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Thai Silk Company, LTD Case Analysis

CASE ANALYSIS: THE THAI SILK COMPANY, LTD.

The purpose of this research is to perform a case analysis on the Thai Silk Company, Ltd., as of mid1979s. The results of this analysis are presented in the following sections: Background; Statement of the Problem; Analysis of the Problem; and Recommendation for Action.

The Thai Silk Company, Ltd. is the major player in thesilk products industry in Thailand. Over the past five years,company sales have increased 2.4 times, while net profits haveincreased 2.7 times.

From 1973 through 1977, net profit as a percentage of sales remained relatively stable (ranging from a low of 9.3 percent to a high of 10.7 percent). In 1978, however, net profits as a percentage of sales increased dramatically to 12.5 percent (from 9.3 percent in 1977). The primary reason for this improvement appears to be related to two major backward integration actions by the company. These actions, in which Thai Silk became the controlling shareholder in joint venture operations related to the company's primary business activities, provided the company with greater control over essential activities, which, in turn, enabled Thai Silk to both better serve its customers, and reduce costs of operation, and led to a significant net profit improvement.

1 2 The bulk (82.4 percent) of the company's sales are derivedfrom the sale of finished silk goods. Of this finished silk goods total, somewhat less than twothirds of the sales occur within Thailand, while somewhar more than onethird are export sales. Significantly, however, even the domestic sales are oriented toward the foreign consumer. Thai residents accountfor only fivepercent of the company's customer base.

In mid1979, the company is considering a third backwardintegration action. This backward integration proposal involves the creation of a new weaving mill. Again, as wastrue in the company's two earlier backward integration act...

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Thai Silk Company, LTD Case Analysis. (1969, December 31). In LotsofEssays.com. Retrieved 21:27, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1691415.html