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International Business and WTO

Project

Submitted To: Sir Imran Qurashi


Date of Submission: Monday, 11, jan, 2017
Submitted By: Muhammad Noman Qureshi
Role No: 3847-FMS/BBA/F13
Class: BBA 28 (A)
Table of Contents
 Flag Description of Pakistan
 Background of Pakistan
 Economic Analysis of Pakistan
 Exports of Pakistan
 Imports of Pakistan
 Diamond Porter Model
 Factor Condition
 Demand Condition
 Related & Supporting Industries
 Firm Strategy, Structure & Rivalry
 Comparative Advantage of Pakistan
 Absolute Advantage of Pakistan
 Introduction of Al-Karam Towel Industries
 History of Al- Karam Towel Industries
 Products of Al- Karam Towel Industries
 Target Country of Nigeria
 Background of Nigeria
 Economic Analysis of Nigeria
 Exports of Nigeria
 Imports of Nigeria
 Mode of Entry
Flag Description
The national flag of Pakistan (Urdu: ‫قومی پرچم‬Qaumī Pārc̱am) was adopted in its present ,
form during a meeting ofConstituent Assembly on August 11, 1947, just four days before the
country's independence, when it became the official flag of the Dominion of Pakistan. It was
afterwards retained by the current-day Islamic Republic of Pakistan. The flag is a green field
with a white crescent moon and five-rayed star at its centre, and a vertical white stripe at the
hoist side. Though the green colour is mandated only as 'dark green' its official and most
consistent representation is Pakistan green, which is shaded distinctively darker. The flag was
designed by Amiruddin Kidwai, and is based on the All-India Muslim League flag.

Background of Pakistan: Pakistan officially the Islamic Republic of Pakistan, is


a federal parliamentary republic in South Asia. It is the sixth-most populous country with a
population exceeding 200 million people. It is the 36th largest country in the world in terms of
area with an area covering 881,913 square kilometers (340,509 square miles). Pakistan has a
1,046-kilometre-long (650-mile) coastline along the Arabian Sea and the Gulf of Oman in the
south and is bordered by India to the east, Afghanistan to the west, Iran to the southwest
and China in the far northeast respectively. It is separated from Tajikistan by Afghanistan's
narrow Wakhan Corridor in the north, and also shares a maritime border with Oman. Pakistan is
strategically placed as it straddles the Middle East, Central Asia and South Asia.

The territory that now constitutes Pakistan is considered a cradle of civilization which was
previously home to several ancient cultures, including the Mehrgarh of the Neolithic and the
Bronze Age Indus Valley Civilization, and was later home to kingdoms ruled by people of
different faiths and cultures, including Hindus, Indo-Greeks, Muslims, Turco-
Mongols, Afghans and Sikhs. The area has been ruled by numerous empires and dynasties,
including the Indian Mauryan Empire, the Persian Achaemenid Empire, Alexander of
Macedonia, the Arab Umayyad Caliphate, the Delhi Sultanate, the Mongol Empire, the Mughal
Empire, the Durrani Empire, the Sikh Empire and the British Empire.

Economic Analysis of Pakistan: Pakistan has a semi-industrialized economy.


