CHAPTER 5

STRATEGIC ANALYSIS OF HANDLOOM

INDUSTRY
In this chapter, the strategic analysis of the cooperative handloom firms
is carried out. The chapter is dived into four sections. The first section states
the unique characteristics of the handloom industry, problems faced by it
and factors influencing its demand. The results of the strategic analysis
gained through interviews are provided in section two. In third section, to
analyze the forces affecting the industry, the Porter‟s five force framework is
used. Finally, the findings from the Strengths Weaknesses Opportunities and
Threats Analysis (SWOT) conducted on handloom units are summarized.
Various schools of thought view sources of wealth creation and the
essence of the strategic problem faced by firms differently. This has been in
terms of industry structure, entry deterrence, and positioning in the
competitive forces framework; the strategic problem has been viewed in
terms of interaction between rivals with certain expectations about how each
other will behave in game-theoretic models; while from the resource-based
perspective the focus have been on strategies for exploiting firm-specific
assets (capability exploitation) and also looks into the managerial strategies
for developing new capabilities (Wernerfelt, 1984; Luo, 2000). The resource
theory of the firm has attracted particular interest in recent years, asserting
that unequal returns persist when impediments block the flow of advantage-
producing idiosyncratic resources. (Rumelt, 1984; Mahoney and Pandian,
1992; Peteraf, 1993) Economic factors- which included industry, market
share and firm size effects and organizational factors-which included goal
and human resource emphasis was found to explain the variance in business

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unit returns. [Hansen and Wernerfelt, (1989)] There is need for exploring the
theoretical rationale for the strategic development of industry organisations
that shape the survival and success of certain industries or industrial sectors.
This study, therefore, focuses on strategic analysis of the handloom industry
operating under the cooperative societies to trace out its competencies and
capabilities. Due to the paucity of data and relevant information, the
reluctance of the entrepreneurs to cooperate with the study and the related
controversies has limited the application of strategic analysis in the
handloom private sector. So the analysis confines to cooperative sector
alone.
5.1 PROBLEMS OF THE HANDLOOM INDUSTRY
In the present context, handloom industry faces many problems which
create constraints in the growth path of the industry. The great significance
of the industry requires that it is essential to remove all the problems in front
of the industry and to ensure its survival in the changing global scenario.
The major problems faced by the handloom industry are listed below,
1. Marketing problem: The absence of proper marketing strategy is the
major reason for the crises of the handloom industry. As a matter of fact, the
importance given to the field of production is not followed in marketing.
Factors that are responsible for the poor marketing of handloom products are
failure of handloom units to cater to the changing tastes and preferences of
consumers within and outside the country and higher prices of the handloom
products manufactured within the state due to higher cost of production.
Poor delivery system and manufacturing defects in production caused by
lack of appropriate training also contributed to the market failure of
handloom products.

