CHAPTER 1

INTRODUCTION ABOUT INDUSTRY

Exhibit 1.1 Indian Charkha

1.1 INTRODUCTION TO KHADI

Khadi is an Indian fabric. Khadi is also known as “Khaddar”. It is made by
spinning the treads on an instrument known as “Charkha”. During pre-independence
era the movement of khadi manufacturing gained momentum under the guidance of
father of nation Mahatma Gandhi ji. This movement of khadi manufacturing and
wearing started as to discourage the Indians from wearing of foreign clothes.
Khadi before independence was considered as the fabric for the political leaders
and the rural people. But now it has found its way into the wardrobe of fashion
conscious people. The current situation is that the demand is more than the supply.
Earlier the type of khadi available was khadi cotton which had very coarse texture
and feel. However many varieties of khadi like khadi silk, khadi wool and khadi
cotton are available now, which makes it a fashionable fabric and likable by the
masses.
Its concept was developed by Mahatma Gandhi Ji. It was a symbol for political
agendas during the fight for independence in India against the British Rule. It was
primarily a means to provide employment to the unemployed rural population of
India at that time. The Indian flag has to be also made from khadi material. Thus it
holds national importance; we could even call it the national fabric of India.
OVERVIEW
Khadi is a versatile fabric. It has the unique property of keeping the wearer warm
in winter as well as cool in summer season. This fabric has coarse texture and gets
easily crumpled, therefore in order to keep it firm and stiff, starch is to be added. This
fabric on washing is more enhanced thus the more you wash, better it looks. Khadi is
not easily worn out for years together, at least for 4-5 years. Very attractive and
designer apparel are made by doing handwork on the garments made out of it. Khadi
spinning is generally done by female workers and weaving mostly by male workers.
During spinning of khadi the threads are interwoven in such a manner that it provides
passage of air circulation in the fabric. Apart from this unique property, it also
provides warmth in winter season which is quite surprising factor.
Khadi cotton is required to be starched so that it does not get easily crumpled. It
comes in many colors and is not harmful to the skin as synthetic fabrics. This is very
soothing in summer season as ample amount of air ventilation is there, it has the
capacity to absorb moisture therefore it easily soaks the sweat and keeps the wearer
cool and dry. Khadi cotton comes in plain as well as the printed fabrics. The most
common outfit made from khadi cotton is the ‘Kurta’. Many types of apparel are
manufactured from khadi cotton like saree, salwar suits, fabric yarns, western tops,
shirts, trousers, skirts, hand kerchief, etc. It is very durable fabric.
In khadi silk, the ratio of khadi and silk fabric is 50:50. This fabric requires dry
cleaning. It shrinks about 3% after the first wash. It is quite an expensive fabric.
Khadi silk provides a royal and rich look. The various types of apparels made from
khadi silk are salwar kameez, Kurta pajama, saree, dupattas, shirts, vest and jackets.
Apparels like Kurta, Jacket, Saree blouse requires lining to be given to ensure its
longetivity.
Previously khadi was dyed in earthy colors, tones and was used to make
traditional garments but now designers are experimenting by dyeing khadi with
striking colors like lime green, violet, baby pink, turquoise blue, etc. Stylish garments
like miniskirts, halter neck tops, racer tops, tunics, etc. are made from khadi.
Khadi is hand woven and hand spun fabric which takes time to be made. It is
mainly manufactured in rural areas of India. In previous times it was considered as
 the fabric for the poor rural workers and farmers. But wearing khadi is no more for
the poor, many high profile personalities and economically sound people prefer to
wear khadi. It is considered as one of the most beautiful Indian Fabric. The khadi
wearer gets a royal and distinguishable look due to its fall and style. It symbolizes
luxury and uniqueness.
1.2 KHADI AND VILLAGE INDUSTRIES COMMISSION (KVIC)

Exhibit 1.2 KVIC (Khadi & Village Industries Commission)

INTRODUCTION

Khadi & Village Industries Commission (KVIC) was established under the Khadi &
Village Industries Commission Act, 1956(61 of 1956), is a statutory organization
engaged in promoting and developing khadi and village industries for providing
employment opportunities in the rural areas, thereby strengthening the rural economy of
the country. It took over the activities from the erstwhile All India Khadi and Village
Industries Board w.e.f. 01 April 1957. KVIC has been identified as one of the major
organizations in the decentralized sector for generating non-farm employment
opportunities in rural areas at low per capita investment. It undertakes activities like skill
improvement, transfer of technology, research & development, marketing, etc. in the
process of generating employment/self-employment opportunities in rural areas.
MAIN OBJECTIVES

 The social objective of providing employment in rural areas.

