SWOT ANALYSIS OF KHAADI:

PEST ANALYSIS :

POLITICAL FACTOR:
 Democratic representation
 Division among multiple bodies
 Stable foreign policy
 Involvement in many global initiatives

ECONOMIC FACTOR:
 Service sector contributes 67% of GDP
 10,000$ GDP/Capita
 Reducing public debt in progress
 Free trade agreement
 Rigid labors trends
 High taxes
SOCIAL FACTOR:
 Significant GAP between different classes
 Islamic culture but blended with western touch

TECHNOLOGY FACTOR:
 Significant growth in R&D
 National innovation strategy
 Double digit growth in technology sector
 Increase number of skilled scientist

PORTER’S FIVE FORCES ANALYSIS:

Threat of New Entrants:
The Threat of New Entrants is a moderate threat for Khaadi, due to the following factors:

Economies of Scale:
Khaadi is a perfect example of economies of scale as they are working on huge operations. No
new other new entrant can have such economies of scale.

Product Differentiation:
The Manufacturers of Khaadi produce all carefully handcrafted products.

Capital Requirements:
The investments for setting up a retailer like Khaadi would be really high as the potential
competitor will have to raise funds for equal to or more than 7050 stores and make an
association of manufacturers.

Access to Distribution Channels:

Requires very strong distribution channel which would not be easy for a new entrant.

Bargaining Power of Suppliers:

Bargaining power of suppliers is less significant due to the following reasons:

Buyer is not an important customer to supplier:

Khaadi as a buyer is the most important customer to all the suppliers as these little industrial
hubs are earning majorly through Khaadi only.
Suppliers’ product is an important input to buyers’ product:
The supplier’s product is indeed important to Khaadi, as Khaadi deals with multiple suppliers so
they can offer everything under roof.

Suppliers’ products are differentiated:

Khaadi India sells products which are clearly set apart from its substitutes offered by the direct
as well as competitors. The reason is the identity of products made by industries which are
completely natural and hand crafted.

Suppliers’ products have high switching costs:

The switching cost aren’t that high in case of Khaadi suppliers as these are rural industries and
multiple suppliers in each category.

Bargaining Power of Buyers:

The Buyers from retail store have a very insignificant bargaining power

Buyer has full information:

The buyers are fascinated by products from Khaadi as they know the fact about these products
which are handcrafted and picked up from each store of Pakistan. These buyers are very
knowledgeable about the products.

Product unimportant to quality:

The quality of Khaadi products does matters, especially for fabrics product range.

Buyer presents a credible threat of backward integration:

There is no threat from buyers venturing into backward integration.

Buyers face few switching costs:

There is no switching cost involved.

Products are undifferentiated:

Products are partially differentiated as only few private retailers are providing such hand
crafted products at a large scale.

Threat of Substitute Products:

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. Also there are plenty of non
herbal cosmetic ranges available.
Rivalry among Existing Competitors:
There are very few direct competitors like MOTIFZ, SANA SAFINAZ and THREADS for Khaadi.
But these retailers sell their products at a higher price and possess a smaller foot print as
compared to Khaadi. Thus there exists a very subtle rivalry among existing competitors.