Despite being a very poor country in 1947, Pakistan's economic growth rate has been better than
the global average during the subsequent four decades, but imprudent policies led to a slowdown
in the late 1990s. GDP growth was steady during the mid-2000s at a rate of 7%; however,
slowed down during the Economic crisis of 2008 to 4.7%. A large inflation rate of 24.4% and a
low savings rate, and other economic factors, continue to make it difficult to sustain a high
growth rate. Pakistan's GDP is US$167 billions. The structure of the Pakistani economy has
changed from a mainly agricultural base to a strong service base. Agriculture now only accounts
for roughly 20% of the GDP, while the service sector accounts for 53% of the GDP. Significant
foreign investments have been made in several areas including telecommunications, real estate
and energy. Other important industries include apparel and textiles (accounting for nearly 60% of
exports), food processing, chemicals manufacture, and the iron and steel industries. Pakistan's
exports in 2008 amounted to $20.62Â billion (USD). Pakistan is a rapidly developing country.
Historically, Pakistan's overall economic output (GDP) has grown every year since a 1951
recession. Despite this record of sustained growth, Pakistan's economy had, until a few years
ago, been characterized as unstable and highly vulnerable to external and internal shocks.
However, the economy proved to be unexpectedly resilient in the face of multiple adverse events
concentrated into a four-year (1998-2002) period -the Asian financial crisis.
economic sanctions - according to Colin Powell, Pakistan was "sanctioned to the eyeballs";
The global recession of 2001-2002;a severe drought - the worst in Pakistan's history, lasting
about four years;
heightened perceptions of risk as a result of military tensions with India - with as many as 1
million troops on the border, and predictions of impending (potentially nuclear) war;
the post-9/11 military action in neighboring Afghanistan, with a massive influx of refugees from
that country;
Despite these adverse events, Pakistan's economy kept growing, and economic growth
accelerated towards the end of this period. This resilience has led to a change in perceptions of
the economy, with leading international institutions such as the IMF, World Bank, and the ADB
praising Pakistan's performance in the face of adversity.
Due to inflation and economic crisis worldwide, Pakistan's economy reached a state of Balance
of Payment crisis. "The International Monetary Fund bailed out Pakistan in November 2008 to
avert a balance of payments crisis and in July last year increased the loan to $11.3 billion from
an initial $7.6 billion." Today Pakistan is amongst the elite group of 11 countries, also termed as
'The Next Eleven “identified by Goldman Sachs investment bank as having a high potential of
becoming the world's largest economies in the 21st century along with the BRICs.
By October 2007, Pakistan raised back its Foreign Reserves to a handsome $16.4 billion.
Exceptional policies kept Pakistan's trade deficit controlled at $13 billion, exports boomed to $18
billion, revenue generation increased to become $13 billion and attracted foreign investment of
$8.4 billion.
The middle term however may be less turbulent, depending on the political environment. The
EIU estimates that inflation should drop back to single digits in 2010, and that growth should
pick up to over 5% per annum by 2011. Although less than the previous 5 year average of 7%, it
would represent an overcoming of the present crisis wherein growth is a mere 3.5-4%.

Export of Pakistan :The following export product groups represent the highest dollar
value in Pakistani global shipments during 2015. Also shown is the percentage share each export
category represents in terms of overall exports from Pakistan.

Cotton: US$4 billion (18.3% of total exports)


Miscellaneous textiles, worn clothing: $3.8 billion (17%)
Knit or crochet clothing, accessories: $2.4 billion (10.7%)
Clothing, accessories (not knit or crochet): $2.1 billion (9.6%)
Cereals: $1.9 billion (8.8%)
Leather/animal gut articles: $687.6 million (3.1%)
Salt, sulphur, stone, cement: $507.6 million (2.3%)
Raw hides, skins not furskins, leather: $425.1 million (1.9%)
Fruits, nuts: $415.3 million (1.9%)
Optical, technical, medical apparatus: $369.2 million (1.7%)
Fruits and nuts were the fastest-growing among the top 10 export categories, up 33.6% for the 5-
year period starting in 2011.In second place for improving export sales were optical, technical
and medical apparatus which rose 22.1% notably instruments and appliances used in medical,
surgical, dental or veterinary sciences. Pakistani unknit and non-crochet clothing and accessories
posted the third-fastest gain in value at 19.9%.Led by wheat and corn, the fastest-declining
category among the top 10 Pakistani exports was cereals fell in value by -30.8%. Cotton exports
from Pakistan depreciated by -20.7% while salt, sulphur, stone and cement decreased in value by
-11.1%

Import of Pakistan :Below is a list showcasing 15 of Pakistan’s top import partners,


countries that imported the most Pakistani shipments by dollar value during 2015. Also shown is
each import country’s percentage of total Pakistani exports.

United States: US$3.7 billion (16.6% of total Pakistani exports)


China: $1.9 billion (8.8%)
Afghanistan: $1.7 billion (7.8%)
United Kingdom: $1.6 billion (7.1%)
Germany: $1.1 billion (5.2%)
United Arab Emirates: $899 million (4.1%)
Spain: $782.3 million (3.5%)
Bangladesh: $700.6 million (3.2%)
Netherlands: $666.9 million (3%)
Italy: $618.2 million (2.8%)
Belgium: $592.2 million (2.7%)
Saudi Arabia: $431.3 million (2%)
France: $360.6 million (1.6%)
India: $312.3 million (1.4%)
South Korea: $294.7 million (1.3%)
Nearly three-quarters (71.1%) of Pakistani exports in 2015 were delivered to the above 15 trade
partners. Among the top import partners, Spain increased its purchases from Pakistan at the
fastest rate with a 37.3% gain from 2011 to 2015. In second place was the United Kingdom (up
24.9%) closely followed by the Netherlands (up 24.6%).

DIAMOND PORTERS MODEL APPLIED: Porter’s diamond is a model used as


part of the strategic analysis stage of the strategic planning process.

