Strategic Marketing Planning Internal and External Analysis of

Presented by:
Amna Abdulla (3431), Fatima Hanif (3544), Mohammad Ali Jamot (3738).

Presented to:
Mr. Azhar Aqil

Date of submission:
10th December 2007

TABLE OF CONTENTS

LETTER OF ACKNOWLEDGEMENT ..................................................3 INTRODUCTION...................................................................................4 MANUFACTURING UNITS...................................................................6 EXTERNAL ANALYSIS......................................................................... 8

Customer Analysis...............................................................................................................8 Customer As Active Partner................................................................................................9

COMPETITOR ANALYSIS.................................................................11
Local Competition: ...........................................................................................................11 Foreign Competition:.........................................................................................................12 Other Exporters .................................................................................................................13 Global Competition............................................................................................................13

MARKET ANALYSIS........................................................................... 15
Market Growth...................................................................................................................15 Product Life Cycle.............................................................................................................15 Market Profitability............................................................................................................16 Key Success Factors...........................................................................................................16 Raw Materials.....................................................................................................................17 Novas Raw Materials.........................................................................................................17 Demand Conditions............................................................................................................18 Exhibitions and Trade Fairs...............................................................................................18

ENVIRONMENTAL ANALYSIS..........................................................20
Technology.........................................................................................................................20 Government........................................................................................................................20 Research & Development..................................................................................................20 Social Compliance..............................................................................................................22

INTERNAL ANALYSIS........................................................................23
PERFORMANCE ANALYSIS.........................................................................................23 Production Capacity.......................................................................................................23 Customer Satisfaction....................................................................................................23 Product Quality .............................................................................................................24 Managing Workforce Diversity:....................................................................................25 Employee Training and Productivity.............................................................................26 Responding to Labor Shortage .....................................................................................27 Machinery.......................................................................................................................27

DETERMINANTS OF STRATEGIC OPTIONS..................................29

Past Strategies.....................................................................................................................29 Future Strategies.................................................................................................................29 Strategic Problems..............................................................................................................29

SWOT ANALYSIS...............................................................................30 RECOMMENDATIONS.......................................................................32

LETTER OF ACKNOWLEDGEMENT

Dear Reader This course has helped us expand our understanding of Strategic Business Planning, in general, and has taught us how an effective business strategy is set, in particular. Through this report we have attempted on our part to explore the various dimensions of Nova Leathers internal and external environments. We thoroughly value the time and effort spent on compiling this report into its final form. For this we are grateful to you, Mr. Azhar Aqil, for mentoring and inspiring us to give in our best! We have worked with full dedication and conscientiousness to bring this report into its final form, with the hope that it makes informative and insightful reading! Sincerely, Amna Abdulla (3431), Fatima Hanif (3544), Mohammad Ali Jamot (3738).

INTRODUCTION The leather industry is the second largest industry in Pakistan after textile, contributing more than 7% to its export earnings. It constitutes more than 5% of the manufacturing GDP of Pakistan. With over 17 years of experience under its belt, Nova leathers are proud to be one of the largest garment and accessories manufacturers in Pakistan and today hold the first position in leather exporters in Pakistan. Their strengths include having a tannery to ensure a smooth supply of raw material, the presence of a dedicated workforce and state of the art machinery. Nova has been growing ever since its inception and has embossed its name on foreign markets. Corporate Profile Nova leathers were established in 1986 and have grown by leaps and bounds. Initially starting out as a tannery manufacturing all types of garment leathers, Nova set up its first stitching unit in 1998 manufacturing quality leather apparel. From humble beginnings of 25,000 pieces a month, Nova now produces an annual quantity of approximately 800,000 pieces. In view of continuous expansion, Nova has increased its human resources with qualified people at all levels and the current figure of Novas personnel lies somewhere around 2000. Its array of state of the art machinery includes 1400 stitching as well as embroidery and embossing machines. The acquisition of a digitized pattern cutting grading machine (investronica), allows customers to send patterns via email, saving them time and eliminating the possibility if ill fitting garments. In 2002, the accessory division was started, producing leather hand bags and gloves. Initially starting out with the aim of utilizing garment wastage, this division quickly outgrew the resource and is now doing exceptionally well. With the acquisition of a new tannery two years ago, Nova grew in size as well as exports
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 The exports figures for Nova in particular have grown about 3040% in the previous 2 years.