 The economic objective of producing saleable articles
 The wider objective of creating self-reliance amongst people and building up a
strong rural community spirit.

FUNCTIONS

The functions of KVIC as prescribed under the KVIC Act, 1956(61 of 1956) and rules
made there under, are as follows:

 To plan and organize training of persons employed or desirous of seeking

employment in khadi and village industries.
 To build up reserves of raw materials and implements and supply them or arrange
supply of raw materials and implements, to persons engaged or likely to be
engaged in production of handspun yarn or khadi or village industries at such
rates as the Commission may decide.
 To encourage and assist in the creation of common service facilities for the
processing of raw materials or semi-finished goods and for otherwise facilitating
production and marketing of khadi or products of village industries.
 To promote the sale and marketing of khadi or products of village industries or
handicrafts and for this purpose to forge links with established marketing agencies
wherever necessary and feasible.
 To encourage and promote research in the technology used in khadi and village
industries, including the use of non-conventional energy and electric power with a
view to increasing productivity, eliminating drudgery and otherwise enhancing
their competitive capacity and arranging dissemination of salient results obtained
from such research.
 To undertake directly or through other agencies, studies of the problems of khadi
or village industries.
 To provide financial assistance directly or through specified agencies to
institutions or persons engaged in the development and operation of khadi or
 village industries and guide them through supply of designs, prototypes and other
technical information for the purpose of producing goods and services for which
there is effective demand in the opinion of the Commission.
 To undertake directly or through specified agencies, experiments or pilot projects
which in the opinion of the Commission are necessary for the development of
khadi and village industries.
 To establish and maintain separate organizations for the purpose of carrying out
any or all of the above matters.
 To promote and encourage cooperative efforts among the manufacturers of khadi
or persons engaged in village industries.
 To ensure genuineness and to set up standards of quality and ensure that products
of khadi and village industries do conform to the said standards, including issue of
certificates or letters of recognition to the concerned persons.
 To carry out any other activity incidental to the above.
1.3 INTRODUCTION ABOUT THE ORGANIZATION

Exhibit 1.3 Head Office

Karnataka Khadi Gramodyog Samyukta Sang Federation (KKGSSF) is located at just 4

kms from the Hubli district of Karnataka in a small village called Bengeri which was
established by great Gandhians on 1st November 1957. Soon after its establishment, about
58 institutions around Karnataka were brought under the aegis of the KKGSS and the
federation started functioning with Hubli as the head office. The head office is spread
across 17 acres and along with the manufacturing facilities; it also houses a training
college to train students in textile chemistry. Presently the federation has around 51
member institutions functioning under KKGSS all over the state. The production of khadi
began in the year 1982. The federation manufactures all types of khadi products such as
khadi clothes, Khadi bags, Khadi Carpets, Khadi Bed sheets, Khadi caps, and handmade
paper. The primary product that is manufactured by KKGSS is the National flag of
India following the guidelines set by the Bureau of Indian Standards (BIS). The standards
set by BIS are strict, and the permission to produce the national flag was been granted to
KKGSS by the Khadi and Village Industries Commission. The flag manufacturing unit
started its operations in the year 2004. In 2006 it got the award of excellence and also got
certified by Bureau of Indian Standards (BIS). KKGSSF is the only authorized maker of
tri-colour in the country. It is the only production centre that produces the national flags
according to BIS standards and a sole supplier of national flags to the union and state
governments besides private organizations across the country. The unit manufactures
flags of various sizes including tiny pocket flag to huge 21 feet by 14 feet flags. KKGSS
holds the monopoly for the manufacturing of Indian national flag. The KKGSS
manufactured Tricolor is supplied across the country and also to Indian Embassies in
other countries. The cloth needed for making the flag is sourced from Bagalkot, a unit of
KKGSS.