Porter tried to answer the following questions:


Why does a nation become the home base for successful international competitors in an
industry? Nigeria is renowned for Towel manufacture..
Why are firms based in a particular nation able to create and sustain competitive
advantage against the world's best competitors in a particular field?
Why is one country often the home of so many of an industry's world leaders?
Porter called the answers to these questions the determinants of national competitive advantage.
He suggested that there are four main factors which determine national competitive advantage
and expressed them in the form of a diamond.

Factors Conditions: Factors can be basic or advanced, generalized or specialized. A


sustainable competitive advantage in a particular industry is created by specialized and advanced
factors such as a specific technology for that industry. Basic and generalized factors are easily
replicated and usually inherited not created such as cheap raw materials. A lack of basic
resources may force a company to innovate and upgrade while an abundance of basic resources
may lead firms to become complacent and inefficient. Favorable factor conditions include the
following also available in Pakistan: Physical resources such as land, minerals and weather:
Pakistan is available with vast land and minerals as well. Capital: The capital market in the
Pakistan is one of the largest and most sophisticated in the world. This has helped American
companies fund expansion and innovation over time. Human resources such as skills,
motivation, price and industrial relations. Knowledge that can be used effectively Infrastructure
which is latest over the globe. Advance factors are also present in Pakistan like technology
advancements and due to competition a lot of innovations which help to improve their Towel
industry very quickly.

Demand Conditions: The nature of home demand is the key to global success. It is not
the size of the home demand but rather its character that makes the difference. Sophisticated and
demanding home buyers helps the firm to see an early picture of buyer needs and satisfying those
needs improves the firm competitiveness globally. A small domestic demand may in fact drive
firms to explore foreign markets and pursue a global strategy to overcome any deficiencies in
local demand conditions.

There was a high home market demand of Al-Karam Towel Industry Pakistan due to different
reasons like war matter, road structures; etc which lead them to make them self innovative and
capable enough that later on they started fulfilling demand overseas.

Related and Supporting Industries: The concept of related and supporting


industries refers to the extent to which firms’ domestic suppliers and other complementary
industries are developed and helpful.

The success of an industry can be due to its suppliers/ supporting and related industries.

The success of the Al-Karam Towel Industry is based on related as well as supporting industries.

Related industries (e.g. Cotton chemical thread), Supporting Industries (e.g. Finance, insurances,
Banking Sectors Insurance Companies .

Many of these supporting industries have also achieved leading global positions as well.

Firm Strategy, Structure and Rivalry: The nature of competition and domestic
rivalry has a fundamental impact on the international competitiveness of nations firms. Local
rivals provide a powerful stimulus to the creation and persistence of competitive advantage as
local rivalries often goes beyond just business competition to become personal. The struggle for
market share, talented locals and social status makes domestic rivalries intense. This is an
element which competition with foreign firms seldom produces. Domestic competition
automatically cancels any shared advantages that come from being in the same home nation and
forces companies to move beyond those current advantages to create more sustainable
advantages.
Rivalry: Destructive (Purchase of other companies) or Constructive Rivalry. Rivalry is good and
healthy for an industry as it creates competition among them and they get lead towards
innovation and new things.

COMPARATIVE ADVANTAGE: The theory of comparative advantage is an


economic theory about the work gains from trade for individuals, firms, or nations that arise
from differences in their factor endowments or technological progress.In an economic model, A
Country has a comparative advantage over another in producing a particular good if he can
produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative
marginal cost prior to trade. One does not compare the monetary costs of production or even the
resource costs (labor needed per unit of output) of production. Instead, one must compare the
opportunity costs of producing goods across countries.

COMPARATIVE ADVANTAGE: Pakistan has a great potential to stand out in this


sector in the region as a prospective and overwhelming proportion of labor force is engaged in
this sector. It is expected that export-led growth strategy cause a significant boost in production,
employment and the productivity of labor along with the improvements in overall economic
status but the political and socio-economic conditions in addition to primitive types of
technology use may hinder the way to rapid progress.

The Towel industry plays a fundamental role in determining the export bearing of Pakistan.
There has been an ever increasing demand for towels in Pakistan and around the globe. The
Towel industry plays a fundamental role in determining the export bearing of Pakistan. There has
been an ever increasing demand for Towels in Pakistan and around the globe.

