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STRATEGIC MANAGEMENTTAPAL TEA
Submitted To:M. Ekhlaque Ahmed
Submitted By:Kiran SaleemNameah Quidwai
Maria Mehboob
TABLETABLE OFOF CONTENTCONTENT
S.NO Topic Page #
1 Testimonial 4
2 Business Scope
Regions Function And Applications Customers Added Value
5
3 External Analysis
Market Structure: Communication Channels: Change And The Effect: Market Size: Competition Matrix Product Life Cycle Stage: Distribution Structure: Driving Forces Top Ten External Trends And Their Impact:
7
4 Internal Analysis
SWOT Analysis Threats And Weaknesses Which Could Be
Converted Into Opportunities And Strength The Customer: Basis Of Business: The Relative Importance Factors: Rating Against Customer Buying Criteria
(Evaluation Table) Customers Buying Criteria: Price..%, Quality
Attributes ..% Impact Of Issues On Strategic Profile
23
5 Business Objectives
Vision & Mission: Suggested Mission: Suggested Vision: Objectives: Competitive Innovation
33
6 Key Issues 35
7 Action Plan 36
8 Unorthodox Strategies 38
TESTIMONIAL:
We thanks The Great Al- Mighty ALLAH for showing us, the strength and courage for all the
challenges through out our journey in exploring the wonders of this visionary and dynamic
subject of “Strategic Management”. Indeed, we are grateful to our instructor Mr. M. Ekhlaque
Ahmed, whose dedication, guidance and enthusiasm for the subject always persuaded a
challenge for us to become and prove that, how good we are business managers. We had at most
optimum, placed our sincere efforts and sheer hard work to satisfy our mentor with this report.
We would always like to remember and honor with gratitude toward our family & friends, in
supporting and motivating us during days, we felted low and finally, the TAPAL people
specially, Mr. Imran Ali, Mr Zeeshan Gunatara and Ms. Touba whose endless support glimpsed
a ray of hope and success to this project.
Thank You,
Kiran Saleem
Maria Mehboob
Namrah Quidwai
1. BUSINESS SCOPE:
Tapal is the national tea brand and competing in Pakistan against the multinational brands and
the smuggled tea i.e. open tea. In Pakistan people really needs an excuse to have a cup of tea and
such is the tradition of tea drinking in Pakistan that every special moment is enhanced with the
presence of tea and where there are these moments Tapal brand is there.
It is almost 60 years when Tapal was launched and since that time Tapal is has always
passionately delivered the excellence to its customers. Whether the company’s motto of
uncompromising quality, or a continuous quest towards innovation and improvement, the
warmth and the passion they put in to tea is what makes Tapal one of the leading tea brand in
Pakistan. Tapal is also ISO 9001: 2000 certified.
Tapal tea always catered to the demand of the diversified tea consumers by launching numerous
brands of conventional tea and also the unconventional blends. Tapal has the strong heritage of
innovation and they the pioneer in creating the unconventional tea market. Tapal wants to
increasingly cater to the demands of its customers.
Regions:
Tapal has divided itself in to two region one is in Pakistani local market other is exported brands.
Region 1:
Local market:
o Southern region------Sindh and Baluchistan
o Northern region------Punjab, Kashmir and NWFP
Region 2:
Export:
o New York
o Chicago
o Texas
o Florida
o Saudi Arabia
o Hong Kong
o Greece
o Korea
o Canada
o Spain
o Great Britain
o Afghanistan
o Australia
o California
o Germany
o Muscat
Tapal tea has two manufacturing plants one in Korangi, Karachi catering 70% of the production
to meet the southern needs and other is in Raiwand, Lahore catering the 30% of the production to
meet the northern parts need. There are total 9 warehouses in Pakistan.
Function and applications:
What are the needs of the customers?
Needs of the customers vary from region to region that is why Tapal has different variations in
product like Danedar, Mezban, Family mixture, shades of green, chenak, tezdam and ice tea. The
Tazdam and Family mixture are the hot favorite demand in northern region and while the others
are more popular in southern region.
Customers always seek variety in tea. Some like strong flavor, some like aroma, some prefer
quality and some wants aroma. Availability and price are also the important factors for the
choice of a brand.
Customers:
Tapal’s target customers are people of urban and rural areas whose belong to the lower class,
middle class and upper class. But the major share of Tapal is in rural market that is 68% where
the daily income of the people are very low and they can hardly afford proper meal a day that’s
why they prefer to have tea in low cost.
