Sports Industry Of Pakistan 3749a

SPORTS INDUSTRY OF PAKISTAN Sports: Sports are all forms of usually competitive physical activity or games which, through casual or organized participation, aim to use, maintain or improve physical ability and skills while providing entertainment to participants, and in some cases, spectators.(“Sport,” 2016) OVERVIEW: At the time of independence, this industry was in an infant stage with a nominal export of Rs.0.82 million. The Government took immediate steps to develop this industry by providing loans and subsidies to the manufacturers and arrangements were made to market the manufactured goods. Since then, the industry has flourished locally and enjoys good reputation in the international markets as well. (“Sports Industry Presentation (Aisha n Mehreen) Documents,” n.d.) In Pakistan almost all sports related items are produced but the famous products are soccer ball, cricket bat, cricket ball, tennis ball and some other items too. Sports industry of Pakistan has even manufactured the soccer ball for the FIFA World cup of the year 1994; this shows that how demanding the sports industry of Pakistan is in the world market of sports goods. The sports industry of Pakistan lies in the city of Sialkot which is a part of the province of Punjab. All the items of sports of the best quality are manufactured in the city of Sialkot and sports industry in Sialkot is the main factor of Sialkot’s economy as it earns great profit from it due to the high demand of sports good in international market. (“Sports Industry - Dost Pakistan,” n.d.)

Porter Diamond Model Analysis of Sports Industry of Pakistan: Porter Diamond’s model attempts to explain the competitive advantage some nations or groups have due to certain factors available to them. (root, 2010) The four determinants of Porter’s diamond model are;

Factor endowment: A country's factor endowment is commonly understood as the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing.(“Factor endowment,” 2015)

Raw Materials: The raw materials required for the production of sports goods, are leather, wood, glue, nylon guts, rubber and chemicals, cotton and synthetic material. While the new materials like PVC and PU sheets are imported. The industry annually utilizes materials worth Rs.8 billion, including imported raw material

Labor: The Pakistan sports goods industry is a highly labor intensive industry. The total number of persons working in the entire sports goods industry is about 300,000. The skilled and unskilled labor ratio is 70:30

Geographic concentration: Sialkot is the center for the production of sports goods. Major industries units are located here.

Capital: Since it is a cottage industry investment is made on a small scale. The capital output ratio is 1: 0.75

Technology: Pakistan needs to adopt new technologies in order to compete with other countries presently the technology statistics are: Low technology 84% Medium technology 16% High technology –

Tariff Structure: Raw material imported for manufacturing of exportable sports products are exempted from custom duties and other taxes.

Infrastructure: Inadequate infrastructure has remained a very troublesome issue for this industry. Transport lags, with high costs becomes a major issue when competing with international competitors.

Demand Conditions: Demand conditions in the home market can help companies create a competitive advantage, when sophisticated home market buyers pressure firms to innovate faster and to create more advanced products than those of competitors. (“Diamond model,” 2015)

Demand Patterns: Most of industry’s consumers of sports goods are between 15 and 35 years of age. Older consumers tend to purchase local brands, younger ones are highly devoted to name brand recognition and trend following.

Items Purchased: Cricket Bats, Hockey sticks, Basketball shoes and clothing, in-line skating apparel, American sports teams’ baseball style hats, sports sandals, and sport t-shirts are the most popular items with the younger consumers. Older consumers prefer jogging shoes and golf apparel. Consumers: The purchases are not in large volumes. Furthermore, the industry sets and creates the fads and determines what is "hot". Buyer countries include;  Indonesia  Hong Kong  Thailand  Korea  Vietnam  USA  European countries

Substitutes: The threat of substitute products is basically low. The industry is upgrading the products frequently to cope with fashion. There are not too many close substitute products.

Related and ing industries For many firms, the presence of related and ing industries is of critical importance to the growth of that particular industry. A critical concept here is that national competitive strengths tend to be associated with "clusters" of industries(“National Diamond,” 2016)

Suppliers: Since there are few companies so the bargaining power of suppliers is medium to high. The product is unique, and the switching costs are high. Presently, Pakistan is competing with India, Japan, Taiwan and South Korea in international market. Since the entry of Japan, Taiwan and Korea, the industry is tilting towards mechanization and the use of modern equipment. ing industries include:  Plastic Industry  Leather Industry  Paint Industry  Textile Industry

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Rubber Industry

Diversification of sports goods: The following new sports items can be manufactured through the existing sports manufacturing facilities at Sialkot:

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Cycle Sports Products industries involve composite material units, Shoe Factories, Engineering, Clothing and Rubber units. Swimming Sports product industries involves plastic, rubber and clothing units.

