CASE STUDY : Towel Manufacturing Company

Vinod Kumar Yadav SMBA -2 8th July2012

Background of TMC
TMC was founded in 1972 in Karachi, Pakistan. Majority of shares owned by the family of Mr.Khalil, its M.D. This family also own one of Pakistans leading fabric manufacturing concern. TMC has grown consistently over the years to become Pakistans largest manufactures of towels for export. TMC employs about 400 employee, engaged in the production of White terry towels carrying the brand name Ocean Breeze Ocean Breeze brand was leading export market with a share of 90% of its total sales in United States. TMC produces solely for Export.

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SWOT Analysis
TMC has current profit of 5% on bleached towels. A margin of 15% can be expected if it is decided to produce unicoloured dyed towels. In order to this, it would have to invest Rs. 7.5 million on dyeing equipments. This investment needed to be safeguard the companys reputation for the quality. The Managing Director feels that subcontracting will not result in products of consistent quality. The current Ocean Breeze line is dependable, durable and is price competitively.

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Strengths of the company

It is largest manufacturer of towels for export, its leading export market with share of 90% of its total sales is United States of America and rest comes from no of European countries. Company has plenty of factory space and access to labor and technical assistance. Company enjoys a reputed brand image in the market with its current ocean breeze line is dependable, durable and priced competitively.

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Weakness of the company

A number of small Pakistani companies have been operating with smaller overheads and have eaten in to TMCs market share.

Unlike a number of small companies ,TMC does not produce solid colored towels and is thus unable to meet the demand for this product line , this is making it vulnerable to competition from newer and smaller producer of towels in Pakistans.
The profit margin of 5% on current product line on white towels is very low. It will loose favor from United States importers if it cannot supply dyed towels to complement its current product line.

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TMC foreign and domestic market analysis

TMC is largest manufacturer of towels in Pakistan and mainly into export with United States America counting for sales up to 90% and rest coming from number of European countries. TMC solely for export, management is not fully committed to exporting but also has a decade of export behind it. TMC has started experimenting with European markets. In the commonwealth of independent states (CIS), profit margin are 5% for white towels and 10% for dyed towels .

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Analysis of the recommended strategy

Product Adaption and Development First TMC should continue to produce its white ocean breeze towels as it is where company experience lies and then it should also produce dyed towels in addition to its traditional white towels this will enable to meet the demand and thus compete with suppliers to both its current and potential markets. Hence it will be benefit from both larger profit margins obtained from dyed towels and from expanded trade. The new product line may enable the company to obtain the business of distributions chains larger retailers such as Sears and Roebuck and Montgomery Ward's and other distributor. Market Development TMC should concentrate on both its domestic market as well as international market not only in United States of America but other European countries. This would provide advantage to turn to other market such as Common Wealth of states and Western Europe. This will help company to turn to other countries in case of recession and also provide company with international presence, exposure and experience and greatly increasing companys potential customer and sales base.

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Analysis of the recommended strategy

Export marketing plan To penetrate the market for uncolored towels TMC must carry out certain steps, first it must obtain information on future fashion trends in United States and eventually in CIS and Western Europe Second it could seek to become supplier for a major retail chain in the United States, the financial rewards are quite high and substantial

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