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2. Financial problem: Finance is the lifeblood of any industry. The day to
day working of a unit mainly depends up on the availability of working
capital, which is the vital ingredient entering in to the entire process of
production. The lack of proper funds may turn a progressive unit in to sick.
Unsound financial position would render the products less competitive. The
institutional sources for financing capital expenditure for the handloom
sector are practically limited; on the other hand, non-institutional sources are
exploitative in nature. Mounting liabilities towards financial institutions and
mismanagement of available funds also deteriorates the present status of the
sector.
3. Labour problem: The labours in the handloom sector are characterized
by low remuneration, unstable employment, tedious and tensioned work.
Only aged and women labours are still engaged in handloom production as it
adds to poor productivity of the production system. In early days, majority
of handloom weavers followed their hereditary line. But, today, new
generation or younger labours are reluctant to undertake handloom
production activities. Handloom weavers are shifting to alternative jobs due
to uneconomic nature of handloom production and a part of handloom
weavers are also replacing powerlooms as against handlooms as because of
low productivity and higher cost of production. Absence of proper training
to the labours in pre-weaving and weaving activities also aggravates the
situation by resulting deterioration in quality of products and increase in
sales return.
4. Competition from power looms and mills: Handloom industry suffers
competition from power loom industry and mill sector. The power looms
and mills offer their products at lower prices with the use of modern
technology. The difference in technology too strengthens their relative
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position in the competitive market. Therefore, there is an increased demand
for the products of the power loom and mill sector, which in turn
discourages the production and marketing of handloom products.
5. Obsolete technology: The method of production followed by the
handloom industry is age-old and subjected to low productivity. As a result
of this, cost of production under handloom industry tends to be very high
and they lack diversification and extension of market. Higher prices of
handloom products may have an unfavorable impact upon its marketing.
6. Higher cost of production: Cost of production is relatively high in the
handloom sector due to scarcity and higher prices of raw materials,
especially yarn. The supply of yarn within the state is not sufficient to meet
the entire production requirements of the handloom industry; hence it has to
depend on the yarn suppliers of other states. Increased demand for yarn
within the state tends to raise its price. Absence of proper infrastructures
including transportation, lack of processing and printing equipments within
the district and the use of outdated technology are other factors responsible
for the higher cost of production of the industry. Higher cost of production
in turn raises the prices of the products of the industry and discourages its
mass consumption.
7. Higher exploitation: The evolution of master weavers and other
middlemen have created a wide gulf between the weavers and the customers.
In most cases, both of them are exploited and the ultimate benefits are
enjoyed by the middle men, who act as a marketing channel in between
them. As a result of this, the actual weavers fail to ensure reasonable prices
for their products and the products reach the consumers at higher prices. The
middle men are creating only jobless growth in our economy as they are out
sourcing products from manufactures within and outside the state. Most of
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the private handloom industrial units in the district except sample units are
come across the category of such middle men as they are operating as a unit
of purchase and sale.
8. Inadequate finishing machines: Due to the lack of high width processing
machineries, high speed dying machines, and mercerizing plants the process
are now sub-contracted to other states. This increases the dependence on
other states and raises the cost of production and thereby hampers the
growth of the industry in the district.
9. Accumulated stock: Accumulated stock is another problem faced by the
handloom industry. It is mainly due to the inability of the firms to find
proper markets in domestic and abroad. Ignorance and conservatism of the
weavers do not allow introduction of new designs to suit modern trends,
which increases the marketing problem and there by increases the stock of
finished goods. Due to the use of obsolete technology and the absence of
proper job training the units find it hard to maintain the quality of its
products. Along with this lack of strict discipline in the delivery of the
products also adds to the accumulation of finished goods in the firms. The
accumulated stock has resulted in idle capital, capacity and low profits.
10. Lower productivity: The productivity of handloom industry is very low
in terms of labour and capital. The lower productivity is caused by the use
of outdated technology, lack of proper training to the labours, inefficient
management and low investment in fixed assets. Lower productivity tends
to decline the profitability of the handloom industry. In order to raise the
competitiveness of the handloom industry, it is essential to increase its
productivity both in terms of labour and capital and to ensure optimum
utilization of factor inputs.

