Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Submitted to:
Submitted by:
Abdul Latif (1204101)
Muhammad Waseem (1204136)
Syed Tufail Haider (1204177)
Dated:
November 05, 2015
2 | Page
3 | Page
4 | Page
Acknowledgement
Countless Thanks to He Who Is Lord of Lords
5 | Page
S.NO
Topics
Page
No
An Overview
06
2
3
4
5
Brand Portfolio
07
08
09
10
11-13
14-16
SWOT Analysis
17-20
21
10
CPM
22
11
Space Matrix
23-25
12
BCG Matrix
26
13
IE Matrix
27
14
QSPM
28-30
15
Organization Structure
31
16
32
17
References
33
T ABLE O F C ONTENTS
6 | Page
A N O VERVIEW
This is the project about Strategic Management analysis of a
company. In this regard the company which we chosen to be analyzed
areENGRO FOODS LIMITED. The company is dealing in food business
for many years. The company is well reputed in the market and deal
in a wide range of healthy food products. Its product line contains
products such as milk, tea whitener, cream, ice cream, juices,
flavored milk and many others. The company has strong marketing
strategies to come up with in a competitive market. It has targeted all
of its customers no matter they are of what age. The company is
running its business so well. ENGRO FOODS is the 1st company which
is using Bactofuge technology. The company has not been in this
business for as long as NESTL is, but the way it has grown up is
appreciable. It has come up with innovative features in its products.
The company has capability to pay it liabilities on time and to keep its
assets managed. ENGRO FOODS not only provide incentives to its
stockholders but also to its employees. It offers its employees much
outdoor training so that they can work in a healthy environment and
dont get tired of their hectic routine. That is why it has many loyal
employees to work with..
7 | Page
I ntroduction:
Engro Foods Limited was officially launched as a fully owned subsidiary of
EngroCorporationin2004.Using dairy as a stepping stone to enter into the
food business, the Company has establishedstate-of-the-art processing
units in Sukkur and Sahiwal, along with an ice cream productionfacility in
Sahiwal. Top quality brands like Olpers, Olpers Lite, Tarang, Omore and
Olpers Cream have beensuccessfully launched under the helm of
Companys dairy products. To support these brandsand their highest
standards of quality, Engro Foods has invested heavily in milk processing
andmilk collection infrastructure. Engro Foods has also venture beyond
the dairy sector. In thispursuit, grain and fruit markets have been
analyzed in great detail. Engrohas launched its newbrand in fruit juices
called as Y-frooter. EngroFoods purposeis to Elevate
Elevate Consumers Delight
Worldwide
Worldwide and the Company aims to generate a significant portion of its
revenuefrom foreign operations.
H istory:
Engro Foods Pvt. Limited (EFL) has beenestablished in 2005 as part of a
diversification process attheEngro Group. The plant located at Sukkur on
23acre land, has the raw milk reception capability of more than
300,000liters per day and UHT milk capacity of more than 200,000liters
perday. The plant has been established at a cost of Rs. 1billion which
provides direct employment to 750people.Engro Foods has entered the
Food businessthrough milk processing and sale with the companys vision
to pursue growth opportunitiesbased on country fundamentals and own
strength. It also positions the company to leverage itscorporatesocial
responsibility initiatives and work closely with rural communities to
promoteintegrated farming and livestock development. This effort is
expected to play vital role inpoverty alleviation and improving livelihoods
of the poor in the milk collection areas. Engro Foods will work with the
Pakistan Poverty Alleviation Fund and its three partnerorganizations to
help implement sustainable business models that increase farmers
8 | Page
profitability and develop a positive social and business climate for growth
and expansion oflivestock and other forms of value added agriculture.
V ision:
Engro Foods will continue to make investments aimed at impacting lives
and delighting consumers each day, every day, in a multitude ways.
M ission:
To build food business to improve quality of life by offering tasty,
affordable and high nutritional products to our consumers while
maximizing stakeholders value.
C ore V alues:
9 | Page
inclusive Business.
The first Pakistani company to produce 1 billion tetra packs in a single
year.
Engro Foods 2012 Annual Report secured 2nd position for the Best
Corporate Report Award in its category.
