edge stitch the back yoke.000 sq.oriented factories. the usual Indian shirt shop used to be a clutter of racks with little by way of display. ft. In fact. pneumatic holding for tasks like shoulder joining. this plant will need only 800 persons for a capacity which is three times that of the first plant which employs 580 persons. The technical collaborators are the renowned C&F Italia of Italy.

Renato Grande. The products were displayed in such a manner that the customer could spot their qualities from a distance. to design its spring/summer collection 2003. To improve its presence in the high-end market. . Arvind brands ltd. Arrow also tied up with renowned Italian designer. Arvind brands licensed brands(arrow. Arvind brands also widened the geographical presence of its home-grown brands. and draw in new customers for readymades.with the aesthetic. and wrangler)had grown at a healthy 35 per cent rate in 2004 and the company planned to sustain the growth by increasing their retail presence. but arrow showed the way. Of course today this has become standard practice with many other brands in the country. The current turnover at retail prices of the arrow brand in India is about Rs 85 crore. who has worked with names like Versace and Marlboro. fragrances. In the pipeline are light jackets and jeans engineered for the middle-aged paunch. undergarments. of which about 15 per cent will be from the licensed non-clothing products. lee. the firm started negotiating with an international brand and is likely to launch the brand. Tshirts. He expectsthe turnover to cross Rs 100 crore in the next few years. From just formal dress shirts in the beginning. the product range of arvind brands has expanded in the last ten years to include casual shirts. watches. President. Stuffed racks and clutter were eschewed. targeting small towns across India. It is also present in 30 retail chains. The company has also announced its intention to license the arrow brand for other lifestyle accessories like footwear. and leather goods. and trousers. The company planned to increase the number of outlets where its domestic brands would be available. In 2005. Arrow today has the largest network of 64 exclusive outlets across India. According to Darshan Mehta. such as Newport and Ruf-n-Tuf. arvind brands launched a major retail initiative for all its brands. It branched into multi-brand outlets in 2001. and is present in over 200 select outlets.

Telecom and garments. . Divisions : Arvind mills was split in 1993 into three Units-textile. Arvind brands is subsidiary of arvind mills. Narottam bhai and Chimnabhai. COMPANY PROFILE Name of the company : Arvind mills Year of establishment : 1931 Promoters : Three brothers-Katurbhai.The company has plans to expand its retail presence of Newport jeans. from 1200 outlets across 480 towns to 3000 outlets covering 800 towns. Growth strategy : Arvind mills has grown throughout buyingUp of sick units.going global and acquisition Of German & US brand names.

International brotherhood. Geographical specialization.e. Optimum use of resources. Development of transport and communication. 3. Despite of the huge domestic markets. 7. Globalization. 6. 2. 5. Higher standard of living. 8. Generation of employment. Price equalization. there are certain benefits that can be reaped only after getting connected with other countries i. It exists for different reasons. 9. Economic development. Why did Arvind Mills choose globalization as the major route to achieve growth when domestic market was huge? Ans. Arvind mills can have benefits of comparative cost advantage i. Economies of scale.e. it will get inputs or other needed material at cheaper rates from other countries which can produce it more efficiently and economically than domestic country. Other benefits of diversification are1.Q. .Trade among countries is natural and desirable. 4.

ff€f  ¯°– n°– –   n°– ¾ ½   f f  ¯f .

-.

€f nn°–¯fn°  f¯fnnff° n€€¾n°–¯fn° ¾ ½° ¯fn °–€f¾¾  ¾ ©°°–  f¯¯°–f°  ¯ ¯¯°– f¾½ nf¯fn°  ffnf°  – ¾n  fn €f¯€°¾ ¾n¾ ff° ¾ f¯  ¯ n f¾ ¾° €°¾ –f¯ ° f° ¯f° ¾ @ ¾n°– ¯fn° ¾°¾½f°nf°  ½¾n ¾½ °n n°°¾ ¯°°–€ ½ n°½n ¾¾°  ° €fn¾ ° –f n¯½  f½½f ½ n°¯f°f– ¯ °¾¾ ¯ n¾   ¯fn°  nf¾ € ¾ €¾n n°– ¾½f°° ° ½ ¾°¾€fnf½fnn¾ ¯ ¾f€ €¾½f°n ¯½¾½ ¾°¾  ½¾€–f¯ °¾¯f €– f f° ¾€ n  f°  f° ¾ ¾n ° f° ¾nf°   ° ° €   f¾  ° ° €fn– ¾°€¾ f¯ °€fn  €°–€  n° ¾ f –¯ °    f¾– ° ¯f° €– f–f¯ °¾€¯° ff° f° ¾f f n°¾ °–¾ °–½ ¯ ¾n– n ½  ° €fn ¾  ¾°©¾° f f€ ¯f°€fn  f¾ f°–f f f°  –f° €nf°–  ° ° f°¾n ° 9¾n¯°–  ¾f° f°¾¾½¾  f n €fn¾  f€ ¾½f Jff°  f° ¾  f¾¾  ½ n¾ ¾¯¾€f¾¾°n €°n°ff¾n¯ °  .