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11. Lack of innovation: Innovation is the key strategy to compete with the
products of the low cost countries and mechanized mill and power loom
sectors. Most of the units in the handloom sector lack innovation in products
and production processes. Lack of sufficient funds, low investment,
conservatism and ignorance of weavers, lack of information about consumer
preferences, inefficient management, lack of trained personnel and absence
of research are the factors against the innovational attempts of the handloom
industry.
These problems create obstacles in the expansion of the handloom
industry. In order to ensure the competitiveness of the handloom industry in
the present global scenario and also to enable its effective functioning and
progress; the Government, apex organizations and other responsible
institutions have a vital role to play by initiating proper measures, policies
and remedies. The revival of this traditional industry will act as a propulsive
force for attaining industrial development in the district.
Long term coordinated strategy is necessary to five a firm, structure,
focus and direction. The idea of matching the firms internal factors to the
external environment putforth by Philip Selzmick in 1957 led to the
emergence of SWOT analysis. Through the SWOT analysis the firms
strength and weaknesses are assessed taking into consideration the
opportunities and threats from the environment within which the firm
operates.
Strategic management of a firm is related to the content- which refers to
what the firm does and the process-which is related to the manner in which
the firm decide to do what it does. It is important to analyse the process as
the way the small scale firm take decision is often related to the
performance.
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 The study aimes to find out what strategic management practices
cooperative handloom firms empoyed and reasons for these practices.
Qualitative research methodology is employed to gain indepth undestanding
of these strategic management and to understand the reason for these
observed practices and to compare these to practices prescriped in theory.
An inductive-deductive process of reasoning of the qualitative data
processed through indepth interview of the office bearers and careful
analysis of the societies records have been used to draw the conclusions. The
questionnaire was formulated to get an understanding of the stratergic
management practices and reasons for these practices. The questionnaire
focused on marketing, financial, human, operations/production,
organizational and information resources in the firm (See Appendix 2 for the
complete questionnaire used). The employee and the administrators had to
rank each item in the questionnaire as a weakness or strength for the unit.
The scale used ranked from 1 (great weakness) to 5 (great strength).
The results help in comparing perceptions and gaining insights into the
challenges confronting the handloom units functioning under the cooperative
societies. Private firms which were operating under large scale, through their
corporate planning departments, continually explore ways for strategic
management. The cooperative societies, face difficult trading conditions,
internally and externally, that make the quest for competitive advantage a
difficult exercise lading to failure.(Brever,2007)
The systematic incorporation of several participants in planning
activities of the firm-including persons outside the firm enhances creativity
and ultimately the firms performance. [Robinson and Pearce (1984)]
Strategic management practices must be undertaken to accommodate
characteristics of markets with respect to the technology and competitor and
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buyer information. Analysis of the strengths, weaknesses, opportunities and
threats of handloom industry revealed several competitive advantages that
the industry possesses over its rivals as well as some areas of weakness that
can be improved.
The strategic analysis supported by Porter Five Forces framework and
SWOT analyses of the industry are appropriate foundations for the strategy
formulation of a firm. The study makes use of the strategic analysis, SWOT
analysis, Porter‟s Five Forces, face-to-face interviews, etc. to develop a
strategy for the handloom industry.

5.2 STRATEGIC ANALYSIS OF HANDLOOM COOPERATIVE

SOCIETIES
Strategic analysis carried out through interviews and questionnaire
brings out the aspects in relation to the marketing, financial, human,
operation/production, management/leadership, organizational and
informational.

5.2.1 MARKETING

Among the eight cooperative societies where the study was conducted
87.50 percent assessed that the customer satisfaction with its products is
high and that this represents a strength (average score of 4) for the society.
The view of the employees and the administrators remained to be almost the
same. However in case of one cooperative society, the opinion of the
employees and administrators varied. While the administrators were not
satisfied with the quality of the product, the employees denoted a score value
of 4 with respect to product satisfaction. Even with stiff competition, the

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employees and administrators were of the opinion that the ability of the
society to gain customers could be improved. The cooperative societies that
possess traditional customers stated strength in keeping customers by
offering quality products. The weakness was with respect to the competing
over price with the power loom products and some private handloom units
operating under large scale.The advertising and promotion activities were
not found to be satisfactory both by the employees and administrators
(average score 2). The scores reflect the perception of the cooperative
society‟s deficiency in the marketing area.

