Pakistan is one of the top cotton producing countries of the world

Pakistan is single of the top like producing countries of the globeExecutive unofficialPakistan is matchless of the close to top like producing country of the world. Pakistan has the t annulency to stool the best spirit cotton fiber in the world, because of that Pakistan disdains its cotton to different vendees across the globe. do and cloth exertion of Pakistan needs a lot of coronation to flourish its production plants to give more and more to the country and new(prenominal)s in the globe as easy.Currently country being in pretension affected the entire industry. As prices of all products pay g unrivaled high, companies ar forced to bring less. The political situations in our country have do the industrial celestial sphere bargon losses. The policies and laws ar hindering the activities of the industry. Because of that the other competing countries argon getting an edge e precisewhere Pakistan. more(prenominal) research needs to be through with(p) in this heavens to avail all the possible technologies to substantiate our framework and garment industry better. Other than that our needs to st dodge producing end wearable garments and then export them to ontogenesis the exports and subjoin aw arness of the local brands. Currently popular framework is working on producing jean for noned brands of the world. G all oernment needs to make efforts to establish the garment industry in Pakistan.Table of ContentContentsContents 2 door 4Industry Scenario 7Industry Facts and Figures 7Problems in industry 7Technology being implied 8 air sit down Analysis 8SWOT Analysis 12Strength 12Weakness 13Opportwholey 16Threats 18SWOT Analysis (Summary) 19Strengths 19Weaknesses 19Opportunities 19Threats 19PEST Analysis 2020 semipolitical Outfit 2020Economical Analysis and exploit 20 affable Liabilities and Duties 21 scientific Requirements and up gradation 22PORTER Five Forces Model 231.Bargaining index finger of customers (demand scenario) 2 424Factors 242.Bargaining power of suppliers ( come forth scenario) 24243. Threat of unseasoned entrants 26264. Threat of substitutes 275. Competitive rivalry 28 part to Exports 30Conclusion 31References 32Garment Industry of PakistanIntroduction stuff and Garments is considered the more or less important sector of Pakistans economic system and the biggerst industry with a 46% shargon of total manufacturing. Accounting for 67% of exports, employment for 40% of the work force and a 10.20% share in GDP confirms the importance of this sector. Pakistans large available human resource pool offers an important incentive for nevertheless ariseth of this push intensive industry.Contri furtherion of stuff Garment fieldPercentage ContributionTotal Manufacturing46%Total Exports67% study for Workforce40%Total Share in GDP10.20%Although Pakistan is the poop largest cotton producer in the world with strong spinning and twine infrastructure, the jimmy added sector (cotton products) h as a small share in exports. The of import reason is shortage of prepareing facilities able to enhance skills and produce fit middle managers having in-depth k direct conductge of processes and hands-on experience in contemporary technologies.Garment manufacturing is a major growing sub-sector of the fabric range chain. It consumes the majority of the workforce in Pakistans cloth and garments industry and has been contributing towards the high growth-rate in exports as figures shows it is 67% contributing in export of Pakistan.However, the garment industry is now suffering from some acute problems in productivity, in quality, in instruction marting skills and thus facing a serious threat of a reduced share of international markets.According to the World Banks report on the impact of Quota Elimination in Pakistan, the effect on apparel exports from Pakistan forget be negative e realplace cod to stronger competition from other countries. The implication would be serious if no action is taken to improve productivity and efficiency.In the garments sector, Pakistans productivity is estimated to be only 37% of the benchmark established by China. Compared to this, Indias garments sector productivity is better, at 46%. For Pakistan, raising productivity by improving production process efficiency is key to draw in benefits by and by the Multi-Fibre placement was abolished. If Pakistan is able to increase its productivity in materials and clothing by 60% and reach Chinas productivity level, the gain would plausibly be over US$ 1 billion per year.Keeping in view the emerge cause in the global market, there is a huge capability for Pakistans garment sector. However, to be competitive in the global market after the removal of the quota regime in January 2005, it is imperative to have efficient and woo effective production systems with minimum wastages to attract buyers. The TUSDEC need assessment which include discussions/interviews with the key gar ment exporters clearly revealed the need for urgent reforms in the stuff industry and especially in garment manufacturing and exporting as this is the most value added sector. This need had never before been felt as intensely as now, in the major garments clusters located in Lahore, Karachi, Sialkot, Faisalabad and Multan. In agreement they expressed that the existing infrastructure of framework garments institutes in the country is not able to fulfill the requirement for skilled human resources to meet the fast demand.The need assessment showed that an intervention for fast-track potentiality mental synthesis of the garment industry to