Ammar Textile Industry example essay topic

ACKNOWLEDGMENT We bow our head before almighty Allah, who bless us with great courage and enthusiasm, to utilize our strengths and knowledge, we are also thankful to our talented and respectable teacher Prof. Muzamal Malik to provide us sufficient opportunity and spiritual support, to complete our project report. We are highly indebted to all respectable managers mentioned below: Mr... Irfan Ahmad Ch. Manager Production. Mr... Zia-ul-Haque Manager Administration.

We are thankful to all the above mentioned people for their commence knowledge, experience and effective behavior, which enable us to complete this report. We are also humbly thankful to our collage administration and especially to our Dean Mr. Sheikh Antique-ur-Rehman for our continuous and effective help during our project. We are gracious to our parents, family members and especially to all our group members for their mutual cooperation and unity. We all including: Muhammad Rasheed Khalid.

M azhar Muna war. Mahmood Ahmad. Habib Abbas. Khurram Rasheed. COMPANY PROFILE: Ammar Textile was established in 1984 at a very low scale.

At that time the company is only operating in the Domestic Market with 100 employees. But now Ammar Textile have a vertically integrated facility for designing and manufacturing of 100% COTTON KNITTED GARMENTS. The Company has in-house Knitting, dyeing, finishing, garment manufacturing, and washing facilities. Their product integrity Department, which is the single largest department comprising 25% of our total salaried staff, ensure consistent standards and impeccable quality. Between their two divisions, the cotton knitwear division and the leisure wear division, they have 1100 workers employed.

In 1988 the CEO Mr. KH. Bilal Ahmad goes for Internationalization and Globalization process and start exporting their product i.e. T-shirts, outside th country. The company is having a business with Levis and provide maximum of their production to Levis. The company have 70 to 75% of exports to the USA, 10 to 15% of exports to Japan and 10 to 15% to the other countries. Ammar Textile is 100% export oriented company and have created its name for quality and integrity with some of the big name of fashion world, Levis strauss, GAP, Ralph Lauren, Polo Dockers and target. This is the only company so far in the textile industry in Asia which achieve ISO 9000 certificate.

Ammar Textile has two sister concern, 1) GALAXY TEXTILE. 2) SARAH TEXTILE. Galaxy textile has business operations in OMAN. Ammar textile set up their subsidiary in 1992, and the stitching process is only done at that place.

The total number of employees at Galaxy Textile is 350 and all of them are skilled and sent from Pakistan. At Ammar Textile 90% of the work in process is used in Production and the rest of the work in process is used while stitching and making the finished product. All the major operations are done at Ammar while the re-export of the finished product is done from Oman. Sarah Textile International owes its existence to its parent company Ammar Textile international which revolutionized knitwear made ups in Pakistan when it came on stream in 1993. Sarah came into existence and was register on 31st May 1991, this huge project was approached by IFC & CDs for financing. Sarah was converted into public limited company on 24th December 1992.

In context to the two subsidiaries Ammar Textile is one of the modern and technologically advanced project in South Asia. The Sarah Textile project specialized in 100% cotton knitted fabrics and quality garments with the capacity to produce 1.38 million pieces of garments and 1.5 million kg of the fine quality dyed Fabric. Ammar Textile is the pioneer in adopting environmental standards set by EPA USA and the world bank by installing water effluent equipment in the factory and in its subsidiary Sarah textile. INDUSTRY OVERVIEW: The knitwear industry in Pakistan has grown fairly rapidly after the independence.

Since the knitwear industry is closely related to the textile industry its development and growth has closely followed the foot steps of the textile industry. Starting with 2 or 3 units in 1950 today there are 700 units with more than 15000 machines of these 700 units, more than 50 are fully integrated. In early years the industry produces simple items such as socks and undergarments but with the passage of time it has increasingly produced more sophisticated items such as sweat shirts, T-shirts, jogging suits, track suits, and various undergarments. Pakistan export of knitwear has increased from US $9.8 million in 1977-78 to US $513 million in 1993-94. In addition to that the knitwear industry employed more than 20,000 workers Today the estimated production of knitwear has risen above 34 million kg Knitwear exports have become an increasingly important foreign exchange earner for Pakistan. The main export destination of Pakistan knitwear exports are USA, Japan, Germany.