Table 5.1
MARKETING RESOURCES
Si. Employees Administrators Standard Employees-
perception perception Deviation Administrators
No
Average score Average score Average score
1. Customer satisfaction
with products/services 4.16 4.0 0.72 0.16
2. Ability to gain
customers versus 2.33 2.01 0.61 0.32
competition
3.
Knowledge of market 2.97 3.94 1.03 -0.97
4. Product/service
quality in terms of
function, image,
place, time,
possession, ease of 4.0 0.59 0
use 4.0
5. Advertising and
promotion activities 2.14 2.97 1.20 - 0.83
6. Product/service
pricing 3.63 4.0 0.64 0.37
7. Facilities and methods
used to sell to 3.0 1.15 1.87
customers 2.13
8
Market Share 2.72 2.0 1.07 0.72
Source: Computed from survey results

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5.2.2 FINANCIAL RESOURCES

The differences of perceptions of the employees and the administrators

show the lack of knowledge of the employees with respect to the society‟s
profitability and financial performance (Average score differences being
greater than one for all financial aspects). This usually happens in private
sector firms where the workers do not have any knowledge about the
financial resources. In case of cooperative societies it is not concealed thing.
However, employees did show little knowledge on the financial aspects
probably due to lack of literacy or lack of concern.
Table 5.2
FINANCIAL RESOURCES
Si. Employees Administrators Standard Employees-
No perception perception Deviation Administrators
Average Average score Average score
score
Strong and
recurring
1. operating 3.16 2.0 1.67 1.16
profits
Efficient asset
2. management 2.33 4.01 1.61 1.68
Strong and
3. recurring return 1.94 1.03 2.03
on investment 3.97
Ready access to
outside/new
4. funds 3.13 1.97 1.15 1.16

5. Well managed
customer credit 3.12 2.0 1.07 1.12

6. Well managed
2.45
supplier credit 4.0 0.97 1.55
Source: Computed from survey results

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 Therefore only the administrators‟ perception is taken into consideration
with regard to the financial matters. Only with regard to the efficiency in
asset management and management of supplier credit the administrators
were confident to note a high score. Accessibility to outside/new funds
scored only an average score of 1.97. This was evidenced in the economic
analysis of the capital structure of the cooperative societies.

5.2.3 HUMAN RESOURCES

Administrators and employees in cooperative societies both being a part

of the human resource, there exists no discrepancy between the perceptions.
The problems related to the human resource management are known to both
the parties, workers and administrators. Both the administrators and
employees averaged a rating of less than two for adequate number and
quality of people to do the work. This can result in lack of motivation
impacting the performance and profitability of the industry. Specific job
descriptions was rated low by the employees which implies that confusion
with regard to the work to be carried out by the respective workers existed
leading to inefficiency and duplication of efforts. However the
administrators rated it as being average at best indicating that the confusion
existed only at the employee level. The training programs were rated at a
low level by both the administrators and employees pointing on to the
insufficient and inadequate training programmes. This could be affecting the
productivity adversely. The pay structure was not equitable and competitive
according to both the weavers and the administrators of the handloom
cooperative societies.

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 Table 5.3
HUMAN RESOURCES
Si. Employees Administrators Standard Employees-
No perception perception Deviation Administrators
Average Average score Average score
score
1. Adequate
number of people
to do the work 1.16 1.67 0.69 -0.51
2. Adequate quality
of people to do
the work 1.33 1.01 0.66 0.32
3. Job design and
descriptions 1.24 3.0 1.45 -2.76
4. Performance
standards and
evaluation
procedures 2.14 2.0 1.08 0.14
5. Training
programmes
1.07 1.53 0.86 -0.46
6. Provisions for
employee growth
and development 1.05 2.03 0.78 -0.98
7. Compensation
system that
promotes
performance and
satisfaction
1.78 1.97 0.65 -0.19
8. Equitable and
competitive pay 1.64 1.90 0.53 -0.26
Source: Computed from survey results

5.2.4 OPERATION/PRODUCTION RESOURCES

Productivity of the firm is decided by its efficiency and effective use of

production and operations resources. Both the administrators and employees
rated use of up-to-date and appropriate technology at a lower average score.
The quality of facilities to serve customers and capacity of needed facilities