10 | P a g e
B rand P ortfolio:
Sheer
indulgence
in every sip
Enhance
the culinary
comes
only with
theOlpers
rich
experience
with
creamy
thickness
of Olpers. of
CreamA rich celebration
Give
day
a fresh
start with
lifeyour
at its
creamy
best.
Olpers!
11 | P a g e
12 | P a g e
2014
2013
Sales
43,027,377
37,890,688
Cost of sales
(34,926,132)
(29,747,587)
8,101,245
8,143,101
(4,692,502)
(5,063,279)
Administrative expenses
(1,282,240)
(1,041,254)
(103,770)
(188,729)
304,854
324,301
Operating profit
2,327,587
2,174,140
Other expenses
(596,328)
(881,456)
(1,236,904)
(784,904)
494,355
507,780
Taxation
394,476
(296,820)
888,831
210,960
(Rs. In Thousands)
Gross profit
Finance costs
I NCOME S TATEMENT
13 | P a g e
B ALANCE S HEET
2014
2013
15,021,51
9
14,504,77
1
Biological assets
858,680
716,465
Intangible assets
112,208
122,838
109,174
93,132
Compensation expense
112,581
168,865
Assets
Property, plant and equipment
427,288
Investment in subsidiary
Non Current Assets
16,214,162
16,033,359
788,141
739,671
Stock-in-trade
3,697,78
7
3,083,58
3
95,962
153,573
113,501
181,080
Other receivables
2,865,60
7
2,354,28
0
90,430
136,153
1,637,01
8
636,588
170,000
196,900
557,266
Current Assets
9,485,346
8,012,194
Total Assets
25,699,5
08
24,045,5
53
Trade debts
14 | P a g e
2014
2013
7,665,961
7,665,961
Share premium
865,354
865,354
399,740
407,133
Hedging reserve
Re-measurement of post employment benefits Actuarial loss
Inappropriate profit
(27,736)
(9,581)
(35,715)
(34,839)
2,710,013
1,821,182
11,577,617
10,715,210
5,476,993
7,126,994
1,185,717
1,538,583
2,516
9,410
6,665,226
8,674,987
1,605,597
1,032,008
3,222,661
3,369,182
41,397
14,517
194,025
229,312
61,092
10,337
2,331,893
7,456,665
4,655,356
25,699,508
24,045,553
Equity
Share capital
Advance against issue of share capital
Non-Current Liabilities
Long term finances
Obligations under finance lease
Deferred taxation
Deferred liabilities- pension scheme
Deferred Income
Current Liabilities
15 | P a g e
1-
Capital requirements
Competing in a new industry requires resources to invest. Production of
packed products requires huge investment of financial, human, technical,
and marketing resources. At the moment EngroOlpers have some threats
like from new entrants goodmilk product of shskargang food and Cupshup
of Dalda.
Economy of scale
Economy of scale determines entry because they force potential
competitors either to enter on a large scale bases (a costly and perhaps
risky move) or to accept a cost disadvantage. Moreover, new entrants in
the pasteurized milk business may encounter scale related barriers not
just in the production, but in the advertising marketing, distribution,
financing, and raw milk purchasing as well, Engrofoods achieved its
breakeven in 2010
16 | P a g e
Number of suppliers
Raw milk is standard commodity and is available in the open market from
a large number of milkmen. If anyone refuses to sell its product then
company can buy it from others who are already willing to sell to
company.
Backward integration
Another reason of low bargaining power is that no buyer/distributor has
the resources to start involve in backward integration.
4- AVAILABILITY OF SUBSTITUTES:
This one is pretty straight forward, for there are plenty of substitutes in
the food industry. Most large food companies offer similar suites of
services. Companies focusing on niche areas usually have a competitive
advantage, but this advantage depends entirely on the size of the niche
and on whether there are any barriers preventing other firms from
entering.
17 | P a g e
5- COMPETITIVE RIVALRY:
The food industry is becoming highly competitive. The difference between
one Food Company and another is usually not that great. As a result, food
industry has become more like a commodity - an area in which the food
company with the low cost structure, greater efficiency and better
customer service will beat out competitors. Food companies also use
higher investment returns and a variety
of food investment products to try to lure in customers. In the long run,
we're likely to see more consolidation in the food industry. Larger
companies prefer to take over or merge with other companies rather than
spend the money to market and advertise to people.
