strategic mgt report.finalllll

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1 Introduction 2

1.1 Nishat Group 3

1.2 Company 7

2.1 vision 8

2.2 Major competitors 9

2.3 Industry evolution 10

2.4 Strategy followed 10

2.5 Human Resources and Corporation culture 12

3 Strategies formulated 14

3.1 Industry structure 14

3.2 Corporate strategy 15

3.4Strategies adopted for Marketing Human resource and

Finance17

4.0 Strategy implementation 20

4.1 Organizational structure

4,2 Matching manager to strategy

4.3 Quality Control

5.0 EVALUATION AND CONTROL 22

5.0.1 Design control

Swot Analysis & Pest Analysis 24-31

Porter Five forces model for Nishat mills ltd 32

Conclusion 34

Recommendation 35

References 36

TABLE OF CONTENTS


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1. Introduction

The Textile Industry:

Over the years, Pakistan is said to be the single crop economy i.e. cotton and textilethat claims the lion's share in terms of the contribution

in the national economy of Pakistan.

Despite efforts to bring in diversification in country's

overall economic get-up the textile sector continues to

be the most important segment of the national

economy. Its share in the economy, in terms of GDP,

exports, employment, foreign exchange earnings,

investment and revenue generation altogether placed the textile industry as the

single largest determinant of the economic growth of the country.

Despite harsh and hard international economic conditions, Pakistan's textile

industry has weathered the storm by coming out of the international crisis in a very

positive manner.

During the year exports were controlled from falling and significant investment was

made in value-added expansion and in Balancing-Modernization- Replacement

(BMR).

Besides fall out of the events of September 11, the implementation of WTO's

agreement, various bilateral agreements have been signed and implemented.

As a result global scenario has changed. Government and the corporate

textile sector adjusted their policies to achieve maximum benefits of free trade. So,

Nishat Mills Limited 2


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This man of vision, courage and integrity, Mian Mohammad Yahya was born in

1918 in Chiniot. In 1947 when he was running leather business in Calcutta, he

witnessed by the momentous changes that swept the Indo-Pak subcontinent.

This is story of success through sheer hard work and an undaunted spirit of

enterprise. Beginning with a cotton export house, he soon branched out in to

ginning, cotton and jute textiles, chemicals and insurance. He was elected Chairman

of all Pakistan Textile Mills Association. He died in 1969, at the age of 51 having

achieved so much in so short time.

After almost half a century of undaunted success, Nishat group is among the

leading business houses of the country and ranks among the top 5 groups in terms

of assets and sales revenue. The group has its roots firmly planted into four core

business namely

Textiles

Power Generation

Banking

Cement



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TEXTILES

The textile business is further subdivided into 2-textile division:

Nishat Faislabad

Nishat Chunian

The textile capacity of the group is the largest in the country. An addition of 20,000

new spindles, 100 new air jet looms and new dyeing plants has increased the

existing capacity of 242,000 spindles, 740 looms and dyeing and finishing capacity

of 5 million meters. The largest exporters of textile products from Pakistan, for

more then decade!

POWER GENERATION

Nishat group has also been a pioneer in power generation in the private sector of

the country. Nishat setup the first power generation unit in the private sector in

1995.

CEMENT

In 1992, Nishat Group acquired D.G Khan Cement Company Limited (DGKCC)

from the second largest project of the group and is ideally located in the heart of the

country, with easy access to transportation all over Pakistan. DGKCC unit No. 1

has a capacity of 2,200 tons per day. A new unit heaving the capacity of 3,300 tons

was setup in 1997.



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International Finance Corporation and common Wealth Development Corporation

have financed this unit. With the addition of unit No.2, DGKCC has become the

largest manufacturer of cement in Pakistan.

BANK

In 1991, Nishat Group ventured into the financial sector through the acquisition of

Muslim commercial Bank. MCB has grown ever since and is now the largest bank

in the private sector. MCB has a network of over 1200 branches employing over

12,000 people.