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to serve customers attained average score from the administrators.
Meanwhile the effective and efficient physical layout, inventory control and
purchasing practices scored an above average grade of the administrators
and employees. The production practices scored a lower rate. It can be
inferred that the operation and production resources that effect the
productivity is in a better position though technology remained obsolete.
Through interactions it was found that the technology was not updated due
to the lack of skilled workers and inadequate training to use them.
Table 5.4
OPERATION/PRODUCTION RESOURCES
Si. Employees Administrators Standard Employees-
No perception perception Deviation Administrators
Average score Average score Average score
1. Quality of
facilities to serve 2.96 0.58 -0.01
customers 2.97
2. Capacity of needed
facilities to serve
customers 2.73 2.81 0.64 -0.08
3. Up-to-date and
appropriate
technology 1.01 1.53 1.02 -0.52
4. Effective and
efficient physical 3.67 1.25 -0.13
layout 3.54
5. Effective and
efficient work flow 3.11 4.02 1.07 -0.91
6. Effective and
efficient inventory 4.00 0.97 -2.00
control 2.00
7. Effective and
efficient 3.83 0.85 -1.49
purchasing
practices 2.34
8. Effective and
efficient 2.01 1.01 0.10
production
practices 1.91
Source: Computed from survey results

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5.2.5 MANAGEMENT/LEADERSHIP RESOURCES

The cooperative societies did not have management functionaries

owning the firms, as it was functioning under administrators who took care
of the managerial decisions. Therefore the ratings with respect to the
effective management style, effective allocation and leadership as per the
workers perceptions were average. While the administrators perceived that
decisions were taken and imparted on time, the timely decision-making was
rated at a lower score by the workers. This was mainly due to the absence of
the administrative bearers in the unit and lack of involvement in day-to-day
activities of the society.

Table 5.5
MANAGEMENT/LEADERSHIP RESOURCES
Si. Employees Administrators Standard Employees-
no perception perception Deviation Administrators
Average Average score Average score
score
1. Effective
management 3.01 1.23 -1.04
style 1.97
2. Timely decision
making 1.03 3.98 1.01 -2.95
3. Effective 2.12 0.63 -0.11
delegation 2.01
4. Effective 3.0 0.85 -0.38
participation 2.62
5. Effective risk 2.98 1.07 -0.93
taking 2.05
6. Effective 4.0 0.97 -1.13
leadership 2.87
Source: Computed from survey results

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5.2.6 ORGANIZATIONAL RESOURCES
Appropriate mix of resources and placing of resources scored a very low
rate both by the employees and administrators making it one of the
weaknesses of the firm. The workers were engaged in various tasks in which
they were not trained and were not able to adequately contribute towards the
assigned task. The job satisfaction was low as they could not do the job for
which they were trained for. Administrators scored firm‟s public image and
strong organizational culture at a higher level while the employees recorded
both at an average. Interdepartmental communications were found to be
effective by administrators and the employees and hence can be considered
as strength among the organizational resources. The units being small,
interdepartmental communications were much easier.

Table 5.6
ORGANIZATIONAL RESOURCES
Si. Employees Administrators Standard Employees-
no perception perception Deviation Administrators
Average score Average score Average score
1. Appropriate mix of
resources (people,
money, equipment) 1.03 0.55 0.14
available 1.17
2. Resources properly
placed to do the job 1.94 0.67 -0.71
1.23
3. Effective
interdepartmental 3.84 1.03 -0.68
communications 3.16
4. Firm's public image
2.5 3.98 1.15 -1.48
5. Strong organizational
culture (productivity,
honesty, dispute
handling, tolerance of 4.0 0.97 -1.68
change) 2.32
Source: Computed from survey results

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 5.2.7 INFORMATION RESOURCES
The financial and cost accounting systems were rated appropriate at a
3.6 score on an average by the employees and 4 on an average by the
administrators. However with regard to the operation of control system that
highlights problems and generates corrective action and information system
that use the best technology available, the score ratings of the employees as
well as the administrators were low. The ability to utilize internet and e-
commerce was rated nil. The strategic decision making and operational
decision making were not found to be efficient. The information system was
not effectively functioning in the firms and therefore it can be inferred that
timely and efficient evaluations regarding the implementation of business
activity plans were weak in the cooperative societies.