Table 1.1 Organization Profile

Karnataka Khadi Gramodyog Samyukta

Name of the Company
Sangh (Federation)
Bengeri, Hubbali - 580 023.
Address Dist. Dharwad, Karnataka State.
INDIA
Establishment 1st November 1957

Sector Manufacturing

Industry Khadi and Village Industry

Managing Committee of 13 members
Board
headed by the Chairman
Registration Number MY/104/DWR
Membership 51 Member Institutions
1) National Flags
2) Towels
3) Hand Kerchiefs
4) Bed Sheets
5) Pantings and Shirting’s
Product profile
6) Carpets
7) Saree
8) Ready-Made Shirts
9) Shoulder bags
10) Khadi Caps
Charkhas : 630
Machines
Looms : 210
No. Of employees 81
No. Of Artisans 840
 CHAPTER 2

ORGANIZATION PROFILE

2.1 BACKGROUND

While dedicating their lives for the cause of Khadi and Village Industries, some
leading Gandhians like late Sri H.A. Pai of Ankola, late Sri Anant Bhat of Bijapur,
late Sri Jayadev Rao Kulkarni of Belgaum, late Sri B.J. Gokhale of Dharwad, late Sri
Vasudeva Rao of Chitradurga and late Sri. B.H. Inamdar of Raichur felt the need for
guiding the Khadi institutions and founded the Federation on Nov 1, 1957. It was
named the ‘Karnataka Khadi Gramodyog Samyukta Sangh (Federation), Bengeri,
Hubli’, with late Sri Venkatesh .T. Magadi being made its first Chairman and late Sri
Sriranga Kamat its Vice-Chairman.
The initial work of the Federation was started with a sum of Rs. 10,500/- donated by
the above said member Institutions. Later, over the period of time, this small
organization has grown into a big tree as Khadi Federation, taking under its shelter 53
member Institutions across the state, helping and guiding them in their way ahead.

HEAD OFFICE
The head office is spread over an area of 17 acres of land. It is the heart of the entire
member Institutions discharging all its duties and commitments towards member
Institutions. The following units are functioning within the campus of the head
office.
AREA OF OPERATION IN KARNATAKA STATE

HUBLI –Administration Wing

 HEAD OFFICE

BAGALKOT DISTRICT- Production Wing

 PRODUCTION CENTRES, KHADI & POLIVASTRA, AND SALES

BHANDAR

BANGLORE – Sales Wing

 SALES BHANDAR, EMPORIUM & H.M.P UNIT

 Exhibit 2.1 Area of Operation

AREA OF OPERATION IN BAGALKOT DISTRICT

BADAMI TALUKA - 14 VILLAGES

 KERUR
 UGALWAT
 MOMATGERI
 GOVANKOPPA
 HOSUR
 HALKURKI
 BELUR
 JALIHAL
 YAKANCHAI MANINAGAR
 KAGALGOMBA
 JAMMANKATTI
 KADARKOPPA
 HALIGERI
 RADDER TIMMAPUR
BAGALKOT TALUKA – 07 VILLAGES

 GADDANKERI
 SIMIKERI
 SHIRUR
 TULSIGERI
 KHAJJIDONI
 RAMPUR
 MURNAL

BILAGI TALUKA – 05 VILLAGES

 SIDDAPUR
 BILAGI
 BISANAL
 SUNAG
 GALAGALI

2.2 NATURE OF BUSINESS

Nature of business refers to the type or general category of business carried on by the
organization. Karnataka Khadi Gramodyog Samyukta Sang (Federation) is an
organization which has 51 member institutions functioning under it all over
Karnataka state which guides the Khadi institutions coming under the federation. It is
a non-profit organization which has a turnover of about 11-12 crores coming under
Manufacturing Sector. It the medium sized enterprise.

2.3 VISION, MISSION, QUALITY POLICY

VISION

“To promote khadi products and to provide employments to people in the rural areas
under khadi and village industries sector”

MISSION

“To manufacture world class products of outstanding quality that gives our customers
a competitive advantage through superior products and values”
QUALITY POLICY

 Meet customers’ requirements and excel in all spheres of management through

continual improvement of products, services, processes and system, in order to
satisfy customers, suppliers, stake holders, employees and interested parties.
 Involve people at all levels of the organization to achieve Organizational
Objectives.
 Take decisions and implement actions based on analysis of data and information in
order to ensure Improvement and Growth.
2.4 WORKFLOW MODEL