meet the challenges posed by the ever-ever-changing demand of international markets was justified. To argue with this dire need, it was proposed to hire foreign experts on tenacious term base to promote the knowledge and skills of the workers employed in the garment industry.Industry ScenarioAs quoted by Chairman of All Pakistan Textile Mil l Association, Textiles are the most important industry in Pakistan. It accounts for approximately 40 percent of manufacturing employment, over 60 percent of total exports, and over 30 percent of value-added production. Pakistans textile industry, base on locally grown cotton, produces cotton yarn, cotton cloth, and represent textiles and apparel.Industry Facts and FiguresAs data cited at web published accommodateation of aptma, Pakistan had a total of 503 spinning mills with an installed capability of 10,437,000 spindles and 155,104 rotors. The weave industry has 53 integrated units (composite units with spinning and weaving in one unit) with an installed capacity of 14,130 looms 512 shuttle less weaving units with an installed capacity of 13,340 1ooms and approximately 30,000 units in the power loom (shuttle loom) sector, with an estimated 225,253 looms. In PFY-97 it additionally had 670 finishing units with a production capacity of 3,460 zillion sq. meters of fabric per ann um, 700 knitwear units with 15,000 knitting machines, and 4,000 garment units with 160,000 industrial and 450,000 domestic sew machines. Exports of all textiles in PFY-97 totaled a value of USD 5.4 billion. The major buyer of textile clothing and accessories was the United States, which purchased USD 309.2 one zillion million of goods. (Michelle, Pakistan Profile, January/February 2007)Problems in industryPakistans prodigal economic reliance on the textile industry now necessitates the upgrade of its low value-added textile products to higher(prenominal) value-added products and the development of additional export markets. The regimen of Pakistan (GOP) has reportly constituted a textile commission to examine the problems of the textile industry and guide its future planning in the effort to chip this vital sector of the country economy into a healthy and internationally competitive industry. The upgrade to value-added production leave require more civilize machinery. Trade sources believe that given favorable rupee/dollar parity, the textile industry may be acquited to grow by as much as 10 to 15 percent annually over the next 2-3 years.Technology being impliedIn PFY-98 Pakistan offered an import market of USD 213 million for the sale of textile machinery, equipment and parts. Statistics for domestic production are not available, but guile sources report that manufacture, which is pitch to demand, is at the present cadence negligible. The market has declined drastically over the last six years. In PFY-93, Pakistan imported USD 789.2 million worth of textile machinery. Imports fell in subsequent years to USD 352.7 million in PFY-94, USD 294.9 in PFY-95, USD 187.0 million in PFY-96 and USD 129 million in PFY 97. presumption improve financial conditions, the import market share is expected to increase by 10 percent annually over the next threesome years. (Citied at website of aptma.)Business Model AnalysisThe textile industry is immediately based almost entirely in the private sector as the inefficiency of the public sector units has forced the GOP to privatize them. The three re primary(prenominal)ing textile units in the public sector are integrated units and are to be offered for privatization in the very(prenominal) near future.Pakistans textile spinning industry is with by delay in a crisis. As a result of poor cotton crops, the withd rawal of cotton subsidy and the export of raw cotton, the industry, whose feasibility has been based on the use of low-priced cotton, is no longer viable.Pakistans weaving sector has an installed capacity of 14,130 looms in integrated weaving mills 13,340 looms in shuttless weaving units and approximately 200,500 to 225,250 looms in the power loom sector. The looms installed in the integrated units are old and less than approximately 40 percent are working. The autonomous weaving units are a relatively new phenomenon in the Pakistan market, and have been created as a result of market d emand, government incentives and the move towards higher quality products.Pakistans finishing industry is comprised of approximately 670 units, the majority of which are nonparasitic units and complimentary to the weaving industry. Their installed capacity is old and needs replacement. The integrated units are reported to have a capacity utilization of only 35 percent of installed capacity as most of their machinery is as well as old and uses overaged engine room. (Citied at Directors go off of aptma.)Competing CountriesExport Share of Market- Trend Analysis body politic1980199020002005Variance2000 2005China4.08.918.226.98.7Turkey0.33.13.34.31.0India1.72.33.13.0(0.1)Mexico0.00.54.42.6(1.8)Bangladesh0.00.62.02.30.3Vietnam0.91.70.8Pakistan0.30.91.11.30.2Sri Lanka0.30.61.41.0(0.4)Thailand0.72.61.91.5(0.4)Source United States Department of kitchen-gardeningGlobal Market SharesTop 15 retailers worldwideS. NoRetailerOriginMarket Share USD Millions1Wal-Mart Stores Inc.the States$219, 0002 overlap GroupFRANCE$61,5653Royal A holdHOLLAND$57,9764The domicil Depot, IncUSA$53,5535The Kroger Co.USA$50,0986Metro AGGERMANY$43,3577TargetUSA$43,3558AlbertsonsUSA$37,9319KmartUSA$36,15110SearsUSA$35,84311SafewayUK$34,30112CostcoUSA$34,13713TescoUK$33,61414JCPennyUSA$32,00415Aldi EinkaufGERMANY$31,310(Source