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RReeppoorrtt OOnn::

SSTTRRAATTEEGGIICC MMAANNAAGGEEMMEENNTT AANNAALLYYSSIISS OOFF

Engro Foods Limited

SS uubb mmii tt tteedd ttoo ::

MMaa’’aamm SSaaddiiaa PPaarrvveeeenn

Federal Urdu University (Abdul Haq)

Department of Commerce

SSuu bb mm ii tt ttee dd bb yy ::

Abdul Latif (1204101)

Muhammad Waseem (1204136)

Syed Tufail Haider (1204177)

DD aa ttee dd ::

November 05, 2015

3 | P a g e

4 | P a g e

AAcckknnoowwlleeddggeemmeenntt

“Countless Thanks to He Who Is Lord of Lords”

At first instant, humbly we bow our head with all the feeling of our heart and soul before the

Almighty Allah, the beneficent, the omniscient who bestowed us with all the mental abilities

to work out this project.

The report being submitted today is a result of collective effort. There are innumerous

helping hands behind who have guided us on our way. Writing this report appeared to be a

great experience to us. It added a lot to our knowledge. This report is one of our memorable

experiences in student life. Though words are inadequate in offering thanks to our teacher

but we owe our profound gratitude to “Ma’am Sadia Parveen” for stimulating our creative

abilities by assigning this project to us and for his able guidance and useful suggestions,

which helped us in completing the project in time. Whatever we have learnt from her and

this report has put indelible impression on our minds and it is our conviction that this

learning experience will always be a source of help in our practical life and professional

career.

Finally, yet importantly, we would like to express our heartfelt thanks to our beloved

parents, for cooperation, help, kindness and blessings, our family and friends for their help

and wishes for the successful completion of the work.

5 | P a g e

TTAABBLLEE OOFF CCOONNTTEENNTTSS

S.NO Topics Page No

1 An Overview 06

2 Introduction & history 07

3 Vision, Mission & Core Values 08

4 Facts & Figure Strategic objectives 09

5 Brand Portfolio 10

6 Income Statement & Balance Sheet 11-13

7 Porters Five Forces Model 14-16

8 SWOT Analysis 17-20

9 EFE & IFE Matrix 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 Suggestions & Recommendation 32

17 References 33

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AANN OOVVEERRVVIIEEWW 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 NESTLÉ 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 stockholder’s but also to its employees. It offers its employees much outdoor

training so that they can work in a healthy environment and don’t get tired of their

hectic routine. That is why it has many loyal employees to work with..

7 | P a g e

IInnttrroodduucctt iioonn::

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

Company’s 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 “EElleevvaattee CCoonnssuummeerrss’’ DDeelliigghhtt WWoorrllddwwiiddee” and

the Company aims to generate a significant portion of its revenuefrom foreign operations.

HHiissttoorryy::

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 company’s 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 farmer’s

profitability and develop a positive social and business climate for growth and expansion

oflivestock and other forms of value added agriculture.

8 | P a g e

VViiss iioonn::

Engro Foods will continue to make investments aimed at impacting lives and delighting

consumers each day, every day, in a multitude ways.

MMiissssiioonn::

To build food business to improve quality of life by offering tasty, affordable and high

nutritional products to our consumers while maximizing stakeholder’s value.

CCoorree VVaalluueess ::

Ethics and integrity

Safety, Health and Environment

Innovation& Risk Taking

Our People

Community & Society

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FFaaccttss &&FFiigguurreess::

12 Million Consumers nationwide use Engro’s products each day.

More than 1600 milk collection points spread throughout the country.

Ranked2nd in ice-cream business.

Holds more than 50% market share in UHT milk business.

Providing livelihood to 350,000 farmers across Pakistan.

2 state of the art processing plant and a production farm.

Growing Market Share covers more than 310 cities in Pakistan.

FT/IFC Transformational Business Award 2014 for achievement in 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.

SSttrraatteeggiicc OObbjjeecctt iivveess ((44DDss)) ::

DIVERSIFY: Moving beyond the traditional dairy portfolio and explore new categories

to delight consumers.

D E C I PH E R : bringing clarity in approach within our dairy portfolio to encompass a

wider consumer segment.

DISTANCE: The brand portfolio to allow further expansion.