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1.2. The Company

Nishat Mills Limited is a public Limited Company incorporated in Pakistan under

the Companies Act, 1913(Now Companies Ordinance, 1984) and listed on Stock

Exchanges in Pakistan

Nishat Mills

Nishat Mills Limited (Nishat) is a public company incorporated in Pakistan and

listed on all three Pakistani stock exchanges. Nishat is engaged in textile

manufacturing.

Which involves spinning, combing, weaving, bleaching, dyeing, and printing,

stitching, buying, and selling of textiles? They deal with yarn, linen, cloth and other

goods including fabrics made from raw cotton, synthetic fiber and cloth.

The Company is engaged in the business of textile manufacturing and of spinning,

combing, weaving, bleaching, dyeing printing, stitching, buying, selling and

otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw

cotton, synthetic fiber and cloth, and to generate, accumulate, distribute and supply

electricity.

Company is providing quality products to its customers within the Pakistan and

outside the Pakistan. Presently company is exporting its all kinds if apparel

products.



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2.1 Vision

To transform the company into a modern and dynamic yarn, cloth and processedcloth and finished product manufacturing company with highly professionals and

fully equipped to play a meaningful role on sustain able basis in the economy of

Pakistan.

To transform the company into a modern and dynamic power generating

company with highly professionals and fully equipped to play a meaningful role on

sustainable basis in the economy of Pakistan.

Mission

To provide quality products to customers and explore new markets topromote/expand sales of the company through good governance and foster a sound

and dynamic team, so as to achieve optimum prices of products of the company for

sustainable and equitable growth and prosperity of the company.

Quality Policy



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We work together as a team for implementation and continual improvement oftotal quality system in order to achieve satisfaction of our internal and external

customers

2.2 Major competitors

Nishat competitors are

Crescent

Chenab

Arzoo

Alkarms

Sitara

Kohinoor

Amtex

But main competitors of Nishat Mill are

Crescent Textile Mills

Chenab Textile

Nishat Textile Limited has seven spinning units situated in Faisalabad. These unitsare equipped with the latest machines in all of their departments. In the spinning



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intelligence system is necessary for every firm. The intelligence system of

Nishat mills is the reverse engineering process, Industrial espionage.

Forecasting Technique

The forecasting technique used by firm are Brain storming in which

the people sits and share knowledge about what is happening in the industry.

Expert opinion is another technique used in which the experts are called

from other firms or they may be the ex-managers of the same company and

their opinion is taken about coming trends in industry.

2.4Strategy Followed

The strategy followed currently is Differentiation Strategy

A differentiation strategy calls for the development of a product or

service that offers unique attributes that are valued by customers and that

customers perceive to be better than or different from the products of the

competition. The value added by the uniqueness of the product may allow

the firm to charge a premium price for it. The firm hopes that the higher

price will more than cover the extra costs incurred in offering the unique

product. Because of the product's unique attributes, if suppliers increase their

prices the firm may be able to pass along the costs to its customers who

cannot find substitute products easily.

The benefit of this strategy for Nishat mills are



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Access to leading scientific research.

Highly skilled and creative product development team.

Strong sales team with the ability to successfully communicate the

perceived strengths of the product.

Corporate reputation for quality and innovation.

2.5 Human Resources and Corporation

culture

Lowest Employee Turnover.

Seeks to fulfill the highest practical degree in

administering its welfare and compensation program.

Apprenticeship and other training schemes at all levels.

It is our company policy to adopt measures to achieve the following

objectives:

To obtain, manage, develop, motivate and gain the

commitment of company's key resource- the people

who work in and for it.

To develop a positive corporate culture to promote

commitment to excellence and quality through out

the company.

To identify training needs and provide required training

to all categories of employees.

To make best use of the skills and abilities of all those

employed in the organization.

To ensure that the company meets its social and legal

responsibilities towards its employees, with particular



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regard to the conditions of employment, quality of

working life provided for them and the need to

promote environment, occupational health and safety.

To ensure industrial peace and harmony through

excellent employee relations to achieve optimum level ofemployee, productivity and to contribute towards

company's aimed quality standards.

Key resources to gain competitive

advantage



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Their resources has been identified and classified in terms of strength and

weaknesses.

