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Case study



Ayesha AwAN L1s17mbal0071




TexItalia versus AZ Textiles: The Deadlock in Negotiations

three-party negotiations has been discussed in this case . There is business conflict between
TexItalia, Italy; Creative Clothing and Textiles, Pakistan; and AZ Textiles, Pakistan . Creative
Clothing and Textiles is a buying house acting as the middleman between AZ Textiles, a woven
garment stitching unit, and TexItalia, its customer.

The issue arises from quality problems and this case describes the discussions and tactics
employed by the three parties during the negotiation stage including bluffs, threats and delaying.

Iftikhar Khurshid was the managing director of Creative Clothing and Textiles, which was a
textile buying house. Having great work and great business one day he was notified that there
was a deadlock in negotiation between their client Texitalia and their supplier AZ Textiles. They
had quality problems and he client claimed for the defects in order to not pay the given amount.

Industry background

The Textile industry in Pakistan is the largest manufacturing industry in Pakistan . Pakistan is
the 8th largest exporter of textile commodities in Asia. Textile sector contributes 8.5% to the
GDP of Pakistan .Pakistan is the 4th largest producer of cotton with the third largest spinning
capacity in Asia after China and India and contributes 5% to the global spinning capacity units
which produce textile.But the problem generate when we talk about marketing. The marketing
of textile industry is week because there are language barriers, geographical distance and lack of
contacts in foreign markets. A buying house served as a bridge between the customer in the
foreign market and the supplier in domestic market. As it was difficult for a person to look at
every step of manufacturing, buying house provided such facility. It take cares of entire process
of manufacturing so that all the customer’s requirements are satisfied.

The steps involved in the order process are the following:

Process involved in fabric manufactures

 Cultivating and harvesting.
 Preparatory processes - preparation of yarn.
 Spinning - yarn manufacture.
 Weaving-fabric manufacture.
 Knitting- fabric manufacture.
 Finishing- processing of textiles.
 Economic, environmental and political consequences of cotton manufacture.
 Flax.
 Steps involved in clothing manufacture
1. Customer send an order
2. sourcing all materials , fabrics and accessories
3. Patterns , sampling , and size grading patterns
4. Review sample & Approve samples from customer
5. Review order size, delivery date, price, etc.
6. Customer Receive payments
7. customer open a Letter of Credit
8. receive charges
9. preparations for mass manufactures
10. mass manufactures and quality control
11. When good ready, buying house conduct final order
12. Take care of shipping

Thus buying house is involved in whole process from beginning to the end of the goods.

Industry norms regarding quality problem

Quality problem in industry occur when each step is not followed and lake of commination
found during the order proceed

1: quality problem

buying house before dispatch of goods has not check the each paces. In this case there should be
negotiation between both supplier and customer. A buying house can solve these type of
problems by monitor the each step . Due to custom problems it was not possible to return back
goods to manufacturer in Pakistan. There should be a third party audit to verify the customer’s
claim, since the customer’s evaluation of damages could be exaggerated.

2: lake of commination

It can be a barrier if sender or receiver fails to use modern information technology. If message is
not shared on time things may not be done effectively.
if feedback is missing from receiver that means either he fails to understand or not willing to
work. Technical terms that not used in common:
Undefined technical terms may hamper production process
E-mail may not be all time effective, sometime verbal communication can be good channel to
solve problem in production. Poor listening skill will lead to misunderstandings, errors, bad
decisions, loss of team work strength
Cultures provide people with ways of thinking–ways of seeing, hearing, and interpreting. Thus
each culture has its own rules about proper behavior which affect verbal and nonverbal
Women often has soft communication & male communication is often more direct
Main problems
the main problem occurred when they gave their first order. The customer’s requirement was not
fulfill. They provided a specific measurements but there was a difference of 2 cm. As the
tolerance was of 1 cm, this caused a major quality problem.

A visitor came to give order and in a meeting with CCT and AZ Textiles, they complaint about
the quality of their products. After this issue they called Chiara to discuss if she provided the
specification chart to AZ Textiles. They found that she didn’t provided the chart and thus
arranged a meeting with Chiara to solve the issue.