DEVELOP: Extending physical reach to other geographies for exploring the untapped

possibilities

BBrraanndd PPoorrttffooll iioo::

Enhance the culinary experience

with Olper’s Cream- A rich

celebration of life at its creamy

best.

Get nutrition and the best value for money

with omung

::

Enhance the culinary experience Sheer indulgence in every sip comes

only with the rich creamy thickness of

Olper’s. Give your day

with Olper’s!

Get nutrition and the best value for money

with omung dobala.

10 | P a g e

Sheer indulgence in every sip comes

only with the rich creamy thickness of

Olper’s. Give your day a fresh start

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IINNCCOOMMEE SSTTAATTEEMMEENNTT

(Rs. In Thousands) 2014 2013

Sales 43,027,377 37,890,688

Cost of sales (34,926,132) (29,747,587)

Gross profit 8,101,245 8,143,101

Distribution and marketing expenses (4,692,502) (5,063,279)

Administrative expenses (1,282,240) (1,041,254)

Other operating expenses (103,770) (188,729)

Other operating income 304,854 324,301

Operating profit 2,327,587 2,174,140

Other expenses (596,328) (881,456)

Finance costs (1,236,904) (784,904)

Profit before taxation 494,355 507,780

Taxation 394,476 (296,820)

Profit for the year 888,831 210,960

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BBAALLAANNCCEE SSHHEEEETT

Assets 2014 2013

Property, plant and equipment 15,021,519 14,504,771

Long term Investment - -

Biological assets 858,680 716,465

Intangible assets 112,208 122,838

Long term advances and deposits 109,174 93,132

Compensation expense 112,581 168,865

Investment in subsidiary

427,288

Non Current Assets 16,214,162 16,033,359

Stores, spares and loose tools 788,141 739,671

Stock-in-trade 3,697,787 3,083,583

Trade debts 95,962 153,573

Advances, deposits and prepayments 113,501 181,080

Other receivables 2,865,607 2,354,280

Deferred employee share option compensation expense 90,430 136,153

Taxes recoverable 1,637,018 636,588

Short term investments - 170,000

Cash and bank balances 196,900 557,266

Current Assets 9,485,346 8,012,194

Total Assets 25,699,508 24,045,553

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Equity & Liabilities 2014 2013

Equity

Share capital 7,665,961 7,665,961

Advance against issue of share capital - -

Share premium 865,354 865,354

Employee share option compensation reserve 399,740 407,133

Hedging reserve (27,736) (9,581)

Re-measurement of post employment benefits - Actuarial loss (35,715) (34,839)

Inappropriate profit 2,710,013 1,821,182

11,577,617 10,715,210

Non-Current Liabilities

Long term finances 5,476,993 7,126,994

Obligations under finance lease - -

Deferred taxation 1,185,717 1,538,583

Deferred liabilities- pension scheme - -

Deferred Income 2,516 9,410

6,665,226 8,674,987

Current Liabilities

Current portion of long term finances 1,605,597 1,032,008

Trade and other payables 3,222,661 3,369,182

Derivative financial instruments 41,397 14,517

Accrued interest / mark-up on

* long term finances 194,025 229,312

*short term finances 61,092 10,337

Short term finances 2,331,893 -

7,456,665 4,655,356

Contingencies and Commitments

Total Equity & Liabilities 25,699,508 24,045,553

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PPOORRTTEERRSS FFIIVVEE FFOORRCCEESS MMOODDEELL

11-- TTHHRREEAATT OOFF NNEEWW EENNTTRRAANNTTSS::

The average entrepreneur can't come along and start a large food company. The threat of

new entrants lies within the food industry itself. Some companies have carved out niche

areas in which they underwrite dairy supply. These food companies are fearful of being

squeezed out by the big players. Another threat for many food companies is other food

services companies entering the market.

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 EngroOlper’s have some threats like from new entrant’s 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

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22-- BBAARRGGAAIINNIINNGG PPOOWWEERR OOFF SSUUPPPPLLIIEERRSS::

The suppliers of food might not pose a big threat, because of the reasons;

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.

Importance of volume to supplier

Suppliers also have less leverage to bargain over price because the company is purchasing

the large volume of their milk and suppliers don’t have much option to sell milk to others.