Their corporate capabilities are much more but those which gives it a

competitive advantage over competitor are

High quality product and Latest mechanized machinery.

The strategy they are using is differentiation and product development

strategy by taking full advantage of its key resources

3. Strategies Formulated

The strategy formulated by Nishat mills are focus strategy ,First they

were focusing on a narrow segment of cotton only but now they are not only

focusing but also looking to broader segment and pursuing a differentiation

strategy to differentiate their selves from other competitors.

3.1Industry structure

The industry in which nishatll mills is operating is consolidated

industry in which there are few giants companies like sitara ,Chenab etcc.

The tactic they use as an offensive tactic is Frontal Assault which

mean head to head with its competitors because they have superior resources

and willingness to persevere.

3.2Corporate Strategies followed

The strategies usually that nishat mills follow are:

Growth strategies



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Vertical integration

Horizontal integration

Backward integration

In growth strategies the have been growing Backward by moving on value

chain and becoming supplier their selves.

Horizontal integration by Nishat mills is in such a way that they are

expanding their product line and as well as distributing to more geographical

locations.

Being involved in a forward integration they are their selves the distributor

of their goods manufactured.

Mostly they are involved in Taper integration which the firm produces lessthen half of its own requirement and buys the rest from outside suppliers

In recession times the strategies followed by Nishat mills

were:

3.3Stability Strategies

The strategy in which the company stops growing and concentrates or

waits for any change in environment.

Pause/proceed with caution

A company initiate a change only if there is a change in theexternal environment of company or industry.

So nishat mills follows this stratregy in sense that they innovate thereoffering only if their competitor intend to do so.



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No change strategy

A company doesnt change its strategy because of the followingreason.

The company is either in ok position.

They dont have many resources.

There is no hyper competition.

The strategy they are following is profitable.

Profit strategy

This strategy is followed by Nishat mills when there firm sale is not

normal or you can say declining so what they do is that they try to minimize

there cost like advertisingcost,Expenses,R&Dexpenses,But mostly they

reduce there expenses for shorter period of time because in long run they

may suffer losses.

3.4 Strategies Adopted for

MARKETING

HUMAN RESOURCE

FINACIAL



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Marketing Strategy deals with pricing ,Promotion and sistrin=buting ofgoods.The strategies are

MARKET DEVELOPMENT

Product development

Market penetration

Market Skimming

These are al strategies of Marketing but the strategies on which nishat mills

is emphasizing isProduct developmentand Market developmentby pursuing

these strategies they expand there product line and as well as products to

capture the more and more market

Buyers Purchase Order:

Nishat Mills LimitedAfter the sales contract has been signed by the

both par5ties, the buyer issues the purchase order regarding

the specified design, quality & quantity of the product on

their letter head and signed by the higher authority of the

organization .The purchase order includes date, purchase

no., shipment date, and ref. no. , terms, name of the vendor,

description of the products required.

Strike off program:

In simple words you can say strike off programs

is the samples made according to the customers

requirement in order to send him for approval. Sometime the

customers demand the strike off program especially when he



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send his requi4eddesigns are very complex and involved

different color shades.

Then export manager prepares strike off program and issues

it to the different departments. Rotary sampling machine

(Austrian made j-zimmer) which can provide12 meters freshstrike offs according to the requirements is used .This strike

off is carefully examined before sending it the customer for

approval.

Management of Nishat MillsLimited

Nishat Mills Limited employees are highly qualifiedprofessionals and have a young , energetic and dedicated

team of professionals who have a lot of knowledge to their

credit.

Managers are responsible for the task assigned to them in

their departments and also have to match whether their

respective department is achieving the desired efficiency

level or not.

There are at least three basic requirements for a successful

company and the managers of Nishat Mill Limited are made

to think on these lines:

1. It must provide a product (good or service) that suits

best to the companys capabilities and for which there is a

sufficient market.



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2. It must provide the product with consistent quality at a

level that appeals to intended customers and satisfy their

needs.