MANUFACTURING UNITS

Tannery: To ensure a steady supply of raw material for its units, Nova has its own tannery producing leather for the garments and accessories unit, and for exporting to customers in Far East and Europe. With skilled technicians at the helm Nova is able to produce over 120 different qualities of leather as per the demands of the client. The qualities of leather differ and the range of colors is also constantly increasing. Covered area: 90,000 sq ft Human resource: 150 workers. Production capacity: 12 million sq ft per annum Nova is also proud to be one of the first tanneries in Pakistan to install an in-house tannery effluent treatment plant for the primary treatment of discharging water. This makes the garments made from its leather environment friendly. Garments: Standing proud as the largest leather apparel stitching unit in the country, Novas garments unit produces a wide range of products that includes jackets, trousers, skirts, long coats etc. constant upgrades of machinery are made to enhance efficiency and quality. Covered area: 100,000 sq ft Human resource: 1250 workers Machinery: 500 stitching machines Button-hole Embroidery embossing machine Digitized pattern grading and cutting machine (Investronica). Accessories:

Since its establishment in 2002, the accessories unit has grown by leaps and bounds. Utilizing both garment leather and vegetable tanned accessories leather, their range of products includes ladies hand bags, mens briefcases, wallets, gloves, scarves etc. Covered area: 35000 sq ft Sub-division: Hand bags Gloves Human resources: 250 workers Machinery: 65 stitching machines Embossing Strip cutting Clicking press

EXTERNAL ANALYSIS

Customer Analysis Nova Leathers is essentially in the business of exporting its goods all over the world. Although the company has few local outlets, its main focus is on the global market. Its customers include big brand names such as Zaras, H&M, and Esprit. Nova Leathers does not interact directly with its customers. It does business with exporting middlemen, which are generally referred to as agents. These agents in turn deal directly with the clients and serve as an intermediary which bridges the gap between the company and the customer. Many a times Nova Leather also produces directly for big brand names. These companies, for example Zara, approach Nova directly and provide them with designs and quality specifications. Nova thus exports to these brands directly, and the brands sell to customers further. Whether Nova deals with the agents or the branded companies directly, the clients mostly provide the specifications for the product in all aspects. This includes color, patterns, cuts, quality, and designs. Designs can also be copied off from previously designed products for bigger customers; however, they cannot be supplied in the same season in which the original design was launched. Creating an end-consumer profile for Nova is not possible since they manufacture products for business customers and not endconsumers or individuals. Nova Leathers has divided its global customers into the following logical units based on the region, size of order, and the product quality which is also their customer profile: CODE NAME Alpha REGION/QLT/QTY BRANDS Scandinavia Big Bock, Mustang, Street One
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Bravo Charlie Sigma

Spain, France Germany, U.S.A, Turkey Big quantities

Quaterfil, Alcampo, Promode, Camare, Mango Espirit, H&M, C&A, Bugati, FrontLine Zara, Bershka

The Alpha unit handles orders from Scandinavian countries whereas Bravo covers most of Spain. Charlie employs the best and most skilled workers and this unit fulfills small and specialized orders. Sigma handles the biggest orders for brands such as Zara, and Bershka. This department has its own capacity setup as well as backup machines. However, at times when the orders placed are in numbers beyond the companys production capacity, Nova out sources certain quantities so as to ensure order completion. Nova out sources its production to a parent company in Lahore.