33-- BBAARRGGAAIINNIINNGG PPOOWWEERR OOFF BBUUYYEERRSS::

The individual doesn't pose much of a threat to the food industry. Large clients have a lot

more bargaining power with food companies. Large corporate clients like airlines and

retailers pay millions of dollars a year. There are large numbers of distributors, who are

buying and distributing the product, so their bargaining power is low and company have

leverage to dictate implement its terms and conditions to distributors.

Backward integration

Another reason of low bargaining power is that no buyer/distributor has the resources to

start involve in backward integration.

44-- AAVVAAIILLAABBIILL IITTYY OOFF SSUUBBSSTTIITTUUTTEESS::

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.

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55-- CCOOMMPPEETTIITTIIVVEE RRIIVVAALLRRYY::

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.

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SSWWOOTT AANNAALLYYSSIISS

SSttrreennggtthh

Olper’s is a brand of ENGRO foods. This means that consumers can relate their former

image of ENGRO foods to Olper’s. 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 Olper’s 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 Olper’s

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 won’t have to look elsewhere to sell their milk.

Positive response from customers

In first year, EFL crossed 1.4 billion sales figure which shows customers’ satisfaction upon EFL’s products. 4. Its taste, quality proposition and world-class quality proposition system.

Strong consumer & product research

Olper’s done a strong consumer & product research before and after launching the product. This has provided them the perfect launching pad to eventually emerge as a global player in the food industry. To develop its future portfolios, EFL has hired various global research partners like AC Nielsen, Mindshare, JWT Asiatic and MARS marketing and advertising agencies.

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).

18 | P a g e

Worldwide fame of Engro.

Efficient milk collection system.

Keeping high quality standards.

Integrated distribution and warehousing facilities.

Successful related diversification.

Generic brand name of Olper’s

Large market share of Engro innovative and chemicals.

Having Good reputation in the market by strong brand name i.e. Engro

WWeeaakknneesssseess

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 Olper’s. The company may need to find a suitable color in which to focus its upcoming marketing strategies.

Low Quality Milk

EFL is not having its own dairy farms; it largely collects loose milk from farmers & through its 40 milk collection centers, which sometimes is of low quality and impure because they add vegetable oil to milk to get higher prices.

Packaging

EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. Tetra Pak is the only option available to Olper’s 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.

Milk collection & distribution costs

EFL’s 34 out of 40 milk-collection centers are located in Punjab, where as its only milk processing facility is situated near Sukkur (Sindh). It increases the milk collection & distribution costs; and also increases the chances of milk getting spoiled because of increased traveling time.

19 | P a g e

Narrow brand portfolio

It has been more than a year now, when EFL launched its first dairy product, Olper’s Milk on March20, 2006. But EFL’s brand portfolio still consists of just 3 products i.e. Olper’s Milk, Olper’s Cream. Whereas its competitors like Nestle and Haleeb Foods have a much diversified line of dairy products.

Unable to compete in price sensitive segment of UHT milk market.

Under-utilization of the capacity.

Unable to fulfill the demand of local powder milk market.

Not yet ISO certified

OOppppoorrttuunniitt iieess

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.

Third largest producer of milk

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, country’s 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

20 | P a g e

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

TThhrreeaattss

Competition

Competition may pose a threat because the company will have to maintain its leadership in

an expanding market so that it doesn’t lose its market share to its competitors. For Olper’s

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.

Perceptions and Price Differentials

Consumers’ perceptions and price differentials can cause a threat for the company. It is important that Olper’s comes up to the expectations of the customers and fulfills its conformance quality that is the company meets its promised specifications. Consumer’s preferences change with time and prices might create certain barriers in terms of the profit margins for Olper’s. For example, lose milk is still cheaper than packaged milk and that is also one factor that people still prefer to buy lose milk.

High inflation rate.

Low purchasing power.

Decrease in GDP growth rate.

Increasing interest rates.

Decreasing investment.

Recessionary period in business cycle

Competition with Nestle, Engro Foods and the new entrants.