Not only local but attempts by cross border competitors or companies to
gain stronger foot hold in each others domestic market boosts the
intensity of rivalry, especially when the foreign rivals have lower cost or
very attractive products. In case of Engro foods so far nestle and hale are
the only diverse rival and another players that has just joined the UHT Milk
sector is goodmilk, no doubt the competition between Engrofoods and
Haleeb is quite intense both are engaged in consistent homework just to
break and attract the customer towards each other but goodmilk is adding
to the competition between the sector.
18 | P a g e
S WOT A NALYSIS
Strength
Olpers is a brand of ENGRO foods. This means that consumers can relate
their former image of ENGRO foods to Olpers. ENGRO is a well
established brand name in Fertilizer, IT and infrastructure business. The
brand is well known so customers will automatically have a brand
association with Olpers and see it as a premium quality product. ENGRO
is world renowned so it can easily attract foreign investors in backing it
against other competitors such as Nestle. ENGRO foods can easily afford
research and development costs for Olpers have in order to introduce
new products. It can also distribute the brand through better channels
because of its long term relationship with distributors in the agriculture
sector.
PR with farmers
ENGRO has been interacting with the farmers for fertilizers and has gained
quite a good reputation over the years. It has led to a strong bond and
long term relationship with the farmers who are willing to supply milk to
the company. This is an added advantage and strength for the company
because it will never be short of milk production. The farmers also wont
have to look elsewhere to sell their milk.
19 | P a g e
Third-Generation Plant
EFL only, has the third-generation UHT milk plant in the country. EFL plant
is the only plant in Pakistan that uses Bactofuge technology to virtually
eliminate bacteria and ensure premium quality and hygiene. Moreover, it
is also setting up another milk processing plant in Central Punjab (Sahiwal)
with an investment of Rs. 2 billion (US $ 33 million).
20 | P a g e
Weaknesses
Owning Red Color
The company has not owned the color red like Nestle has a green Milkpak;
Haleeb has a blue carton etc. This may create problems because when a
consumer enters a grocery shop, then he/she might have problems in
recalling the brand because there is no color association attached to
Olpers. The company may need to find a suitable color in which to focus
its upcoming marketing strategies.
Packaging
EFL is dependent upon Tetra Pak for the packaging of its entire dairy
products. Tetra Pak is the only option available to Olpers for packaging
because it is having monopoly in the packaging sector in Pakistan. Due to
this reason, Tetra Pak can charge them higher and it could increase the
production costs.
Opportunities
Increased funding by Government
Government has decided to increase farmers funding. This is an
opportunity for ENGRO foods because previously due to weather
conditions and other reasons there was lots of wastage of milk but now
that can be reduced as farmers will be better able to store milk for longer
time periods.
Awareness
Growing dissatisfaction with loose milk and increasing awareness about
health and hygiene issues have led to increased processed milk
consumption.
Pakistan is the Third largest producer of milk in the world with a total
production of 32 billion liter of milk a year, whose value is more than that
of the combined value of wheat and cotton, from a total herd size of 50
million milch animals (buffaloes and cows). Livestock accounts for 46.8
percent of agricultural value added and about 10.8 percent of the GDP.
Milk is the largest commodity from the livestock sector accounting for 51
percent of the total value of the sector. Due to the steps taken by the
government and private sector, countrys annual milk production is
expected to grow at an additional 3 billion liters in the next few years. This
is quite an opportunity for ENGRO foods as there is lot of growth in this
part of the sector.
Improving Economy
Population growth rate.
High urbanization rate.
High literacy rate.
Flexible government policies for food industry.
Have significant growth opportunities
Has sufficient capital to expand.
Has the potential to innovate and differentiate the company's
products to sustain a competitive advantage
May merge with other global businesses to eliminate competitors.
Having Capable of expanding into other markets of the world
Threats
Competition
Competition may pose a threat because the company will have to
maintain its leadership in an expanding market so that it doesnt lose its
market share to its competitors. For Olpers it might be difficult to
penetrate in a market where the loyalties exist for such brands as Nestle
and Haleeb. These brands have been in the milk industry far too long and
have left a mark in the minds of consumers in terms of quality.
