Strategic Management Report: Guna Fibres, Ltd. Case Study Analysis

This report provides a comprehensive strategic analysis of Guna Fibres, Ltd., focusing on its business environment, internal resources, and strategic models. The analysis begins with an introduction to strategic management and its importance, followed by a critical examination of the external business environment, including competitors, industry structure, market dynamics, and current and future trends. The report then delves into an internal analysis of the firm, assessing its resources, capabilities, and competitive advantages. Strategic models are explored, and potential barriers are identified. The report concludes with an evaluation of the company's current strategic position and recommendations for improvement, based on the case study provided. The assignment covers topics such as financial challenges, market competition, and the need for strategic planning to ensure the company's future success. The report also considers the impact of external factors like government regulations and market trends on the company's performance.

Running Head: Management
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guna fibres, ltd.
Strategic Management
8/18/2019

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Contents
Introduction......................................................................................................................................2
Background of the case study..........................................................................................................2
Question 1........................................................................................................................................2
Critical analysis of the business environment..............................................................................2
Competitors..................................................................................................................................3
Structure of the industry...............................................................................................................3
Market details...............................................................................................................................4
Current trends and key drivers.....................................................................................................4
Future trends and key drivers.......................................................................................................4
Question 2........................................................................................................................................5
Internal analysis of the firm.........................................................................................................5
Resources and capabilities...........................................................................................................5
Competitive advantages...............................................................................................................6
Question 3........................................................................................................................................6
Strategic models...........................................................................................................................6
Question 4........................................................................................................................................8
Barriers which have occur............................................................................................................8
Conclusion.......................................................................................................................................8

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References......................................................................................................................................10

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Introduction
Strategic management is necessary for any organization as it helps in monitoring; planning,
assessing and analyzing the needs so that the objectives and the goals can be meet up. It involves
implementation and the formulation of the goals so that objectives can be achieved. It helps in
integrating all the activities and the functions in the organization so that proper organizing;
planning, controlling, leading can be done in the organization (Villar, et al., 2014). With the help
of strategic management, the future goals of the company can be ascertained. It also gives the
values, goals, and purpose to the company to reach those objectives. So this reports this based on
the case study of Guna Fibres and their strategic analysis. In this report, the contemporary
strategic issues will be evaluated. The importance of strategic management to the company will
also be stated. The report will also put the major focus on the internal and the external business
environment of the company and helps in analyzing the current and the future key drivers. In this
report, the current strategic position and the tactics will also be explained and its impact on the
success of the firm will also be evaluated. The strategic model will also be created so that the
leverage of the core business will also be evaluated.
Background of the case study
The company was founded in 1972 which produces the nylon fiber using the domestic raw
material and new technologies. The managing director and principal owner of the company
Surabhi Kumar discovered the problem that their trucks of the fiber had not been loaded to the
customers on time because the company has not paid the excise duty. For paying the excise duty
the inspector is demanding for the cash and the company does not have enough cash in their
bank accounts (Holm, 2016). The company provides colorful clothes which help in making the

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India attires, saris, etc. The company is earning a huge profit as the sales of the company are
increasing at a high rate. The sales of the company have increased at the 18% rate.
Question 1
Critical analysis of the business environment
The business environment of the Guna Fibre limited is effective as it includes all the factors such
as political, cultural, social, economic, technological, physical, legal and global forces. The
business environment of the company is very competitive as there were many industries who are
dealing in synthetic textiles. The environment in the textile industry is very dynamic as it is very
difficult to predict the changes and the taste of the customers (De Meyer, et al., 2017). As Guna
is situated in India which is about 500 km away from new South Delhi so there are many
festivals are celebrated. The demand for synthetic textile and fiber is more when there is the
season in the market. The demand of the nylon yarn is also increased in the mid-summer. So the
environment of the company is based on the season, traditions and it very dynamic and
competitive.
Competitors
There are many suppliers and the merchants in India who are dealing in the textile industry so
the competition for the Guna fibers is very high. The competition in the market is in terms of the
price, credit facility, services which are grant to the merchants. The competition is very high
among the suppliers as they produce to order the cloths in advance when the peak season arises.
As the selling of the textiles increases when there is peak season so the company already builds
the inventories of the woven cloth and keep the stock in advance to give the competition to other
merchant suppliers (Secundo, et al., 2015). The company also has competition with the yarn

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manufacturer as they provide effective services and credit facilities. There were many textile
chains in India so it is a downstream activity for the industry. The major competition was due to
the increasing prices in the market which lead to affecting the performance of the company. The
one who is the earliest and oldest in the industry earns more profits as their production is higher
and their customers are known.
Structure of the industry
The structure of the Guna Fibre is highly fragmented as the value chain is vertically integrated
and has the interconnection with the various departments and operations. The company is the
large scale industry which is dealing in the different textiles and organized the mill sector also.
The textile industry of the company includes both the sector such as Fibre and the Yarn sector.
There are certain types of fibers which are invented by the company such as synthetic, nylon,
manmade, etc. (Vogel and Güttel, 2013). The wide range of activities was designed and offered
by the company. The production volume of the company is very high due to the product quality
and high demand for the products. The structure of the textile industry is labor oriented which
depend upon the market segments. There is a high degree of flexibility and the apparel
manufacturers have to handle the variety of clothes.
Market details
The market reputation and the productivity of the company are high as they are earning a huge
profit. The company has to adopt the policies against the overstocking and the overproduction
which carry a lot of the inventories through the slack of the selling season. The company has
maintained the two distribution warehouse as the roads were poorly repaired and narrow and due
to this truck get delayed in finishing the yarn (Hakkak and Ghodsi, 2015). The growth in the
company is continuing as their sales have been increasing at an immense rate. As the company is