Engrofoods is currently facing are increase in Sales Tax

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EEXXTTEERRNNAALL FFAACCTTOORR AANNAALLYYSSII SS

Key Strategic Factors Weight Rating Weighted Score

OOPPPPOORRTTUUNNIITTIIEESS

Trend of cattle farming increase by 20% 0.3 3 0.9

Competitor across town slow down their operations 0.1 4 0.4

Diversification opportunities increased by 5% 0.05 1 0.05

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

TTHHRREEAATTSS

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

IINNTTEERRNNAALL FFAACCTTOORR AANNAALLYYSSII SS Key Strategic Factors Weight Rating Weighted Score

SSTTRREENNGGTTHHSS Brand Image 0.08 4 0.32

Growing Trend of Sales 0.03 2 0.06

Market Share 0.05 3 0.15

Distribution Channel 0.08 2 0.16

Product Quality 0.07 3 0.21

Innovation 0.04 3 0.12

Customer Oriented 0.06 3 0.18

Qualified Work force / Excellent Employee Moral 0.02 3 0.03

WWEEAAKKNNEE SSSSEESS Centralized Decisions 0.17 2 0.34

No Sales on Credit 0.21 2 0.42

High Price 0.07 2 0.14

Related Diversification 0.12 1 0.12

Total 1 2.25

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CCOOMMPPEETTIITTIIVVEE PPRROOFFIILLEE MMAATTRRIIXX ((CCPPMM))

OLPERS NESTLE HALEEB

Critical Success Factors Weight Rating Score Rating Score Rating Score

1

Research& Development

0.12 3 0.36 4 0.48 2 0.24

2

Financial Position

0.13 3 0.39 4 0.52 2 0.26

3

Market Share

0.09 4 0.36 3 0.27 1 0.09

4

Product Quality

0.08 3 0.24 3 0.24 2 0.16

5

Price Competitiveness

0.11 3 0.33 2 0.22 3 0.33

6

Management

0.12 3 0.36 4 0.48 2 0.20

7

Customer service

0.06 3 0.18 3 0.18 2 0.12

8

Sales And Distribution Network

0.09 2 0.18 4 0.36 2 0.18

9

Production Capacity 0.07 2 0.14 3 0.21 4 0.28

10 Customer Loyalty 0.13 3 0.39 4 0.32 1 0.13

Total

1.0 2.93 3.28 1.99

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SSPPAACCEE MMAATTRRIIXX SSTTRRAATTEEGGIICC MMAANNAAGGEEMMEENNTT MMEETTHHOODD

The SPACE matrix is a management tool used to analyze a company. It is used to

determine what type of a strategy a company should undertake. The Strategic

Position & Action Evaluation matrix or short a SPACE matrix is a strategic management

tool that focuses on strategy formulation especially as related to the competitive position

of an organization. The SPACE matrix can be used as a basis for other analyses, such as the

SWOT analysis, BCG matrix model, industry analysis, or assessing strategic alternatives (IE

matrix).The SPACE matrix calculates the importance of each of these dimensions and places

them on a Cartesian graph with X and Y coordinates.

Financial Position

+7

+6

+5

Conservative +4

Aggressive

+3

+2

+1

Competitive Position

Industry

Position -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6

-1

-2

Defensive -3

Competitive

-4

-5

-6

-7

Stability Position

24 | P a g e

Y-A

xis

INTERNAL STRENGTH POSITION EXTERNAL STRENGTH POSITION

Competitive Position(CP) Industry Position(IP)

(Worst -7,Best -1)

-1 Product Quality -1 Product Life Cycle

-3 Market Share

-2 Brand and image

Average Score =-1.75

(Worst +1,Best 7)

+5 Barriers to entry +4 Growth Potential +4 Access to Financing +6 Consolidation

Average Score =4.75

Financial Position (FP) Stability Position(SP)

(Worst +1,Best +7)

+5 ROA

+5 Leverage

+4 Leverage +6 Cash Flow

Average Score = 5

(Worst -6,Best -1)

-2 Inflation -1 Technology -2 Demand Elasticity

-4 Taxation

Average Score =-2.5

X-Axis

25 | P a g e

EENNGGRROO FFOOOODDSS SSPPAACCEE MMAATTRRIIXX

CP = 1.75

FP = 5

SP = 2.5

IP = 4.75

X- Axis

1.75 + 4.75 = 6.5

Y- Axis

-2.5 + 5 = 2.5

Financial Position

+7

+6

+5

Aggressive

+4

2.5

+3

+2

+1

Competitive Position

Industry Position -6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6 +7

-1

6.5

-2

-3

-4

-5

-6

-7

Stability Position

Conclusion

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.