Stores/Deloitte Touch Tomahatsu)SWOT AnalysisStrengthRaw bodily BasePakistan has high self sufficiency in raw temporal and is the fourth largest producer of cotton. Abundant use of cotton resources has made the Textile industry of Pakistan move towards the area of industrialization. fag outCheap stab has ceaselessly been the backbone of the economy of Pakistan. Cheap and ample cut of turn over strengthens the industrial and agriculture sector of the country. Around 39% of the labor force whole shebang in the textile sector. As Karl Marx said that we have to use the soldiery of labor present in the country for productive means. Thus moth-eaten and abundant labor means low approach of production.Rich heritageDue to cultural diversity and rich heritage, designers come up with new different and attractive designs which are appreciated worldwide. Our culture comprises of Sindhi, Punjabi, Balochi and Pushtoo values. Also we are also influenced by the Indian culture through the media exposure, which of course gives the Pakistani designers an inspiration and taste of Karnataka, Rajhastani styles, etc. This varied culture and fusion among these twain neighbours gives inspiration to the designers to give their best in equipment casualty of styles, creativity and forge. interior(prenominal) MarketThe recent shift of the population from the agrarian society to the urban areas, increased income levels and growth of the population raised the domestic demand. This means more factories more manufacturing units, more supply and more labor.WeaknessResearch nurtureDeveloped countries are using the engineering science of genetic engineering and ergono mics to increase the quality and quantity of their cotton production. They are able to grow colored cotton, organic cotton and several different varieties cotton to added value to the textile chain. In Pakistan, there is very some research done on small scale by private companies to invent modified cotton fibers. Practically no efforts are being made by the APTMA in the RD of the textile industry to enhance the quality of its products, upgrade the engineering science used, and encourage effective methods of production in order to compete internationally. alternatively the industry suffers lack of in style(p) means of production and falling cotton crop output every year. Due to low quality of cotton crop, profitability decreases and the farmer switch to the other crop much(prenominal) as sugar faecal mattere, maize and thus the cotton production decreases.More dependance on CottonAs the textile sector is heavily certified on cotton production, low cultivation of cotton exit drop down the textile industry. On the other hand, Pakistan lacks expertise in the development, production and merchandising of synthetic products and fabrics required for items like swimwear, skiwear and industrial apparel. So far Pakistan has been futile to diversify in the export of textiles and is heavily dependent on integrity fibre that is cotton and its blends. This dependence on single crop economy is restricting the diversification of exports from Pakistan.Labor resultivityDespite of the abundant supply of the labor, productivity of the labor is very low. According to a study by Federal Adviser on textiles, the regional competitors of Pakistan take75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the similar work. We also waste 30% in finishing and 12% in washing. European buyers recommended that we should cut our speak tos up to 45%in sewing by getting more efficient. Labor productivity can be improved by giving the labor appropriat e training with the advancement of technology so as to make them more efficient and with dispirit wastage of resources. In China an average 70 hours of training are given to labor to enhance their expertise.Poor themeThe important resources and infrastructure, such as capable of supply of water, continuous supply of electricity and gas, efficient logistics and transportation, tax structure, raw poppycock supply are all basic requirements for the development of an industrial base. However, on the other hand, the industry is faced with rising charges of the nix sector, which increases the comprise of production, making it difficult to compete with the other regional rivals.Poor prime(a) StandardsWith the exception of big and leading units who comply with global quality standards in textiles, most of the medium and small sized units can not chink the reliable and consistent quality standards. Some of these textile units import warrant hand machinery from China, India, Korea, a nd Taiwan with no checks and balances on the quality of the machinery parts and tools. tasting is only given to the cheap and workable machinery with no concern of the quality of the machine, therefore, resulting in poor quality of the end product. The industry can come more profit by adding more value to the product, as value can be measured in terms of quality, increased per unit price, etc. Pakistans textile industry should focus on latelyst material handling techniques and should train workers. The inability to magazinely modernize the equipment, machinery and labor has led to the decline of Pakistani textile competitiveness.Unstable Political SituationPolitical unrest, strikes and terrorism have critically affected the economy of Pakistan. Frequent changing of the government has adversely maligned the policies of the textile sector. According to the World Trade Review Pakistan has failed to take necessary steps need to meet post Multi-Fiber Agreement (MFA) challenges for it s textile industry owing to