Table 5.7
INFORMATION RESOURCES
Sin Employees Administrators Standard Employees-
o perception perception Deviation Administrators
Average score Average score Average score
1.
Appropriate financial and
cost accounting systems 3.6 4.0 0.67 -0.4
2.
Control system that
highlights problems and
generates corrective action 1.17 1.21 1.15 -0.04
3. Information systems that
use the best technology
available 1.07 2.0 1.07 -0.93
4.
Effective information for
strategic decision making 1.98 2.12 0.97 -0.14
5. Effective information for
operational decision
making 2.01 2.23 0.97 -0.22
6. Ability to utilize internet
and
e-commerce 1.00 1.23 0.89 -0.23
Source: Computed from survey results
Low cost or differentiation advantages can be enhanced by firms that
possess capabilities with respect to its production, marketing, organization
216
and information resources. Firms with a low cost position outperform their
competitors in producing and selling goods and services at lower costs.
Firms with differentiation advantages emphasize producing goods and
services that customers perceive as unique and for which they are willing to
pay a premium price (Porter, 1985).
The internal barriers associated with organizational resources existing in the
cooperative societies are financial constraints, inadequate trained workers
and staff and lack of managerial expertise.
To analyze the competitive strategies a five force model of market
structure- (1) Degree of rivalry, (2) Threat of substitutes, (3) Buyer power,
(4) Supplier power and, (5) Barriers to entry/exit and threat of entry was
introduced by Porter in 1979 (Porter, 1980). The next section analyses the
handloom industry operating under the cooperative societies using the five
force model.

5.3 FORCES INFLUENCING THE HANDLOOM INDUSTRY

[THE PORTERS FIVE FORCE MODEL]
5.3.1 DEGREE OF RIVALRY

The level of competition observed in an industry demonstrates the

degree of rivalry. The intensity is depended on the market growth, free entry
and exit of the firms and economies of scale. In the handloom industry, there
exists an accelerated market growth following the opening up of the market,
new innovations and customer preferences due to comfort of handloom
products and health concerns. This increased demand for handloom products
in the internal as well as external market decreases the level of rivalry in the
industry. However, the existence of large number of handloom units and the

217
existence of free entry increase the rivalry as units have to compete for
market share. Handloom units operate under different scales ranging from
tiny household units to small and medium units to large scale units. Due to
its very nature of existing even as a household unit, they enter in to the
market as and when the market demand exist leading to increase in the
degree of rivalry. The units also have to work under full capacity utilization
so as to utilize the raw materials that they have purchased in bulk. This
leads to increased output production which has to compete to find market.
Therefore it can be inferred that the degree of rivalry in the handloom
industry is high.
5.3.2 THREAT OF SUBSTITUTES

Availability of substitutes in the market constrains the ability of the

units to increase prices. Economic theory states that a substitute exists when
a product‟s demand is affected because of a price change or introduction into
the market of another product. The handloom industry faces major threat
from the power loom industry. The cost efficiency of power loom industry is
very high making it available at low prices. The handloom production
suffers from huge cost of production and therefore is not able to supply
products at the same low prices. However, the hall mark sign given for the
handloom products and consumer specific demands gives it a place in the
market. The existence of close substitutes poses threat to the handloom units
and limits the extent to which they are able to increase their prices and
widen profit margins. The clustering of the cooperative societies helps in
providing economies of scale. This will help in reducing the cost of
production to a certain extent enabling the handloom products to compete
with its substitutes.

