Textile Industry Case Study

History and Background

GulAhmed started textiles trading sometime back in early 1900’s. With its grasp of knowledge and years of experience, they decided to enhance their portfolio and entre the area of manufacturing, hence, in the year 1953, GulAhmed Textile Mills Ltd was setup as a private entity. Later, in 1972, it was listed on KSE - Karachi Stock Exchange. Since that time the company has been making constant progression and is amongst the finest composite textile houses across the globe. At present the mill is a combined unit with a capacity of around 103K spindles, 220-225 air jet looms (wide width), and high-tech processing units and final units, all installed.

 Major Companies

The following are major companies comprising this group:

Nishat

2. Al-Karam

3. Chen-One

All these competitors are recognized and are strong players in the market. So far GulAhmed holds an edge concerning the technology, expertise and facilities.

• Competition is increasing, as the industry is rapidly growing and many small to medium sized textiles companies are coming because of deregulation.

 New Entrants:

Entry barriers as well as the exit barriers are high in the textile industry, making the profit prospective high. But at the same time there also exist high risks with the industry. The contemporary players in the market are deep-rooted with high brand equity, resulting in profits, they enjoy. These are the considerations for a new entrant to must take into an account else they would be struggling out in vain which might ultimately result into winding up of their business.

 Substitute Products:

There actually exists no substitute for cotton, yarn, linen or curtain.

 Bargaining Power of Suppliers:

The bargaining power of buyers is low since they offer products of various quality and design so if they are conscious about quality then they must think hard before switching making the cost of switching high.

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This strategic move would give them competitive edge. Another advantage of this move will be the augmentation of brand position and will recall the brand in the eyes of the consumers.

• Currently their capacity of 8 composite units are underutilized, they can use this for diversification by manufacturing stylish sweaters of exclusive color, designs, pattern and the quality.

• Any firm able to reduce their cost of wastage can become a market leader. As Chinese sector of textile has 3% wastage only as compared to the textile sector of Pakistan which has 10% of the wastage, increasing the costs of doing business considerably making profits for textile industry to shrink. A great opportunity lies in this area for all to develop and advance.

• Along with the quilt covers or bed sheets they can offer matching curtains and matching cushion covers and mats as well.

• The weaknesses of other competitors can be attacked along with their products’ by keeping them back and off the balance.

• They should be hiring more foreign designers if possible from around the globe in order to envisage more designs and to bring in new and different