Siawish Garments

Abstract

The case is about a garment shop that started providing low price products to its
customers in the year 2003. It all started at the Panorama Center Rawalpindi by the
name of Siawish Garments. The basic stimulant in the popularity of the Siawish
Garments has been the most effective system of quality control on pants and shirts
with low prices.

Siawish Garments have a policy that they do not compromise on the quality of its
products. That’s why prices and quality has neither diminished nor changed over
time.

The case mainly focuses on the current problems being faced by almost every
business and specially a business which emphasizes on low rates and quality
garments. Major problems are load shedding and the consequences of load
shedding which resulted in destruction of the supply chain. Prices of raw material
are on hike as well as the textile factories, majorly located in Faisalabad, are facing
shut downs and hence, this all has resulted in expensive raw materials and high
cost of labor and has made things difficult for Siawish garments who have a
competitive edge of low prices and high quality. They are facing a real challenge to
maintain this competitive edge in these tough conditions.

How to survive?

It was a beautiful evening of Mid April 2010, Ghulam Farid, owner of Siawish
Garments, was sitting in his office, located at Panorama Centre, Stadium Road,
Rawalpindi. The customers were busy in shopping and salespersons were busy in
handling them. Whole of the shopping mall, which Ghulam Farid had hired in recent
past, because of his expanding business and the future needs of the business, was
effulging with the fancy lights and chandeliers. “what if the things remain the same
as they are now”. thought Ghulam Farid with a sigh.

Suddenly the side table phone rang, “who is there”? Asked Farid. “This is Shahab
from Faisalabad”. Shahab is the person who supplies readymade garments to
Siawish Garments and is a key player in the success story of this business. Ghulam
Farid relies a lot on him.

“yes Shahab, Is everything perfect?. Inquired Farid.

“I am sorry but things are no way near to perfection and I am afraid that I do not
have any good news for you, Farid”. Replied Shahab deplorably.
“what has happened now?. Go ahead, I think I am ready to hear anything bad as I
have been used to hear bad news from your side for last six months or so.” Farid
was kind of annoyed at evasive behavior of Shahab.

“Sir, As you know that because of power shortage, lots of power looms in Faisalabad
are facing a shut down and because of this, the factory owners are not able to pay
wages to the workers, and obviously, the labor is on the road, unemployed,
annoyed and there is sort of chaos in the whole city, in fact, the whole country,
specially in industrial cities. 60% of the textile industry is either facing shut down
conditions or has increased the prices of cotton yarn and raw materials because of
the production through diesel generators, which has resulted in high costs of
production to them.”

Continued Shahab, “I know that you are based on low prices and high quality
products in the centre of twin cities and it is the matter of survival for you because
you may lose your competitive edge of low prices and high quality if you raise the
prices. But as a matter of fact, we have to raise the prices if we have to survive
because at the current rates, no supplier is ready to produce the garments and let
me make it more clearer to you that the current sale price of the garments at
Siawish garments is less than the cost of production which will be in the near
future.”

As this dialogue was going on, Siawish garments sank into darkness because of the
power failure, “My words”. Said Ghulam farid disappointedly to himself. “Are you
there Farid?” Asked Shahab,” Yes Shahab, I am here and I am all ears, please
continue”. Replied Farid.

“So as I was saying that the cost of production has increased so we have to raise
the prices with a considerable difference which may hit your business badly but for
the survival, this is inevitable and as far as my personal opinion is concerned, to
lose some money is far better than losing all at all. What do you say?”

“Yes, I guess so and I agree and understand the conditions. You know shahab that
we have hired a whole shopping mall because of expanding business, have hired
new staff and a whole new decorative strategy has been applied by us which has
cost us highly. Moreover, we are hearing about value added tax being implemented
by the government soon. We are facing minimum salary decision of Rs. 7000 per
employee by the government. Plus, we are using diesel generators to run the
electricity for 8 hours a day which again is an expensive yet inevitable method. The
government has ordered to close down the shops at 8’ o’ clock in the evening
which, you know, is the prime business time in the summers. I am afraid that with
all these factors added up, we are going towards disaster if we do not come up with
a really miraculous strategy that could save us and our business from these
enormous challenges”

Farid was very down.