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5.3.3 BUYER POWER

The impact that customers have on a producing industry shows the

buyer power. The concentration of buyers and purchase of commodities in
bulk increase the buyer power. In case of handloom products there exists a
fragmented structure of buyers. Due to its fragmented nature of buyers, the
smaller cooperative societies do not face higher bargaining power from the
buyers. However, in case of larger firms which has to produce their products
to the maximum to ensure full capacity utilization experience the buyer
power.
5.3.4 SUPPLIER POWER

The bargaining power of input suppliers over a producing industry is

referred as the supplier power of the industry. The supplier power is a
determining factor for the cost of production. The ability to acquire quality
raw materials at a lower cost by the handloom units depends on its supplier
power. The raw materials are to be supplied at a required quantity and
quality on time. Otherwise production suffers leading to low capacity
utilization. The suppliers for the handloom industry comprise of the yarn
supplier, dye and chemical supplier and the machinery suppliers. The
handloom units in the district have to depend on the suppliers of yarn outside
the state, leading to shifting of bargaining power away from the handloom
units.
5.3.5 BARRIERS TO ENTRY/ THREAT OF ENTRY

Perfectly competitive market structure demands for free entry and free
exit. As in reality perfect competitive market structures do not exist there
are barriers to entry or threats of entry as well as exit which can restrict the
new firms from entering and the existing ones from expanding. The
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handloom products can be produced at the household level. This industry
does not require huge capital for entering into production process. However
to have economies of scale that will help to keep the cost of production at
the minimum level, the handloom units require to maintain minimum
efficiency scale. This increases the capital requirement and can act as a
barrier to entry. The mandatory requirements of establishing a handloom
unit imposed by the government also to an extent reduces the freedom of
entry to the industry. The name and fame required for the handloom
products to compete in the market that have been acquired by the existing
units also restricts the entry of new units.

5.4 Strengths Weaknesses Opportunities and Threats (SWOT) Analysis

The SWOT analysis is based on the information gathered from the units
by way of questionnaire and face to face interviews and also summarizes the
findings of the research study on economic structure, financial stability and
strategic analysis. The internal forces amounting to strengths and
weaknesses of the industry, the external forces of competition and threats
that affect firms can be analysed by conducting a SWOT analysis. A SWOT
analysis can be thought of as a balance sheet where internal strengths
represent competitive assets, while internal weaknesses represent
competitive liabilities. Opportunities, which are external, are outside-of-the-
firm situations that can be taken advantage of via strategic moves to improve
a company‟s competitive advantage over rivals. Threats, also external, on
the other hand are factors that increase the influence exerted by competitive
forces acting in the industry and tend to reduce a company‟s profitability
(Wysocki 1997).

220
Using SWOT analysis a list of Strengths and Weaknesses of the handloom
industry as indicated by an analysis of its resources and capabilities, together
with a list of the Threats and Opportunities identified by an analysis of its
environment is presented to provide the basis for establishing objectives and
strategies.
The strengths and weaknesses pertain to the situation inside the firm
including the factors relating to products, pricing, costs, profitability,
performance, quality, people, adaptability of skills, brands, services,
reputation, processes, infrastructure, etc. Opportunities and threat which
looks into the external situation related to markets, sectors, audience,
fashion, seasonality, trends, competition, economics, politics, society,
culture, technology, environmental, media, law will helping in tracing the
future of the handloom units.
5.4.1 STRENGTHS

Industrial units possess certain competitive advantages or strengths over

its competitors. Here in case of the cooperative societies producing
handloom products the advantages are due to its traditional knowledge
possessed by its weavers, the ethnic designs it can make, its fame and name
in the market, long years of experience, knowledge base, broad range of
products, established clients. Almost 90 percent of the handloom cooperative
societies have the reputation of offering quality products. There is a broad
range of products in which the handloom units are specialized. This enables
the firms to produce those products in accordance with the demand in the
market. Fifty percent of the cooperative societies claimed to have established
clients to which they cater. This poses a competitive advantage for the
established cooperative societies compared to the new entrants.