BBCCGG MMaattrr iixx MMooddeeThe BCG matrix or also called

known portfolio management tool used in product life cycle theory. BCG matrix is often

used to prioritize which products within company product mix get more funding and

attention.

The BCG matrix model is a por

Boston Consulting Group in the early 1970's.

The BCG model is based on classification of products (and implicitly also company business

units) into four categories based on combinations of

relative to the largest competitor

eell or also called BCG model relates to marketing. The BCG model is a well

known portfolio management tool used in product life cycle theory. BCG matrix is often

used to prioritize which products within company product mix get more funding and

portfolio planning model developed by Bruce Henderson of the

Boston Consulting Group in the early 1970's.

The BCG model is based on classification of products (and implicitly also company business

into four categories based on combinations of market growth and market share

relative to the largest competitor.

26 | P a g e

relates to marketing. The BCG model is a well-

known portfolio management tool used in product life cycle theory. BCG matrix is often

used to prioritize which products within company product mix get more funding and

model developed by Bruce Henderson of the

The BCG model is based on classification of products (and implicitly also company business

market share

27 | P a g e

IInntteerrnnaall EExxtteerrnnaall (( IIEE))MMaattrr iixx

The Internal-External (IE) matrix is another strategic management tool used to analyze working conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an analysis of internal and external business factors which are combined into one suggestive model.

I

Grow and Build

II

Grow and Build

III

Grow and Build

IV

Grow and Build

V

Grow and Build

EENNGGRROO

VI

Harvest

VII

Grow and Build

VIII

Harvest

XI

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.

Strong 3 to 4

Average 2 to 2.99

Weak 1 to 1.99

Low

1 to 1.99

Medium

2 to 2.99

High

3 to 4

IFE

IFE

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QQuuaanntt ii ttaatt iivvee SSttrraatteeggiicc PPllaannnniinngg MMaattrr iixx oorr aa QQSSPPMM

The Quantitative Strategic Planning Matrix or a QSPM approach attempts to objectively select the best strategy using input from other management techniques and some easy computations. In other words, the QSPM method uses inputs from stage 1 analyses, matches them with results from stage 2 analyses, and then decides objectively among alternative strategies.

Stage 1 strategic management tools...

The first step in the overall strategic management analysis is used to identify key strategic factors. This can be done using, for example, the EFE matrix and IFE matrix.

Stage 2 strategic management tools...

After we identify and analyze key strategic factors as inputs for QSPM, we can formulate the type of the strategy we would like to pursue. This can be done using the stage 2 strategic management tools, for example the SWOT analysis (or TOWS), SPACE matrix analysis, BCG matrix model, or the IE matrix model.

Stage 3 strategic management tools...

The stage 1 strategic management methods provided us with key strategic factors. Based on their analysis, we formulated possible strategies in stage 2. Now, the task is to compare in QSPM alternative strategies and decide which one is the most suitable for our goals.

The stage 2 strategic tools provide the needed information for setting up the Quantitative Strategic Planning Matrix - QSPM. The QSPM method allows us to evaluate alternative strategies objectively.

Conceptually, the QSPM in stage 3 determines the relative attractiveness of various strategies based on the extent to which key external and internal critical success factors are capitalized upon or improved. The relative attractiveness of each strategy is computed by determining the cumulative impact of each external and internal critical success factor.

QQSSPPMM OOFF EEnnggrroo ffooooddss

Based on strategies in the stage 1 (IFE, EFE) and stage 2 (BCG, SPACE, IE), company executives determined that Engrofoods needs to pursue an aggressive strategy aimed at development of new products and further penetration of the market. They also identified that this strategy can be executed in two ways. One strategy is acquiring a competing company. The other strategy is to expand internally. They are now asking which option is the better one.

