HAIRMAN INTERNATIONAL Harvard Case Solution & Analysis


Problem Statement

There are different problems that slow down the delivery of clothes to the Pioneer.

 Due to uncertain completion date by the embroidery vender, Harmain International had difficulties to ship the finished goods to the concerned party i.e. Pioneerto meet the deadline.
 Since the company’s inception, Harmain International didn’t have a manufacturing plant and this leditto rely on the third party vendor to complete the project.
Harmain International had become the largest textile firm in India however;the reliability on the second tier supplier made them lose their sales because the third party vendor was giving false hope in order to complete the consignment of embroidery. The embroiderer was not committing to complete the project. During the conversation, Mr. Dhawan was aware of the fact the consignment would take 10 more days to complete.
Embroidery setup wasdone by third party. The party was not giving fixed timefor the completion of the order. 3rd March was the beginning datehowever;it would take up to10th March to 20th March to finish with their part. This would lead to the late shipment to Pioneer. Hence, it would deduct the receipt payment by 20%. Only 8 to 10 firms in India embroidered the clothes. Thisoligopolistic condition encouraged exploitation to Harmain International.
The manufacturing department comprises of 5 processes in order to bring the product at inventory hold. The first process is embroidery that wasdone by the party vendor. The first process comprised of bleaching, cutting, sewing, washing & packing and shipping. It was a very long process and wasa big challenge for Harmain International. The in-house production took19 days in the beginningwithout depending on the embroiderer however;the embroiderer was not doing the work on time.
Pioneer had good relations with Mr. Dhawan’s company therefore; they were giving leverage to them. Pioneer was concerned about the order because it was the peak season. They did notwant the order to be received late astheywill lose their customers, hence the relation weaken. Mr. Dhawan was very anxious and annoyed after the conversation with the vendor however,in the end they came to an agreement later on.

Alternative Decision and Evaluation

The finished goods comprise of table linens & women’s clothing. The revenue turnover was 10 million (INR). The company was launched in 1990. The purpose of doing the business was to provide funds to finance its education. The decision of Dhawan to do the export business was influenced by government offering variety of incentives. If the order would exceed by 150,000 (INR), then another interactive incentive would be applied. The government was also paying cash incentives in order to improve competitiveness of the Indian products to the global market.

Pioneer made the order of 6 samples within two weeks. The samples were prepared within a week and sent to Pioneer. Dhawan ordered all the raw materials, which include fabrics, zips and lining at that point of time. Mr. Dhawan thought that the investment of 188400 INR was not appropriate. Embroidery clothes we resold at about 65 % cost while the unembroidered clothes were sold for 90 % of the cost. The order was placed after several weeks for all six styles. The Indian government was promoting the exports especially to Japan, which is why the profit from Pioneer was tax free. The deadline of the order was April 6. The receipt would excess the amount of 150000 therefore;Mr. Dhawan had the right to claim 10 % of actual receipt in the withdrawal of the duty and 15 % in cash compensatory duty.

Mr. Dhawan also qualified for the replenishment license with face value of 40 %. The price of this license was 80 % of the face value in actual. Thus, Mr. Dhawan valued the package at 57 % revenue from the government. The total value was 281238 INR. He received the order to increase his employee’s payroll. Pioneer placed the order late therefore,Mr. Dhawan had the opportunityto delay the order......................

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