3. It must provide a product at a cost that always an

adequate profit and areasonable sale price

3.4.1Training Programs

Training programs should be there to upgrade

the skills of employees.On the job training programs should

be provided so that workers get knowledge about work

Financial overview

OVERVIEW (December 22 2009): Nishat Mills Limited (NML) is the

largest textile composite unit of Pakistan. It is engaged in the

business of textile manufacturing, spinning, combing, weaving,

bleaching, dyeing, printing, stitching, buying, selling and dealing in

yarn, linen, cloth and other goods and fabrics made from raw cotton,

synthetic fibre and cloth, and to generate, accumulate, distribute and

supply electricity.

Its shares are listed on all the three stock exchanges of the

country. Its manufacturing facilities are located at five different

locations in three districts of Punjab. From the foregoing it can be

seen that it is a gigantic and wider diversified unit and its textile

processing functions are fully integrated with information technology

as business processing is dependent on timely providing information

and data. At NML, the management has built comprehensive



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information systems for all the locations of the company providing

relevant information accurately to ensure thoroughness in decision-

making and managing company s resources. For reliable and

cheaper power, Nishat has installed its power generation plants.

These are cutting-edge technology, highly efficient reciprocatingengines and gas turbine generators, which besides generating power

are supplying steam and air conditioning, being produced using so-

called waste heat to the production units.

In fact, Nishat Mills is the trendsetter in this type of power

generation in the country. On the marketing side it has entrenched

customer bases in Hong Kong and Europe and during the past few

years, it set its goal to achieve greater market share in Central

American, Spanish, French and Portuguese markets which it

managed to achieve



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4.0Strategy Implementation

In implementing a strategy the willingness of people and structure of

organization must be in accordance to implementation of a new strategy.

So talking in context of Nishat mills the implementation of strategy

depend almost on structure of organization because the structure follows

strategy

4.1Organizational Structure

The structure of Nishat mills is Divisional structure managing diverse

product lines in numerous industries. It decentralizes decision making

authority. This organization grow more by diversifying their product line

and expanding to cover wider geographical areas.



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4.2 Matching Manager to strategy

In Matching manger to strategy as discussed in books ,there is no

such implementation in nishat mills about that which manger have to

do which task nor there are different managers for different

strategies.Simply eacg head of the department is responsible for this

own department and no matter however he plans but he must achieve

his objectives.

4.3 Quality controlAs the productions starts, the duties of the

merchandisers increase. They not only have to visit the

designing department to ensure that the work is being doneon the designs, the design are made according to the

requirement of the customer, screens are sent to the

printing department on time etc.They also see that fabrics

are being bleached according to the requirement of the

dying and printing. If the fabric goes for dyeing they should

be very careful about color matching in the printing

department. They have to mange the printing on time. They

also have to give the guidelines to the production

department employees. They have to remain in close

contact with the quality control department in each and



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every stage. The merchandiser also ensures that the fabric

has been reached in the finishing department on the time

and that the finishing is done according to the customer

specification (e.g. water repellent, oil repellent, and fire

retardant).

5. EVALUATION AND CONTROL

Evaluation and control of procedures designs and finance is beingheld by an internal employee ,some of the control procedure are as

follow.

5.1 DESIGN CONTROL

Design and Development Planning

For designing of products, there should be

specific arrangements. Department of design planning

should be established, if the enterprise want to achieve

quality certificate like ISO 9001 and ISO 9002.

Design review

Design should be reviewed once made by the firms.

This design should have some characteristics that

should be in accordance with the business practices.

Verify Validity Of Design Once design is complete, the

competent authority should verify it.



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Customer Data Control It is the perquisite for ISO 9001

that proper customer data should be there. This is to

provide customers list if required by the top

management.

Control of Customer Supply Product

There should be proper control over customers

products.

Product Identification and Traceability

Product should be clearly identified and

traceable. It should have some

characteristics that distinguish it fromothers. It should not be similar with other

products in terms of its name, logo etc.

Inspection

There should be proper inspection of stores

so that every thing functions according to

manners prescribed by certificates.

Corrective and Preventing Measures

There should be check and balances. If the

mistakes are made, there should be proper

systems so that they are identified and corrected.

Preventing methods should be there.

