Final Project of IB Part#2

FINAL PROJECT OF IB, Part2
CONTINUED...
PROJECT of International Business ON SAPPHIRE TEXTILE MILLS LTD.
SUBMITTED TO:
SAPPHIRE TEXTILE MILLS LTD.

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SIR SHAHID KALIM KHAN

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FINAL PROJECT OF IB, Part2 COMSATS Institute of Information Technology, Lahore. (Department of Management Sciences)
GROUP MEMBERS
Khurram Maqsood Talha Qaisar Raheel Ahmad Muhammad Jahangir Azka Rehman Tanzeela Sajjad FA09-MBE-025/LHR FA09-MBE-065/LHR FA09-MBE-053/LHR FA09-MBE-070/LHR FA09-MBE-013/LHR FA09-MBE-066/LHR
DATE: 08th May 2011

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Table of Contents-Continued
5) TACTICS AND STRATEGIES Primary target selection Product selection for primary target market Choosing a method of market entry- Franchise or license Selection of distribution partners and promotion Terms and procedures
6) FINANCE/ BUDGETING Internal sources of funding Offshore financial sources Capital budgeting 7) INTERNATIONAL MARKETING Marketing strategies Marketing mix-Product, Price, Place, Promotion Branding

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5) TACTICS AND STRATEGIES Primary target selection: The primary target market for Sapphire Textile Mills is clothing manufacturing textiles making garments. There are many customers but Victor Innovatex, Inc. (Victor), of Saint-Georges, Canada, is the current customer of us with a total requirement of 5 Tons per day to process Knitted Dyed Fabric. Product selection for primary target market: Dyed Fabric, Grey Fabric, Bleach Fabric, Printed Fabric, Khaki Fabric, Organza Fabric, Peach skin Fabric. Choosing a method of market entry: Sapphire Textile Mills Ltd. entered in the international market to distribute their products by appointing their agents in the targeted markets-like Europe, who played a vital role for selling the products of our company. UK and Germany are the strong supporters of Pakistan in this case and both countries have been pushing EU decision makers to ease the regulations of GSP plus schemes for the last few months to add eligible developing countries to it. So exporting textile firm like Sapphire textile mills has an opportunity to target the market in an efficient manner. Selection of distribution partners and promotion:
Frontier Spinning Mills 1823 Boone Trail Road, Sanford, NC 27330, U.S.A. Sapphire Textile Mills created a liaison with Frontier Spinning Mills to distribute their textile products along with the promotion of our products in North America. Further we do participate in the trade exhibitions like Taxworld exhibition in UK, etc.

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Recommended Tactics and Strategies being adopting by Sapphire Textile Mills Ltd. Program 1: Sapphires nice quality products foe everyone! Company will find out the low cost countries and will form strategic alliances with companies in those countries. This will enable the company to minimize trade barriers and as a result reduces its cost. Procedure: Need to decide the low cost countries in which strategic alliance is to be formed and a series of procedures should be made to decide the amount of profit to be shared. SFL needs to grow more, e.g. it can focus on the production of specialized products like Zero Twist Yarn for increasing its exports by a large volume as this type of yarn has a huge demand in foreign countries. It can also concentrate on the finished production like making Woven Fabric. Program 2: Power of One Since SFL is a leader in the production of core yarn. It can take advantage of it by stating the production of Zero Twist Yarn and after success of its knittings (e.g. T-shirts), it can start the production Woven Fabric and by advertising its offers. Procedure: A set of procedures needs to be developed to ensure display of famous Core Yarn with Zero Twist Yarn and its fine quality T-shirts with Woven Fabric in advertisements. A series of procedures should be developed to ensure ideal display of these products. They should advertise their products on cable through different TV channels and though fashion magazines for increasing its products awareness and demand in different countries. (Corporate Strategy)
Values:

P eople R elationship I ntegrity D iversity

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E nvironment

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Data Collected through Questionnaire about Sources of Funding:
Sapphire group have two sources of borrowing. That is banks and financing by private investor. The rate of interest is both fixed and floating. Sapphire group tackle their interest rate fluctuations by using FRA (forward rate agreement) and interest rate swap. Borrowing is supported by collateral security. Sapphire group is also having covenants which help the company to better monitor its business decisions. Company is meeting its debt requirement through operating profit. Company resort to debt financing rather than equity financing because its best cost of capital. Company goes for other sources of financing that are bank overdraft, bonds and debentures. Company is utilizing its borrowing for long term and short term investment. Capital budgeting: Capital budgeting is the process of generating, evaluating, selecting, implementing and following- up on capital expenditure projects. The term Capital budgeting is used interchangeably with capital expenditure decision, capital expenditure management & long-term investment decision. The following are the basic features of capital budgeting: Potentially large anticipated benefits A relatively high degree of risk A relatively long time period between the initial outlay & the anticipated return