The problem still remain in the field. Few orders were not successful as per requirements of the
customers. According to Khursid, this was an embarrassing moment. And it marked the
beginning of a gradual decline in Texitalia and faith of customers in AZ Textiles abilities.

This main problem of quality control is occur due to lake of communication between
manufacture and supplier

Bachground informations of three parties

Creative Clothing Textiles

Khursid first worked in Legler Nafees Denim Mills. He learned many skills there like customer
satisfaction, marketing skills. And after learning all he started his own company named Creative
Clothing Textiles (CCT).

CCT was formed in April 2000 in partnership with Mario Maldini, an Italian living in Rome. He
had huge experience in the textile industry and had represented various suppliers as their agent in
the Italian market. Maldini took care of the marketing side for CCT as he approached potential
clients in Italy to generate business. Khurshid, worked to build a strong relationship with
Pakistani manufacturers and was responsible for monitoring production and communicating with
customers regarding process of their orders.

In March 2000, CCT approached Texitalia (Italian retailer) and convinced them to work with
Pakistani suppliers. Maldini used his contacts and set up meetings with Texitalia. Texitalia send
his chief buyer to access the quality production of garments in Pakistan. He was impressed and
decided to start work with CCT to place orders with certain textile manufacturer in Pakistan.

Texitalia accounted almost 80 percent of the revenue of CCT. Buying house charged 7%
commission on all orders. The commission was paid by Pakistani manufacturers.

Their primary objective was to keep their customer satisfied. They often pressurized their
suppliers to take care of good of the buyers.


Texitalia was Italian retailer based in Florence. They have a unique technique to sell their
product. Every year they print catalogues and distributed in every household in every season.
Their main target customers are farmers. They had a fleet approximately 650 delivery trucks.
They procured garments from Bangladesh, India, Morocco, Tunisia, and many other countries.

AZ Textiles
It is a woven garment stitching unit. The reputation of the company in Pakistan is high. It started
in early 70s. Although AZ Textiles had some large customer, Texitalia benefited it a lot. Texitalia
has given huge business volume by providing them customers from the beginning.

Texitalia’s quality department

During the initial business relationship, both CCT and AZ Textiles had faced significant
communicating problems with Texitalia. Texitalia’s person Chiara was contacted by CCT, and
she didn’t speak English fluently. So that they were not able to communicate easily with each

Because of the communicating problem, CCT and AZ Textiles were not acknowledged about the
requirements of customers and many orders were delayed. But Texitalia was compromising and
accepted all the delays of the orders because they knew that there was communicating problem.
Khursid got the feeling that Texitalia was quite dissatisfied with the attitude of the quality

Solutions of problems

After analyzing the whole case study we can get the points

(1) I think he should continue with the working business but he keep an eye on each
steps involved and the goods ordered carefully before delivering it to the
customers. AZ Textiles must be careful during replacing order to manufacture and
giving instruction very clearly . And Customers will have trust again on AZ
Textiles abilities.
(2) To maintain or to improve the quality of the product they must improve the
communication skills between their suppliers and clients .To improve
commincation skills these steps must be follow like

Message should be very simple & clear so that anyone can understand it at any level of
downward & upward stream.Irrelevant message always create doubt & confusion. So careful
discussion & writing should have to be taken in consideration for effective communication.
Giving and receiving feedback effectively is an important part of communication whether inside
or outside the organization. Confident communication will help to build trust level between the
parties. No one like a rude person so carefully rude wards should have to be avoided. In
conclusion, textile business message is complete when it contains all facts the reader or listener
need for a proper feedback. So manufacture has to be aware all time that his message is
conveying the meaning what he wanted to say. So, effective business communication is really
important for a in this industry

(3) Employees of each department should be trained and a research and development
team must be make to keep balance and find out problems . Employees should be
compensate to motivate them to work hard .

CCT can’t compromise on the customer’s requirements and they should do the effective work in
order to get the best quality. CCT is involved in very complications because they don’t work with
only one company. They are not consistent about their supplies which can lead to more
complications and more disorders.