The proportion for 1999-2000 are 50.7% to USA, 17.7% to Japan and 25.2% to Germany. PRODUCT DISCRIPTION: The company is producing T-shirts of all designs and all sizes. All production is done according to the samples given by the buyers. MANUFACTURING PROCESS: Ammar textiles has a very advanced manufacturing plant, which includes knitting, dyeing, finishing, stitching, and packaging departments. The company believes in using the most advanced and state of the art technology available world wide for each process. Ammar knitting department has a unique feature of computerized knitting machines from Germany for making wide range of gray fabrics.

The companys dyeing section, has the most advanced computerized soft-flow dyeing machines for piece-dyeing and computerized yarn dyeing plant for striped fabrics. In companies finishing area this has an all star cost from the world of textile technology and also has advanced Radio-Frequency Dryers for high quality finishing. Stitching department is using the latest embroidery and stitching machines made by Singer. Quality checks are run at every stage of production, starting from knitting to finished product, ensuring that the final garments for shipping is to be perfect in every respect.

MISSION OF THE COMPANY: 100% satisfaction of the customer, with the tradition of quality in product and business practice, runs unbroken through the history of Ammar Textiles since its inception in 1984. GOAL OF THE COMPANY: 1) To adhere the quality standards set by our customers. 2) Cost efficient and effectiveness. 3) To meet the production targets.

OBJECTIVE OF THE COMPANY: To increase the production 30% to 40% and reduce the fixed cost 30% to 40% up till 30th March 2001. SALES OF THE COMPANY: The company has 100% advanced sales booking up to December 2001 now the booking for 2002 is started. The company have 45 million US $ sales in USA only. PRODUCTION & PROFIT OF THE COMPANY: The production of the company is 510 thousand dozens per year. The company is earning reasonable profits. CUSTOMER PROFILE: In the last 10 years, Ammar has achieved remarkable position with Levis strauss most successful brand DOCKERS.

One of their popular product, namely double P K POLO shirt with 250 gms M 2 weight was developed by Ammar in 1988. The company have already got outstanding performance award from Levis. The other buyers of the company is AMC, Jasie Penny, Timberland, Nike, Champion, Hanger, VF-Lee, Chap and Gap. COMPETITIVE ADVANTAGE: Quality is the competitive advantage and company produce costly valuable garments. INTERNATIONALIZATION PROCESS: WHY TO GO FOR THAT Ammar Textile industry has gone for the international market for the sake of maximum profit and foreign exchange for the country. At the time when company go for Internationalization the main reason is the credit problem in Pakistan.

If they run the company at that time in the domestic market the company might get bankrupt and the textile in concerning the market is dead. ISSUE for the Company to Go for Globalization AMMAR Textiles go for Globalisation, Expansion, Open market, International market innovations as it is dependent on fully on exports. OBJECTIVE OF THE INTERNATIONALIZATION: The major objective behind the internationalization of Ammar is to capture the maximum market. USA 80% to 85%.

Japan 30% to 45%. Germany 25% Belgium 10% England 20% France 10% Others 25% The above figures are the production share of the company. INTERNATIONAL POLICY: The company havent their own international policy, as they have been dealing with Levis and other buyers so they have been booked by monopolized production policy. Decline in sales due to the Quota restrictions Solution: To overcome the US quota restrictions the company set its a new stitching unit in Oman. COUNTRY ANALYSIS: At the time when Ammar set its stitching unit in Oman the major factors in Pakistan like economic, legal, and political, are not favorable and there is a slum in the domestic market. The another factor which forces Ammar textile to go out of the country is a Quota problem in Pakistan.

So the company chooses a best place Oman where they have better chance to run their business operation. Political Factors in Oman: Oman is the country where there is a rear chance of any political disability so there is a political influence free structure. The company before setting its unit have a research study of different countries and decided to starts its operation in Oman where they found a supportive political culture where the government gave good incentive to the industry. Economic Factor in Oman: Oman is the place where the economic condition is very supportive and a well stabilized. The government has provide a good Export & Import policies which help the local industry to grow, and that is the reason the country have very debts to pay. The another incentive is the free port which help the industry to increase its sales and profits.

