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Business Policies & Strategic Analysis
Group VIDebarghya Mukherjee (Roll-26)
Debjit Sengupta (Roll-27)Dibyajyoti Bhattacharji (Roll-28)
Harpreet Kaur (Roll-29)Dipro Sengupta (Roll-30)
The Fabric Of India
Philosophy
“FabIndia was founded with the strong belief that there was a need for a vehicle to market the vast and diverse craft traditions of India and thereby help fulfil the need to provide and sustain rural employment.”
“Our endeavour is to provide customers with hand crafted products which help support and encourage good craftsmanship.” John Bissell, Founder of FabIndia
Vision & Mission
Vision
Grow revenues of Rs 8.6
billion from 200 stores by
the end of 2011
Mission
Growth of company
along with growth of
suppliers. And to provide
more employment
opportunities.
Background
John Bissell established FabIndia in 1960. Primary aim was to fuse the best aspects of East & West
collaboration. Initially, FabIndia started as a wholesale export company,
concentrating on the export of upholstery fabrics, durries and rugs.
First retail store opened at Greater Kailash in New Delhi in 1976
In 1999, on John Bissell’s death, his son William aged 32,formally took over as the Managing Director of FabIndia
Presently, FabIndia has 128 retail stores across India.
Businesses
RetailThe retail channel is already developed within India with almost
128 stores in Tier 1 and Tier II cities. Fabindia also owns retail stores in Rome (Italy), Guangzhou
(China), Dubai (UAE), Kathmandu (Nepal) Manama (Bahrain) and Doha (Qatar).
The product range consists of: Garments for men, women, children and infants; garment,
accessories; Home furnishings – bed, bath, table and kitchen linen, upholstery
fabric, curtains, floor coverings Non textile products like furniture, lights, lamps and stationery. Fabindia’s product line also includes organic foods and body care
products. Fabindia Organics carries several types of cereals, grains, pulses,
spices, sugar, tea, coffee, honey, fruit preserves and herbs.
Wholesale exportsAs of today, Fabindia exports to more than 34 countries. The clients are wholesalers as well as secondary retailers. Products exported include home linens as well as garments. Fabindia develops a special collection for exports markets
twice every year.
Institutional SalesFabindia envisages to service high business
institutional segment especially the heritage hotels and multinational corporate houses.
It provides customization and interior designing consulting for clients like heritage hotels, resorts and corporate houses.
Internal Environmental Analysis
STRENGTHS
• Differentiable products• Brand recognition and
loyalty• Diverse product mix• Partnering with suppliers• In-house manufacturing• Price Trends Setter• Different categories of
stores• Customer Loyalty
• No specific promotions strategy
• Limited channels of business
• Sourcing strategy skewed towards suppliers
• Inconsistent quality of products
• Inconsistent service in stores
WEAKNESSES
OPPORTUNITIES
• In store merchandising & navigation
• Promoting e-business channel
• Organic foods market• Customer acquisition
Strategies
• Substitute producing competitors
• Not in touch with Fashion Trends THR
EATS
Resource Audit
OwnedNumber of employees: 850 on the rolls, 1,000
consultants and on contractNumber of craftspeople supplying products:
40,000Heavy Machinery owned: Hydro Extractors & Dry
Cleaning MachinesTrademarks owned: Fabindia® is a registered
trademark used for Decorative Pillows Natural Fiber Fabrics and Soft Furnishings In Cotton, Silk, Linen and Wool, Namely, Upholstery Fabric, Cotton Fabric, Spun Silk Fabric, Linen Fabric and Wool Spun Yarn Fabric and owned by Fabindia Overseas Pvt. Ltd., Fabindia, Incorporated.
Joint VenturesFabindia has around 35 joint venture
companies in different states, with weavers and craftsmen holding 51% stake in each of these companies. These joint ventures ensure investment back into the supply base, making it easier for weavers to access funds and design inputs.
In 2009, Fabindia has picked up a 25% stake in the UK-based womenswear retailer EAST for an undisclosed amount with an option to acquire the rest by 2012
Supplier Arrangement Fabindia links over 40,000 craft based rural producers to modern
urban markets, thereby creating a base for skilled, sustainable rural employment, and preserving India's traditional handicrafts in the process.
Fabindia promotes inclusive capitalism, through its unique COC (community owned companies) model. The COC model consists of companies, which act as value adding intermediaries, between rural producers and Fabindia.
Predominantly rural based suppliers Designers work with weavers. The artisans sometime suggest
designs. No written contracts for suppliers behavior New suppliers usually come with referrals of existing suppliers New suppliers are first given trial orders Bank loans are provided to weavers No goods are returned back to suppliers, even if they are defective
or late
Core Competency
Definition
To provide its customers with quality products which reflect the unique Indian culture and tradition
To deliver hand crafted products which help in the empowerment of rural craftsmen through the Community Owned Companies (COC) Model
Fabindia’s Core Competencies
Core competencies are those capabilities that are critical to a business achieving competitive advantage.