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achieving the growth continuously so the demand for the synthetic textiles was stable. The
national income has also increased due to the increase in the demand of the unit production as
the population is also increasing. In India, several ‘festivals are celebrated and in the festive and
the wedding season the market of the synthetic textile remains high. Market inflation and the
interest rate is also increasing.
Current trends and key drivers
The current market trends and the key drivers of the company are mainly focused on the
customers. The customers of the company are demanding the higher quality of the product and
the new designs and effective fibers. So the current trend was to meet the requirements of the
customers and to design the fiber of the cloth as per the needs of the customers. To target the
specific customers is very essential so the company’s key drivers are the one who is targeted, and
has created an effective marketing strategy and positive digital marketing. The new technologies
and the updating of online networking are also essential as it helps the company to socialize the
product (Rothaermel, 2013). 2013). The company has also improved the shipments and reduces
the requirement of the raw material inventory in the current trends. The buildup the space in the
warehouse the amount of inventory has reduced.
Future trends and key drivers
The company has agreed on the various parameters in the market. The Malik has made some
monthly forecasting with the help of the financial statements of the company. It was expected
that the performance of the company will be declined in the future as per the projected balance
sheet and the monthly sales (Saeidi, et al., 2015). The loan was not paid by the company on time.
The company will not even get more credit in the future. The debt position of the company is
very high and they are not able to meet the requirements of the banks on time. The company has

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decided to make the maintained in the inventory and the cost of direct manufacturing and direct
labor will be reduced.
Question 2
Internal analysis of the firm
The current strategic position of the company is good as the company is making the growth
yearly and their sales in the market are also increasing. The company has to face many tactics as
their debt is very high and they do not have the cash to pay the bank. The company also does not
pay the excise duty which is also carpeting the tactics for them. The company has created a plan
to improve its current performance (Langley and Abdallah, 2015). The liquidity position of the
fir is not good so the plan was created by the Kumar in restoring the firm’s liquidity. The
company has adopted the plan for seasonal production and makes policies against the
overstocking and overproduction. The yarn plant was operated in the two months of the year and
the rest of the year it is operated at the modest level (Hill, et al., 2013). As the loan on the
company is very high and the interest rate is also high. The company was demanding for more
seasonal credit which was refused so the company was making the plan is such a way that the
amount of the loan can be clean up at the end of 2012. The plan was made to improve the debt
position of the company.
Resources and capabilities
The success of the company was declining due to the increasing the debt and the credit of the
company. The company does not have enough cash in their bank accounts and their accounting
books are also not good so the company resources of the company are not effective. The
company has a good inventory as they have the gross plant; equipment’s to produce cloth,

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property (David, 2013). The company has a good plant and equipment which has increased in the
year 2011. The capabilities of the textile industry include good fabrics, tapes, sleeves which
helps in designing and delivering effective services. The supply chain management of the
company is very effective and it mainly emphasizes on the production of the company.
Competitive advantages
There are many competitive advantages which the company is getting. Such as they are getting
the advantage of the seasonal hiring and the layoffs as it is not necessary for the company. The
major objective was to negotiate this year to suppress the labor interest and to cultivate the
stronger workforce. The manufacturing of the company is lower and risk gets declined as the
level production gets lower. The company has a good plant and equipment which is the better
advantage as the company does not have to suffer from the breakdown of the equipment. As the
loads and the demand of the production are increasing at peak time so the company has better
equipment’s which gives better results (Alkhafaji and Nelson, 2013). The greater value of the
company increased and the company has majorly focused on the particular target of the group.
The company also sells the textile product at a lower cost than its competitors of the merchant
suppliers. The company mainly focuses on the two things cost and differentiation which is also
the major advantage of the company. The company also has the inventory in advance at the peak
season which is the biggest advantage as the company can manage the over demands. The
company also has the two warehouses so they manage the high inventory and also monitor them
on a regular basis. The Guna Fibres is the old company so they have also manages the
relationship with the customers which are also the biggest advantage to them (West, et al., 2015).

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Question 3
Strategic models

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Strategi
c Model
Resources
The production
process of the
comaony is
effective
Competitive
Advantge
Good plant and
equipment
Attractive
industry
Provides the
qulaity nad
desiner fibre.
Capability
THe resources
are effectieve
to complete the
task

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Question 4
Barriers which have to occur
There are many barriers which the company has to face such as they have to pay the excise duty
and for that, they do not have the proper cash in their bank accounts. The debt of the company is
very high which is creating many issues and implication for the company (Noone, et al., 2013). It
was analyzed that due to the increasing competition and increasing prices in the market the
company has to suffer a lot. The cost of the goods sold of the company is very high which the
biggest barrier in paying off the debts is. The expenses of the company are also very high as they
have much inventory so for that they need to manage the warehouse properly and it indulges
high cost. The trucks also charge the higher cost of delivering the products. In the year 2011 and
2012, the company has to pay both taxes, excise duty as well as the other expenses so it also
creates a barrier for them to achieve higher growth and sales. The major barrier for the company
is that they increase their sales at the time of the festive and wedding season but the rest of the
time the company does not go with the higher sales so it creates the biggest issue (Mentzer, et al.,
2018).
The strategic buyers are the customers, suppliers and the new entrants in the market also. The
competition was increasing due to the new entrants and it is creating a major problem. The
buyers want the high quality of the product and suppliers wants the delivery of the goods on time
(Bustinza, et al., 2015). So this is the major issues as the trucks were unloaded due to the excise
duty and the company has to face major problems. The plan was created to reduce the inventory
and the other cost so that the debt can be paid on time.