Competition seems to be getting tougher as a result of new players
entering the dairy market.
Weight
Rating
Weighted Score
OPPORTUNITIES
Trend of cattle farming increase by 20%
0.3
3
0.9
Competitor across town slow down their
0.1
4
0.4
operations
Diversification opportunities increased by
0.05
1
0.05
5%
Reduction in Exports Restrictions
0.07
3
0.22
Demand for UHT milk Growing by 9%
0.08
4
0.32
Milk Consumptions Increased
0.1
3
0.3
THREATS
New Entrants
0.08
2
0.16
Increment of Sales Tax
0.07
3
0.21
Economic & Energy Conditions
0.05
3
0.15
Fresh Milk market
0.05
2
0.1
Small Target Market
0.05
2
0.1
Total
1
2.91
Consumers perceptions and price differentials can cause a threat for the
company. It is important that Olpers comes up to the expectations of the
customers and fulfills its conformance quality that is the company meets
its promised specifications. Consumers preferences change with time and
prices might create certain barriers in terms of the profit margins for
Olpers. For example, lose milk is still cheaper than packaged milk and
that is also one factor that people still prefer to buy lose milk.
24 | P a g e
Weight
Rating
Weighted Score
4
2
3
2
3
3
3
0.32
0.06
0.15
0.16
0.21
0.12
0.18
0.03
2
2
2
1
0.34
0.42
0.14
0.12
2.25
STRENGTHS
Brand Image
0.08
Growing Trend of Sales
0.03
Market Share
0.05
Distribution Channel
0.08
Product Quality
0.07
Innovation
0.04
Customer Oriented
0.06
Qualified Work force / Excellent Employee
0.02
Moral
WEAKNESSES
Centralized Decisions
0.17
No Sales on Credit
0.21
High Price
0.07
Related Diversification
0.12
Total
1
25 | P a g e
Research&
Development
Financial Position
Market Share
Product Quality
Price
Competitiveness
Management
Customer service
Sales And
Distribution
Network
8
9
1
0
Production Capacity
Customer Loyalty
Total
NESTLE
HALEEB
Weig
ht
Rati
ng
Scor
e
Rati
ng
Scor
e
Rati
ng
Scor
e
0.12
0.36
0.48
0.24
0.13
0.39
0.52
0.26
0.09
0.36
0.27
0.09
0.08
0.24
0.24
0.16
0.11
0.33
0.22
0.33
0.12
0.36
0.48
0.20
0.06
0.18
0.18
0.12
0.09
0.18
0.36
0.18
0.07
0.14
0.21
0.28
0.13
0.39
0.32
0.13
1.0
2.9
3
3.2
8
1.9
9
26 | P a g e
Conservative
Competit
ive
Position
-6
-5
-4
-3
Defensive
-2
Financi
al
Positio
n
+
7
+
6
+
5
+
4
+
3
+
2
+
1
-1
-1
-2
-3
-4
-5
-6
-7
+
1
Aggressive
+
2
+
3
+
4
+
5
+
6
Indust
ry
Positio
n
Competitive
27 | P a g e
Stabilit
y
Positio
n
28 | P a g e
Y-Axis
(Worst +1,Best 7)
-1
-1
-3
-2
+5
+4
+4
+6
Product Quality
Product Life Cycle
Market Share
Brand and image
Barriers to entry
Growth Potential
Access to Financing
Consolidation
+5
+5
+4
+6
-2
-1
-2
-4
ROA
Leverage
Leverage
Cash Flow
Average Score = 5
Inflation
Technology
Demand Elasticity
Taxation
X-Axis
29 | P a g e
6.5
2.5
2.
5
Competit
ive
Position
-6
-5
-4
-3
-2
Financi
al
Positio
n
+
7
+
6
+
5
+
4
+
3
+
2
+
1
-1
+
1
-1
-2
-3
-4
-5
-6
-7
Stabilit
y
Positio
n
Aggressive
+
2
+
3
+
4
+
5
+
6
+
7
Indust
ry
Positio
n
6.5
Conclusion
30 | P a g e
This particular SPACE matrix tells us that our company should pursue an aggressive
strategy. Our company has a strong competitive position it the market with rapid growth.
It needs to use its internal strengths to develop a market penetration and market
development strategy. This can include product development, integration with other
companies, acquisition of competitors, and so on.
