Strategic Management Of Leather Organization

ABC LEATHERS The name of company is “ABC LEATHERS”. It was started in the year 1989 and good Division was started in the year 2004. It’s a Leather Export enterprise known for its commitment to quality and good values. Leather was the first clothing fabric over the past few decades. Leather is emerging as a hip look on the streets and in the office covering men or women, young or old from top to bottom.

MISSION To become a leading transportation, clearing and

export company in the

India. To be the recognized industry leader, through total commitment to customer service, by maintaining our uncompromising integrity, in the support and development of our People, Communications and Systems in sustained growth and profitability.

VISSION To set the standard for excellence in global export through total commitment to quality in

people and customer service, with superior

financial results. To solve reliable export services to the needs of the business community. Reliable services means on-time delivery, undamaged goods, and correct documentation in case of deviations. To perform continuous business improvement in order to meet and exceed customer expectation, To create sustainable business growth in order to enhance the prosperity of employee and benefit shareholders. Decisions can impact the success of the company as much as the performance of the export.

Quality :-By maintaining high standards of quality in the work culture and products that is in manufacture /exports and the services that its provides. Cost:-By always remaining competitive by world standards and maintaining production levels Delivery:- By always delivering goods on time with excellent planning and by cutting down the production lead time. Development:-By developing cost effective and innovative products without compromising on quality. Safety:-By providing a world class,safe and hazard free work environment to its employees. Moral :-By always keeping its moral standards high and conducting its business with dignity according to the established rules and regulations.

OBJECTIVES

SWOT ANALYSIS

STRENGTHS ➢ Easy availability of low cost of labour. ➢ Presence of qualified leather technologists in the field. ➢ Comfortable availability of raw materials and other inputs. ➢ Massive

institutional

support

for

technical

services,

designing,

manpower development and marketing. ➢ Exporter-friendly government policies. ➢ Tax incentives on machinery by Government.

➢ Well-established linkages with buyers in EU and USA. ➢ Managements

with

business

background

become

quality

and

environment conscious.

WEAKNESSES ➢ Low level of modernization and up gradation of technology and the

integration of developed technology is very slow. ➢ Low level of labour productivity due to inadequate formal training / unskilled labour.

➢ Less number of organized product manufacturers. ➢ Lack of modern finishing facilities for leather.

➢ Highly unhygienic environment. ➢ Difficulties in accessing to testing, designing and technical services.

OPPORTUNITIES ➢ Abundant scope to supply finished leather to multinationals setting up

shop in India. ➢ Growing fashion consciousness globally. ➢ Use of information technology and decision support software to help eliminate the length of the production cycle for different products ➢ Product diversification - There is lot of scope for diversification into other products, namely, leather garments, goods etc. ➢ Growing international and domestic markets.

THREATS ➢ Entry of multinationals in domestic market. ➢ Stiff competition from other countries. (The performance of global

competitors in leather and leather products indicates that there are at least 5 countries via, China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive than India. ➢ Non- tariff barriers - Developing countries are resorting to more and more non – tariff barriers indirectly.

➢ Improving quality to adapt the stricter international standards. ➢ Fast changing fashion trends are difficult to adapt for this leather firm.

INTERNAL FACTOR EVALUATION MATRIX IFE matrix means Internal Factor Evaluation Matrix; is a popular strategic management tool for auditing or evaluating major internal strengths and internal weaknesses in functional areas of an organization or a business.

IFE MATRIX OF ABC LEATHERS Sno . 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Key Internal Factors STRENGTHS Easy availability of low cost of labour

Weight

Rating

Weighted Score

0.10

3

0.3

Presence of qualified leather technologists Comfortable availability of raw materials Manpower development and marketing Export friendly government policies Tax incentive on machinery Well establish linkage with EU n USA Management with business background WEAKNESS Low level of modernization n technology Low level of labour productivity Less number of organized product manufacture Lack of modern finishing facilities Highly unhygienic environment Difficult in accessing techniques , designing

0.07 0.08 0.05 0.08 0.08 0.07 0.08

3 4 3 3 3 3 3

0.21 0.32 0.15 0.24 0.24 0.21 0.24

0.06 0.06 0.05 0.07 0.08 0.07

3 2 2 1 2 1

0.18 0.12 0.1 0.07 0.16 0.07

Total

1.00

2.61

The total weighted score for the organization is 2.61 which is just above average, so the organization is just above the average score.

EXTERNAL FACTOR EVALUATION MATRIX The EFE matrix is similar to IFE matrix the only difference is that IFE matrix evaluate the internal factors of the company and EFE matrix evaluate the external factor.

EFE MATRIX OF Sno . 1 2 3 4 5 6 7 8 9 10 11

Key external factors OPPORTUNITIES Abundant scope to supply finished leather Growing fashion globally Use of information technology and software Product diversification Growing domestic and international market THREATS Entry of multinational in domestic market Stiff competition from other countries Non tariff barriers Improving quality to adapt the stricter international trade Faster changing fashion difficult to adapt TOTAL

Weight

Rating

Weighted Score

0.15 0.11 0.07 0.08 0.09

3 4 3 3 3

0.45 0.44 0.21 0.24 0.27

0.10 0.12 0.11

4 3 2

0.4 0.36 0.22

0.09 0.08 1.00

1 2

0.09 0.16 2.84

The total weighted score is 2.84 which is above average that indicates the organization is responding in a steady manner to existing opportunities and threats in its industry.