Production Process of National Flag

Hand Spinning

Hand Weaving

Bleaching and Dyeing

Chakra Printing

Stitching

Toggling

Chart 2.1Flag Manufacturing Process

DETAILS OF MANUFACTURING PROCESS OF FLAG

Raw Material:- Cotton

1. HAND SPINNING
The Cotton which is well suited for the production of required count of yarn,
i.e. 30 tex for bunting cloth and 38 tex for duck cloth, will be procured from
the market and used for yarn manufacture. This raw-cotton will be converted
into a yarn of required count by processing it through various complicated
machineries viz. openers, cleaners, card, draw frame, comber, roving frame
and charka.
2. HAND WEAVING
Two different types of clothes are being woven on handlooms one is Bunting
cloth, which is required for making 3 panels of National Flags and the other
Duck cloth, which is required for sleeve attachment. Yarn of 30 tex count will
be used as warp and weft for weaving bunting cloth and that of 38 tex count
will be used as warp and weft for weaving duck cloth. Every care will be
taken while weaving, to see that, the required number of ends per inch, picks
per inch and weight are in par with the BIS norms.
3. BLEACHING AND DYEING
The bunting meant for manufacturing the top and bottom panels shall be
bleached and dyed in India Saffron and India Green colours respectively, and
that meant for the middle band shall be bleached. The dyed pieces shall be
free from dyeing defects, such as uneven dyeing and streakiness. While
dyeing, utmost care will be taken to see that, the dyes selected must give the
required shade, good fastness to light and washing, correct PH value and
dimensional changes, as per BIS norms.
4. CHAKRA PRINTING
The bunting cloth which is free from any defects will be taken for cutting. As
per the specific dimensions of the Flag, cutting will be done. After cutting, the
bleached samples are taken for chakra printing. The Ashoka Chakra of
specific size will be screen printed with Navy blue color on specific sized
 bleached fabric in such a manner that, the chakra shall be completely visible
on both sides of the Flag in the center. Later it will be cured to make the
chakra fast.
5. STITCHING
Stitching of Flags will be done by machine stitching with lock stitches. The
sewing threads used for machine stitching shall confirm the BIS norms and
the color of the thread being the same as that of the panels on which it
appears. The four corners of the Flags will be reinforced with triangular pieces
of bunting of the same construction and color as is used for making the Flags.
Finally, a sleeve will be provided along one side of the Flag.
6. TOGGLING
A toggle will be attached to each Flag at the top by splicing the hemp cordage
around it before sewing the inside sleeve. The toggle is attached at the top of
Saffron panel with an intension to avoid hoisting of the flag in reverse
manner. Wood toggles are made from well seasoned timber of any of the
following species like Haldu, Padauk, Shisham, Sal or Teak. At every stage of
manufacture of National Flag BIS norms will be followed and the Flag is
stamped with ISI mark.
The toggled Flag will be steam ironed and folded neatly.

MACHINERY / EQUIPMENT

A. CHARKHA

Exhibit 2.2 Charkha

The Charkha is a symbol of the Indian Independence movement. It is known as
spinning wheel, is a device for spinning thread or yarn from natural fibers. In this, the
drive wheel is being turned by hand, while the yarn is spun off at the tip of the
spindle. The floor charkha and the great wheel closely resemble each other. With
both, the spinning must stop in order to win the yarn onto the spindle. It is also used
for making bundles of yarn for the weft on bobbin. Bobbin is a small wooden stick,
on which the yarn is rolled, to be used on the loom for weaving. KKGSS have 63
Charkha’s.
B. LOOM

Exhibit 2.3 Loom

The wooden frame loom is used in the production centre. The loom is made of
sticks and boards attached at right angles that is producing a box-like shape, which
means that it is portable and can even be held on weaver’s lap. The foot pedals at
the bottom of the loom for controlling the operation of the heddle harness is known
as treadles. KKGSS have 210 Looms.
2.5 PRODUCT PROFILE
 National Flags
National flags of different sizes are manufactured as per BIS norms. The
following different size flags are being manufactured.
No: Length (mm)* Width (mm)
1) 6300* 4200
2) 3600 *2400
3) 2700 *1800
4) 1800 *1200
5) 1350* 900
6) 900 *600
7) 450* 300
8) 225 *150
9) 150 *100
 Towels : Made of Khadi cotton to different sizes
 Bed Sheets: Made of Khadi cotton to different sizes and printed with attractive
designs and Colors.
 Chaddars: Made of Khadi cotton to different sizes and printed with attractive
designs and Colors.
 Shirting’s and Pantings : Made of 100% Khadi cotton and blended with
Polyester (67/33)
 Carpets: Made of Khadi cotton to different sizes.
 Saree: Made of Khadi cotton and 100%Silk.
 Ready-Made Shirts: Made of 100% Khadi cotton, Polyvastra to various standard
sizes.
 Shoulder bags: Made of 100% Khadi cotton to different sizes
 Caps: Made of 100% Khadi cotton to different sizes
 Beds: Made of well cleaned cotton to Box and Ordinary types
 Hand Kerchiefs: Made of 100% cotton to different sizes
  All India Khadi Gramodyog Vidyalaya (Textile Chemistry): The main
purpose of the institution is to meet the demand and requirement of technically
qualified and skilled technicians for wet processing of textile fabrics to improve
the quality of fabrics.