f 9 ¾ ° °  f° ¾ @ n °° f f½n ¾€  f f° °° f¾f ¾n   ½ n¾ ° n¾¾¾ n ° ° €  f¾ €nf ½ n ° €¯  n °¾ °° n°–½ n¾  ° f°  f° ¾f°n f¯f© f °f €f¾ f° ¾ °  f° ¾n °¾  f° ¾%f  f°  f°– %f –°ff f½ n °f °f°  n¯½f° ½f°° ¾¾f° – °n f¾°–  f½ ¾ °n °  f° ¾ f¾ °  – –f½nf½ ¾ °n €¾¯ –° f° ¾ ¾nf¾ - ½f° € ° @€ f– °–¾¯f°¾fn¾¾° f @ n¯½f° ½f°° °n f¾  °¯ € ¾  ¾ ¯ ¾n f° ¾   fff  f°  f°° n¾¯ ¾€ f ¯f ¾ @¯½ ¾½ ¾ °n  ° – ° ¯f   €¯¾f ° –f°–f°° °f°f f°  f° ¾ f°n  f°  . f ¾ n €€ fn¾f° n    ¾n  @ ½ n¾   ¾½f °¾nf¯f°° f n¾¯ n ¾½ f ¾€¯f ¾f°n €n¾  f¾f¾ n¯ ¾f° f ½fnn ¯f°  f° ¾° n°  f¾  f  ff¾ f– ¾ ° € n¾  ¾fn¾¾° f ¾f¾½ ¾ °° fnf°¾   f°n °¯ f°  ¾° f° ¾½ ¾ °° ¾  n  ¾  ¯©¾€¯f  ¾¾¾¾°  –°°°–  ½ nf°– € f°  f° ¾f¾ ½f° ° f¾ ° f¾°n nf¾f¾¾ @ ¾¾ f° ¾ ¾ ° ½½ ° f –©fn ¾f° © f°¾ °–°  €  ¯  f– ½f°n f¾ ½ °° ff° ¾–°    °ff° f¾ °f¯ ¾ I ¾fn f° .f   ¾–°¾¾½°–$¾¯¯ n n° @ n¯½f°f¾f¾f°°°n ¾ ° °°n °¾  f f° € € ¾ fnn ¾¾ ¾ € f  fn ¾ ° –f¯ °¾ €f–f°n ¾ f°  f – ¾ nn °–f¾f° .

@ n¯½f°f¾½f°¾ ½f° ¾ f ½ ¾ °n €- ½© f°¾ €¯ ¾fn¾¾°¾ ¾ n °–°¾       .

  .

 -f¯ € n¯½f° ° ¯¾  f€ ¾f ¾¯ °  9¯ ¾ @   ¾ f f -ff¯ f f° .

¯°f f  ¾°¾ ° ¯¾f¾¾½°°  D°¾   @  n¯f° –f¯ °¾  °  f° ¾¾¾ ¾ f€f° ¯¾  ¾f – ° ¯¾f¾–°– °–  D½€¾n°¾ –°–– ff° fn¾° € ¯f° D f° °f¯ ¾     .

J  ° ..¾n¾ – ff°f¾ ¯f©  fn  – ° ¯ ¾n¯f f¾– " °¾ @f f¯°–n° ¾¾°fff°  ¾f   ¾¾€ €€  ° f¾°¾  ¾½ € –  ¯ ¾n¯f ¾   f  n f° ° €¾fnf°  f½ °f€ – °–n°° n   n° ¾  ff° ° ¯¾nf°f  ° €¾€ n¯½ff n¾f f°f–  – °½¾ °  ¯f ffn f½ f ¾€¯ n° ¾nnf°½ n  ¯  €€n °f°  n°¯nff° ¯ ¾nn°   ° €¾€  ¾€nf°f    –f½nf¾½ nff°   ½¯¯¾ € ¾n ¾   n°¯n  ½¯ °   n°¯ ¾€¾nf    ° f°€ ¯½¯ °   – ¾f° f €°–   9n  ff°   ° °f°f       ½¯ °€f°¾½f° n¯¯°nf°   .