COMPETITIVE PROFILE MATRIX Competitive profile matrix is an essential strategic management tool to compare the firm with the major players of the industry. Competitive profile matrix show the clear picture to the firm about their strong points and weak points relative to their competitors.

CPM FOR ABC LEATHERS

Critical success factors

Weights

Market share Financial position Product quality Distribution channels Global expansion Production capacity Price competitiveness Customer loyalty Product diversity Totals

0.06 0.09 0.13 0.12 0.15 0.10 0.13 0.12 0.10 1.00

ABC Leathers Supreme leathers Vision export Rating Weighted Rating Weighted Rating Weighted score score score 1 0.06 2 0.12 1 0.06 2 0.18 3 0.27 4 0.36 4 0.52 4 0.52 3 0.39 4 0.48 4 0.48 3 0.36 3 0.45 3 0.45 4 0.06 4 0.4 3 0.3 3 0.3 2 0.26 4 0.52 3 0.39 3 0.36 4 0.48 3 0.36 3 0.3 4 0.4 3 0.3 3.01 3.54 2.58

The total weighted score of the three organizations are calculated above, by using the numbers above we can interpret that Supreme leathers is relatively stronger internally and externally as compared to other two firms.

TOWS MATRIX SO STRATEGIES 1. More number of qualified leather technologist in the field as the fashion growing globally. 2. Used more advanced technologies and machineries for designing and creativity. 3. Increase promotion in the markets of USA and Europe as there are large numbers of buyers.

WO STRATEGIES 1.

SPACE MATRIX The SPACE matrix is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake. The Strategic Position & Action Evaluation matrix or short a space matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization.

To explain how the SPACE matrix works, it is best to reverse-engineer it. The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy: ○ Aggressive ○ Conservative ○ Defensive ○ Competitive

Internal strategic position Financial strength

Rating

Return on investment

5.0

The company primary capital ratio is 7.02 percent

3.0

The company revenues increased 4%

3.0

Average

3.66

Competitive advantage(CA)

RATING

Market share increases 1%

-4.0

Technological know how

-2.0

Product quality and life cycle

-1.0

Average

-2.33

External strategic position

Environment stabilities (ES)

RATING

Technological changes

-2.0

Price range of competitive products

-4.0

Competitive pressure

-4.0

Average

-3.33

Industry strength (IS)

RATING

Growth potential

5.0

Maximum resource utilization

4.0

Financial stability

4.0

Average

4.33

Conclusion Y axis: - financial strength: 3.66 Environmental stability: -3.33 Y coordinate: 3.66+ (-3.33) = 0.33 X axis: - competitive advantage: -2.33

Industry strength: 4.33 X coordinate: -2.33+4.3= 2

Therefore the company should pursue in Aggressive advantage.

QSPM Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating possible strategies. Quantitative Strategic Planning Matrix or a QSPM provides an analytical method for comparing feasible alternative actions. The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework.

Key factors

Weight

Keep expanding

Focus on specific us

in foreign markets customer External

1 to 4

1 to 4

OPPORTUNITIES •

Abundant scope to supply

0.05

3

0.15

4

0.06

3

0.18

2

finished leather •

Growing fashion globally

0.12

0.2

•

Use of information

0.05

3

0.15

3

0.04

4

0.16

4

0.15

technology and software •

Product diversification

0.16 •

Growing domestic international market

and 0.06

3

0.18

4

0.24

THREATS •

Entry of multinational domestic market

in 0.06

1

•

Stiff competition from other 0.07 countries

3

•

Non tariff barriers

0.04

• •

2

0.12

0.21

1

0.07

1

0.04

2

0.08

Improving quality to adapt the 0.03 stricter international trade

1

0.03

2

0.06

Faster changing difficult to adapt

3

1

0.04

fashion 0.04

0.06

0.12 0.5

Internal

1 to 4

1 to 4

STRENGTHS •

Easy availability of low cost of labour

0.05

2

0.1

3

0.15

•

Presence of qualified leather 0.04 technologists

3

0.12

3

0.12

•

Comfortable availability of 0.04 raw materials

1

0.04

4

0.16

•

Manpower development and 0.05 marketing

1

0.05

2

0.10

•

Export friendly government 0.03 policies

2

0.06

1

0.03

•

Tax incentive on machinery

0.04

2

0.08

2

0.08

•

Well establish linkage with 0.03 EU n USA

4

0.12

1

0.03

•

Management with business 0.04 background

3

0.12

3

0.12

WEAKNESS •

Low level of modernization n 0.04 technology

2

0.08

2

0.08

•

Low level productivity

labour 0.03

1

0.03

4

0.12

•

Less number of organized 0.04 product manufacture

1

0.04

3

0.12

•

Lack of modern finishing 0.02 facilities

2

0.04

1

0.02

•

Highly environment

1

0.02

2

0.04

•

Difficult in accessing techniques , designing

of

unhygienic 0.02 0.03

0.5

3

1

0.09

0.03 2.27

2.4 4

T