(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 = probably acceptable; 4 = most acceptable; 0 = not relevant)

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QQSSPPMM ooff TTaarraanngg

Internal External Factor Weight DIVERSIFICATION

(TARANG POWDER)

MARKET

PENETRATION

STRENGTHS AS TAS AS TAS

Brand Image 0.08 3.00 0.24 2.00 0.16

Growing Trend of Sales 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 0.06

Qualified Work force / Excellent Employee Moral

0.02 2.00 0.04 3.00 0.06

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

Competitor across town slow down their operations

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

Reduction in Exports Restrictions 0.07

Demand for UHT milk Growing by 9% 0.08 1.00 0.08 4.00 0.32

Milk Consumptions Increased 0.10 4.00 0.40 4.00 0.40

Threats

New Entrants 0.08 4.00 0.32 4.00 0.32

Increment of Sales Tax 0.07 2.00 0.14 3.00 0.21

Economic & Energy Conditions 0.05 4.00 0.2 3.00 0.15

Fresh Milk market 0.05 2.00 0.1 2.00 0.1

Small Target Market 0.05

Total 1.00 3.97 4.31

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QQSSPPMM ooff OOllppeerr’’ss

Internal External Factor Weight MARKET

DEVELOPMENT PRODUCT

DEVELOPMENT

Strength AS TAS AS TAS

Brand Image 0.08 2.00 0.16 1.00 0.08

Growing Trend of Sales 0.03

Market Share 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 0.06 1.00 0.06 3.00 0.18

Qualified Work force / Excellent Employee Moral

0.02

Weakness

Centralized Decisions 0.17

No Sales on Credit 0.21 2.00 0.42 1.00 0.21

High Price 0.07

Related Diversification 0.12 1.00 0.12 1.00 0.12

1.00

Opportunities

Trend of cattle farming increase by 20%

0.30 3.00 0.90 1.00 0.30

Competitor across town slow down their operations 0.10 4.00 0.40 1.00 0.10

Diversification opportunities increased by 5% 0.05

Reduction in Exports Restrictions 0.07 4.00 0.28 2.00 0.24

Demand for UHT milk Growing by 9% 0.08 3.00 0.24 2.00 0.16

Milk Consumptions Increased 0.1 2.00 0.20 2.00 0.20

Threats

New Entrants 0.08 1.00 0.08 2.00 0.16

Economic & Energy Conditions 0.05 3.00 0.15 2.00 0.1

Increment of Sales Tax 0.07

Fresh Milk market 0.05 3.00 0.15 2.00 0.1

Small Target Market 0.05

Total 1.00 3.66 2.32

EEnnggrroo

CEO

Chief Finance

Chief operating

management

VP of Marketing

VP of HR

oo ffooooddss SSttrruuccttuurree ((hhiieerraarrcchhyy))

Chief Finance officer

Chief operating officer

Brand head tarang

Brand head of omore

Brand head of omang

Brand head of olpers

Chief management

officer

VP of Marketing

VP of HR

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Subordnate

Subordnate

Subordnate

Subordnate

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SSuuggggeessttiioonnss aanndd RReeccoommmmeennddaattiioonnss

Following are the suggestions and recommendations for EFL.

The co-ordination between different departments of EFL should be improved it will

lessen the bureaucratic cost and increase the efficiency of the company.

The activities like customer satisfaction day should be performed on regular basis

so the company should know the feedback and satisfaction level of customers

regarding the product and the image of the company.

The shopkeeper complains that EFL is not providing replacement for the expired

products, EFL should provide proper replacement to the shopkeeper to enhance

the image of the company, and create better working relations with such an

important stakeholders.

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.

There is no check on the performance of the distributor, and this has led to huge

problems in the delivery of many products in some areas of the city

They should also start to manufacture powder milk in order to meet the domestic

demand and so that it can be helpful in saving the foreign exchange that is

expensed in importing the powder milk from foreign countries.

The company should explore the market potential in a way, so that it can utilize its

full capacity in order to gain economies of scale in the production.

At the moment the company is using focus marketing approach that only that

segment is approached which highly attractive for the company but it should also

develop the marketing program that distinguishes the characteristics of existing

available substitutes to their highly quality & hygiene oriented product.

The company should also develop an integrated awareness plan in order to aware

the people about the quality of the UHT milk as compared to other pasteurized or

loose/fresh milk.

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RReeffeerreenncceess

1. Strategic Management concept and cases by FRED R DAVID 13th edition.

2. Marketing Management by Kotler 11th Edition.

3. www.olpers.com.pk

4. www.engrofoods.com.pk

5. www.engrocorporations.com

6. www.Engro\web search\marketing-sales.aspx.html

7. www.Engro\web search\about-us.aspx.html

8. www.google.com

9. www.wikipedia.com