Added value:
For adding value to the product Tapal tea lots of promotional activities like offering the special
gifts (Mug), free sampling, gifts in tea Pack (sooper biscuit and every tea whitener), lucky draws,
deals, coupons, relationship story competition, ATL and BTL activities and etc. Promotional
activities also attract the non customers to use their brand.
They also work closely with their tea suppliers for the better quality of the tea imported from
international market and also give incentives to the distributors for the promotion of the brand.
2. EXTERNAL ANALYSIS
a. Market structure:
Strong taste Medium taste Light taste Health conscious
Mezban
Chenak
Tezdam
Pearl dusts
Red Rose
Royal
Surhan
Dawn
Family Mixture
Vital chai
Lipton tea bags
Loose/
Unbranded
Danedar
Lipton Yellow
Label
Supreme
Tetley world
Vital Chai
DD tea bags
Tetley tea bags
Lipton tea bags
Jasmine TBs
Elaichi TBs
Lemon TBs
Gulbahar
Clear green tea
Loose/ Unbranded
Communication channels:
USD/CSD Armed forces & export channels
International Modern trades
Retailers
Retailer
43%
41%
6%4%
6%
UnileverTapalTetelyVitalOthers
Branded Tea53%
Loose Tea47%
Pakistan Tea Industry
Rural67%
Urban33%
Pakistan Tea Market
Retailer
Change and the effect:
The emergence of the Modern Trade is opening new ways for reaching the customers. This may
attack the direct selling technique and mat effect the conventional distributors.
Armed forces are the niche but they are contributing a good amount
Population growth rate: Market is growing due to increase in population. According to economic
survey the population growth rate is 2.196 % per annum and tea consumption is 1 KG per capita.
Rate of exchange: as money is being devalued the dollar value is increasing That why exporting
is beneficial for the company.
Import duties: Increase in Import duties up to 11% has put pressure on company since it has
increased the input cost.
Smuggled tea: Tea being smuggled from Afghan border has captured the market up to 47%.
a. Market Size:
Market growth rate in terms of volume (past) (in tons)
Market
segments
2005-06 2006-07 2007-08 2008-09 Growth rate
health
conscious
146 151 158 165.5 4.1%
taste conscious
strong
50381 52425 54667 57123 4.12%
taste conscious
medium
4751 4803 4842 4890 0.99%
taste conscious
light
92508 95376 98428 101890 3.09%
Overall
growth
3.075%
Market growth rate in terms of value Rs. (past)
Market segments 2005-06 2006-07 2007-08 2008-09 Growth
rate
health conscious 1168000
00
135900000 158000000 182050000 15.95%
taste conscious
strong
1385477
5000
17300250000 21866800000 25705350000 22.94%
taste conscious
medium
1377790
000
1681050000 2057850000 2298300000 18.70%
taste conscious
light
2312700
0000
30520320000 37402640000 44650760000 24.63%
Overall growth 20.6%
Assumptions for growth:
• Increasing population by 2.196% will expand the market
• Shift in Economy of Pakistan: Due to inflation buying power of individual has been effected that
has resulted in the switching from lunch to Tea with Roti.
• Health conscious: People are becoming more aware about healthy and fit life so it is assumed
that this segment will grow in near future.
• Communication channels like Internet, TV, Radio, Billboards etc are helping in creating the
awareness in the customers about the arrival of new products and the benefits associated with it.
It also helps the company to know about the consumer need through interactive channels.
• Shift in the segments: Cannibalization effect between the medium and the light taste.
• Technological impact: New state of the art machineries will increase the production and will help
in developing new innovative products
• Shipping cost: As the raw material is received from foreign countries the supply chain
department checks its quality at various levels and this costs high that’s why we are assuming
that this cost will be shifted to consumer resulting in high price.
• Import duties
Market growth rate in terms of volume (future) (in tons)
Market
segments
2008-09 2009-10 2010-2011 2011-12 Growth
rate
health
conscious
165.5 173 181 190 4.71%
taste
conscious
strong
57123 59760 62550 65590 4.72%
taste
conscious
medium
4890 4945 5010 5087 1.33%
taste
conscious
light
101890 105590 109800 114589 3.99%
Overall growth 3.7%
Market growth rate in terms of value Rs (future)
Market
segments
2008-09 2009-10 2010-2011 2011-12 Growth
rate
health
conscious
182050000 211060000 244350000 285000000 16.11%
taste
conscious
strong
25705350000 31075200000 38155500000 47880700000 23.05%
taste
conscious
medium
2298300000 2711500000 3237000000 3776250000 18.01%
taste
conscious
light
44650760000 57697750000 72882600000 89268420000 26.01%
Overall growth 20.8%
ANALYSIS
• The growth rate of health conscious group increased by 4.71% and also the price will increase
over time.