Nishat Mills Limited

Internal Audit

There should be strong internal audit. So all

discrepancies should be



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disclosed. In order to get ISO 9001 there should be

separate internal audit department.

Training Programs

Training programs should be there to upgrade

the skills of employees. On the job training

programs should be provided so that workers

get knowledge about work.

Statistical Techniques

Various statistical tools are required to better

controls the affairs of organization. They should be available

to achieve quality awards. Uses of information technology,automation of factory, Internet and computer technology are

prominent features in achieving ISO 9001 and ISO 900



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SWOT Analysis

Strengths:

The major strength of Nishat is its location. The plant is

situated in Faisalabad which is renowned in the world for

textile production.

Nishat is using the best machinery available in the

market in its all the



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Department, which helps Nishat to produce the world class

products to meet the needs of the customers.

As Nishat is a part of large industrial group, so it has no

need to search out the raw materials from the market

even during the peak season. For example, they can producehigh quality yarn.

Nishat management provides an excellent working

environment to its

Employees, which motivate them to work more effectively

and efficiently.

Nishat has strength to produce the quality products at

the lowest possible prices as compare to their competitors.

Nishat is an ISO certified company, which produce a

sense of satisfaction to its customers.Nishat also follow the

ISO Standards.

Quality control department equipped with most modern

machines is also a big

Strength of Nishat, which ensures the quality at every stage

of production. As a result the wastage is very minimal as

compare to competitors.

Adequate financial resources are also strength of

Nishat. Nishat has the assets of worth about us4.5$ Billion.

Nishat has highly educated and competent

management and skilled labour which contributed to the

success of Nishat.

Nishat focuses on the chain stores and other big

customers rather than focusing on the small



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customers.Nishat also focus on the long lasting relations with

the customers. For these reasons its customers are very

loyal.

Nishat has a good reputation and image in the local as

well as in theInternational market, which is also a major strength of

Nishat.

Weaknesses

NML is purely following the centralized management

style, due to which management has a burden of

decisions, which ultimately takes too much time.

As most of the machinery is imported from other

countries therefore sometimes few spare parts are not

available in the market which creates problems.

Although NML pays very high salaries to the top

management, it is not offering attractive salaries to the

other employees of the organization. Therefore the moral

of the employees is decreasing.

Due to low salaries the rate of turnout is very high

which hinders the growth of the organization.

The rate of overtime payment to the employees is not

comparable with market. NML is paying at the normal

wage rate for overtime while the overtime rate is alwayshigh in all the organizations.



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Due to centralized management there is n o delegation

of authority in NML which also hinder motivation of the

employees.

Less chances of promotion are available for the

employees in NML, which is causing dissatisfaction.

OPPORTUNITIES:

When the WTO will be implemented, there would be a

great opportunity of increase in exports if NMLl follow the

international standards and provide high quality products tothe customers at competitive prices

NML should try to implement the latest

ISOstandardsincludingISO14000 series, which will improve

their image and customer satisfaction in the local market as

well as in international market.

NML can explore the new markets for exports by giving

the different incentives to its employees in the export

department, which will improve its profitability.

There is a lot of potential in the local market for NiCads

products because people believe that Nishat products are

always of high quality. So NML should also focus on local

market.

Nishat can introduce its garments in the local market by

using the same

Stitching unit. This is also a great opportunity.



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Threats:

WTO implementation is a good opportunity but it is also

a big threat at the same time it STI fails to provide good

quality and competitive prices to its customers.

There is no consistency in the government policies

regarding textile sector.

Incidents like September 11, 2001 attacks would also be

a major threat.

Political conditions of the country affect both NML and

its customers as well. On one hand it makes reluctant to the management to

make new investments.

On other hand its customers also hesitate before signing

new contacts.

Increasing rate of electricity and GST are also big

threats.

Currency fluctuations and exchange rates can also

create problems for NML.



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Government is focusing on the industrialization and is

giving different

Incentives to the investors. It is also a big threat because the

number of

Competitors will increase. More and more competitors (National and International)

are entering in the same markets and offering attractive

pric4es to the customer

PEST AnalysisPolitical Instability.

