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    Arvind Mill Case Analysis: Increasing No of Players Increases Bargaining Power of The Suppliers

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    Pritam D Biswas
    Arvind Mills case analysis discusses the strategy and performance of denim manufacturer Arvind Mills. Key points include: 1. Arvind Mills followed an industry organization model instead of a resource-based model and set up large production facilities in a fragmented industry where size does not confer advantages. 2. The company lacked external environmental analysis and based its strategy solely on past achievements in a volatile industry. 3. A SWOT analysis identified strengths like large scale integration and economies, but also weaknesses such as high capital costs, leverage, and lack of flexibility.

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    Arvind Mill Case Analysis: Increasing No of Players Increases Bargaining Power of The Suppliers

    Uploaded by

    Pritam D Biswas
    76 views5 pages
    Arvind Mills case analysis discusses the strategy and performance of denim manufacturer Arvind Mills. Key points include: 1. Arvind Mills followed an industry organization model instead of a resource-based model and set up large production facilities in a fragmented industry where size does not confer advantages. 2. The company lacked external environmental analysis and based its strategy solely on past achievements in a volatile industry. 3. A SWOT analysis identified strengths like large scale integration and economies, but also weaknesses such as high capital costs, leverage, and lack of flexibility.

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    arvind mill strategy

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    SM-arvind

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    Arvind Mills case analysis discusses the strategy and performance of denim manufacturer Arvind Mills. Key points include: 1. Arvind Mills followed an industry organization model instead of a resource-based model and set up large production facilities in a fragmented industry where size does not confer advantages. 2. The company lacked external environmental analysis and based its strategy solely on past achievements in a volatile industry. 3. A SWOT analysis identified strengths like large scale integration and economies, but also weaknesses such as high capital costs, leverage, and lack of flexibility.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    76 views5 pages

    Arvind Mill Case Analysis: Increasing No of Players Increases Bargaining Power of The Suppliers

    Uploaded by

    Pritam D Biswas
    Arvind Mills case analysis discusses the strategy and performance of denim manufacturer Arvind Mills. Key points include: 1. Arvind Mills followed an industry organization model instead of a resource-based model and set up large production facilities in a fragmented industry where size does not confer advantages. 2. The company lacked external environmental analysis and based its strategy solely on past achievements in a volatile industry. 3. A SWOT analysis identified strengths like large scale integration and economies, but also weaknesses such as high capital costs, leverage, and lack of flexibility.

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    of 5

    Arvind mill case analysis

    1.

    Case highlights:
    First slide should list highlights of the case as given by Prof.

    Highlights of the Case:


    1. Arvind followed Industry Organisation model for strategy instead of Resource
    based model.
    2. Set-up large scale production facilities in a highly fragmented industry where size
    does not matter.
    3. Lack of external environment analysis in a volatile industry structure.
    4. Total business model based on historical achievements
    5. Overly leveraged
    Please add more as you guys feel.
    2.

    Industry analysis
    Tushar mentioned as below:

    Increasing no of players increases bargaining power of the


    suppliers.
    In my view, increasing number of suppliers will increase competition and reduce
    bargaining power of suppliers.
    Group members comment please.

    3.

    My comments in red
    SWOT analysis
    Strengths:

    One of the largest manufacturers of Denim in India and the


    world.

    Strong portfolio of domestic and international brands.


    Economies of scale through complete integration.
    Arvinds run Indias largest value-chain(Retail) MEGAMART
    with over 200 stores.
    Latest manufacturing tools in production of denim and
    clothing.
    Over 26000 employee from the work force for Aravind mills
    CSR activities like- Education ( Sharda Trust), upgrading
    slums etc enhance its brand value.
    Operational efficiency and fast and latest machines.
    Skilled and comparatively cheap labour.(This is an
    opportunity for Indian companies and not only for Arvind)
    Redefining product portfolio by increasing the no of brands
    to 120.
    Access to export market.( This is again an opportunity for
    all companies and not only for Arvind)
    Learning process from previous bad experience. Forward contracts for
    naphtha and cotton.( this is a strategy which is a strength and not
    an opportunity, so I moved from Opportunity to Strength)
    Restructuring plan approved and leverage ratio has improved.
    Going up the Value Chain developing styles/making garments for global players.
    Redefining core competency large scale economies to Product Innovation. Differentiating itself
    as a maker of value-added denim trade.
    Going for Wet Leases instead of setting new capacity will provide flexibility.

    Weakness:
    Global penetration is limited compared to other few
    brand. ( better to be specific in relation to which brands)
    Presence of Indian and other international brands offers
    more offering to customers therefore high brand switching. (This
    is not weakness of Arvind but an Industry characteristic.)
    Lack of fresh idea. ( as per case study, Arvind has already
    started working in innovation/ developing designs for
    international market).
    Presence in big cities only.

    Not doing enough to build their brand equity. (Arvind has


    been carrying on basis brand strength, so its not a weakness)
    Business concentration leading to increased risk (pls
    explain)
    Wrong assumption and forecasts. (Lack of external
    environment scanning)
    High capital investment in setting-up new plants.
    Inability to retain skilled professional.
    High Break Even Point/ Margin of Safety is zero. No scope for any error.
    Complacency of management due to earlier success.

    Opportunities :
    Continuous Growth in the garment industry.
    Global expansion and reach of brands to increase
    sales. (This is not an opportunity but strategy to revive company)
    Changing retail scenario. Rapid growth in target groups as
    well as higher incomes.
    Rapid growth in age group 15 to 44 years.
    Skilled & Cheap labor available
    Product diversification. ( this is not an opportunity but a
    strength and already mentioned under strengths)
    Threats:
    Highly fragmented & volatile industry. Size does not allow to dominate.
    Market is highly competitive and dynamic.Increasing competition from

    Indian as well as international brands.


    low market share due to competition. ( difficult to prove by
    numbers, so not required)
    Cheaper imports from other countries and pirated productsChina, Thailand , Bangladesh etc.
    Excise duty ( is it mentioned any where in case study).
    Decline in exports ( it is not a threat but weakness)

    Rise in raw material price.


    Complacency of management due to earlier success. (it is a
    weakness, so I moved to Weakness section)
    High employee iteration especially senior skilled
    managers. (already mentioned in weakness)
    Regional trade Agreements such as NAFTA

    Opportunities

    Threats

    Denim prices are rising

    Highly fragmented & volatile industry. Size


    does not allow to dominate.

    Skilled manpower is available


    Market is highly competitive and dynamic.
    RTA such as NAFTA

    Strengths

    Weakness

    Large capacity to meet demand and compete


    on price.

    High Break Even Point/ Margin of Safety


    is zero. No scope for any error.

    Restructuring plan approved and leverage


    ratio has improved.
    Learning process from bad experience
    Going up the Value Chain developing
    styles/making garments for global players.

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