ASSIGNMENT #4 STRATEGIC MANAGEMENT

Submitted to: Sir Irfan Mehmood

Submitted By: Ayesha Khalid (12121002) Iqra Kausar (12121001) Hassan Tariq (12121003) Khalil Ur Rehman (12121010) Haider Dar (12121014) Dated: 11.06.2012

History Sialkot is the third largest economic hub in Punjab after Lahore and Faisalabad. Pakistan is one of the major countries to export sports goods, especially hand-stitched footballs. Sialkot (situated in the province of Punjab) and the 1,450 neighboring villages account for about 75% of the world production of footballs. In 1997-1998, 35.4 million footballs were exported for a total amount of 5,000 million Pakistani rupees. Belgium imported 1 million footballs. So Pakistan is adding a lot to the GDP due to this Sports Good Industry. Other countries are far behind to Pakistan in this Industry. Sialkot is one of the Biggest Industrial areas where there are more than 500,000 inhabitants. Of the 39.5% of the population over 14 in employment, 11.7% (4% women and 7.7% men) work sewing footballs. Industry Overview This type of industry having close substitutes or similar products. The registered firms in the Chamber of commerce account for more than 5000. This Industry of Pakistan is recognized in the world due to designing, manufacturing sports Goods and the selection of appropriate raw materials to make the goods. Quality and durability remains the cornerstone of the manufacturers. It is a labor-intensive industry providing direct and indirect job opportunities to about 60,000 workers, while sub-contracting of work on piece rate is a common practice, resulting in more jobs for people. More than 200,000 people are directly employed in this sector exporting goods worth US$450 million annually from around 2,400 companies of various sizes. Most companies fall under the commercial exporters category. These are trading companies, having minimal staff (often only one the owner himself). They depend totally on vendors for the production of goods. In this industry employee getting their wages as piece rate by weekly basis these are those which are directly involve in making bats rest of get their salaries by monthly basis. Following are products produced by the Industry Balls (foot ball, hand ball, rugby, basket ball) Gloves

Garments Shoes Socks Protective Equipments Boxing and martial arts products Knit wear

Some of the world famous brands who get their supplies from Sports Industry of Sialkot are Adidas, Nike, Puma, Diadora, Select, Umbro, Lotto, Micassa, Wilsons and Decathlon etc Football is exported more as compared to other sports goods. There are different qualities of footballs The A-quality footballs, or valaiti , are used during matches and training sessions The B-quality footballs, or lahori, are mostly sold on the local market The C-quality footballs, or desi, are used as promotional material

There are many exporters in Pakistan for Footballs. Their export include the following companies West Indies, Bahrain, Nepal, Maldives , Switzerland, South Africa, Australia, Bangladesh, Srilanka, UK, USA, India, Kenya, Zimbabwe, Malaysia, Qatar, Singapore, Oman, Kuwait etc. Total export of sports industry of Sialkot was over $1.2 billion a year without the support of the government Porters Five Forces Model Porter identified five competitive forces that shape every single industry and market. These forces help us to analyze everything from the intensity of competition to the profitability and attractiveness of an industry. Threat of New Entrants There are certain factors that can limit the threat of new entrants which are called barriers to entry. Some of the barriers to entry in this industry are that competition is already stiff in this

industry so nobody would come by investing in industry unless they are sure about getting profits. Other barriers are energy crisis because these firms are exporting the goods at low prices they have to cover the fuel costs and in doing so must charge high. If prices are high international buyers may switch to others. Issue of using child labor raised by UNICEF was also raised restricting them to make hand stitched footballs which are preferred more in world cups and other tournaments. Industry Rivalry Sports Industry of Pakistan is in a perfect competition. Because so many Competitors, Buyers and Suppliers are in the Industry and they are adopting the new strategies, they are adopting the new technologies for the competition because if any company provide the best quality of product, that will lead in the Industry. Actually, all these things like, quality, time of delivery etc are developed the Brand Name and if any company has a strong Brand Name that can be cash their Name. Bargaining Power of Suppliers This industry has many suppliers locally as well as international ones which gave raw materials at low prices including Malaysia and Korea. They all provide raw material to the industry like wood, leather and yarn so the industry can switch from one supplier to other supplier easily. Thus the bargaining power of supplier is very low because industry is not dependent upon one or few supplier. Bargaining Power of Buyers Buyers for sports include local as well as international buyers. International buyers (exports) are more interested as they all include brands and they prefer to have sports goods at low prices and they resell them on premium prices to their potential customers. Local buyers also include trading firms. Both international and local buyers have high bargaining power because if they raise prices local buyers would switch to some firms in Pakistan whereas international buyers may switch to some other firms across the globe. Threat of Substitute Goods The substitute for physical games is indoor games or games on Computer and web. Consumer trend is changing and people prefer to save time so they utilize their extra time on the internet
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and play games on other devices. Industry for substitutes growing day by day due to which this industry is affected also. Industry Attractiveness After the Porters Five Forces Analysis, the Industry is attractive for international buyers because they have high bargaining power as the major source of revenue for Sialkot sports industry is exports. Pakistan is earning the foreign currency through export of goods. Export of these goods can be expanding to different countries. The Bargaining power of suppliers is very low which means that this industry can get economical and raw material supplied would be on time which leads to low cost strategy thus; this is an industry in which the average sports firm can expect to earn an attractive return over the long run. Chinese market would be flourished if the firms in Industry would bear high costs due to energy crisis then cost of producing goods would be greater so buyers would switch to Chinese market because they are having low cost. This industry is running on very low profit margins so according to porters five forces there are fewer threats due to new entrants because of intense competition and low profit margins. As far as customers bargaining power, it rests with the customer because of immense competition in this industry. The estimated PIE of this industry lies between 26 to 30 million US dollars. This is the figures of 2008 and the figures are dropping after that due to crisis and competition. The industry is also suffering because UNICEF imposed restrictions on the use of child labor at work. But this industry is still recognized in the world and there is still hope that this industry would flourish if proper Government attention and policies would be in favor of this industry and energy crisis would be resolved. Chinese are not in their competition right now because they are suffering problems hiring expensive labor for the production.