As there is a stabilize economy so there is impressive rate of employment and inflation rate is very less as compare to the Pakistan. Legal forces in Oman: In Oman there are no legal forces implemented by the government on the local industry. This provide a good infra-structure for the neighboring countries to come in Oman and sets its business operation. All these factors are the basic reason for Ammar Textile to set its one unit GALAXY TEXTILE in the country like Oman. INDUSTRY STRUCTURE: Ammar Textile when set up its unit Galaxy Textile in Oman the only thing done at that unit is the stitching of the T-shirts. The company have 90% of work done in Pakistan and only the stitching and the re-export procedure is done in Oman.

This shows that all the major operations are done at the mother company. In Oman the finished product is transferred to their buyers. As the country have good legal, political, and economic condition so there is good opportunity for any industry to grow. Competitiveness: As Ammar Textile is 100% export oriented company and providing its whole product to its buyers, but still the company have a good competition in the international market.

One of the biggest competitor in the international market is India, acquiring 40 to 45% of the market, while some of the other competitors are Srilanka, and Bangladesh. All these countries have major crop of cotton and that is the reason they acquire a bigger portion of the market. Profit Margin: As the company have all its major operations in Pakistan so we relate the profit of the Galaxy Textile with Ammar Textile, and it got a reasonable profit through its business. Financial Highlights: Excluding one Time items (In Millions except per share data) 19991998% change Net Operating Revenues$20,096$19, 1917% Operating Income$942$8698% Net Income to Share owners$125$11212% Diluted Earning / Common Share$0.29$0.2804% Cash Operating Profits$2,290$1, 98915% Amortization Adjusted Net Income$405$35014% Total Market Value$8,469$14,347 (41%) Status of Labor and Technology: Labor and technology is the key factor of any industry to grow faster. Ammar textiles with its two subsidiaries have a skilled and efficient labor with advanced technology. The total strength of the labor working in Ammar and its two subsidiaries are, Ammar Textiles 1700 employees. (including 100 managers) Galaxy Textiles 350 employees.

(1 manager, 3 supervisors) Sarah Textiles 2800 employees. The Company strives to create a business environment that encourages local managers and employees, with authority and responsibility, to constantly seek new and better business methods. They are dedicated to seizing opportunities, to improving efficiency and service in ways that grow profits for their customers and their Company, allowing our company to reinvest in our brands. Talented employees The Company is confident in its commitment to local decision making and responsibility because of the skills, drive, and dedication of its people. External Environment: The external environment of an organization mainly consist of the macro environment and industry environment. As for as macro environment is concern following are the factors effecting the Ammar Textiles.

INDUSTRY ENVIRONMENT: Threat of New Entrants: High: - Threat of new competitors entering the industry is High, because the industry is in high growth and there are many exporters fighting for market share. Rivalry among The existing Competitors: High: - Ammar Textiles is facing a intense competition because there are many competitors in the industry searching for Market share. The main competitors are India, Sri Lanka, Bangladesh, Far east, Hong Kong, Taiwan, Turkey and Spain. Substitutability High Substitutability as a brand is high Because there are number of brands in the International market. Substitutability as a product is also high because there is a substitute for Knitted shirts like dress shirts. Bargaining Power of Buyer High: - The bargaining Power of buyer is very high because there are many brands in the International market.

Bargaining Power of Supplier Low: The bargaining power of the supplier is low because there main raw material is cotton yarn and there are so many supplier in the domestic market. MACRO ENVIRONMENT: Political / legal forces High / Low: The political / legal forces is the most important for every industry. If this force is not favorable than this is a threat for the existence of the firm. In Pakistan the political and legal forces are high and in Oman it is low. Technological Forces Medium: - There is a technological threat, as this is a age of technological revolution. In case of change it will cause the trouble because the machinery is already very expensive.

