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Environment scanning leads to the identification of many issues that affect the organization. These issues could be judged on the basis of the intensity of their impact on the business of the organization and the relative probability of such an impact. In this situation, it is a serious challenge to top business executives/strategists how to manage their business portfolios effectively in the changing and turbulent environment. Key words: AD-HOC, Stratigests, Portfolios.
INTRODUCTION The success of the business depends on their managerial caliber and ability to scan the environmental changes and to restructure or modify the business strategies in the concerned areas. ENVIRONMENTAL SCANNING BASIC APPROACHES Kubr has suggested three basic approaches, which could be adopted for sorting out information for environmental scanning.1 Systematic Approach Under this approach, information for environmental scanning is collected systematically. Information related to markets and customers, changes in legislation and regulations that have a direct impact on an organisations activities, government policy statement per taining to the organisations business and industry, etc. could be collected continuously to monitor changes and take the relevant factors into account. Continuously updating such information is necessary not only for strategic management but also for operating activities. Ad Hoc Approach Using this approach, an organization may conduct special surveys and studies to deal with specific environmental issues from time to time. Such studies may be conducted, for instance, when an organization has to undertake special projects, evaluate existing strategies or devise new strategies. Changes and unforeseen developments may also be investigated with regard to their impact on the organization. Processed-Form Approach For adopting this approach, the organization uses information in a processed form available from different sources both inside and outside the organization. When an organization uses information supplied by government agencies or private institutions, it uses secondary sources of data and the information is available in a processed form. STATUS OF INDIAN TEXTILE INDUSTRY The Indian textile industry is one of the second largest employment generating industr y next to agriculture. It accounts for 14% of the total industrial production, contributes to nearly 30% of the total exports. The Vision Statement prepared by the Indian Cotton Mills Federation has projected that the industry has the potential to reach a size of $ 85 billion by 2010 from the current level of $ 37 billion. Further, the Vision Statement has estimated that textile exports could touch $ 50 billion by 2010 from $11 billion in 2002. Indias share in the global textile and clothing trade is expected to double from 4% to 8% by 2010.2 Our textile exports during AprilAugust 2005 has increased to $5776 million as compared to $5223 million during the same period last year. It stands at just 9% as compared to the current years target of 20%. The lower than expected growth is primarily due to decline in unit value realization due to strong competition from China. Scrapping of export quotas had led expectation of a big boom in the textile expor t but our performance is poor as compared to China. Despite restrictions, Chinas textile exports to the US grew at near 55% in the first eight months of the current calendar against about 25% for India.3 Indian textile players are in the process of expanding their capacity while investing a huge amount. Investment Plan of Indian Textile Companies

Raymond plans to double capacity at the cotton shirts facility to 6,000 units per day, which will see investment to the tune of Rs. 640 crores. Welspun India is also planning investment to the tune Rs. 650 crores to expand capacity and boost exports.

Journal of the Textile Association May-June 2006

S. Kumars Nationwide Ltd. Is expanding capacity to 14 million metre per annum, and expecting expor ts wor th Rs. 250 crores in the next three years. JCT is now on an expansion drive. It is investing Rs. 300 crores to expand its cotton and nylon production capacities. Indian Rayon has also spelt out a Rs. 536 crores capital expenditure programme for its various division ranging from textiles and garments. Ar vind Mills has also undertaken new projects since the mood is bullish despite slow growth in overall exports. Vardhman group is also planning to set up a new plant at M.P.

The Ministry has asked for classifying export activity as a public utility to curb strikes in the sector.4

Table 1. Approaches used by Indian Textile Companies to Environmental Scanning Approaches (A) (B) (C) Systematic Adhoc Both Total Organisations 13 07 20

OBJECTIVES OF THE STUDY To highlight and examine the environmental scanning process in Indian Textile Companies. METHODOLOGY This study is mainly based on primary data, which have been collected through specifically designed questionnaire from the strategies designated like Chairman, Managing Director, President, Executive Director, Joint President, Senior Vice President, Vice President etc. SAMPLE SIZE The researchers have selected twenty Indian Textile Companies i.e. Reliance Industries, Grasim Industries, Ashima Syntex, Century Textiles, Mahavir Spinning, Malwa Cotton Spinning, Abhishek Industries, Indo-rama Synthetics, Vardhman Spinning, Indian Rayon, Century Rayon, Bhilwara Spinners, Modern Terr y Towels, Maral Overseas, Modipon Fibres, SRF Ltd., Vardhman Polytex, Welspun India, Agarwal Overseas and Gontermann Peipers. APPROACHES USED BY INDIAN TEXTILE COMPANIES TO ENVIRONMENTAL SCANNING There are mainly two approaches i.e. Systematic and Adhoc. 13 organisations are in favour of systematic approach whereas 07 organisations have claimed that they used both the approaches for environmental scanning i.e. systematic and adhoc approaches (Table - 1). As per the opinion of the scholars it is essential on the part of the organizations to use both approaches for proper environmental scanning in the present scenario.