“yes, Sadly, it is so and I agree that we have to take some revolutionary measures
to survive in the market” agreed shahab.” Alright Farid, lets pray and hope for the
best, take cares, Allah hafiz”

“Allah hafiz”, Farid Almost slammed down the receiver.

History and Background

Mr. Ghulam Fareed is the owner of Siawish Garments who just wanted to enter into
this business for experience where he has managed to introduce the concept of low
prices. He had not enough experience regarding this business. After completion of
his MBA (Marketing), he joined a pharmaceutical company as a salesperson in 2000.
He spent a lot of time with this company. In early 2003, he went to Lahore for some
company work. In Lahore he saw a shopkeeper who was selling shirts at Rs. 150. He
was very pleased to see that the price of that shirt is near about 240 in twin cities.
So an idea struck his mind to purchase some shirts and sell these shirts at lower
price as well. So he purchased 45 shirts from the manufacturer at Rs. 4800. He
carried this inventory to Rawalpindi and told his friend to keep this inventory in his
shop. His friend was running a video shop. He did set the price 140 rupees for each
shirt. So when the owner of siawish garments came back in evening, he found all
the shirts have been sold. He gave Rs. 10 commission to his friend for selling a shirt.

When he saw a tremendous sale, he purchased more inventories. As soon as he got

success in this business, he felt that he should leave his job and should start his
own business of garments. So in 2003, he got a shop on rent in Panorama Center
Rawalpindi, which now has been turned into a whole shopping mall. His inventory
reached from Rs.4000 to Rs. 125000 just in an year. He captured the market,
customers with low prices and now he has inventory of near about Rs. 4,000,000.

The location, which he has selected for this business, has become successful
because of its importance that is condensed population as the people start utilizing
their services and they prefer to get quality products at low prices. The initial
investment required for starting this business is not much as according to the owner
only time is required for starting up this kind of business e.g. If you want to start
your own business like this and you have stars in eyes, you have to make sure that
they don’t blind you so that you shouldn’t know that where you are going. Mostly
new businesses fail just because their owners don’t have balanced business
experience.

The Problems

As discussed earlier by Shahab, the problems in this case are just too many and
seem quite inevitable to handle with yet Farid has not lost all the hopes and so do
his companions.
Problem of Electricity is, as we all know, increasing day by day. This problem
includes not only the difficulties which owners face on the showrooms but it affects
whole of the supply chain as the whole country is facing a severe energy crisis for
whatever reasons. The suppliers are not ready to produce the garments at older
and cheaper rates because of increasing production costs, due to diesel generators,
and the use of generators at Siawish Garments is another plus to already increasing
costs.

The other problems are associated with this increasing cost and definitely, rising
prices phenomena. Siawish Garments’ success reason is their low prices and high
quality which seem hard to be maintained by the owner. If the business loses its
competitive edge, there will be no room for a simple garment shop in the market
where giants are working with much better quality but at higher prices. So
maintaining the competitive edge is another challenge for Siawish Garments.

Moreover, a recent restriction of minimum salaries of Rs. 7000 by Government has

also struck the business badly with already existing problems. This has affected not
only the employees working on Siawish Garment but also the workers back in
Faisalabad which obviously results in an increase in cost.

Another problem is the order by Government to shut down the shops and markets
at 8’o’ Clock in evening. In twin cities, especially in summers, shopping starts after
8 because of hot weather in the day time. Closing down the markets at 8’o’clock is
affecting the business severely and the situation is getting worse with the strikes by
the shop owners and the fear of chaos which could hit the business badly.

Discussion Questions

1. How should Ghulam Farid tackle with the increasing cost problem, keeping in
consideration all the inevitable external and internal factors?

2. How should the competitive edge be maintained by Siawish Garments so as

to survive in the business?

3. With the shops closed at 8 p.m., what options Ghulam Farid is left with to
increase the business to overcome the cost?

4. How should Ghulam Farid handle the suppliers who are demanding an
increase in prices because of higher costs?

5. What initiative should Ghulam Farid take so as to stand tall to face the
challenge?
 6. What are the chances of survival keeping in view the current scenario?

References

Mr. Ghulam Fareed Owner of Siawish Garments Panorama Center Stadium Road
Rawalpindi Tel: 0092-51-4855322 Mob: 0300-8568217