Economic Forces High: - Pakistani Rupee is continuously devaluate as compare to the dollar but the exporters could not get benefits from this devaluation because the inflation is increasing at a high rate. The prices of Sui-gas and electricity increases up to 37.5%. Now a days there is period of recession in Pakistan. The overall economic condition of Pakistan is not favorable for any type of business.

Social Forces Low: - Ammar Textile is the pioneer in adopting environmental standards set by EPA USA and the world bank by installing water effluent equipment in the factory. The company is also implementing the ISO 9000. STRATEGIES: Corporate strategies: corporate strategy of Ammar Textiles is to hold these three units together and make the work with each others corporations. The corporate culture of these three units can be described as a team of workers united and motivated for achieving common goal. Business Strategies: The business strategy of the company is to form strategic alliance with its customers like Levis, Timber land, jasie penny etc... The company helps Levis to open office in Lahore.

In this way the company is try to hold global customer in its hand. Now they are planning to expand its area like Singapore to compete with India and Japan. Functional Strategies: The company specialize in manufacturing solid knitwear. Decentralized of work is their functional strategy.

Every department is responsible for its own decision making. The company have high quality of product and 100% predictability in their goals. Penetration Strategy: At the time when company goes for internationalization they adopt a Strategy in which they emphasis on quality control and follow all the international standards for production. The company is also known as well reputed in the knitwear industry.

Product Strategy: The companys product strategy is to produce value added goods according to the samples of the buyers. Pricing Strategy: The company is using Cost plus reasonable Profit strategy. Promotional Strategy: The company have not marketing their own brand name so they are not involved in any promotional activities. Cultural Adjustments: When the company sets its unit Galaxy Textiles in Oman they employed the whole labor from Pakistan. So there are no cultural differences faced by the company.

Channel Of Distribution: The company has effective and efficient distribution channel and provide the finished good to their customers in time. The company has two distribution channels, 1) 2) Achievements: The overall evaluation of the mother company and its two subsidiaries are as follows, Oman: In Oman the company is successfully achieving its goals objectives, but they are still little behind in achieving their targets. Pakistan: In Pakistan the company is almost achieving their targets, and the reason for this success is the skilled Labor, professional Managers, Quality control, and full determination in achieving the companies Mission Goals and Objectives. The major achievement of the company is that it is the only industry in Asia which have got ISO 9000 certificate.

INTERNATIONAL MARKETING: The Companies international focus creates a unique opportunity to meet the demands of the marketplace with targeted innovative strategies and brands. SWOT ANALYSIS: Strengths: The company has good image among its buyers and a strong hold in knitwear industry, and also has a strong financial positions. The major strength of the company is that it is the only industry in Asia which have got ISO 9000 certificate. Ammar textiles is the biggest quota share holder in the knitwear industry. The effective distribution channel providing on time delivery to its buyers There is no employees union in the company.

Highly decentralized management helps the company to take timely decisions. The company has most advance technology for producing value added goods. The company has special employee training program for effective and efficient management. The strategic alliance of the company with Levis.

Weakness: The company is bearing high labor cost in Oman. As the company is sending the whole skilled labor from Pakistan. The companys business operations are working successfully and that is the reason the management is overconfident, but in the long run this would create a problem in overall operations. Long working hours creates a problem for the labor that they are not been full determined in their work. Opportunities: The biggest opportunity for the company is to capture the biggest European Market.

The company has a chance to increase their market in Japan. Due to the SAARC the trade barriers are reducing the company can capture the Asian market. The company can promote there own brand name in the international market. Threats: The biggest threat for the company in the international market is the intense competition with INDIA, SRI LANKA, and BANGLADESH, due to the over all low cost. The Quota restriction creates barrier in the way of operating the business. Continues changing policies regarding exports and duties.

Conclusion: Ammar Textile is 100% export oriented company and have created its name for quality and integrity with some of the big name of fashion world. The company is focusing on quality products which are delivered by skilled people the strategic intent is very much help for the employees to conduct their job efficiency. The overall operations of the company is performed successfully. RECOMMENDATIONS: The company should reduce their dependency on the US market i.e. from 80 to 85% to 60% and would increase in the rest of the market. The company should go for European Market as there are lot of opportunity for them to excel with high quality standards. The company should Promote their own Brand name.