• In strong taste market will grow by this 4.72% because we will be emphasizing the north region
(especially in the rural market of Punjab).
• Medium taste segment is mature segment and it is being cannibalized by the light taste and tea
bags. So we analyzed that there will be negligible increase in this segment.
• Light taste market will grow because of the introduction of more innovations in tea bags so we
have analyzed that this segment have potential to grow more.
Competition matrix
Competition Health
Conscious
Strong
Taste
Medium
Taste
Light Taste Overall
1 Tapal 9% 39% 25% 27% 100%
2 Unilever
(Lipton &
Brooke bond)
10% 41% 20% 29% 100%
3 Tetley - - - 100% 100%
4 Vital - 60% 40% - 100%
5 Loose/
Unbranded
2% 39% 39% 20% 100%
Historical growth 4.1% 4.12% 0.99% 3.09% 3.075%
Projected growth 4.71% 4.72% 1.14% 3.99% 3.7%
Profitability ++ ++ + ++ ++
ANALYSIS:
Tapal and Unilever is having neck to neck competition. Tapal needs improvement in strong taste,
health conscious and light taste category. Over all business is in profit.
b. Product life cycle stage:
Market
Segment
Introductory Growth Maturity Decline
Health
conscious
Strong Taste
Medium
Taste
Light Taste
variety
seeker
Convenient
seeker
Tapal Industry
ANALYSIS
• Health conscious, light taste and convenient seeker is growing both the industry and Tapal.
• In strong taste Tapal is behind the industry because its competitor is already on the top of the
mind of north customers.
• Medium taste is at maturity but soon it will be on declining stage if measure are not taken.
• Variety seekers is on introductory stage and yet it is not able to develop the taste.
c. Distribution structure:
% Tea Market
2008 2012
DISTRIBUTOR 65 60
MODERN TRADES 7 13
USC/CSD 10 7
OOH 18 20
100 % 100%
ANALYSIS:
Tapal tea is linked with number of distributors that are around 400 since the time this brand has
established.
GAP- they are catering only 114,000 outlets while competitor is catering almost 450,000 of the
outlets. OOH is only 18% which they should increase as its contribution in the profit is high. As
Tapal intended to decrease the % sales through utility store it will ultimately result in less
support from the government.
d. Driving forces
Social and Cultural Forces
Pakistan is a country where one can find diversified culture. The norms and traditions
vary in from culture to culture but the common thing in our Pakistani culture is hospitality.
People are always welcomed and served with cup of tea in every event, festival or even on
normal days. Taste varies from culture to culture; in accordance with this factor Tapal launches
its different flavors and taste for different regions. Like strong taste is preferred in Interior
Punjab and Sindh, where as in urban areas the preference is towards the light taste.
Political and Legal Forces
The political factor is also affecting the Tpal. As Tapal imports its raw tea from
international market the increasing taxes and duties results in the high cost of tea. Another
important factor is smuggled tea. Tea is smuggled from Afghanistan and is sold at the less prices
but the Government of Pakistan is being restricted due to scarcity of resources.
Technological Forces
Technology is also harnessed at Tapal to benefit the consumer. Tapal was the pioneer in
soft packaging and round tea bag. They imported this innovative technology and established a
fully automatic facility under the guidance of their founder, Adam Tapal, where soft packs were
produced for the first time in Pakistan. Few years back Tapal has improved the technology to
hard packaging. At this facility tea is blended and packed in hygienic conditions, untouched by
human hands whilst the hard packing technology keeps tea fresh and packaging costs
economical.
Economic Conditions:
Change in economic have a major impact on tea industry. Inflation plays a major role on
the strategies used by a company due to two main reasons. Firstly, inflation affects the
consumers’ psychology and they become more selective in their purchases. Secondly, inflation
results in rising prices for the raw materials purchased by Tapal, which in turn increases the cost
of production. This factor plays a major role especially if the increase in cost cannot be
transferred to the consumers in the form of raised prices.
e. Top ten external trends and their impact:
TREND POTENTIAL
IMPACT
TAPAL UNILEVER VITAL TETLEY
Traditional
Hospitality
culture of
Pakistan
Increase in
sales volume
and sales
revenue
yes yes yes no
Technological
Trends
Increase in cost
Increase in
efficiency
Yes Yes Yes Yes
Covering the
market
adjacent to
Afghan border
dominated by
smuggled
loose tea.