Each of these units has a fixed amount of agents to handle. The division of agents per unit is elaborated below: Alpha: 3-4 major agents. Alluna is its biggest agent in terms of quantity Bravo: 4 agents. Including Indigo, and a French company Charlie: 3 agents. Includes the Brand FrontLine Sigma: Handles one agent which is responsible for 50% of the exports of Nova. The Indi-tech brand which is a parent brand for companies like Berksha and Zara Customer As Active Partner Nova Leather works closely with its customers treating them as their own partners. Although there is an agent handling the interactions, Nova makes sure it succumbs to its customers every whim and collaborating with them from beginning to end. Even before the customer places an order, they visit the factory to make sure the company is complying with the international laws and regulations.

After the customers approval, active dialogue is carried out to ensure both parties understand the contract terms. Since Nova exports its products all over the globe, it deals with a diverse range of customer requirements. Some highly sophisticated, some requiring basic work. Novas break up of its customers in different groups according to regions and size simplifies the process as well as keeps its customers happy and satisfied. Novas offer to 100% customize any material or design gives its customers an immense number of options. Customers may send in their own designs or choose one from Novas previous collections and make the changes they want to make.

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COMPETITOR ANALYSIS

Local Competition: Nova Leathers entered the local market with the opening of K.O.S.S around 5 years back. It faced heavy competition from Hub Leathers and Jafferjees. K.O.S.S essentially offered garments made from leather not used in export production. Leather was heavily wasted either because of unapproved quality or because of the pieces left behind from the cut outs used for other things. Nova also ventured into an accessory line by the name of Limited Edition for which a special designer had been brought in. Currently Limited Edition outlets are situated at,
1. Karachi : Forum

Zamzama Park Towers 2. Lahore Plans to open outlets in Islamabad and Multan are underway.
nova leathers local selling VS Export

Local 2%

Local Export

Export 98%

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Proportionate Local Market Share

Othersl 6% Nova Leathers 2% Jafferjees 48%

Hub leathers 39%

Foreign goods 7%

Foreign Competition: Pakistan holds 1.5% share in the total world leather exports. In 2001 the country had a boost in the international market because of the foot and mouth disease affecting various European Countries. As a result Pakistan was the next best country to import leather products from and sales rose. However, in 2002-03 the demand steadily decreased; the reasons being economic recessions in buyer

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countries e.g. in USA; Other factors include the Iraq War which cut off trade routes for a while thus reducing contracts.

Other Exporters Nova Leathers stands at number 1 in the Pakistani export market. A very close Number.2 is a leather manufacturer in Sialkot. As far as local leather exporters are concerned, competitor organizations are shutting down due to black trade as well as tough competition faced by them from the major leather manufacturing units in Pakistan. Its main current competitors are listed below: 1) 2) 3) 4) Leather Field Sialkot Skin Craft (shut down) NBZ (shut down) Focus Sister company

Global Competition On the global front, Nova Leathers falls on number 4 in ranking. The competing countries are few but the competition faced is tough. This is because the industry competes on a quality basis and not price. Major competition is faced by India and China which have a great advantage in terms of cheap labour. Pakistans quality of leather is about 10% better than India. However Chinas quality is just as good as Pakistans and they have a competitive advantage as well because of their cheap prices. China generally has a cost advantage due to the fact that in addition to cheap labour they even have cheap leather. Moreover, they even sell pig leather which is cheaper. India gains a competitive advantage over us because they produce their own chemicals whereas the Pakistani Chemical Industry has not been developed and therefore imports more than 90% of its chemicals. Thus this increases the cost of production
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Since there is a lot of idle production capacity in leather garments factories in Turkey and because of cheaper raw material, the Turkish suppliers are offering very competitive prices to the buyers in Europe and USA. In the past, Turkey used to be expensive than Pakistan by about 15-20 per cent in prices, but now the Turkish manufacturers are offering the same or even cheaper prices than the manufactures from Pakistan. The European buyers prefer to buy from Turkey because there is no customs duty for imports from Turkey into Europe whereas European importers have to pay customs duty on import from Pakistan. In case of equal prices, the European buyers would still prefer Turkey because of close proximity and their better taste of fashion and design than the Pakistani producers.

