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Essay: Shree Mathura Textiles strategy

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  • Subject area(s): Business essays
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  • Published: 25 September 2022*
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  • Words: 1,410 (approx)
  • Number of pages: 6 (approx)

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*RESEARCH QUESTION:-“Should SHREE MATHURA TEXTILES reduce the product range of their own factory and start buying cloth material from other firms and play a role as a mediator?”

*RATIONALE:- The business is planning to reduce the production of their own factory and start purchasing cloth materials from other firms and suppliers and supply in the foreign markets. Which will help their business for a better standby lowering manufacturing costs and wastage of goods?

*TOOLS TO BE USED:-

Forcefield analysis on the company- will help us gather and watch out the driving forces (benefits/threats) and the restraining forces (costs/opportunities) of opening the new branch.

ratios- This will help us evaluate the profits before and after the decision taken.

Ratio analysis to show the past profits…. (graphs)

Key areas of the syllabus

Ch.No. Name and tool used.

*Methodology-

*ANTICIPATED DIFFICULTIES:-

*ACTION PLAN:-

RECEIVED THE INTERNAL ASSESSMENT- DECEMBER 2017

INTRODUCTION

The business I’ve chosen is Shree Mathura Textile. It’s a clothing manufacturer operating in New Delhi focusing on providing customers with unprecedented customizability. Started in 1996 it took on a different way of approaching traditional Indian clothing all over the world, by adding different mixes of products for a unique one.it also took a move of exporting many raw materials needed by Pakistan, Afghanistan and many other too. To help increase sales the business started their own factory to show off their work which turned out to be a huge success. They also expanded their business in various places within Delhi only.

Currently, the firm has seen high profits and high sales of cloth. Recently the business faced some downfall because of the demonetization and then the new system of GST. This brings me to my Research question:

“Should SHREE MATHURA TEXTILES reduce the product range of their own factory and start buying cloth material from other firms and play a role as mediator?” Shree Mathura textile has been doing well but due to the demonetization and GST, the business’s isn’t earning the same high profits which it was earning before. Therefore, the company is looking into the option to reduce the production of their own factory and start purchasing cloth materials from other firms and suppliers and supply in the foreign market. Which might help the business for a better standby lowering manufacturing costs and wastage of goods.

Methodology:

I plan to use tools such as the Force Field analysis and Ratios to provide more precise and accurate analysis. with primary and secondary data like financial reports and my theoretical knowledge.

Primary Research: I had a conversation with the owner of the Shree Mathura textile about the current market and business state. later I had a word with the manager for gaining other predicted information related to sales and costs.

Secondary Research: I looked into their thinking about the research question for knowing their reason for the same to see the feasibility of limiting production in own factory and any anticipated difficulties that could be encountered which could then be used to perfect the plan.

I then looked at the situation of the market to see if limiting own production and buying goods from other manufacturers a right idea through reports found through resources like internet and meeting some market people planning to do the same.

THE INFORMATION IS GATHERED FROM TRUSTED SOURCES AND IS COMPLETELY VALID.

Main Findings

The market that the business operates in is the clothing market for high-quality clothing. As a result of this, the demand for some goods are made in the factory and that isn’t cheap for the factory and sometimes leads to huge losses too. The targeted consumer base is the foreign market and local consumers. Finally in the type of market Shree Mathura Textile needs to be very innovative and should know how to increase profit for the company through different sources, this means that it’s good but even bad for Shree Mathura Textiles if they’re limiting their factory usage and buying products from a wender and playing a role as a mediator for higher profits buy buying them at lowest cost and selling them at highest which is fair too.

Shree Mathura Textiles is a company which is 18-19 years old and suffered as well as gained a lot of respect and profits over the past years and has great respect in the market for their well properly finished work with proper decency.

As we can also see from SHREE MATHURA TEXTILE current financial accounts 3 has the capital to begin its expansion plans outward towards Pakistan, currently, its gross profit stands at 8,160,173

ANALYSIS:

3.1 Ansoff’s matrix

The Ansoff’s matrix is a tool that helps a business analyze whether to take the decision depending on the risk.

Since Shree Mathura Textile is using its existing products but getting more products from the market, this would be Market Development (Medium risk), which is not good since would put the business in a delicate situation. Shree Matura Textiles will be needing less of capital already in use because of less of extra machinery work would be required.

Therefore a low-risk strategy will work for Shree Mathura Textiles, the costs should be easily recovered and in a set timeframe so not as to disrupt the business activities. A larger consumer base and more market share would help as Shree Mathura textile market is something that is in need of constant goods which would be cheap if they’re made from an external source.

3.2 Force Field Analysis

The force field analysis is used to determine the restraining and driving forces behind any decision.

Benefits:

being a mediator: SHREE MATHURA TEXTILE market size by taping the consumer base in foreign is a great advantage. The business of luxury clothing while lucrative does somewhat limit the market so implementation and a decrease in personal market indulgent size are greatly appreciated. More consumers mean more people buying from SHREE MATHURA TEXTILE and more people likely to return giving a more stable revenue base.

Driving Forces

  • the company won’t need a large capital to store their goods but rather order for the goods required
  • having a vendor for providing you goods would be cheaper than manufacturing own.

Restraining Forces

  • the vendor might sell the same products to other businessmen leading to no antiqueness of the product left
  • The company’s depended on the vendor. if the vendor doesn’t provide them the good the company is nowhere.

Should, “SHREE MATHURA TEXTILES reduce the product range of their own factory and start buying cloth material from other firms and play a role as a mediator?”

Increase in revenue earned: Since SHREE MATHURA TEXTILE is set for a massive expansion drive in 2020 onwards the capital gained from its first can both be a measure of its success and give the extra revenue needed to fund the new expansions. More revenue can lead to the growth that MR. AGGARWAL has been waiting for plus it gives the company a shield against larger foes like FabIndia.

Larger market to counter seasonal demand: As stated before SHREE MATHURA TEXTILE market can sometimes lead to seasonal drops in demand due to summer months being too warm for heavily embroidered clothing such as satan and other meaning the company focuses on simpler but less revenue earning products, another market can allow more revenue during these months.

Drawbacks:

Capital Diversion: To fund the implementation and all other changes to the company’s capital from past 16 years will have to be diverted away, although as analyzed further the implementation is predicted to be highly profitable it is still a major investment and in the scenario it doesn’t work out the costs will still have to be covered with no benefits.

Investment Appraisal

Payback period: If SHREE MATHURA TEXTILE goes ahead with this plan the cost may vary depending on where they wish to set up their vendor as. If they wish to start in a different location away from a city center the costs go down to 3 million from 4 million. With SHREE MATHURA TEXTILE operating in a high-end market sales are projected at around 6,00,000 (away from city center) to 7,00,000 rupees per month (store in the city center):

Shops like SHREE MATHURA TEXTILE can earn high profits annually so it’s no surprise that SHREE MATHURA TEXTILE can easily pay back its costs quickly and start earning from its new implementations.

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