strategic growth initiatives_venkataramank
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Growth initiatives for a tannery industry in India. this is just a draftTRANSCRIPT
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Strategic Growth Initiatives - XYZ Leathers Ltd
Venkataraman K
GD&IB– Assignment # 2
Alliance UniversityAlliance School of BusinessEPGDM-Batch#24
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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
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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
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Global Leather Production & Consumption in Value Chain
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Top 10 Leather Producing Countries in the World in 2011
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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
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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)
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Thanks
Venkataraman K
GD&IB– Assignment # 2
Alliance UniversityAlliance School of BusinessEPGDM-Batch#24