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MARKET ANALYSIS

Market Growth Novas Growth rate of 20% annually has been constant in spite of local exporters moving out and them getting more business. Novas revenue and profits have been stable over the years because of certain external effects. The prices of leather, labor, and utilities are all on the rise and the only reason this is survived by Nova is due to the increase in demand.

Product Life Cycle On a product life cycle, Nova is in its growth phase while Leather Fields is in the maturity phase. There are no new entrants in the market as the barriers to entry are extremely high.

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Sales and Profits ($) Leather Field

Sales Nova

Profits

0 Product Introduction Devlpmt Stage Losses Investment ($) Growth Maturity Decline

Time

Market Profitability Nova Leathers current turnover is of Rs.2.8 billion. There is no set profit for the company as they are continuously involved in the process of expansion and as the prices of leather crust and wet leather keep increasing. They are currently at a break even point. The increase in quantity of finished leather demanded, due to the shut down of various leather exporters is the only reason for the sustainability of Nova in the leather industry.

Key Success Factors Novas key success factors are as under:

1. Top of the line leather quality 16

2. Several grades of quality, some of which cannot be matched by

any tannery globally 3. Some of the worlds most leading brands import Novas products 4. Prompt delivery 5. Perfect customer correspondence

Raw Materials Throughout the leather industry animal skins, which are the basis of the leather industry, are obtained from the provinces of the Punjab and Sindh. Limited quantities of imported hides are also used. The season of peak activity begins around Eid-ul-Azha and extends for between two to three months. Livestock growth in the country is between 1 to 2%. There is shortage of hides and skin, which leads to an import of 30% of the hides and skin. The imports are mainly made from Saudi Arabia, Iran, Afghanistan, and other Muslim countries in the region. The export of live animals to Saudi Arabia and other countries met with a lot of protest from the tanners as such exports made the shortage of the hides and skin more acute. After a lot of lobbying, the exports of live animals have reduced but these have not completely stopped. The import of hides and skin is not always due to shortage. It is sometimes required because of the kind of finished product that the local exporter has to make. Different hides and skin in different countries have varied texture, strength, and quality. The requirement of the product would determine as to what kind of hides and skin is to be used.

Novas Raw Materials Nova imports leather in various forms and then further processes it in its tanneries. Wet blue and crust leather is imported mainly by Nova. Nova also imports items such as buttons and buckles from China.

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Most of Novas leather imports are from Muslim countries. These include the likes of South Africa, Iran and Sudan. The reason for importing from Muslim countries is that the method of slaughter is such that allows all the blood to gush out of the veins and thus leave fewer marks on the skin making the skin of high class quality. Nova prefers to import raw leather rather than get a local supply due to a low threshold for credit. The suppliers can not invest the amount needed. When raw material is supplied it is done in millions of square feet, and they need up to 20-30 containers of raw leather. This also means it is a Rs. 50 to 70 million investments which is too steep for local suppliers.

Demand Conditions Having a sophisticated buyer means that these buyers demand the best quality products. In order to meet such stringent demands of the buyers, the firms are compelled to provide them with the best. These buyers may be individual consumers, industrial buyers, or distributors. When they pressurize firms for high-quality products that should meet the standards of the global market, firms have no choice but to rise to the challenge or face the danger of being driven out of the market. Therefore, it is not the size of the demand that matters; what matters most is the quality of the demand in order for a firm to be globally competitive. Nova caters to a pure global market with a minimal local market share. Therefore in order to compete in the global market, they have to continuously strive to provide its customers with the highest quality products, comply with international standards, and maintain successful customer relations. All these factors contribute to maintaining and increasing Novas current and future demand. Exhibitions and Trade Fairs At times Nova participates in global exhibitions and trade fairs. This is not done for promotional marketing as much as it is carried out for
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clearing remnant stock piles, from excess productions, and left over sample pieces.