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5.4.2 WEAKNESSES
The weaknesses of the cooperative societies put them in a competitive
disadvantageous position. This leads to poor performance and low levels of
profitability. There is a lack of trained workers to do specialized tasks. As
no specific job descriptions were provided to the works, it resulted in
inefficiency and duplication of efforts. Inequitable and non-competitive
wage structure existed leading to low productivity. The financial structure
of the cooperative societies is not strong enough that it has incurred huge
amounts of debts. The current profitability of the societies is also low. On
the basis of the verbal information received it can be inferred that in most of
the cooperative societies the administrators did not possess managerial skill
and training and therefore could not be efficient in timely decision making.
The cooperative societies lacked efficiency in using internet. This hindered
accessibility to market and loss of opportunities. The advertising of products
was not aggressive enough to procure market demand. The private sector
handloom units are producing under large scale and also enter into
subcontracting which enables them to produce handloom products at a
competitive price leaving the handloom cooperative societies in a
disadvantageous position.

5.4.3 OPPORTUNITIES

Opportunities are external forces giving a competitive advantage to a

firm over which the firm has no control. These opportunities will be
available to all the competitors in the field, but who takes advantage of it
will gain. This is possible when the industry environment surrounding the
firm is understood and if the firm possess abilities and strengths within the
firm match up with such opportunities. The growing market demand for the
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handloom products from foreign countries following the healthy wear
propaganda provides opportunities for the handloom cooperative societies.
Their products have an ethnic value and considered to be the best. Opening
up of markets following globalization also increases its opportunity to
expand its market horizon. The web source usage and its wide spread
connectivity also provides ample scope for advertising. Government policies
in favour of the handloom industry and the provision of hall mark symbol to
mark its identity provide opportunity for the handloom units to withstand
competition from its substitutes.

5.4.4 THREATS

Threats are external forces posing competitive disadvantage to a firm

over which the firm has no control. The firm has to devise measures to
minimize the impact of threats to its business. The increase in the price of
yarn due to the downfall of cotton production or increased exports puts the
handloom firms at a disadvantageous situation. Due to sudden declaration of
strikes or any other transportation problem, the raw materials do not reach
the cooperative societies on time. The non-timely delivery of raw materials
results in under production. Declaration of strikes reduces the number of
working days in the cooperative society. The cooperative societies were not
able to comply with the time and instructions given by the customers. This
resulted in losing the market to its competitors.

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CONCLUSION
The cooperative societies are likely to produce good returns if capability
and implementation are viable to meet these challenges. Only basic
awareness, planning and implementation strategies are required. The threats
can be turned into opportunities by way of strategically planning, assess the
capability gaps and plan to defend /avert in very specific controlled ways.
Analysis of the perspectives of the administrators and weavers revealed
the need to improve the competitiveness of the industry, the crucial role of
the trained weavers, need for innovations, implementation of appropriate
marketing strategies and its probable developmental path. The administrators
should be made capable to drive innovation within the organisation. The
administrators stressed on the need for regulation and standardisation of
training for all weavers. The cluster programme should work effectively to
facilitate community learning and sharing local knowledge. There was the
perception of both administrators and workers for a more proactive
marketing approach to grow the market for the industry‟s products and
services, both locally and internationally. The need for research and
development in critical areas to ensure the competitiveness of the industry
and operational excellence was perceived. The financial planning,
monitoring and evaluation areas were found to be weak and therefore needs
to develop strategy that will create more access to credit.
It can be inferred that the operation and production resources that effect
the productivity is in a better position though technology remained obsolete.
Through interactions it was found that the technology was not updated due
to the lack of skilled workers and inadequate training to use them.

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