Competitor Analysis
Organized Retail: Retail Stores (Shopper’s Stop, Pantaloons, Globus, etc.)
Weaknesses:-
1. Product diversity lacking
2. Stock as per running
trends and serve to fads-
inconsistency towards
churning out quality
offerings in hand crafts
3. Authenticity of handcrafts-
No craftsmark present to
validate the crafts as
against the Fabindia
offerings which have the
same imprinted on them
Strengths:-
1. Strong Pan-India presence
and awareness
2. Man-power expertise
3. Competitive Pricing
4. Robust supply chains and
short product development
life cycles
5. High marketing
communications spend
6. Quality consciousness and
adherence to standards
Government Initiatives ( Cottage Industries Emporium, Khadi Gram Udyog, State Government Department)
Weaknesses:-
1. Ambience-non-attractive
to modern day shoppers
are fed on the excellent
ambiences of the retail
formats.
2. Standardization defeats
customization hands-
down.
Strengths:-
1. Source of finances is
fixed and subsidies boost
these initiatives over
time
2. Tie-ups with foreign
governments facilitating
permanent trade of
national handicrafts.
Designer Boutiques: (Ritu Kumar’s, Ritu Beri’s,
Rohit Bal, Manish Malhotra, Sabyasachi Mukherjee, etc.)
Weaknesses:-
1. Exorbitant prices-not
meant for masses
2. Not a robust supply
chain-not meant to be
a pan-India operation
Strengths:-
1. Product customization
facilities-extremely
high
2. Highest level of
customer intimacy-
Relationship
marketing
Unorganized Sector:-Single location stores and local tailoring
units:-
Weaknesses:-
1. Source of finance-not
secure
2. Next-to-nil brand equity
3. Customer loyalty-low
4. Scarcity of skilled
manpower-lack of ability
to employ the same-
critical for expansion.
Strengths:-
1. Effective in addressing
high geographical
dispersion
2. Customization facility
available
Non Government Organizations & Self Help Groups
Weaknesses:
1. Lack of expertise on
part of the manpower
2. Lack of ambition to
spread out on a pan-
India or even a regional
basis
3. Lack scales of economy
Strengths:-1. Strong commitment
towards local communities
2. Helps in making its clients self-reliant
3. Encourages women entrepreneurs and hence a women can supplement the male’s income towards a family
Financial Comparisons
Financial aspects of Fabindia have been compared with Pantaloons
Though not a direct competitor, it represents the Indian Retail Industry very well
Financials for its direct competitors such as Anokhi, Co-optex etc. were not available, restricting comparison
This assessment contrasts the performance of Fabindia with respect to the biggest retailer of India
The interest coverage ratio of Fabindia is far higher than that of Pantaloons. Hence, raising funds through debt is not a big challenge.
2002 2003 2004 2005 20060.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
17.35
8.419.27
10.75
16.54
FabIndia Interest Coverage Ratio
2005 2006 2007 20080.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
3.27
4.13
3.31
2.06
PantaloonsInterest Coverage Ratio
The interest cost as a percentage of sales for Fabindia is far lesser than that of Pantaloons. Hence, raising funds through debt is again not a big challenge.
2005 2006 2007 20080.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2.14
1.49
2.25
3.67
PantaloonsInterest Cost as a
Percentage of Sales
2002 2003 2004 2005 20060.00
0.20
0.40
0.60
0.80
1.00
1.20
0.48
1.091.14
0.96
0.69
FabIndia Interest Cost as a Per-
centage of Sales
The PAT as a percentage of sales of Fabindia is higher than that of Pantaloons. Though retail industry works at low margins, Fabindia’s margins are quite high. Hence, raising funds through debt is not a big challenge.
2005 2006 2007 20080.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
3.413.27
3.63
2.71
PantaloonsPAT %
2002 2003 2004 2005 20060.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
4.79
5.66 5.78
6.306.02
FabIndiaPAT %
Recommendations
Heavy investments in back-end of value chainSupply chain development for efficiency and quality
managementExpansion aiding strong regional presence
Outlets to counter regional competitionSourcing from local suppliers for outlet and other regions
will be easierGrowth through harnessing new customers
Cannot depend on existing customers to counter competitionMust create new customers in all segments
Tie up with different types of graduate schools for talentRural management graduates for managing supply chain
and rural initiativesManagement graduates for helping growth in front-end and
retail arms
ReferencesCompetitive Strategy by Michael E. PorterPrinciples of Marketing by Philip KotlerConsumer Behavior & Marketing Strategy by
J.P Peter & J.C Olsonwww.fabindia.comen.wikipedia.org
Thank You