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ENVIRONMENTAL ANALYSIS

Technology Today technologies such as the Investronica have become a necessity rather then a new innovation. Small innovations are entering the markets which make tedious jobs easier. Such as the machine which makes adding buttons onto jackets easier. Instead of punching one button hole at a time it punches all button holes required on a jacket together or instead of pressing on one button at a time all buttons are pressed on together. These machines are used for bulk quantities and not for small orders. The machines and most of the new technology are imported from Germany. Government The recent political stir in the country has, fortunately, not affected Nova Leathers. The current situation has not imposed a threat on old or new customers although the customers may get apprehensive; however, they have always been reassured. The government does not support the leather industry at all. It does not discourage it either. The export rebates though are on the decline from an earlier 5% to a current 2.5%. As far as rebates on imports are concerned as long as they are shown to be re-exported there are no duties or taxes levied. The government subsidies have decreased and so have the tax returns. The leather industry is currently asking the government for higher rebates and more R&D investment. Research & Development

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Two government based Research and Development institutes are National Institute of Leather Technology (NILT) and Pakistan Council of Scientific and Industrial Research (PCSIR). PCSIR carries out research in various fields like pharmaceutical, glass, ceramics, food, as well as leather. The two institutes have achieved no real results and may be considered to be namesake based on their achievements so far. However, the two most important associations in this industry are: Pakistan Tanners Association (PTA): The PTA is an association that controls and organizes all the functions of most of the tanners existing in the country. It is an influential group that helps make various strategic decisions on the amount of finished leather and tanned leather that needs to be exported and imported. Plus, who should the customers be, the quality and pricing determinants of the tanned leather, which manufacturing process needs to be utilized when and how etc. Pakistan Leather Garment Manufacturing & Export Association (PLGMEA): This association controls the manufacturing and sale of garments that are produced locally. It undertakes market surveys in order to produce for a foreign market since leather garments are demanded on an extremely small scale locally. Its functions are similar to that of PTA except that they relate to Garments and not finished leather. No firm invests individually in R&D. PLGMEA is responsible for conducting all R&D efforts in Pakistan. For example, PLGMEA recently brought in a new machine and placed it at a central location where all manufacturers were allowed to come and utilize the machine at a minimum rate. Skilled technicians have also been brought in for training the local workers. PLGMEA also imported a waste purifier which was set up in Korangi. This machine takes the leather wastes and processes it to transform it into un-harmful form which is wasted in an environmental friendly manner into the water.
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Social Compliance The company adheres to a strict code of conduct which involves the following:
1) Environmental compliance

2) 3) 4) 5)

Non discrimination Child labor Harassment and abuse Freedom of association

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INTERNAL ANALYSIS

PERFORMANCE ANALYSIS

Production Capacity Novas total capacity is an average of 80,000 garments a month. This has doubled in the last 4 years. During seasonal highs the capacity can exceed 150,000 garments per month. Nova gets business almost all year round, except for about 2-3 months of the year which are usually quite unproductive for them. This year, there have been no slow months for Nova. Nova has a capacity of producing 80,000 units without outsourcing. In Nov 2007 they had a preset target of producing 125,000 units of garments and they exceeded their targets and actually produced 133,000 units. The number of garments produced per department is as follows: NO: OF DEPARTMENT UNITS* Alpha 31,000 Bravo 28,000 Charlie 13,915 42,000 + Sigma 17,000 * Figures are approximations Customer Satisfaction Every customer appreciates on time response and delivery. Company performance is analyzed and monitored at all levels. The top level management of Nova personally takes care of their clients needs and queries. The clients are treated as guests in case a foreign
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delegation arrives. Special treatment is given to them in the form of dinners, entertainment and free stay. Timely response is given so much importance throughout the organization that all the e-mails coming in and being sent out are monitored by the General Manager. It is Novas policy to make sure each and every query is being answered and all e-mails should be replied within 24 hours irrespective of the fact if it is a regular client or not. Due to the time difference between Pakistan and various parts of the world, a problem arises where the customer needs to get in touch with the managers and cant because of the time difference. Managers have then been given Black Berrys to ensure they are available for their customers at all hours of the day and night. Clients may contact them at any given time of the day. In order to optimize customer satisfaction Nova keeps a record of all its clients for the previous ten years. This data is analyzed and trends and patterns are deduced. This data can then be useful to identify key clients and their buying and preference patterns. A general mind set that works against Pakistani companies globally is that we have shabby customer service and after sales service. Nova makes sure that this is not reinforced at their company. Nova ensures prompt service, delivery times and customer care. Product Quality The process of leather production is simple as illustrated as follows:

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Raw blue leather Wet blue leather Crust leather Dyed leather Finished leather

There is a Quality control department which is set up at each unit. This ensures that quality is maintained at every step of the production process. Quality control is carried out at the stages of: o Selection of leather, o Cutting o Sewing and o Finally at the shipment stage where the head of quality conducts a random check. Moreover, Nova checks its leather for chromo chemicals, which are against the international standards and laws and may prove harmful to human life. Incase of large orders beyond the companys production capacity, the job requires out sourcing. The company then has to make sure that very high and intensive quality controls are implemented. This is because if the outsourced company makes errors in productions Novas reputation is at stake. To ensure the quality is standardized very high checks and controls are kept on the process of manufacturing the finished products. Managing Workforce Diversity: Nova currently has more than 1,800 employees from different localities of Karachi. Diversification is mainly on the basis of religion and gender. The majority of the workers are Muslims whereas the
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rest are Christens. The organizational culture is such that it encourages them to work hand in hand in an organized manner. Nova treats its workers and employees equally and with great respect. For example in the Muslims holy month of Ramadan every body is offered Iftar regardless of their beliefs. On the other hand Nova has also recently started to hire women on the assembly lines in order to discourage discrimination between the two genders. Moreover Nova understands its employees needs according to the society and culture we live in and therefore women are allowed to work for shorter hours.

Employee Training and Productivity Approximately 80% of the employed individuals in a typical leather firm in Pakistan can be categorized as skilled labor. For recruitment purposes, the general custom is to employ people from other firms. This is practiced for approximately 90% of the cases. Apprenticeshipbased training is prevalent rather than relying on formal training institutes. The workers, after learning how to perform tasks, undergo a test to ensure they are capable of the work they are set out to do. Nova employs about 1700-2000 workers which include the workers in the tanneries, wage workers and regular employees. Nova follows a no child labor policy and all employees are 18+ years. The pay structure for the labor at Nova is one two levels 1) per piece pay this means that the labor is paid for the final number of approved pieces of output they produce 2) Per job This pay structure indicates that a fixed salary will be paid to the labor on the completion of a complete approved job on time. Nova as a company implements both pay structures depending on the type of job. Wage rates:

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Per Month Rs.4600 Per Day Rs.177 Per Hour Rs.22.11 Novas have always provided its customers with the best quality products along with maintaining the interest of their employees. For example extra benefits and bonuses are given to the employees for their hard work and dedication towards their job. Furthermore, extra care is taken of the handicapped employees who are given additional breaks so that they dont get overworked.

Responding to Labor Shortage Labor in Pakistan is very unreliable. If they ask for a three day leave they might show up after a week. This problem puts the top management in a dilemma regarding order completion in a timely manner. Therefore, in order to over come this problem the company usually employs temporary workers or asks the existing staff to work for longer hours for which they are then compensated. Thus Nova always makes sure that right amount of labor is available at the location to produce high quality products within the time limit. Machinery The use of local machinery in the leather units in Pakistan is very low, up to a maximum of approximately 20% of the machinery being locally produced. The main local machinery used is a drum, where finished leather is dried. These machine manufacturers are located mainly in Lahore. The use of foreign machinery represents the opportunities present for the leather industry in Pakistan to invest in better machinery and also the difference in the state of high quality mechanization in Pakistan and its competing countries.

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Nova Leathers carries out the majority of its work on a machine called Investronica, which makes patterns on the leather according to the design specifications fed into the machine. It creates cut outs of stencil nature and also grades sizes automatically e.g. from medium to a large.