PRODUCTS:

Exhibit 2.1 National Flag

Exhibit 2.2 Polyester D.T Coloured Exhibit 2.3 Fine Cotton Khadi
panting colour S.T

Fine Cotton Khadi (100

Polyester D.T Coloured count) colour S.T
Panting (80Cm)
Exhibit 2.4 Doria Polyester Shirting Exhibit 2.5 Readymade Shirting

Exhibit 2.6 Fine Cotton Khadi lining S.T Exhibit 2.7 Carpet

Exhibit 2.8 Polyester S.T Shirting Exhibit 2.9 Bleached Checks Towel
Exhibit 2.10 Coloured Towel Exhibit 2.11 Honey Comb Towel

Exhibit 2.12 Matardan Towel Exhibit 2.13 Polyester Brasso Print

Shirting

2.6 OWNERSHIP PATTERN

As the organization houses 51 member institutions under it, it consists of Board of

Directors upon which the management of the organization is functioned. The managing
committee is elected every year. Any management decisions are thus taken by the
managing committee.
Table 2.1 Managing Committee

Sr. No Committee Members Designation

1. Nadoja Dr. Patil Puttappa Chairman
2. Shri V.A. Balakundi Vice Chairman
3. Shri Shivananda S Mathapati Secretary
4. Shri M.V. Mattikoppa Member
5. Shri Krishna Kulkarni Member
6. Shri N.M. Tirlapur Member
7. Shri K.V. Pattar Member
8. Shri Ramesh Kuligod Member
9. Shri R.P. Hiremath Member
10. Shri Prabhu Swamy Member
11. Smt. Akkamahadevi S Magadi Member
12. Shri B.H. Managuli Member
13. Shri B.H. Layannavar Member

2.7 ACHIEVEMENTS/AWARDS
 KVIC INSTUTION GRADE
Despite stiff competition in the market, the Karnataka Khadi Gramodyog
Samyukta Sangh (Federation), Hubli - 580 023, has constantly maintaining A+
Category in the production and sale of Khadi.
 OVERALL PERFORMANCE
The Federation’s overall performance was recognized by the Ministry of Agro
and Rural Industry, Government of India, and was conferred the National Award
for Excellence in the field of Khadi and Village Industries.
 BIS CERTIFICATION
A new feather in the cap of the Federation, that also symbolized its glorious
tradition, dedication to the cause and excellence in the field, is the centre for the
Production of National Flags. The Federation is the only centre to produce the
national flags of all sizes under BIS certification.
 CHAPTER 3

Mckensy’s 7S framework and

Porter's Five Force Model with special reference to Organization under study

3.1 Mckensy’s 7S Framework

The origin of Mckensy’s 7s framework was first mentioned in “The Art of Japanese
Management” by Richard Pascle and Athos in 1981. At the same time Tom Peters
and Robert H. Waterman were investigating the thing that made a company
excellent in its growth in terms of commercial as well as social.

This management model is developed by Tom Peters and Robert H. Waterman.

This was a strategic vision for groups, to include businesses, business units, and
teams. The 7s are Structure, Strategy, Systems, Skills, Staff and Shared values. This
model is always used as an Organizational analysis tool to assess and monitor
changes in the internal situation of an organization.

The Mckensy’s 7s model includes seven independent factors which are classified as
“hard” or “soft” elements.