lack of political will by the successive governments. In 1978 World Bank surveyed the Pakistan textile industry and reported many deficiencies in this sector. It also gave certain measures to resolve these issues, but unfortunately all these problems still persist and the industry is still unable to hold open its pace with the international market. Successive governments lacked the will to reform human resources and adapt the marketing techniques that resulted present scenario in this industry.System taste And Supply set upNowadays, customers are very systematic in their work and the expect the same professionalism from their vendors. Unfortunately, we lack this capability and are not competent to struggle in the international business, thus losing many opportunities. On the other hand supply chain wariness is rarely implemented. We are disorganized, disconnected and dis torted. Time management is very much important aspect in the business and buyers expect on time delivery to match the retail launch of the onslaught/ Summer or Autumn/Winter seasonal collections on time . Delayed delivery of export orders result increase in cost due to fines by the buyers and at times losing business altogether due to the breach the order con-tract.OpportunityPakistan Textile metropolisPakistan Textile City in Port Qasim, Karachi with an area of 1250 acres, will be completed in 2011 as a private public sector joint venture. The main purpose of the textile city is to provide the textile industry with the world class infra structure to meet the global competitiveness and challenges and as to provide value added textile industrial zone. Its main features include one way window operation, constant supplies of gas and water, and uninterrupted power supply. marketingTargeting the unexplored export markets with the help of aggressive sales and marketing will pave the way for the textile growth. Its all about hunting your opportunities with the handfu l of colorful lollipops. If we make investment in our sales force and train them in the fine art of marketing textile products, we can enthral a much bigger market share from other smaller competitors.Collaboration with exotic CompaniesNo company in the world can afford to ignore the strategic and competitive benefits of making partnership with other company to strengthen the market position. By making partners with the foreign companies, we will be able to learn a lot from them in terms system orientation, supply chain and it would be feasible to import latest technology. We can also reduce our costs, comply with the inter-national standards, and add value to our products, easiness in marketing our products in different foreign regions, improved labor and thus catching up with our regional competitors.Re-engineering of Production System instruction technology has a crucial role in manufacturing sector. Acquiring allege of the art machinery is though very much expensive, but a very fruitful and necessary measure to stay competitive in the long run. It is the level of trust the exporter builds with its customers by giving them flawless products, made on state of the art machinery. Once this trust is developed, there is no other way than any unforeseen exception that you may lose a customer to another competitor. Therefore, it is highly recommended to produce with great efficiency, minimizing the wastage of the raw material, energy resources and thus reducing the cost of production.Producing high Value ProductsIts better to export yarn than raw cotton. Similarly its better to export end fabric than to export grey fabric (raw fabric). Furthermore its very much feasible to export readymade garments than to only fabrics. What makes the latter better is the value added and subsequent increase in per unit price. Therefore, the textile industry should focus on the finished products so as to create more value in their products and reap larger margin of profits. The industry should also diversify into other areas such as technical textiles and nonwovens in order decrease its dependence on conventional and commodity textiles, which is highly sensitive to per unit price and good deal for the profit margin.Image Building of Pakistan to draw in FDISecurity measures should be taken to facilitate the buyers and investors to visit Pakistan for investments. Secure business environment must be needed to attract golden sparrows to facilitate business dealings and building positive image of Pakistan that they can rely upon.Reducing the Cost of BusinessChina and India are much cheaper in labor, raw material and utilities as compared with Pakistan. Rising inflation also increase the cost of production. We have to tone down these unnecessary costs if we have to survive in the middle of the devil giants of the textile sector in the world.ThreatsNew competitorsPakistan is facing new competitors in textile sector such asBangladeshVietnamTurkeyThough we cannot exclude competition but we can always stay ahead of them by reforming our strategies and educating our entrepreneurs so as to move one step forward in every aspect.Phasing out of quota SystemAs the quota system is ruled out by WTO, there is a threat by the Chinese and Indian manufacturers to gain most of the market share. We have high costs, low labor productivity and inefficient production processes. devise life Cycle appearance changes rapidly now a day. Media has so much penetrated in our insouciant lives that we easily adapt our-selves as it pauperisms us to. This has resulted in shortening the fashion lifecycle thus increasing the fashion risk. Now the buyer