The political situation of Pakistan is not satisfactory. Due to the rapid

change in the Government every government sets its own new trade policies.

Govt. should apply sustainable policies for the beneficial of the exporters as

well as the investors.

Economic situation:



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The economic condition of Pakistan can also affect the foreign investors

increasing inflation rate make the cost of production high and thus reduce

the profit margin of the investor.

Social situation:

The change in the lifestyle of the people affects the growing demand of the

NTM products. The change in the lifestyle and needs in different

demographics also affect the demand of the customers.

Due to all these changes NTM is performing excellent for the excellence

organization as well as for the customer.

Technological factor:

Technological advancement in all the sectors of the country has changed the

entire socio-economic environment. Especially in the textile sector there is a

lot of technological development.

NTM Excellent computerized machines and devices are installed in the

NTM \has made extension in its present setup by installation of well

advanced technology imported from Japan China and France.



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Porter 5 forces model

Michael porter an authority on competitive advantage contends that a

corporation is most concerned with the intensity of competition with in its

industry. The forces which are discussed by porter are;

Threat of new Entrants

Rivalry among existing firms

Bargaining power of suppliers

Bargaining power of Buyers

Threat of substitute products

Explaining each of the force in context on Nishat mills.



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Threat of new Entrants

For nishat mills there has been a threat of entering new firms, So to

defend themselves from this threat they gain economies of scale

And the other barriers which nishat mills create for entrants are;

Product differentiationSwitching cost

Rivalry among existing firms

Another threat for nishat mills is the hyper competition in

industry.

The firms currently in the industry are also the threat for nishat mills

because their actions affect the profitability of the nishat mills.

Suppose if one competitor reduce the prices so nishat will also have

to reduce whuch in result will effect the profitability of company.

Bargaining power of suppliers

The bargaining power of supplier also effect Nishat mills

profitability in such a way that if supplier increase their prices of raw

material so definitely the cost will go up as well .

Bargaining power of Buyers

The bargaining power of buyers is also a threat for a firm

operating in industry. The buyer effect the profitability ion such away

that he wants discounts and other services which might lower the

margin of profit for the company.

Threat of substitute products



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The substitute product means any product which satisfies the

same needs. So substitute products in market are also a major threat

for Nishat mills.

Conclusion

Nishat Mills Limited is one of the leading groups in Pakistan. Thesystem, the management style, the policies & decentralized decision making

environment is really remarkable. This report is basically an attempt to

identify the areas which need to be improved. In this era of technology, the

Information is the key to success in the business. This means that the

successful businessman will be who will have the right information at the

right time. This comment leads to the conclusion that the Information

Sharing Process should really be improved.



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The overall analysis is indicating that the companys progress has

mainly attained through dedication of employees. The effectiveness of its

management, their willingness to take advantage of opportunities and face

challenges of changing economic picture, this all contributes to the very

much improved and sound position of company. This is really appreciablefor the devotion and hard work of all the employees of the company

Recommendations

Recommendations for Improvements are:

At present facility of bonus is given only to production staff

but such incentives should also be given to Head office Staff.

Special incentives should also be given to Head on Eid and

on other special days should be given to the workers.

Medical facilities are given in mill but such facilities should

also be given to management.

Different training courses should be arranged for the up

lifting and improving the quality of work for employees



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They provide transportation facility to only female employees

I think male should also be provided with conveyance

convenience. This will create the easiness for workers and

reduce the wastage of time.

There is also a problem of work overload for the employees

and it should be control properly so that the employees are

motivated.

Employees should be paid extra for the work which they

done after working hours.

References

Nishat Mills Limited

www.nishatmillsltd.com

www.Quickmba.com

Book: Strategic management and policy

Author: Thomas L.Wheelen/ J. David Hunger

Strategic management by Fred R.David

http://www.nishatmillsltd.com/nishat/main.php?val=11http://www.nishatmillsltd.com/http://www.quickmba.com/http://www.nishatmillsltd.com/nishat/main.php?val=11http://www.nishatmillsltd.com/http://www.quickmba.com/


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