HYDERI BREVAGES

BILAWAL AKHTAR CH MUHAMMAD FAIZAN ADIL QURESHI USMAN RIAZ AMAD SOHAIL RAZA ZAIDI

Haidri Beverages Group was set up in 1979 and is Pepsi's sole selling agent for District Rawalpindi and Islamabad. It is based in the CDA Industrial Triangle, Kahuta Road, Islamabad. It manages the supply for several wholesalers, retailers, restaurants, hotels and other such food outlets

MISSION STATEMENT We work to increase the value of our shareholders investment. We do this through sales growth, cost control and wise investment of resources. We believe that our commercial success depends upon offering quality and value to our customers. INDUSTRIAL OVERVIEW In Pakistan the beverage industry is not as competitive as compared to the beverage industry of the developed countries. In Pakistan Pepsi and Coca-Cola are the two major shareholders of the beverage industry. ORGANIZATION OVERVIEW Haidri Beverages primary functions are to conduct a systematic manufacturing and supply of the product without any tactical flaws.

7 Up Mountain Dew Pepsi

Haidri
Mirinda Slice

Aquafina

Sting

Corporate Strategy: Haidri corporate strategy is compromised of the following aspects: Gaining leadership in the concerned markets. Maintaining standards of production Efficiency and effectiveness OPERATIONS STRATEGY: The operations strategy of Haidri beverages is integrated with their corporate strategy. Minimizing cost No compromise on quality CORE COMPETENCY: The core competency of Haidri Beverages is its highly automated production plants. The organization ability to analyze the market trends.

Core process: The core process at Haidri Beverages is the Line Process because from the starting to the end product, every sub process is in line with the other and all the processes are interconnected. Each of the sub process adds value to the product. Like in the manufacturing of Pepsi Cans, Cans are unwrapped on stretch wrap through conveyer belts, and then they are passed on for rinsing and then filling and crowning. After that they are inverted on the inverted, which is

in line with the crowner. Then date coding is done and cans are again inverted from where they are passed on for packing. Similarly, in case of glass bottles and PET bottles, all the processes are in line with the other and each process is adding value to the other.

ECONOMIES OF SCALE: As Haidri produces few standardized products on a large scale; mass production; this spreads the overhead cost on more no of units thereby reducing the average per unit cost. This implies that Haidri has a high level of economies of scale. The production capacity of for each line process is mentioned below.

Returnable bottles Non returnable bottles

Glass line PET bottles Cans

600 bottles/min 200 bottles/min 600 cans/min

PREVENTIVE COSTS: Regular internal tests are carried to ensure that the bottles are meeting the pre-determined standards. Managers talk sporadic rounds to ensure that the manpower is being effectively utilized. Regular checks ensure the reduction of beverage, glass and plastic wastage. All the operators examine the machines theyre operating on a daily basis at the time of closing. Preventive maintenance is carried out in schedules which vary from machine to machine. APPRAISAL COSTS: Monthly audits and annual audits are carried out to maintain quality. Moreover, auditors from Beijing visit the plant annually to check the performance. Employees are motivated by placing them in their interested fields so that they remain vigilant in their work.

CAPACITY EFFECTIVE AND PEAK CAPACITY: The peak and effective capacities of bottles at Haidri Beverages are as follow:

Effective capacity Peak capacity

24000 bottles/hour i:e 400/min 21000 bottles/hour i:e 350/min

Basic Cost: Selling price of the Pet Bottles is Rs.28 Variable Cost is Rs. 22 How they do their analysis: Case 1: Suppose Haidri receives an order of 16,000 no. of bottles and the person who is ordering that he will give Rs.25 per bottle. First of all they check out what is variable cost per unit for producing more bottles which is also known as incremental costs. If this incremental cost is less than the selling price or that price which company is receiving (also known as incremental revenue), Haidri beverages accept the order and start working on it. Or if the incremental revenue is less than incremental cost than the company must refuse the order, either they have the capacity or not. So the INCREMENTAL COST is: (22*16,000 = 352,000Rs) And the INCREMENTAL REVENUE is: (25*16,000= 400,000Rs) Decision: Haidiri have the capacity to produce more units in routine with its normal capacity, and receiving 48,000Rs profits by accepting this project

Case 2:

Haidri receive an order of 10,000 pet bottles. The person who is ordering ready to give the 20 Rs per pet bottle. First of all Haidri analyses the cost of the order check out the incremental cost which occurs due to accepting a project which is: (22*10,000 = 220,000Rs) And the incremental revenue is: (20* 10,000 = 200,000Rs) Decision: Through cost analysis we came to know that if Haidri accepted that he has to face a loss of 20,000Rs and it is benefited for the company to reject it.