Source: Personal Survey

SOURCES OF INFORMATION USED FOR ENVIRONMENTAL SCANNING BY INDIAN TEXTILE COMPANIES Organisations collect the required information for Environmental Scanning from various sources like documentary, internal sources, external agencies, formal studies, mass media and spying. Table 2 represents the sources of information used by the selected organizations for environmental scanning. On the basis of individual rank internal/formal data bank is the main sources of information for environmental scanning which have been claimed by 17 organisations out of 20. Informal data source/ documentary, formal studies and external agencies secured almost equal weightage with a number of 14, 13 and 13 respectively.
Table 2: Sources of Information Used by Indian Textile Companies for Environmental Scanning Sources (A) Internal/Formal Data Bank (B) Informal Data Sources/ Documentary (C) External Agencies (D) Formal Studies (E) Spying (F) Others Organisa- Rank tions 17 14 I II

In this direction the textile ministry has put forward three demands.

The Industrial Disputes Act should be amended for exempting exporting units from labour law provisions. This, the Ministry feels, will give the companies freedom to hire additional labour. Gone are the days when orders of few thousand garment pieces used to be considered big. Global orders nowadays, may ask for the delivery of millions of units at short notice. But orders of this size are usually seasonal and activity bound. So hiring permanent workers to meet this temporary surge in demand doesnt make economic sense. Producers would want to retrench workers when there are no orders to be executed. Raise the number of working hours from 48 to 60, for which, an amendment to the Factories Act of 1948 is needed.

13 13 01


Source: Personal Survey

Journal of the Textile Association May-June 2006

METHODS USED FOR ENVIRONMENTAL SCANNING BY INDIAN TEXTILE COMPANIES Judgement and Quantitative are important methods for environmental scanning. Majority of the organizations i.e. 17 used both the methods for environmental scanning. There were only 2 and 1 organisation(s) who have used quantitative and judgement methods respectively (Table 3). Of course single method will not serve the purpose that is why it is essential on the par t of the organizations to use both the methods for proper environmental scanning.
Table 3 : Methods Used by Indian Textile Companies for Environmental Scanning Methods (A) (B) (C) Judgement Quantitative Both Total Organisations 01 02 17 20

forecasting in strategic planning. These are: scenario-writing, simulation, morphological analysis, PPBS, game theory, cross-impact analysis, field anomaly-relation, multiechelon coordination and other forecasting techniques. 6 While many of these techniques are based on statistical methods used for forecasting some of them, like scenario-writing, may not use statistical information but employ informed judgement and intuition to predict what the future is most likely to be, expressed in the form of a descriptive statement or report. Scenario Writing, Decision Tree Analysis, Trend Analysis, Customer Dialogue and Basic Statistical Forecasting are the important techniques which are used by majority of organiasations for environmental scanning and requires lot of efforts in their uses. 14 organisations out of 20 applied trend analysis for environmental scanning whereas 13 organisations have treated customer dialogue as important technique (Table 4). There are two more techniques i.e. Scanario Wr iting and basic statistical forecasting which secured the equal number i.e. 4. Of course the use of above techniques is not a easy task on the part of the organizations. Organizations require a few experts in the area of statistics and operations research.
Table 4 : Techniques Used by Indian Textile Companies for Environmental Scanning Techniques (A) Scenario Writing (B) Decision Tree Analysis (C) Trend Analysis (D) Customer Dialogue (E) Basic Statistical Forecasting Organisa- Rank tions 04 03 14 13 04 III IV I II III

QUEST Used by Indian Textile Companies for Environmental Scanning B. Nanus proposed Quick Environmental Scanning Techniques (QUEST) for environmental scanning, which includes a four step process: (1) Strategists make observations about the major events and trends in their industry. (2) Then, they speculate on a wide range of important issues that might affect the future of their organizations by scanning the environmental broadly and comprehensively. (3) The QUEST director prepares a report summarising the major issues and their implications, and three to five scenarios incorporating the major themes of the discussion. (4) The report and scenarios are reviewed by the group of strategists who identify feasible strategic options to deal with the evolving environmental conditions. The options are ranked and teams are designated to develop 7 strategies. Quick Environmental Scanning Technique (QUEST) is also a good tool for environmental scanning but unfortunately only 6 organisations have used it. Fourteen organizations i.e. 70% have given the negative response to the request. The status of QUEST of the selected companies have shown in Table 5.
Table 5 : QUEST Used by Indian Companies Status (A) (B) Used Not-Used Total Organisations 06 14 20