Hard Elements Soft Elements

Strategy Shared Values

Structure Skills

Systems Style

Staff

Hard elements are easier are to define or identify and management can directly
influence them. These are strategy statements of organization. Soft elements can be
more difficult to describe and are less tangible and more influenced by culture.
These elements are important are as the hard elements.
 Exhibit 3.1 Mckensy’s 7S framework

3.1.1 STRATEGY

Strategy is a plan or course of action of which is of vital pervasive or continuing

importance to the organization as a whole. Strategy includes the purpose of
business and the way that organization seeks to enhance its competitive
advantage.

The organization’s strategy is to make awareness among the consumers about the
latest designs and varieties of fabrics and products and creating mass awareness
about the khadi products to carry traditional skill of artisans and thus helps in
promoting the image of the organization and also to promote khadi products to the
consumers achieving maximum utilization of employee skills by conducting
programs at primary level and providing various benefits to spinners, weavers and
artisans.
3.1.2 STRUCTURE

It includes well-built organization structure which says how the responsibility

flows, also determines how the roles, power and responsibilities are assigned,
controlled, and coordinated, and how information flows between the different
levels of management. It defines each job and its function and where it reports to
within the organization.

CHAIRMAN
and
VICE CHAIRMAN

SECRETARY

EMPLOYEES AND LABOURS

Chart 3.1 Organization Structure

The organizations structure includes Chairman and Vice Chairman at the Upper
Level, includes Secretary at the Middle Level and includes other staff such as
assistant employees, spinners, weavers and artisans at the Lower Level.

3.1.3 SYSTEM

Systems are the processes and procedures of the company, which reveal business’
daily activities and how decisions are made. Systems are the area of the firm that
determines how business is done.

The head office receives orders for various products and hence the head office
directs the managers of the respective departments for fulfilling the orders received.
The respective production departments manufacture the required products and are
 packed and labeled accordingly. The packed products according to the orders
received are then shipped to the respective stores or private organizations.

3.1.4 STYLE

Style represents the way the company is managed by top-level managers, how
they interact, what actions do they take and their symbolic value. In other words,
it is the management style of company’s leaders.

Karnataka Khadi Gramodyog Samyukta Sangh (Federation) adopts participative

leadership style (also known as Democratic Leadership style). The sub-ordinates
are encouraged to talk to their heads regarding any topic/problem at any given
time. While setting targets, the superior & sub-ordinates sit together, discuss and
decide on the targets. At KKGSSF, employees are free to express their opinions
about the working in the organization. This aspect clearly shows that the
management allows participation of employees in the overall development of the
organization.

3.1.5 STAFF

Staff element is concerned with what type and how many employees an
organization will need and how they will be recruited, trained, motivated and
rewarded.

There are total of 81 employees who include various department managers,

assistants, attenders & peons, and helpers. The employees are recruited on
certain qualifications setup by the organization upon vacancies at respective
positions. The employees working here get less salary but the work for the
nation especially in the Flag Production Centre to stitch flags which fly high
across the country.

3.1.6 SKILLS

Staff at KKGSS is highly qualified in accounting and various other fields

possessing writing skills and good communication skills which are very
essential for maintaining books and to keep good interaction with the customers.
 The company also has qualified workers to operate machineries such as
charkhas and looms.

3.1.7 SHARED VALUES

Shared value of the organization can be characterized as the whole of the norms,
views and culture shared by the people working in the organization. These values
and set goals keep the employees working towards common destination as a
coherent team and thus help them to keep the team spirit alive. The shared values
of the Karnataka Khadi Gramodyog Samyukta Sangh (Federation) are:

1) Total quality management.

2) Team spirit in the organization.
3) Attaining organizational growth through team work.
4) Benefits for the employees.
5) No discrimination between staff and workers.
3.2 PORTER’S FIVE FORCE MODEL

Five forces model was created by M. Porter in 1979 to understand how five key
competitive forces are affecting an industry. The five forces identified are:

Exhibit 3.2 Porters Five Force Model

These forces determine an industry structure and the level of competition in that
industry. The stronger competitive forces in the industry are the less profitable it
is. An industry with low barriers to enter, having few buyers and suppliers but
many substitute products and competitors will be seen as very competitive and
thus, not so attractive due to its low profitability.

