SWOT ANALYSIS SWOT Analysis is a popular technique used to analyze some company’s present business situation. It provides us with an overview of company’s major strengths and its critical weaknesses. The external opportunities and threats that the company faces in the external environment are also highlighted in this approach. The SWOT Analysis has two basic components. These components are Internal and External factors. The Internal component of Analysis is concerned with the basic strengths and weaknesses of the organization The external component deals with the factors that the company faces in its external competitive environment. These factors are categorized as opportunities available for the company in the market place and the threats strained by its competitors. Internal Analysis Internal Analysis includes analysis of Strengths and Weaknesses: Strengths: Core competencies of an organization constitute its Strengths. Strengths of an organization lead to success. We have analyzed that Masood textile Mills Limited has following notable strengths: Flexibility in related products production Well thought of Buyers TQM implementation Aggressive R & D Department Product Innovation ability Supply chain management Complete Vertical Integration Professionally managed Organization Weaknesses: Weakness of an organization depicts the areas where the company doesn’t perform up to mark. Lack of abilities to utilize the available resources to the fullest also becomes weakness of an organization. Weak points are very important internal factors which requires the company to overview its operations on regular basis to cover them. The weaknesses of a company are hard to be identified. The management of the company must find the solution to its weaknesses as soon as they are identified. A company may be weak in its processes, methods, ideas, costs, and location drawbacks, factors of production, entrepreneurship, or target market strategies. In essence, a company may be weak in any area in which it is supposed to be strong. We have concluded the following notable weaknesses of Masood Textile Mills Ltd. High Cost of production: The costs of production at MTM are very high as depicted from its Profit and loss account. Vertical analysis of Income Statement shows that the costs of production at MTM are rising regularly. This trend is continuously reducing the Net Profits to a small percentage. High costs restrain the growth of the organization. This trend even threatens the existence of the company. Thus, MTM should try to reduce its costs of sales as well as operating expenses. While doing so, it should not affect the quality of production as it is the major strength of the company. Low Production Capacity: During our internship program, we have noticed that the business volume of the company is increasing on a regular scale. The number of orders and the order size is also increasing at a rapid pace. But at the same time, the production capacity has not been increased at the same pace. Very often, the merchandisers have to reject profit generating orders due to scarcity of production capacity as previous orders have been processed in the production units. This decreases company’s profitability and at the same time it dissatisfies the customers. “At present, MTM is taking steps to cover this weakness. Two high capacities, modern stitching units are under construction in Mills Division, projects for increasing dyeing and knitting capacities also under consideration”. Aggressive Internal Environment: The managements of various departments work aggressively. It means that departmental goals are given more importance over organizational goals. The degree of cooperation among various departments is quite low. They pursue their own objectives and do not bother if those of others are not fulfilled. For will not do so on priority basis. Rather production department will insist on carrying on its current tasks. This is a major weakness. Many times immense opportunities are lost due to this attitude. External Analysis These factors are categorized as opportunities and threats Opportunities: As the name suggests, opportunities may be discovery of new markets or new segments within the same market, better need satisfaction ideas, gaps between what is needed and what is available to satisfy those needs, etc. Firm must keep on investigating and exploring the market place for discovering the opportunities. In today’s cut throat competition, a firm which does not have a fanatical eye on the new coming opportunities cannot survive. Following are the main opportunities for Masood textile mills ltd. Good image for entry in new markets Diversification in related Products Faster market growth Attractive for highly Professionals Marketing opportunity for own garment brand Government own textile ministry To stay Low cost producer Cost Efficiency Product Development Compete on Value, not on Price Threats: Threat is an opportunity missed by the company, a market captured by the competitors, appearance of fresh competitors, some new technology not yet availed by the company, political and economic instability of home country or customer countries, regulations imposed by international organizations like WTO, some restrictive measures taken by the customer’s country, or anything that adversely affects the image or business of the company. In my point of view, following factors are notable threats to the image and existence of Masood Textile Mills Limited. Removal of Textile Quotas: WTO regulations have eliminated Pakistan’s fixed quota in the textile imports of major customers like USA, Europe, Canada and Turkey. China has taken away a major part of business in these countries due to its low cost products. Ultimately, MTM has to reduce its profit margin also from 5.48% of sales in 2002 to 2.48 % of sales in 2006. Very often, merchandisers have to accept orders at 0% profit or even at loss. Increased Rivalry: Free competition has encouraged many countries to come forward and avail the opportunity. India, Bangladesh, Sri Lanka South Africa and some other low cost countries have appeared as giant competitors in present scenario. All these countries are tough time to Pakistani companies. It is very necessary that MTM should reduce its costs tangibly in order to compete with them. Limited number of customers: Masood Textile Mills Limited has a limited number of major customers. Although it has developed good relations with them but at the same time this is a threat to the company. These customers have relations with low cost companies in other countries also. In this perspective, it is desirable that MTM should continuously try to seek new customers while maintaining good relations with its existing customers. Political condition of Paki stan: History of Pakistan shows that it is endlessly passing through a regime of political instability. We have seen Marshall Laws and nationalization phases that almost destroyed the industrial sectors. Presently, Pakistan is facing a lot of trouble from internal and external terrorism. There is increasing the energy crises day by day. Further the Govt. of Pakistan is compelled to follow the IMF conditions which are causing the high price of basic necessities of human beings. These factors increase economic risk of a country and spoil the image of the country in eyes of foreign investors and buyers. Same risk is being faced by MTM at present. This is totally unavoidable and requires the management to have keen observation of environment to become alert of any coming trouble.
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