Absolute Advantage :Pakistan is one of resource rich countries in the world having a
large amount of coal, gas, gemstones, copper and gold reserves. Other resources also included
oil, iron, and aluminum which are a necessity for any growing economy. Absolute advantage of
Pakistan is in different sectors like agriculture and textile sectors and also in finish goods like
leather, sports items, spices, food commodities and textile

Introduction of Al- Karam Towel Industries: AL Karam Towel Industries


(Pvt.) Ltd. is one of the leading manufacturers and exporters of terry products. Equipped with
complete modern plants and machinery designed in a vertical setup, from weaving to consumer
packed articles Al Karam Towel Industries is preferred supplier for terry products in all major
global markets

History of AL- Karam Towel Industry: AL Karam Towel Industries (Pvt.) Ltd
has been in relentless pursuit in its goal of being internationally recognized since 1986 when Mr.
Mehtab Uddin Chawla, founder of Al Karam Towel Industries an ambitious energetic &
dynamic leader had a vision to establish a modest manufacturing unit with key goals such as
providing a quality product from Pakistan. Today it is a Company which is manufacturing and
exporting to several of the larger retailers spread in all international markets. Over the years we
have expanded upon our manufacturing and customer base and have successfully diversified into
manufacturing towel related products linen products, and other household textile items. With our
strong history and bold vision of the future, we intend to achieve even more in the next 20 years
than we have in last 24 years.

AKTI in 2008 set an export target of 50% increase but achieved Export growth over 86% and got
the BEST EXPORT PERFORMANCE AWARD 2007-2008. AKTI in 2009 set an export target
of 100% increase but with a defined strategy of the management, and optimum efforts of the
team, we succeeded in achieving 141% export growth and got the prestigious BUSINESSMAN
OF THE YEAR GOLD MEDAL 2008-2009. For the year 2010 AKTI set a fresh export growth
target of further 50% increase over the preceding year but by the grace of Almighty ALLAH,
succeeded to amplify the exports by more than 65% and got the exalted PRESIDENTIAL
(AWARD) TROPHY 2009-2010. AKTI has now set a fresh target of 50% of export increase for
the year 2010-2011 and with blessing of ALLAH thrive in getting the desired projection. Given
the above trend, based on strategic alliance, we are working towards achieving higher targets for
2014.

COUNTRY OF DISTINATIO Nigeria : Nigeria, is a federal republic in West


Africa, bordering Benin in the west, Chad and Cameroon in the east, and Niger in the north. Its
coast in the south lies on the Gulf of Guinea in the Atlantic Ocean. It comprises 36 states and
the Federal Capital Territory, where the capital, Abuja is located. Its largest
cities include: Lagos, Kano, Ibadan, Benin City and Port Harcourt. Nigeria
is officially a democratic secular country.

Modern-day Nigeria has been the site of numerous kingdoms and tribal states over the millennia.
The modern state originated from British colonial rule beginning in the 19th century, and the
merging of the Southern Nigeria Protectorate and Northern Nigeria Protectorate in 1914. The
British set up administrative and legal structures whilst practicing indirect rule through
traditional chiefdoms. Nigeria became a formally independent federation in 1960, and plunged
into a civil war from 1967 to 1970. It has since alternated between democratically-elected
civilian governments and military dictatorships, until it achieved a stable democracy in 1999,
with the 2011 presidential elections considered the first to be reasonably free and fair.

Nigeria is often referred to as the "Giant of Africa", owing to its large population and
economy. With approximately 184 million inhabitants, Nigeria is the most populous
country in Africa and the seventh most populous country in the world. Nigeria has one of the
largest populations of youth in the world. The country is viewed as a multinational state, as it is
inhabited by over 500 ethnic groups, of which the three largest are the Hausa, Igbo and Yoruba;
these ethnic groups speak over 500 different languages, and are identified with wide variety of
cultures. The official language is English. Nigeria is divided roughly in half between Christians,
who live mostly in the southern part of the country, and Muslims in the northern part. A minority
of the population practice religions indigenous to Nigeria, such as those native
to Igbo and Yoruba peoples.

As of 2015, Nigeria is the world's 20th largest economy, worth more than $500 billion and $1
trillion in terms of nominal GDP and purchasing power parity respectively. It overtook South
Africa to become Africa's largest economy in 2014. The 2013 debt-to-GDP ratio was 11
percent. Nigeria is considered to be an emerging market by the World Bank; It has been
identified as a regional power on the African continent, a middle power in international
affairs, and has also been identified as an emerging global power. Nigeria is a member of
the MINT group of countries, which are widely seen as the globe's next "BRIC-like" economies.
It is also listed among the "Next Eleven" economies set to become among the biggest in the
world. Nigeria is a founding member of the Commonwealth of Nations, the African
Union, OPEC, and the United Nations amongst other international organizations.

