Strategic Analysis of Raymond App. Ltd.

Strategic Analysis
OF
Raymond Apparel Ltd.
Business Policy Assignment
Submitted by
Parimal Thakker
Roll No: 62
PGDM-IB (II)
Submitted to
Prof. C.P. Joshi
K.J. SOMAIYA INSTITUTE OF MANAGEMENT STUDIES & RESEARCH
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Raymond Apparel Ltd. :-
Recognized as the most respected Textile Company of India, Raymond Limited

is amongst the first three fully integrated manufacturers of Worsted Suiting in the world.
As the flag-bearer of the multi-product, multi-divisional Raymond Group, it enjoys over
60% share of Indian Worsted Suiting Market. It produces 25 million meters of high-value
pure-wool, wool blended and premium polyester viscose suiting in addition to half a
million blankets and shawls, all marketed under the flagship brand "Raymond" - a
worldwide trusted name since 1925. It also produces and markets plush-velvet
furnishing fabric in wide array of designs and colours including carpeting for the niche
markets of India and Middle East.
.
Fashion Brands:
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Indian Apparel Industry:
The textile industry spans a whole range of activities, which can be broadly
categorized into three segments: Spinning, Weaving and Garmenting. Over the last two
decades, the industry has witnessed various upheavals from lingering issues, often-
changing government policies, significant capacity expansions, and finally, the closure of
many mills, irrespective of their size or association with large industrial houses.
The Indian textile and apparels industry is in a stronger position now than it was
in the last six decades. The industry, which was growing at 3: 4 percent during the last
six decades, has now accelerated to an annual growth rate of 9: 10 percent. There is a
sense of optimism in the industry and textile and apparels sector has now become a
sunrise sector.
The catalysts, which have placed the industry on this trajectory of exponential
growth are a buoyant domestic economy, a substantial increase in cotton production, the
conducive policy environment provided by the Government, and the expiration of the
Multi Fibre Agreement (MFA) on 31 December, 2004 and implementation of Agreement
on Textiles and Clothing (ATC).
STRATEGIC GROUP:-
Madura, Arvind Mills, Wills Lifestyle are some of the major competitors in the
same strategic group. as far as the Readymade garment business of Raymond Ltd. is
concerned. In the Fabric Range the only major contender is Reid and Taylor.
KEY DOMI%A%T FEATURES:-
Market Size and Growth rate:- Total sale of $20.4 billion in 2008-10, Growing
at CAGR of 14.86%
Degree of Rivalry:- Degree of Rivalry is high as there are large number of

players. 80% of the total market is unorganized.
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Regulatory Environment:
o 100% FDI is allowed in cash and carry business.
o 49% Share of foreign player in joint venture for retail sector.
o Technology Upgradation Fund Scheme (TUFS) introduced by the
government to bring about the modernization of the Indian Apparel
Industry.
Scope of Competitive Rivalry:- The major competitors in this industry are

national and to an extent multinational, on the other hand, 80% of the market is
made up of local and regional unorganized players. Thus the domestic rivalry is
quite high, it becomes more important for the major players in this sector to have
presence in foreign markets.
Learning and Experience effects: - There are players in the industry which are
in the market for more than two to three decades. The experience base build by
such companies is an advantage for the companies.
Degree of Product Differentiation: - High degree of product differentiation

within the industry, based on style, design, fabric, quality etc..
I%DUSTRY DRIVI%G FORCES:-
Increasing globalization of Industry.
Technological change and manufacturing process innovation.
Growing buyer preferences for differentiated products instead of standardized

commodity products.
Regulation influences and government policy changes.
Changing social concerns, attitudes and lifestyles.
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I%DUSTRY ATTRACTIVE%ESS:-
Porter’s Five Forces Model
Threat of %ew Entrants
Economies of Scale are high.