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DETERMINANTS OF STRATEGIC OPTIONS

Past Strategies Novas organizational structure is dynamic and has been changing significantly over the past 17 years. Over the past few years the production quantities have increased by 40%. In the initial years there was slow growth for Nova. They started with one manufacturing unit as tanneries and as customers increased Nova vertically integrated its business and ventured into garments and accessories. Gradually the teams of merchandisers increased and so did the number of people in each team. The regions also expanded and then finally the number of units expanded to where they stand to date. The units Alpha, Bravo, Charlie, and Sigma were started 1.5 years ago as a result of all this activity to make the production processes more manageable. \ Future Strategies In order to approach new clients Nova Leathers go to them directly. Their future strategy is to analyze their past sales trends and get rid of unprofitable clients and retain more profitable ones. They are not looking into further expansion at this point in time. Strategic Problems 1. A major problem that Nova faces are customer claims. Claims are when clients find reasons legitimate or illegitimate to get a 5% claim on the delivered goods. 2. Another problem faced by Nova is the wages for the labor. There is a limited supply of labor and thus other factories may take the workers for higher wages and then Nova has to yet again increase their rates to get them back. Here the theory of sticky wages and wage spirals come into effect.
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SWOT ANALYSIS Strengths: Nova owns its own tanneries where they produce their own leather. This serves as an advantage because; if the prices of finished leather increase or decrease in the market Nova remains unaffected by this market situation. Tremendous experience on their side as the factory has been established for 17 years. Big brand name clients such as Zara, H&M, and Espirit. Good customer relations. Nova has, over time, come to be known as a trusted name in leather manufacturing. Leather market and demand is constant and there has never been a decline in the demand for leather. #1 in leather export Supplier of processed leather to China. Cheaper and better quality leather then China and India. Acquisition of Investronica a pattern making machine. It creates cut outs of stencil nature and can grade sizes automatically. E.g. medium to a large. Follows all international standards: No child labor Environmental friendly ISO certified plant Resource reutilization (generators produce gas with no toxic fumes, the heat produced though is recycled to heat the boilers etc.) Opportunities: The Chinese government is decreasing its subsides placed on the leather industry and thus their production of leather goods will become more expensive and the price will increase making the global market more approachable for us as the prices will be more competitive. This serves as an opportunity as

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compared to Chinas previously cheaper prices and Pakistans more expensive products. Around 20 to 24 leather factories closed down in the past few years giving Nova a wider clientele Threats: Main global competitors are China and India due to cheaper/free electricity and cheap labor. Bangladesh is a minor competitor. Leather field in Sialkot is a close #2 and was #1 till a few years ago. Turkey is a major threat to Pakistan, since their designs and quality are of a superior quality. Moreover, the ease of importing items from Turkey for Europe gives turkey a competitive edge over Pakistan.

Weaknesses: In the current market situation where labor and other prices are high, meeting global prices is difficult for Nova. As previously mentioned before Nova has the highest qualities in the world and this does not come without a price. The finished leather prices are high and additional prices to make these into garments makes it higher and thus other global competitors win in the price war. Nova is unable to meet these prices and at the same time maintain the same high quality it is proud of.

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RECOMMENDATIONS

Remedy for protecting itself from foreign competition is to improve quality by using technology and by giving better customer service. To date Nova has not met a single dissatisfied customer so its ability to compete is tremendous, however little bit support from the government will also give an edge. Research & Development should be undertaken to see how the tanned leather can be developed even further at cheaper prices.
If all finished leather converted into leather garments Pak will earn

30% more foreign exchange & greater employment. Therefore efforts to make this into a reality should be made.

Invite foreign designers to give local designers of garments training; As a result local designers will become familiar with different designs not just local ones. Send local designers abroad so that they could study foreign designs and production processes.
Should try and cater to the higher segment of the markets abroad.

Nova has great potential because their qualities of products are far better than the neighboring countries. As a result they should start marketing to a higher segment of the market by enhancing their value addition.

Potential for entering the footwear industry.

Have a continuous training program. So that workers who leave dont leave the firm in a desperate state for talent & skill.

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