strategic growth initiatives_venkataramank

Strategic Growth Initiatives - XYZ Leathers Ltd

Venkataraman K

GD&IB– Assignment # 2

Alliance UniversityAlliance School of BusinessEPGDM-Batch#24

Overview

� XYZ Leathers Ltd

� Introduction, Financials & Product Mix

� Strategic Growth Initiatives

� Global Market Space & Demand Forecast & 5 P’s of International

Business

� Product, Price, Proximity, Preference & Promotion

� Key Action Plan

� Global Leather Production & Consumption in value chain

� Top 10 Leather Producing Countries in the World

� Stratified Leather Value Chain performance & Global Consumption

XYZ Leathers Limited

� Established on 2003 with factory & HQ located at Mangalore

� Has 36 sales offices across India

� FY15 Financials

� Revenue: 11230 Million INR

� OPBIT : 2300 Million INR

� Products & Promotion

� Leather & Leather Products of which 60% are Leather Footwear

� Owns 2 national Leather Footwear Brands which contributes 45% of

revenue & 55% of profit

� Contract Manufacturer for 1 Global Brand that contributes 15% of

revenue & 10% of Profit

� Leather Garments, Goods, Gloves & accessories contribute balance

40% of revenue 30% of ProfitSuccess factors (Process Optimization, Cost Advantage & Quality) & global market space is

incentivizing XYZ Leathers to go global

Global Leather Production & Consumption in Value Chain

Top 10 Leather Producing Countries in the World in 2011

Value Chain

Value in

Billion US$ %

Raw Hide & Skins 5.2 6.7%

Wet blue 3 3.9%

Crust & Finished Leather 10 12.9%

Leather Footwear 47 60.6%

Leather goods & products (including gloves) 12.3 15.9%

Total Trade 77.5

Sources: Modified from various reference & Projections (Year 2012)

Stratified Leather Value Chain Performance & Global Consumption

� The Leather Footwear Trade accounts for 60% of total Leather products globally

� High leather footwear Consumption/Demand by Developed Countries

Strategic Growth Initiatives of XYZ Leathers Ltd

Vision:

Leverage Leather Footwear and achieve below milestones by FY19-20 through both Local & Global Market

� Double the Revenue to 22460 MINR

(Currently from 11230 MINR in FY15 to 22460 MINR in FY19)

� Triple the OPBIT to 6900 MINR

(Currently from 2300 MINR in FY15 to 6900 MINR in FY19)

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

Product : Leather Footwear

Leather & Leather Products Actuals FY2011 Finished LeatherFootwear & its

components

Leather

Garments

Goods &

Accessories

in Million $Top

Import

Top

Export

India's

Export

India's

shareImport

% to

importImports

% to

importImports

% to

import

Import

s

% to

import

Germany 12011 7086 731 6.1% 971 8.1% 5434 45.2% 562 4.7% 1223 10.2%

USA 28963 439 1.5% 584 2.0% 12234 42.2% 485 1.7% 3862 13.3%

UK 7537 543 7.2% 3275 43.5% 195 2.6% 1055 14.0%

Italy 11026 21654 528 4.8% 2937 26.6% 4555 41.3% 278 2.5% 1112 10.1%

France 9323 6621 304 3.3% 563 6.0% 3894 41.8% 368 3.9% 1558 16.7%

Hong Kong 11394 11563 360 3.2% 3114 27.3% 3689 32.4% 185 1.6% 2934 25.7%

Spain 4607 4016 296 6.4% 710 15.4% 1339 29.1% 192 4.2% 438 9.5%

Russia 4616 33 0.7% 2418 52.4% 129 2.8%

Netherlands 4546 4009 198 4.4%

Belgium 2933 4475 113 3.9% 1310 44.7%

Japan 7801 33 0.4% 1693 21.7% 139 1.8% 2017 25.9%

China 6607 47904 124 1.9%

Korea Rep 2940 38 1.3%

U.A.E 109

DENMARK 74

SWITZERLA

ND34

SWEDEN 44

World 159894 4869

� India’s Export is 3% in FY2011

� Germany,USA,UK,Italy,France &HK are top 6 consumers with 50% of total import

� USA,UK,Russia & Japan don’t have export

� Leather Footwear Demand accounts 45% which is 71950 M$

1st P

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

Product : Leather Footwear

� Both Developed & Developing countries going to drive this high demand for Leather Footwear in Future

1st P

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

Price: Success Factors & Competitiveness are linked with both Labour Cost & Energy Per capita

� Strong Correlation between Labour cost (India, China & Brazil top mfg of leather) & per capita energy consumption (USA, France &UK are top consumers)

� Demonstrate Strong linkage & interdependence of produces (low cost of labour) & consumers (high energy per capita)

Labour Cost

2nd P

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

� Strong Correlation between Labour cost (India, China & Brazil top mfg of leather) & per capita energy consumption (USA, France &UK are top consumers)

� Demonstrate Strong linkage & interdependence of produces (low cost of labour) & consumers (high energy per capita)

Price: Success Factors & Competitiveness are linked with both Labour Cost & Energy Per capita

Energy Per Capita

2nd P

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

� Africa’s production Level of raw materials is 14% of world total production 1303Million

� Africa loses edge to other countries like China & India due to technology, quality & process.

� Africa's advantage are� low labour cost,

� abundance of Raw material,

� Proximity to Global Top Consumers

� It is recommended to set up XYZ’s mfg. expansion unit at Africa

Proximity : Africa would be the choice & Gateway to reach high per capita consumers like USA, Germany , UK & France

3rd P

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

Preference : Why is Africa????

� Low Labour Cost, Proximity to Global Top Consumers

� Abundance of local footwear demand forecast

� Africa is deprived of technical know how & value addition and Govt sops to encourage others to set-up latest state of art leather mfg plants.

4th P

Strategic Growth Initiatives of XYZ Leathers Ltd

Global Market Space & Demand Forecast

Promotion:

� Brand Building of XYZ Leathers to cater Africa’s local mass market

� Contract Mfg & Distribution for a Global Premium Brand to cater high networth population in Africa

� Export to Top Global Consumers USA, UK, France etc (consumes 50% of global exports) from Africa

5th P

1.Appoint a global consultant Accenture or E&Y arrive at project feasibility, Risk mapping, mitigation, fund raising, Africa’s local statutory approval

� Appointing the consultant by April’16

� Completing project report by May’16

2.Board Approval, Fund raising, & Project implementation

� Secure XYZ Board’s approval for investment – by June’16

� Secure Financing & Necessary collaterals – by Sep’16

� Appoint Project & Process consultant and EPC vendors by laws are established along national lines

Strategic Growth Initiatives of XYZ Leathers Ltd

Key Action Points

3. Secure Contract Mfg approvals from select Global Brands who are on demand in Top Global Consumer Markets (like USA, UK, Germany & France)

4.Board Approval, Fund raising, & Project implementation

� Secure XYZ Board’s approval for investment – by June’16

� Secure Financing & Necessary collaterals – by Sep’16

� Appoint Project & Process consultant and EPC vendors – by Oct’16

� Awarding Contract to EPC by Nov’16

5. Complete Trial Run & Production by end Dec’17

Strategic Growth Initiatives of XYZ Leathers Ltd

Key Action Points

Thanks

Venkataraman K

GD&IB– Assignment # 2

Alliance UniversityAlliance School of BusinessEPGDM-Batch#24