Brand Identity of a company in this industry is high.
Capital Requirement to establish a regional or a national level operation are high
This industry is not lucrative, since 80% of the industry is unorganized, composed
of many local players, thus, this unorganized market acts like a perfect
competition, and none of the small players are able to make economic profits.
The companies operating at the national level do manage to make economic
profit, but the entry barriers at this stage are very high.
But this high capital requirement is not an issue for the international players, and
thus the entry of strong international brands in the domestic market is inevitable.
Thus the Threat of New Entrants is moderate.
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Threat of Substitutes
The threat of substitution from the garments provided by the unorganized

sector is high.
Bargaining Power of Buyers
Buyer Concentration is very low.

Buyer volume is also generally low.
Buyer Information is high.
Product differences and brand identity are quite high.
Ability to backward integrate is very low.
Thus the bargaining power of buyers are low.
Bargaining Power of Suppliers
Differentiation of input is pretty low.

Presence of substitute inputs to cotton like polyester, wool, lycra etc.. are
present. Thus we can say presence of substitute inputs is average.
Importance of Volume to Suppliers is very high.
Cost relative to total purchases in Industry is low.
Thus the bargaining power of suppliers is low.
The Degree of Rivalry
Fixed Costs are high in this industry.

Product differences are high.
Brand Identity is high.
Exit Barriers are also high for the national leveled operations,
Thus the degree of rivalry in this industry is high.
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Generic strategies followed at Raymond App. Ltd.
Strategic Advantage
Uniqueness perceived Low-Cost position
By the customer
Differentiation Overall Cost

Industry Raymond
wide Leadership
Strategic App. Ltd.
Target
Particular
Segment Only Focus
Raymond App. Ltd. mainly follows the strategy of differentiating through high quality
perceived brands like Raymond, Manzoni, Park Avenue, Parx.
THREATS TO SUSTAI%ABILITY A%D COMPA%Y’S RESPO%SE
Imitation: Threat of Imitation is less since the customers brand value and quality
perception is important in the textile industry.
Substitution: There are not many substitutes for garments itself, but the threat of
substitution is large if compared to the unorganized sector.
Holdup: There is not much holdup along the value chain as the bargaining power of
Buyers and Suppliers is low.
Slack: The following measures are taken to prevent or control slack – Offering
Performance Incentives, Generating Information and Mobilizing for change.
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STRATEGIC RECOMME%DATIO%S:-]
1) Women Segment is relatively new, which is 35% of the total domestic market,
this part of the market should be focused upon.
2) Focus on accessories
3) Zapp is Premium Kids Wear, to come up with Popular Segment for Kids Wear
4) To expand to International markets – starting with areas with a sizable Indian
population
5) To eliminate the philosophy that only the quality of the product will create
demand, and start brand building exercises for all the Raymond App. Ltd. brands.
6) To increase the consistency of advertising, and also increase the no. of brands
for which ads are run.
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What are the major segments of the Indian textile industry?

What are the major segments of the Indian textile industry?

What are some of the major competitors in the readymade garment strategic group of Raymond Ltd?

What are some of the major competitors in the readymade garment strategic group of Raymond Ltd?

Strategic Analysis

K.J. SOMAIYA INSTITUTE OF MANAGEMENT STUDIES & RESEARCH

Recognized as the most respected Textile Company of India, Raymond Limited

KEY DOMI%A%T FEATURES:-

Degree of Rivalry:- Degree of Rivalry is high as there are large number of

Scope of Competitive Rivalry:- The major competitors in this industry are

Degree of Product Differentiation: - High degree of product differentiation

I%DUSTRY DRIVI%G FORCES:-

Increasing globalization of Industry.

Technological change and manufacturing process innovation.

Growing buyer preferences for differentiated products instead of standardized

Regulation influences and government policy changes.

Changing social concerns, attitudes and lifestyles.

Porter’s Five Forces Model

Threat of %ew Entrants

Economies of Scale are high.

The threat of substitution from the garments provided by the unorganized

Bargaining Power of Buyers

Buyer Concentration is very low.

Bargaining Power of Suppliers

Differentiation of input is pretty low.

The Degree of Rivalry

Fixed Costs are high in this industry.

Differentiation Overall Cost

THREATS TO SUSTAI%ABILITY A%D COMPA%Y’S RESPO%SE

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