PEST ANALYSIS OF GUL AHMED

Political
The global economic slowdown of 2007-08 initially triggered by the
subprime
mortgage crises in the U.S, as a result was which the U.S. Dollar
suffered huge depreciation against major currencies; coupled with the
phenomenal hike in oil and food prices, sent shock waves around the
world,
throwing up enormous challenges for most economic managers.
Pakistan
was no exception.3 Heavy reliance on imported fuel and food
commodities like wheat and sugar placed huge pressure on our
balance of payment
reserves as our import bill soared.
As far as the garment production4 in Pakistan is concerned, the highest
value-added product among the textile group, but the price we are
getting
for our products is less compared to other countries. According to one
estimate 70 percent of these units are in the unorganized sector,
producing
cotton-made articles. These units do not have modern machinery and
use
the non-mill made cotton cloth. This may be one of the reasons that
the price
we fetch for our apparel exports is low compared to other countries.
As apparels/garments provides the highest value added product
among the
textile items. Maximum focus should be towards the units producing
garments. Our producers in this particular industry should try to adopt
(just
like in the West) the “Demand for Market Oriented Strategy” i.e., to
increase
their market power by producing high price fashion clothing. They
should go
for product differentiation through the promotion of brand names and
advertising. And they should also try to increase the efficiency of
distribution.
With an increase in market power they can easily transfer rising cost to
consumer in the form of rising prices.
Regulations in your industry
• National Business Environment
Pakistan’s national business environment is characterized by
abundance of
semi-skilled and low wage labor, moderate natural resources, poor
infrastructure, high rates of corruption, poor governance, moderate
level of
university-industry collaboration and low scientific research on the
factor
side. The context of firm strategy & rivalry can be described as highly
regulated, bureaucratic business environment, high tariffs, no
substantial
presence of foreign companies and static corporate culture.
The textile industry has been the driving force behind the
manufacturing
sector growth of Pakistan. This sector accounts for nearly 60% of total
exports for Pakistan, 46% of total manufacturing produce and employs
38%
of the total manufacturing labor force. Textile trade is classified into
two
broad categories i.e textile which include yarn, fabric and madeups
and
clothing which represents ready-made garments.
The largest growing sector within the global textiles trade has been the
apparel sector – trade in this sector in 1999 accounted for 53% of the
total
value of global textile trade. Over the last decade, the apparel trade5
has
surpassed the trade in textile products such as yarns and fabrics. In
the year
2000 total trade in textiles was $157 billion and trade in clothing was
$199
billion. There was a switch in trade patterns after 1985 when clothing
became more significant as compared to textiles. This sector lies at the
pinnacle of the textile value chain, which begins with cotton and
synthetic
fibers. South Asian countries have established themselves as the most
important players in the textile sector.

Environmental
• what the government says and what market say
Pakistan is one of the emerging economies of the world. It has shown
great
economic growth due to dynamism in its industrial, agriculture and
services
sectors. The services sector alone has continued to perform strongly
and has
averaged growth of over 8% per annum since 2000.
Services sector contribution to real GDP growth
Pakistan’s economic growth7 is broad-based and is shared by all the
major
sectors of the economy. However, a major contribution towards growth
has
come from the services sector, which has emerged as a growth
powerhouse
over the past few years. The commodity producing sectors (agriculture
and
industry) have contributed two-fifths while the services sector
contributed
the remaining three-fifths of the 2006-07 real GDP growth of 7.0%.
Agriculture and industry contributed 30.2%, or 2.9% percentage points,
while
the remaining 59.8%, or 4.2 percentage points, came from the services
sector. Within the commodity producing sectors, agriculture
contributed 1.1
percentage points or 15.1% to overall growth, while industry
contributed 1.8
percentage points or 22.7%. The services sector has contributed the
bulk of
GDP growth for some time.
source referenced from smeda
Social
• Related to your industry
Pakistan’s reliance on agriculture is minimizing with the passage of
time. It is
encouraging to note that the contribution of wholesale and retail trade
is
increasing. It contributed 19.4% or 1.4 percentage points to GDP in
2006-07.