Location of Nigeria: Nigeria, officially the Federal Republic of Nigeria is situated in the
Western part of Africa. Its coastal boundary is delimited by the Gulf of Guinea in the south and
the land boundary is shared by Cameroon and Chad in the east, Niger in the north and Benin in
the west. Abuja is Nigeria’s capital city and Lagos is its largest city. Nigeria covers a total area
of 923,768 sq. km. making it the thirty second largest country of the world. It has a small
coastline of 853 km in comparison to its total land boundary of 4047 km. The latitudinal and
longitudinal extent of the country is 4° to 14°N and 2° to 15°E respectively.

Export of Nigeria :Exports of commodities (oil and natural gas) is the main factor
behind Nigeria's growth and accounts for more than 91% of total exports. In 2014, 43% of total
sales went to Europe; 29% to Asia; 13% to America and 12% to Africa. This page provides -
Nigeria Exports - actual values, historical data, forecast, chart, statistics, economic calendar and
news. Nigeria Exports - actual data, historical chart and calendar of releases - was last updated
on January of 2017.

Import of Nigeria: Nigeria imports mainly: industrial supplies (27% of total in 2014),
capital goods (23%), food and beverage (17%), fuel and lubricants (14%), transport equipment
and parts (12%) and consumer goods (7%). 43% of total imports come from Asia; 34% from
Europe; 15% from America and 7% from Africa. This page provides - Nigeria Imports - actual
values, historical data, forecast, chart, statistics, economic calendar and news. Nigeria Imports -
actual data, historical chart and calendar of releases - was last updated on January of 2017.

Economy of Nigeria: Nigeria is a middle income, mixed economy and emerging


market, with expanding manufacturing, financial, service, communications, technology and
entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal
GDP, and the 20th largest in terms of Purchasing Power Parity. It is the largest economy in
Africa; its re-emergent manufacturing sector became the largest on the continent in 2013, and
produces a large proportion of goods and services for the West African subcontinent. Also,
the debt-to-GDP ratio is only 11 percent, which is 8 percent below the 2012 ratio.

Previously hindered by years of mismanagement, economic reforms of the past decade have put
Nigeria back on track towards achieving its full economic potential. Nigerian GDP at purchasing
power parity (PPP) has almost tripled from $170 billion in 2000 to $451 billion in 2012,
although estimates of the size of the informal sector (which is not included in official figures) put
the actual numbers closer to $630 billion. Correspondingly, the GDP per capita doubled from
$1400 per person in 2000 to an estimated $2,800 per person in 2012 (again, with the inclusion of
the informal sector, it is estimated that GDP per capita hovers around $3,900 per person).
(Population increased from 120 million in 2000 to 160 million in 2010). These figures are to be
revised upwards by as much as 80% when metrics are recalculated subsequent to the rebasing of
its economy in April 2014.

Although much has been made of its status as a major exporter of oil, oil only contributes about
9% to the GDP. Nigeria produces only about 2.7% of the world's oil supply (In
comparison, Saudi Arabia produces 12.9%, Russia produces 12.7% and the United
States produces 8.6%). Although the petroleum sector is important, as Government revenues still
heavily rely on this sector, it remains in fact a small part of the country's overall vibrant and
diversified economy.
The largely subsistence agricultural sector has not kept up with rapid population growth, and
Nigeria, once a large net exporter of food, now imports a some of its food products, though
mechanization has led to a resurgence in manufacturing and exporting of food products, and the
move towards food sufficiency. In 2006, Nigeria successfully convinced the Paris Club to let it
buy back the bulk of its debts owed to the Paris Club for a cash payment of roughly $12 billion
(USD). According to a Citigroup report published in February 2011, Nigeria will get the highest
average GDP growth in the world between 2010 and 2050. Nigeria is one of two countries from
Africa among 11 Global Growth Generators countries. Nigeria is a middle income, mixed
economy and emerging market, with expanding manufacturing, financial, service,
communications, technology and entertainment sectors. It is ranked as the 21st largest economy
in the world in terms of nominal GDP, and the 20th largest in terms of Purchasing Power Parity.
It is the largest economy in Africa; its re-emergent manufacturing sector became the largest on
the continent in 2013, and produces a large proportion of goods and services for the West
African subcontinent.

Mode of Entry: Actually I have chosen the product name as Towel the company name of
Al- Karam Towel Industry .AKTI is exports in different country but not export in Nigeria .So I
doing Direct export through Unzeil Corporation that will export towel from me .