Source: Personal Survey

Techniques used for Environmental Scanning by Indian Textile Companies Strategists may choose the techniques which suit their needs in terms of the quantity, quality, availability, timeliness, relevance and cost of environmental information. Various authors have mentioned the methods and techniques used for environmental scanning. LeBell and Krasner outline nine groups of techniques: single-variable extrapolation, theoretical limit envelopes, dynamic modes, mapping, multivariable interaction analysis, unstructured expert opinion, structured expert opinion, structured inexpert opinion and unstructured inexper t speculation. 5 Fahey, King and Narayanan have included ten techniques in their sur vey of environmental scanning and

Source: Personal Survey

Source: Personal Survey


Journal of the Textile Association May-June 2006

Factors affecting the process of Environmental Scanning Researchers have considered strategic related factors, organization related factors and environmental related factors which affects the process of 8 environmental scanning. Strategist-related factors There are many factors related to the strategist, which affect the process of environmental appraisal. Since strategists play a central role in the formulation of strategies, their characteristics such as age, education, experience, motivation level, cognitive styles, ability to withstand the time pressure and strain, etc. have an impact on the extent to which they are able to appraise their organisations environment and how well they are able to do it. Apart from these factors, related to strategists as individuals, group characteristics too have an impact on how well environmental appraisal is done. Such group characteristics could be the interpersonal relations between the different strategists involved in appraisal, team spirit, and the power equations operating between them. O R G A N I S AT I O N - R E L AT E D FACTORS Like those of strategists, many characteristics of the organization also have an impact on the environmental appraisal process. These characteristics are the nature of business the organization is in, its age, size and complexity, the nature of its markets, and the product or services that it provides. E N V I R O N M E N T- R E L AT E D FACTORS The nature of environment facing an organization determines how its

appraisal could be done. The nature of the environment depends on its complexity, volatility or turbulence, hostility, and diversity. Majority of the strategists have claimed that environmental related factors (10) as an import factor which effect the process of environmental scanning followed by organization related factors and strategist related factors with a number of 6 and 6 respectively (Table 6). It may be analysed from the table that environmental related factors must be given due importance for the environmental scanning. Strategists related factor as well as organizations related factor are internal whereas environmental related factor is external area. In sum, how well environmental appraisal is done depends on the strategists, their organisations, and the environment in which their organizations exist.
Table 6 : Factors Affecting Environmental Scanning for Indian Textile Companies Factors (A) Strategists related factors (B) Organisation related factors (C) Environmental related factors Total Organisations 06 06 10 22

condition in the organisations environment which enables it to consolidate and strengthen its position. A threat is a unfavourable condition in the organisations environment which creates a risk for or causes damage to the organization. The preparation of ETOP provides a clear picture to the strategists of which sectors, and the different factors in each sector, have a favourable impact on the organization. By mean of an ETOP, the organization knows where it stands with respect to its environment. Obviously, such an understanding can be of a great help to an organization in formulating appropriate strategies to take advantage of the opportunities and counter the threats in its environment. Help also can be taken from the external consultant/experts while preparing ETOP for the business. It is essential on the par t of strategists to exploit the opportunity as early as possible because it will not wait for you, and try to deal with the threats with the available resources of the organizations. 50% organizations have claimed that they have prepared ETOP analysis whereas 50% have shown negative response (Table 7). In the absence of ETOP analysis, these organizations cant show the favourable results.
Table 7 : Status of ETOP in Indian Textile Companies Status (A) (B) Used Not-Used Total Organisations 10 10 20

Source: Personal Survey

USE OF ETOP Environmental, Threat, Opportunity Profile (ETOP) is also an important technique for the organizations. Every organisation must know threat and opportunity before they enter in the business. If an organization is able to analyse its threats and opportunities it can enjoy favourable results. 9 An oppor tunity is a favourable

Source: Personal Survey

Journal of the Textile Association May-June 2006

Table - 8 : ETOP analysis of six selected textile companies out of 20 have been given as under: Threats - High Prices of Cotton, Electricity Fuel and water - Increasing wages - Worldwide market depression Threats - Low price of yarn - Low requirement of market - High cost of production due to increased cost of power, fuel labour, logistics etc. Threats - Open competition - Excess supplies Threats - Poor infrastructure in the country - Less friendly labour - Laws/Revenue laws Opportunities - Consumers taste towards cotton - Reputation and goodwill of company

Opportunities - Product Development - Develop new market - Better cotton selection

Opportunities - Quota free period after 2004 - Increase in population would need more clothing Opportunities - Larger consumer base - Abundance of skilled workers - Huge international markets - Good availability of raw materials Opportunities - Promotion of dyed fibres - Application development