31 | P a g e
32 | P a g e
IFE
IFE
Strong
3 to 4
High
3 to 4
II
III
IV
Low
Weak
1 to 1.99
Medium
1 to 1.99
Average
2 to 2.99
V
Grow and Build
ENGRO
VI
Harvest
VII
VIII
XI
Harvest
Harvest
1. Score from the EFE matrix -2.91- this score is plotted on the y-axis
2. Score from the IFE matrix -2.25- plotted on the x-axis
Conclusion
This IE matrix for Engrofoods tells us that our company should hold and
maintain its position. The company should pursue strategies focused
on increasing market penetration and product development.
33 | P a g e
35 | P a g e
Internal External
Factor
Weig
ht
STRENGTHS
AS
TAS
MARKET
PENETRATIO
N
AS
TAS
DIVERSIFICATION
(TARANG POWDER)
Brand Image
0.08
3.00
0.24
2.00
0.16
0.03
1.00
0.03
1.00
0.03
Market Share
0.05
3.00
0.15
1.00
0.05
Distribution Channel
0.08
4.00
0.32
4.00
0.32
Product Quality
0.07
Innovation
0.04
1.00
0.24
1.00
0.24
Customer Oriented
Qualified Work force /
Excellent Employee Moral
0.06
2.00
0.04
3.00
0.06
0.02
WEAKNESSES
Centralized Decisions
0.17
No Sales on Credit
0.21
3.00
0.63
2.00
0.42
High Price
0.07
4.00
0.28
4.00
0.28
Related Diversification
0.12
1.00
Opportunities
Trend of cattle farming
increase by 20%
0.3
1.00
0.30
3.00
0.90
0.10
3.00
0.30
3.00
0.30
Diversification opportunities
increased by 5%
0.05
4.00
0.20
1.00
0.05
0.08
1.00
0.08
4.00
0.32
0.10
4.00
0.40
4.00
0.40
New Entrants
0.08
4.00
0.32
4.00
0.32
0.07
2.00
0.14
3.00
0.21
0.05
4.00
0.2
3.00
0.15
0.05
2.00
0.1
2.00
0.1
0.05
Total
1.00
Reduction in Exports
Restrictions
Demand for UHT milk
Growing by 9%
Milk Consumptions
Increased
0.07
Threats
3.97
4.31
QSPM of Tarang
36 | P a g e
Weig
ht
Strength
Brand Image
0.08
0.03
Market Share
MARKET
DEVELOPMEN
T
AS
TAS
PRODUCT
DEVELOPMENT
AS
TAS
2.00
0.16
1.00
0.08
0.05
2.00
0.10
1.00
0.05
Distribution Channel
0.08
4.00
0.32
2.00
0.16
Product Quality
0.07
Innovation
0.04
2.00
0.08
4.00
0.16
Customer Oriented
Qualified Work force /
Excellent Employee Moral
0.06
1.00
0.06
3.00
0.18
2.00
0.42
1.00
0.21
1.00
0.12
1.00
0.12
3.00
0.90
1.00
0.30
4.00
0.40
1.00
0.10
4.00
0.28
2.00
0.24
3.00
0.24
2.00
0.16
2.00
0.20
2.00
0.20
1.00
0.08
2.00
0.16
3.00
0.15
2.00
0.1
0.02
Weakness
Centralized Decisions
0.17
No Sales on Credit
0.21
High Price
0.07
Related Diversification
0.12
1.00
Opportunities
Trend of cattle farming
increase by 20%
0.30
0.10
Diversification opportunities
increased by 5%
0.05
Reduction in Exports
Restrictions
Demand for UHT milk
Growing by 9%
Milk Consumptions
Increased
0.07
0.08
0.1
Threats
New Entrants
Economic & Energy
Conditions
Increment of Sales Tax
0.08
0.05
0.05
Total
1.00
0.05
0.07
3.00
0.15
3.66
2.00
0.1
2.32
QSPM of Olpers
37 | P a g e
38 | P a g e
EFL has shifted to branding concept but it really has not adopted it
fully, for smoother working of the different brands, the sales teams
should merged with respective brand management.
39 | P a g e
40 | P a g e
References
41 | P a g e