does not want to wait long for his consignment because he is insecure that by the time it will reach to him he will lost its demand due to change in fashion. Therefore, they prefer to buy from neighboring countries even at higher cost to get their products instantly rather than to wait weeks or months for their c onsignments to reach them.SWOT Analysis (Summary)StrengthsRaw material BaseLaborRich HeritageDomestic MarketWeaknessesResearch DevelopmentMore Dependence on CottonLabor ProductivityPoor InfrastructurePoor Quality StandardsUnstable Political SituationSystem Orientation And Supply ChainOpportunitiesPakistan Textile CityMarketingCollaboration with Foreign CompaniesRe-engineering of Production SystemProducing high Value ProductsImage Building of Pakistan to Attract FDIReducing the Cost of BusinessThreatsNew competitorsPhasing out of quota SystemFashion life CyclePEST AnalysisPolitical OutfitTextile industry, and all other business in the field are subjected to very high risk due to unstable political tally, this restricts joint ventures in the industry. We only have only one example of joint act in the industry that is Lucky Tex SITE with J. Rosenthals and Sons of England. As the political outfit is extremely unstable and does not guarantee any consistency over the span of time, ther efore attracting foreign investment in the sector is very limited, and only confined to term financing, or credits.Economical Analysis and mathematical processTill not so long ago, the Pakistan textile industry was one of the key drivers of growth and employment generation.The plight of the textile exports continued during the scratch line four months (July-October) of current financial as they fell by around one percent during the plosive consonant.The export of textile products came to $3.539 billion in the period under review, which is 2008 against $3.573 billion in the corresponding period of previous year.At a time when growth in export is badly needed to plug the widening trade deficit, the dismal performance of the largest export earning textile sector is causing serious problems for the state in its efforts for registering quantum jump in export earnings.Complaining about the high cost of production of textile products due to expensive raw materials and high rates of util izes the textile associations are clamoring for incentives in the shape of RD support to enable them to compete in the international market.The breakup shows that almost all the categories in textile sort performed dismally during the period under review. (Pakistan Textile Journal, October2008)(Microeconomics of competitiveness, Textiles cluster in Pakistan, 2007)Social Liabilities and Duties160 million population growing 3%Growing trend of urbanizationViable middle classIncreasing literacy among femalesPer capita income growing 14% = $ 652GDP growth = 2%Retail whole sale trade is 18.4 % of GDPStock exchange crossed 8000 pointsmillion of expatriate workersTechnological Requirements and up gradationPakistan textile industry is blessed with state of the art machinery, and local entrepreneurs remain well updated in this scenario. Thou, there is no or limited government support in up gradation programs at the moment, but previously from 2003 to 2005 this sector has enjoyed multiple benefits on import of technology and machinery in terms of GOPs program for BMR, so that industry could be geared up to meet challenges of WTO, once the quota regime was over.PORTER Five Forces ModelOne of the worst hit sectors during the skyrocketing interest rate scenario in the late 90s and early 2000s, the debt-laden Pakistan textile industry has spun many turn-around stories since then. Aided by lower interest rates, restructuring packages from financial institutions and the recent dismantle of quotas the sector is today well poised to capture growth opportunities. In 2008, the sector contributed 20% to industrial production, 9% to excise collections, 18% of employment in industrial sector, more or less 20% to the countrys total export earnings and 4% to the GDP. The textile sector employs nearly 35 m people and is the second highest employer in the country. Infect, it is estimated that one out of every six households in the country directly or indirectly depend on this secto r. Here we analyze the sectors dynamics through Porters five-factor model.(Thompson, Strickland III,Strategic Management, Concepts and Cases. 15th Edition)Bargaining power of customers (demand scenario)FactorsHUFAMUFANeutralMFAHFA12345Number of Important buyersFewX numerousThreat of Backward integration high gearXLowProduct suppliedComodityXSpecialitySwitching costLowXHigh% of buyers costHighXLowProfit Earned by BuyerHighXLowTotal1524045Score2.50Global textile clothing industry is currently pegged at around US$ 440 bn. US and European markets dominate the global textile trade accounting for 64% of clothing and 39% of textile market. With the dismantling of quotas, global textile trade is expected to grow (as per Mc Kinsey estimates) to US$ 650 bn by 2010 (5 year CAGR of 10%). Although China is likely to become the supplier of choice, other low cost producers like Pakistan would also benefit as the overseas importers would try to assuage their risk of sourcing from only one country . The two-fold increase in global textile trade is also likely to drive Pakistans exports growth. Pakistans textile export (at US$ 15 bn in 2005) is expected to grow to US$ 40 bn, capturing a market share of close to 8% by 2010. Pakistan, in particular, is likely to benefit from the rising demand in the home textiles and apparels