Strategic Management

Assignment No.1, Industry Analysis of Export Oriented Sports Industry of Sialkot

Prepared By: Syed Imran Haider (10123027) Ali Ahmad Cheema (10123006) Rana Adeel Touqeer (10123002) Muhammad Salman (10123 MBA (3 years) Section A

Submitted To: Mr. Irfan Mahmood

Industry
A classification that refers to a group of companies that are related in terms of their primary business activities. In modern economies, there are dozens of different industry classifications, which are typically grouped into larger categories called sectors

Sialkot Sports Industry

The city of Sialkot has been a centre of excellence for the production of sports goods for more than 100 years. The first record of manufacturing of sports goods in Sialkot can be traced back to 1883 with the products such as cricket bats, hockey sticks, polo sticks etc. In 1918, a football was added and was supplied to British Army stationed at Singapore. Today the Sports Goods sector of Sialkot is at its climax as it has acquired an important place in international trade of sports goods. Presently the Sports Goods Industry of Sialkot is supplying products to almost every country of the world, directly or indirectly. The products are mostly made for international markets and have received worldwide recognition because of the quality that goes into the selection of raw material, design, manufacturing processes and delivery to the customers. Some of the world renowned brands who are sourcing a large portion of their supplies of sports goods from Sialkot are:

Adidas Nike Puma Select Lotto Umbro Mitre Micassa

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Sialkot Sports Industry

Diadora Wilsons Decathlon

More than 200,000 people are directly employed in the sports goods sector exporting sports goods worth US$ 450 millions annually from around 2,400 companies.

Sialkot caters more than 70% of total world demand for hand-stitched inflatable soccer balls i.e. around 40 million balls annually worth US$ 210 million. During the peak season, which repeats after 4 years on the occasion of FIFA World Cup, the production of inflatable balls exceeds 60 million per annum. These balls are produced by a workforce of around 60,000. The sports goods sector also has a very strong international presence in the market. Before Chinas massive entry into international trade a few years ago, Pakistan was the worlds largest exporter of gloves used by motor bikers, goalkeepers, baseball, boxing, shooting etc. Currently the exports value of gloves reaches to US$ 50 million per annum. Today a skilled workforce of more than 10,000 employees is directly engaged in the production of sportswear and its exports value reaches to US$ 100 million per annum.
Source: http://punjab.gov.pk/sialkot_key_industry

Sialkot Sports Industry

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Porters Five Force 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

Sialkot Sports Industry

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Threat of New Entrants

The easier it is for new companies to enter the industry, the more competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some of the barriers to entry in this industry is discussed below:

High Fixed Cost

Perfect Competition

Barriers to entry in Sialkot Sports Industry

Pakistan Economic Situation

Energy Crises

Perfect Competition:
Now there is no threat of new entrant because the industry is already going in the perfect competition so the survival of new company in the industry is very difficult so thats why nobody will be come with a heavy investment in the industry.

Pakistan Economic Situation:

situation of Pakistans Economy is very serious. The prices of every thing are so high because the price of Petrol is increase day by day.

Energy Crises
The industry is also face the different crises like, Short Fall of Energy, Short Fall of GAS. Market is already in competition so nobody cant take risk.

Sialkot Sports Industry

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High Fixed Cost:

Huge capital is needed to be invested in order to come in this industry due to purchasing of costly machinery so there are less chances for new entrants to come in this industry due to high initial investment.

Bargaining Power of Buyers:

Bargaining power of buyers means how much buyer or customer is responsible for gain of a business or how much business is depended on a customer or group of customers There are common two type of buyers in Sialkot Sports Industry, one of them is International Buyers and other one is National Buyers (Exports):

Sialkot Sports Industry Buyers

National Buyers

International Buyers (Exports)

Less Bargaining Power

More Bargaining Power

The international buyer has more bargaining power than national buyers because most of sports goods are exported outside the country and most of the profit of the industry is depended upon
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exports. It we lose international buyers, we will lose most of the profits because international buyers also have options of buying from other seller around the world.

Bargaining Power of Suppliers:

If the industry has only one major supplier and no available alternatives, , the supplier has great bargaining power. There are many suppliers of Sialkot Sports Industry located in Pakistan which provides raw material to the industry like wood, leather and yarn.

Sialkot Sports Industry Suppliers

Large in Quantity

Less Bargaining Power

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 depended upon one or few supplier.

Threat of Substitute
A common substitute of physical game is computer game. The demand for sports goods can be affected by computer game due to change in trend of the people i.e. switching form physical games to computer games. Industry is growing day by day and this substitute has following sub categories: Online Games Downloadable computer game Industry

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
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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. 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 so any 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 inexpensive and on time raw material 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

Sialkot Sports Industry

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