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Water Sports Industries involves rubber, clothing and shoes units.

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Snow Sports Industries involves composite material, clothing and Shoes Industries. Golf Sport Products Industries involves leather, shoes, and engineering and rubber industries. Tennis, Bton, Squash involve composite material, shoes, clothing, plastic and rubber industries. Industries. Baseball Sports involves, metal, rubber, leather, clothing and shoe industries

Firm strategy, structure and rivalry: The way in which companies are created, set goals and are managed is important for success. But the presence of intense rivalry in the home base is also important; it creates pressure to innovate in order to upgrade competitiveness. (“Porter’s diamond model,” 10:13:23 UTC)  Foreign companies are becoming more reluctant to do business with Pakistani manufacturers, because of the negative effects on production schedules related to political and social unrest

 The industry is tilting towards use of mechanization and use of modern equipment, which has resulted in tougher competition for manufacturers and exporters of sports goods of Sialkot that it continues to compete in the global market without a fully mechanized industry, relying mostly on old and traditional production techniques.  Local production is not at a good pace, so as a proportion of the total sports apparel industry, local production plays an increasingly minor role.

The process through which sports goods :  INPUT: First stage is input so the basic raw materials required for the production of sports goods, are leather, wood, glue, nylon guts, rubber and chemicals, cotton and synthetic mat. . As the sports goods are manufactured mainly in Sialkot so the raw materials like wood is obtained from the nearby artificial jungle known as Changa Manga situated near Sialkot. Inputs like leather are taken from the industries situated in Sialkot, Gujranwala.  PROCESSING: Second step is processing which includes weaving, stitching, crafting, cutting, polishing, knitting with the use of manual work and machine work.  OUTPUT: Finally comes the output which includes Cricket Bats, Hockey Sticks, Base Ball Bats, Wickets, Cricket Ball, Hockey Ball, Foot Ball, Sports Gloves, Boxing Gloves, Tennis Ball, Volley Ball, Indoor Ball, Track Suits etc.

Competitive analysis:  Lower priced local or no-name brands have not increased market share. Sources predict the retail segment of the market may soon see consolidation.  Foreign companies are becoming more reluctant to do business with Pakistani manufacturers, because of the negative effects on production schedules related to political and social unrest. The stability of the macro-environment in the U.S., therefore, provides an attractive alternative for Pakistani importers and retailers.  Local production is not at a good pace, thus as a proportion of the total sports apparel industry, local production plays an increasingly minor role.  There is perfect competition & therefore the market share exists more or less equally with the major companies.

 Diamond model. (2015, May 5). In Wikipedia, the free encyclopedia. Retrieved from https://en.wikipedia.org/w/index.php?title=Diamond_model&oldid=660907884  Factor endowment. (2015, August 16). In Wikipedia, the free encyclopedia. Retrieved from https://en.wikipedia.org/w/index.php?title=Factor_endowment&oldid=676291647  National Diamond. (2016, January 26). In Wikipedia, the free encyclopedia. Retrieved from https://en.wikipedia.org/w/index.php?title=National_Diamond&oldid=701698961  Porter’s diamond model. (10:13:23 UTC). Retrieved from http://www.slideshare.net/SuroviDaini/porters-diamond-model?related=1  root. (2010, May 27). Porter Diamond Definition. Retrieved February 13, 2016, from http://www.investopedia.com//p/porter-diamond.asp  Sport. (2016, February 11). In Wikipedia, the free encyclopedia. Retrieved from https://en.wikipedia.org/w/index.php?title=Sport&oldid=704358237  Sports Industry - Dost Pakistan. (n.d.). Retrieved from http://www.dostpakistan.pk/sports-industry/  Sports Industry Presentation (Aisha n Mehreen) - Documents. (n.d.). Retrieved February 13, 2016, from http://documents.mx/documents/sports-industry-presentation-aisha-nmehreen.html