Exhibit 3.3 Determination of Porters Five Force

It is every strategist’s job to evaluate company’s competitive position in the

industry and to identify what strengths or weakness can be exploited to
strengthen that position. The tool is very useful in formulating firm’s strategy
as it reveals how powerful each of the five key forces is in a particular
industry.
3.2.1 THREATS OF NEW ENTRANTS

This force determines how easy (or not) it is to enter a particular industry. If an
industry is profitable and there are few barriers to enter, rivalry soon intensifies.
When more organizations compete for the same market share, profits start to fall.
It is essential for existing organizations to create high barriers to enter to deter
new entrants.

The organization faces threats from new entrants as the new entrants use more of
electrified machineries which can manufacture more of load at a given time as
well requires less workers and the workers are paid high salary/wages. These
new entrants in the industry manufacture quality goods with less of defects and
acquire more of market share by providing smooth cloth material manufactured
from electric machineries.

3.2.2 BARGAINING POWER OF SUPPLIERS

Strong bargaining power allows suppliers to sell higher priced or low quality raw
materials to their buyers. This directly affects the buying firms’ profits because it
has to pay more for materials.

The KVIC will always have an upper hand on suppliers in whole of the India, as
the suppliers are all small clusters and mini industries which are surviving
because of Khadi. They cannot stand out as individual players. So any raw
material required by the organization will have to be ordered from KVIC, if not
available at KVIC other suppliers for raw material are approached.

3.2.3 BARGAINING POWER OF BUYERS

Buyers have the power to demand lower price or higher product quality from
industry producers when their bargaining power is strong. Lower price means
lower revenues for the producer, while higher quality products usually raise
production costs. Both scenarios result in lower profits for producers.
 Here the bargaining power of buyers is low in case of retail as well as
wholesale sale as the products produced by khadi institution are traded with
28% trade commission between the member institutions and 25% discounts are
allowed for the buyers at retail outlets. Hence the bargaining power is low in
both cases.

3.2.4 THREAT OF SUBSTITUTE

This force is especially threatening when buyers can easily find substitute
products with attractive prices or better quality and when buyers can switch
from one product or service to another with little cost.
Threat of substitute products is very high because there are plenty of other
synthetic fabrics made apparels in market which are available in all price
ranges. Due to the coarse texture of khadi which sounds rough when wore and
hence the organization experiences its buyers shifting from khadi to other
fabric clothing due to smooth texture of the clothing of other fabric and hence
the organization should work on the issue of coarse texture of khadi cloth.
3.2.5 RIVALRY AMONG EXISTING COMPETITORS

This force is the major determinant on how competitive and profitable an

industry is. In competitive industry, firms have to compete aggressively for a
market share, which results in low profits.

There are very few direct competitors like Fab India and Mother Earth for
retail outlets Khadi India. But these retailers sell their products at a higher price
and possess a smaller foot print as compared to Khadi India. Thus there exists a
very subtle rivalry among existing competitors.
 CHAPTER 4

SWOT ANALYSIS

Exhibit 4.1 SWOT Analysis

4.1 STRENGTHS

1. Government support.
2. Economical production.
3. Good coordination between the employees helps in full filling the given jobs.
4. Promotion of Indian brand at the global level.
5. Strengthening the rural economy of the country.
6. Ecofriendly.
4.2 WEAKNESSES
1. Lack of good infrastructure facility.
2. Lack of new technology.
3. Slow production.
4. No Branding of the product.
5. Lack of awareness among the buyers.
6. Low wages for artisans.

4.3 OPPORTUNITIES
1. Establishing more selling outlets.
2. Upgrading of technology to enhance the productivity.
3. Many malls and retail outlets are providing opportunities to sell Khadi
products.
4. Online sales opportunity.
5. Expanding into new geographic markets.
6. Tie up with local brands.

4.4 THREATS
1. Preparation of khadi is an expensive procedure which kills the scope of its
popularity.
2. Threats from more competitors in the market.
3. Labours moving from rural enterprises to urban enterprises.
4. Changes in life style of consumer.
5. Changing Government policies.
6. Rapid growth of technology may lead to change over design specifications.
 CHAPTER 5
LEARNING EXPERIENCE

It was a good experience in Karnataka Khadi Gramodyog Samyukta Sangh (Federation)

which is also a single licensed manufacturer of Indian National Flag made up of Khadi.
Over all it was a good experience where in I was able to gain knowledge on following:
 The Organization structure of the organization.
 Various roles and responsibilities of the employees.
 The production process of Indian National Flag.
 The problems faced by the Organization internally and externally i.e..,
understanding the internal and external environment of the Organization.