Threats - Price competition from other fibres - General low economy worldwide - Unhealthy textile industry in India Threats - Low productivity - Poor labour laws CONCLUSION To conclude it could be said that environmental appraisal played a very important role in the corporate houses and organizations must monitor it through the proper environmental scanning techniques like, customer dialogues, basis statistical forecasting, scenario writing, decision tree analysis, trend analysis etc. Strategists must give due response to the quick environmental scanning technique for environmental scanning in the complex, volatile and turbulent environment. All the companies must examine the ETOP analysis

Opportunities - Art of technology

and reduce the degree of threats on the basis of their competency and capability. This is the only way out to compete with China in future. REFERENCES
1. Kubr, M., (Ed.), Managing a Management Development Institution (Geneva: International Labour Organisation, 1982), 88. The Hindu: Survey of Indian Industry (2005). The Economic Times: 25 th Oct., 2005.New Delhi. The Economic Times: 28th Oct., 2005, New Delhi. Labell, D. and O.J. Kranser, Selecting environmental forecasting techniques

for business planning requirements, Academy of Management Review, 7, 373 (1977).

6. Fahay, L. King, W.R. and Naryanan, V. K., Environmental scanning and forecasting in strategic planning, David Hussey, Pergamon Press, Oxford, 497 (1983). Nanus, B., QUEST Quick Environmental Scanning Technique, Long Range Planning, 39 (1982). Kazmi Azhar, Business Policy and Strategic Management, Tata McGraw Hill, New Delhi,115 (2002). Glueck, W.F. and Jauch, L. R., Business Policy and Strategic Management, McGraw Hill, New York, 120 (1984). n


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Journal of the Textile Association May-June 2006

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Signing Biggest Contact The biggest order of 1,500 weaving machines in the Chinese market has been signed by the textile machiner y Group headed by Mr. Miro Radici. Today Mr. Miro Radici Managing Director of Itema Group, worldwide leader in the textile machinery sector, - has signed the most important order ever obtained by the North Italian Company for the supply of 1500 air jet looms in the Chinese market. In particular, the agreement is referred to a first supply by the Italian Group of 776 machines (air jet weaving looms type Mythos ETec) for the new production plant of Jiangsu Hengli Chemical Fibre. A fur ther expansion of this production site has been already planned for next year. Wujiang City in Jiangsu Province (where Jiangsu Hengli Chemical Fibre Co. Ltd. is located) is less than 2 hours from Shanghai by car. This city with 1,200,000 habitants nowadays (45% of the economy based on textile) has started to develop more than 100 years ago with the production of silk and has now become one of the biggest area worldwide for the production of polyester (the weaving machines installed exceed 140,000, 95% Japanese and 5% European). Jiangsu Hengli Chemical Fibre Co. Ltd. is one of the biggest private Chinese concern for the production of polyester fibres. With a covered area of 1,600,000 sqm., this

company actually produces 500 Mio of sqm of fabric (some projects now underway will increase this production to 1,100 Mio of sqm.) and 400 tons of yarn yearly (with a project under fulfilment to reach 540 tons) and today they have 3000 water jet looms and 400 air jet looms installed. The signed CEO Performing the Signature agreement is part of a year 2005. The production for a project, which will allow the 2006 is expected to be of 2200 Chinese company to double the looms in excess with a turnover of fabric production to reach 1,100 55,4 millions of EURO. Mio of sqm. and to pass from the production of light to medium heavy Itema Group with its 9 companies, fabrics. For this target they choose 7 Research & Development centres Mythos E-Tec, a loom which offers , locally active in 90 countries, the widest guarantees of quality around 2700 employees and a and reliability for the production of global turnover of 605 millions of this kind of fabrics. EURO in 2005, now represents the At the same time, Itema Group has main textile machinery Group in the also signed another contract with world. a pool of 11 private Companies for The companies belonging to Itema the supply of 680 weaving Group Holding are: Savio (winders), machines (the same air jet looms Promatech and Sultex (weaving type Mythos E-Tec). machines), First (accessories), This important order - Mr. Miro Eutron (electronics) while the Radici also states - allows us to companies operating directly on look at the Chinese market with a foreign markets are Itema much greater optimism. America., Itema India, Itema Shanghai Textile Machinery and Itema Group is present on the Itema Asia. Chinese market with a production site since 2003. In the 20.000 sqmt production facility, of which 6.000 fully covered, 170 people are employed with an overall turnover of around 30 millions of EURO for
For further information Contact:
Riccardo Mautino Promatech S.p.A. Tel. (+39) 035.7283405 Fax . (+39) 035.743379


Journal of the Textile Association May-June 2006