April 16, 2006 CASE STUDY PRESENTATION ON NOVA FASHION GARMENTS PRIVATE LIMITED PRESENTATION BY : GROUP : 3 1. Mr. K. Chandrasekhar 2. Mr. Dinesh Chandra 3. Mr. Dipak D. Sanghavi 4. Mr. Sarvesh Ranjan Background of the Case •well-known manufacturer of ready-made garments •established in 1970 •Mr. Arun Kumar Jain is the Managing Director •company manufactures especially in gents’ wear. a wide line of products • The company has a network of branches and dealers throughout the country. •A young management trainee was asked to collect the successful strategic examples from various sources Issues in the Case • The company is facing several problems in increasing its market share. – High taxes leading to high prices – Fashion changing very fast / Dead stocks – New players / Unhealthy competition – • wider choice at competitive price The company is in the process of evolving a strategic market orientation in order to compete successfully in the changing marketing environment. Strategy Examples Rolls Royce Beecham Du-Pont Nylon Reliance Nirma Procter & Gamble Balsara Ponds Maggie Noodles Amul Hyundai Bisleri Pioma Industries Common successful strategies drawn from examples * Creation of Brand Equity Product Differentiation/Diversification Market Segmentation/New market expansion Aggressive Advertising/Unique Selling Proposition Effective Distribution System Competitive pricing strategy Global Economic Prospects 2004, World Bank Study Table 2.2 Page 74. ASSUMPTIONS 1. Assumed that the relevant period is during late 80’s. 2. Sufficient Financial strength to make investment for expansion / diversification. 3. Poor integration of distribution channels of the company. 4. Company having proper succession planning. Methodology of Analysis Environmental Analysis Industry Analysis SWOT Analysis Customer Analysis Competitor Analysis Environmental Analysis Political Govt. Policies not very conducive. Economical High taxes leading to high prices. High taxes & controls. Quota Social Demographic changes Change in buying behavior Technical Technical know-how Change in manufacturing process INDUSTRY ANALYSIS •Apparel Industry is one of India’s largest foreign exchange earners. •It accounts for 12% of country’s total exports. •Very diverse in terms of size, production facilities, types of apparel manufactured, quality of output, fabric requirement, price sensitivity etc. •Garment industry is extremly fragnented. SWOT ANALYSIS Strengths-Established manufacturer of readymade garments. -Wide line of products. -Specializing exclusively in gents wear. -Network of branches & dealers throughout the country. -Financial soundness Weakness-Rising manufacturing costs -Poor marketing plan -Poor inventory/materials management -Poor R & D. -Poor brand image. -Lacks corporate direction -High price compared to competitor -Poor market survey/ Customer trends -Lack of strategic market orientation. -Poor integration of distribution channels Opportunities- Identification of new market segments. -Strengthening the brand. -Driving new product development based on customer’s need -Improving customer experience -Utilizing new marketing technology. -Gathering meaningful customer insight -Vertical integration. -Exports. Threats -Attack on core business. -Compressed product life cycle -Increase in domestic competition -Fast changes in customer tastes -Down trend in pricing -Low market growth rate Opportunities- Competitors’ Analysis: Competitive Pricing Strategy Driven Unhealthy Competition Large in Number Marketing Oriented CUSTOMER ANALYSIS •fashion conscious • knowledgeable • price conscious • younger generation’s preference for trendy fashion garments at an affordable price. Observation and Research: The company is facing several problems in increasing its market share. High cost, company’s inability to identify the customers’ changing taste resulting in accumulation of dead stock and weak sales team are taking its toll on company’s profitability. The competition has also intensified in the market and the consumers are offered wide choices at a competitive price. Hence the company has to evolve a new market strategy for increasing the market share. The Gap analysis unveils the areas where the company needs to reinforce the strategies for cornering a substantial market share. Garment industry is a growing market and being the market mover gives the firm an upstart. Nova Garments is an established company but lacks the market research wing, which can capture the emerging fashion trends. The company also lacks an in-house Designing Centre which is essential for success of any garment manufacturer. The Brand building exercise has never been given the due importance for creating everlasting customer affiliations. Various promotional avenues have not been harnessed. The Recommendations: 1. company needs to be customer centered, win customers from competitors, keep and grow by delivering greater value. The company has to target customers’ activities, lifestyle and social space. 2. Market segmentation, target marketing and market positioning 3. Company must think through the four C’s of Customer solution, Customer cost, Convenience and Communication first and then build the four P’s of Product, Price, Place and Promotion. 4. focusing on shorter response time , identify and catch a winning fashion trend while its competitors are struggling to catch up. 5. company can either establish a design team to identify the prevalent fashion trends and styles or outsource the same keeping in mind the cost benefit analysis. The Recommendations (Cont.) 6. Company can adopt a strategy of reducing the quantity of manufactured items and reducing its exposure to any single product. 7. Instead of more quantities per style, the company has to devote efforts for more styles so that even if a style fails, there are new styles already waiting to take up the space. 8. For flexibility and control, the company has to work as vertically integrated group with up-to-date equipment. 9. Super charged product development would give the creative edge in the highly competitive market. Even if the cost of product development is high, it will be adequately compensated by higher realized margins. The entire product development cycle begins with market research. The Recommendations (Cont.) 10.This will require investment in information technology and communication infrastructure to keep streaming up-to-date trend information to the people making the product and business decisions. 11.Rather than concentrating on forecasting accurately, the company has to develop its business around reacting swiftly and responds to the actual need. 12. The company should diversify in to highly lucrative women’s wear and should exploit the massive export potential. Conclusion With the abolition of the export quota regime for garments under WTO since 2005, the company should capitalize the export potential available for the company’s product. The industry will be restructured as follows: i) Joint ventures and strategic alliances with leading world manufacturers will be promoted. ii) Schemes with necessary infrastructural facilities for the establishment of textile/apparel parks will be designed with the active involvement of State Governments, Financial Institutions and the private sector. iii) Setting up of strong domestic retail chains to ensure easy availability of branded Indian products will be encouraged. iv) As the International borders blur Supply Chain Management and Information Technologies take a crucial role in Apparel manufacturing. Global partners in the clothing supply chain are exchanging information electronically, thus the need for Indian Clothing Industry to spruce up. Conclusion v) The 3C's of Commitment, Co-ordination and Co-operation need to be applied at all levels by the industry to be able to maintain its presence in the global market. The industry view is currently positive, and it is felt that most clothing firms have improved in technology and in operational performance. Two alternative strategies are suggested for future competitiveness: A strong combination of design and marketing. This would allow the firm to build a brand with a strong reputation. Strength in service, particularly in efficient turnaround of orders. This would allow the company to build strength as a contract manufacturer. Conclusion • “The company’s vision should be of a knowledgeintensive industry that is equally strong on design, marketing, logistics management, technology...and positioned in markets where these strengths make sense. It could make reference to fashion and to branding.” THANK YOU FOR YOUR TIME, PATIENCE AND CONSIDERATION !!!