This sector is highly labor-intensive and this higher growth may have
contributed to the rise in employment and income levels of people
attached
to the sector.
• A view of the services market
“While dealing with a service giver, I am constantly gripped by a fear
of
being cheated. I have to play extra vigilant; as the fear is not just
about the
conscious wrong doing on the part of a service giver but also about his
skill
and ability to deliver the right quality stuff”.
These issues are reflected below:
• Lack of standardization
Services are not standardized. Legislation protecting consumers is still
at a
very early stage and there are no strong traditions to support
customers
seeking recompense or damages from a services deliverer.
International
quality certifications are systems-based requiring a lot of
documentation,
besides being expensive. There is a need for a simple but effective
mechanism, at the level of the sectoral or professional associations, to
certify
the quality of services and thereby ensure adherence to a consistent
set of
quality standards.
• Free entry and unemployment
With rising unemployment, services businesses requiring a minimum
level of
skill, a small capital outlay and virtually no registration are an easy
option for
investment to earn a living. With scores of people entering the lower
end of
the market, competition is high and the range of pricing limited.
Therefore,
livelihoods are squeezed from the thin margin left after meeting all
costs and
overheads. Expecting such a market to be quality conscious is an
illusion.
• Deficiency of trained HR
Apart from a few organized sub sectors, like banking, medicine and
engineering, there are no credible training institutions offering courses
in the
skills required for the services sector. Resultantly, most of the artisans
in
trades like electricians, mechanics, drivers, tailors, barbers, cooks,
masons,
etc, are trained on the job. The level and quality of skill acquired by
them is
inconsistent and uneven depending on the source and environment of
learning.
Socio Cultural:
The product made by Gul Ahmed is in sync with the socio cultural
aspects of
the region. The dresses usually worn by the women and men here are
of that
material. Gul Ahmed however is not catering to the changing social
trends
for example the move towards more westernized clothing like Bareeze
is
doing with ‘Leisure club’. This change in the social and cultural trends
can
affect Gul Ahmed and it will have to keep re inventing itself to keep up
with
the times. Plus there is a change towards more acceptability of working
women in the society. The firm will have to keep in mind that too
because not even ladies have time to get the clothes elaborately
stitched now.
• Westernization
Due to media proliferation and exposure to the western culture the
younger generations in Pakistan is becoming more and more
westernized.
This change in the society has worked in favor of fashion store like
Chen One
and Bareeze that sell trendy western and eastern outfits for both men
and
women but for Ideas by Gul Ahmed, this is a territory yet to enter.
• Brand Consciousness
People are becoming more and more brand conscious. Reliance on
foreign
brands is increasing. Therefore the Pakistani brands by portraying a hip
and
a trendy image like the west can capture the interest of people.
Technological:
On the national level, Gul Ahmed is enjoying technological edge over
all the
others players in the industry. The technology that is in use in the
industry
has a lot of room to be improved. It is necessary that the industry
undertakes
an up gradation in the technology being used. Also, there is lack of
efficient
R&D and training.
The textile machinery used in Pakistan is imported mainly from
countries like
Japan, Switzerland, Germany, China and Belgium.
Gul Ahmed unlike the other mills and factories of Pakistan is equipped
with
far better technology which helps them to be far more efficient and
maintain
good quality. But, on the Global scenario the costs of inputs in Pakistan
are
more than any of the competing countries like India and china. Gul
Ahmed
has to be more efficient in production and if possible, install more
technology
in order to meet its aim of becoming international brand.
Whereas in IDEAS; they have incorporated Management Information
system
with incorporation of oracle based inventory management system. This
helps
them retain, analyze and forecast the inventory in store and demand
that is
in market for a particular product.
Research and development
To facilitate the textile industry, government has granted 6 percent
Research and Development support to garment exports (both knits and
woven). Research and Development support to export of dyed/printed
and
White, Home Textile at 3 percent and dyed/printed textile at 5 percent
of the
FOB. The scheme has been discontinued from June 30, 2008. As per
the
estimates provided by the State Bank of Pakistan, the government has
doled
out Rs 40 billion to textile exporters of the country