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Phases of Capital Budgeting: 1. Identification of potential investment opportunities: The capital budgeting process begins with the identification of potential investment opportunities. Typically the planning body of Sapphire Textile develops the estimates of future sales, which serves as the basis for setting production target. This information in turn is helpful in identifying required investments in plant and equipment etc. 2. Assembling of investment proposals: Investment proposal identified by the production department and other department is usually submitted in a standardized capital investment proposal firm. Generally, most of the proposals before they reach the capital budgeting committee are routed through several persons. The objective of routing a proposal through several persons is primarily to ensure that the proposal is viewed from different angles. It also helps in creating a climate for bringing about co-ordination of interrelated activities. Investment proposals are usually classified into various categories for a facilitating decision making, budgeting and control. 3. Decision making: The management of Sapphire Textile does Project appraisal and arrives at a decision regarding selection of project. Project appraisal is done regarding financial feasibility, technical feasibility, economic feasibility, managerial competence and market appraisal. Capital budgeting techniques are used while undertaking financial viability study of the project. 4. Preparation of capital budget and appropriation: Project involving smaller outlays and which executives at lower levels can decide are often covered by a blanket appropriation for expeditious action. Project involving larger outlays are included in capital budget after necessary approvals. Before undertaking such project appropriation order is usually required. The purpose of this check is mainly to ensure that the funds position of the firm is satisfactory at the time of implementation. Further it provides an opportunity to review the project at the time of implementation. In

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this step project cost is decided, funds are raised and financial closure of the project is achieved.

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7) INTERNATIONAL MARKETING Marketing strategies: In order to reduce their dependence on a few markets especially Europe, USA, and Asian new markets were developed for finish product of yarn.. This diversification not only reduced their dependence on Hong Kong but also gave those better profit margins at times when Hong Kong market was very depressed. Under this market diversification, Sapphire Textile mills started business with South Africa, Australia etc.
Contacting Old Customers:

The business with some of the old buyers in Europe was also revived during this period after intensive efforts. This revival gave good volumes and better profit margins.
New and Innovative Product Development:

They have developed fancy and special verities of finish fabric such as comber and lycra yarn which are being sold at premium prices. They keep on modernizing their equipment in order to maintain the high quality of their products.
More Quality Conscious:

With the increase of competition, they have become more quality conscious. In order to achieve their quality standards, they maintaining better quality by getting yarn from preapproved sources, tighter fabrics inspection in folding and providing service to their customers.
Marketing strategies includes:

1 2 3 4 5 Meeting with buyers. Company profile. Buyer Visits. Free Sample. Contacts with agents.
Meeting with buyers:

Marketing manager meets with buyer, introducing products to prospective buyer. This strategy helps manager to understand the needs and requirements of buyers as well as marketing people are aware of current trends of market. Through negotiation you win the sympathy of buyers and business for Sapphire Textile Mills Ltd.

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Buyers Visit:
Sometimes buyers visit are arranged to familiarize them with products, SFLis offering for their valuable customers. These visits are crucial for the growth of the company because they help in introducing products to others and also win a lop of business for the company. The Marketing department frequently invites buyer to show them excellent production process and quality productions.
Free Samples:
This strategy is widely too used to boost up exports. Free samples are delivered to customers. When new product is made, free samples are sent to loyal customer show firms concern for them. Customer satisfaction is a important aspect because customer is a person who gives meaning to company.
Contacts with Agents:

SSM is an export oriented organization. More than 70% of its sales constitute exports. So to capitalize foreign market, SFL has long list of agents working in foreign market. This strategy is useful when company is not able to communicate with buyers; it can hire services of agents who for commission introduce their products in market. Relationships with distributors or agents are recognized as critical success factors so a lot importance is paid to agents who are valuable asset of firm. Marketing mix-Product, Price, Place, Promotion: Steps in Marketing Planning:

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Branding: Essence of Brand: The constantly changing market poses new challenges to clothing enterprises, and the clients demands are also continually rising, and so it is necessary every now and again to offer them a higher added value. This added value is a properly planned brand strategy, the so-called branding. Firms without any distinct features, without a clear vision or specific mission, or without permanent values, will sink in the mass of messages hitting the market. Thus it is necessary to launch actions not only directed to distinguish a given brand from the competitors, but also to build a set of values and modes allowing the company to communicate with the market in a manner which would be easily recognizable and which would stimulate positive associations and strong reactions. Stages of the brand building process:

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WOVENS & HOME TEXTILES OF SAPPHIRE TEXTILE LTD:
Brand
H&M PVH GAP OLD NAVY OXFORD AMERICAN EAGLE FEDERATED LEE ZARA MANGO LINDEX C&A CHAPS MAVERIC HERO RANGLER JCP TOMMY HILFIGER MUSTANG OFTEN PULL AND BEAR ANN TYLER BEIRHOLMS VF VF-USA CK UFD SPRINGS T.J.MAX TOLRA CROTEX APE COHEN & CHAPMAN
Region
Sweden USA USA USA USA USA USA USA/ EUROPE EUROPE EUROPE EUROPE EUROPE USA EUROPE EUROPE USA/ EUROPE USA USA EUROPE EUROPE EUROPE USA EUROPE USA/ EUROPE HONG KONG USA USA USA UK SPAIN ITALY USA UK

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Final Project of IB Part#2

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FINAL PROJECT OF IB, Part2

PROJECT of International Business ON SAPPHIRE TEXTILE MILLS LTD.

SAPPHIRE TEXTILE MILLS LTD.