Increase in
sales and
revenue
Yes yes yes No
Growth of
rural markets
and focus of
companies on
this area
Increasing
competition,
Price Erosion
Yes Yes Yes No
Application
segmentation
Customization Yes Yes No No
Traditional Increase in yes yes yes no
Hospitality
culture of
Pakistan
sales volume
and sales
revenue
Technological
Trends
Increase in cost
Increase in
efficiency
Yes Yes Yes Yes
Covering the
market
adjacent to
Afghan border
dominated by
smuggled
loose tea.
Increase in
sales and
revenue
Yes yes yes No
Growth of
rural markets
and focus of
companies on
this area
Increasing
competition,
Price Erosion
Yes Yes Yes No
3. INTERNAL ANALYSIS:
a. SWOT Analysis
Strengths
1. Open culture
2. Strong relationship with the distributors
3. Expertise – Tea Blending.
4. Short term credit policy i.e. efficient ROI
5. Commitment for Quality
6. Efficient production capacity at southern region
7. Decentralized
8. Single product manufacturing company i.e. just Tea
9. Credit Policy of 7 days
10. No liabilities.
Weaknesses
11. Limited budget and investment in the business
12. Weak coverage in upper northern areas of Pakistan
13. Less retail outlet coverage
14. Less resources as compared to No. 1 competitor
15. HR department is still in developing process
16. No customer complain center within the company.
17. Inefficient production capacity at northern region.
Opportunities
1. Growing rural market and export
2. Initiatives in price pack category as to capture value from price sensitive customers
3. Newer segments introduced with entry of new brands which still have huge potential
for growth
4. Central and upper Punjab has tremendous potential for growth and profitability
5. Tea prices are become high in loose tea market
6. Green Tea market is growing because of medical benefits of tea.
7. Customers are shifting from cola drinks to low cost drinks
Threats
1. Abolishment of Subsidy given by Govt. on Tea Import
2. WTO (World trade Order) opening local markets for global competition.
3. International MTO launching newer brands with high margins at reduced price for our
price-sensitive economy proving serious threat in near future
4. Attraction for new entrants in the industry
5. Complementary goods are going more and more expensive then before i.e. Milk, Sugar
etc.
6. Illegal imports under umbrella Afghan transits trade.
7. Internationally increasing tea prices
8. High inflation rate within country
9. Shortage and increasing prices of electricity.
Threats and Weaknesses which could be converted into Opportunities and
Strength
External Analysis Internal Analysis
Opportunities WeaknessesThreats Strength
Competition is still weak in south coastal areas.
Green Tea market is growing because of medical benefits of tea.
Capturing loose tea market through innovation & competitive
prices
Less retail outlet coverage while competitor’s coverage is very high
ANALYSIS
Tapal is 1st national brand but it lacks in financial resources since they are only in tea business.
Its HR policies need to be revised. Company is not interlinked with the other regional areas.
Customer complaint centre should be introduced. They should introduce low profile product in
“DHABBA”
b. The customer: basis of business:
The customers’ most important wants are aroma, color, taste, packaging and availability
Aroma is the most important aspect
We score it 9
Company know it and working on it
Competition score 9
Key strength is the well managed supply chain tea department who assured the quality of tea.
Weakness is that no complaint centre is available
c. The relative importance factors:
Factors Absolutely
Critical
5
Very
Important
4
Quite
Important
3
Nice to
Have
2
Not
significant
1
Don’t
Want it
0
Aroma
Mind blowing
Strong
Freshness
Packaging
Air tight Jar
Sachet
pouches
Price
affordable
premium price
Availability
near stores
modern trade
Communication
ATL
BTL
Customer service
Through
internet
Phone
Color
Dark
Light
Taste
Strong
Medium
light
d. Rating Against Customer Buying Criteria (Evaluation Table)
QUALITY & PRICE This
Business
Unilever Tetley
Non Price
Attributes affecting WEIGHTAGE
Customer Choice %
Product Related 70%
1. Aroma 20 18 18 15
2. Freshness 20 17 18 14
3.Packaging 10 7 9 6
4.Color 10 8 8 4
5.Taste 10 8 8 6
Service Related 30%
1.Customer Complain Service 10 4 8 3
2.Availability 10 7 8 2
3. Communication 10 7 9 4
Total 100% 76 86 54
Has Quality Gone Up/Down
(+/-)In Past 4 Years
Relative Price Today (Rs.) 440-500 / KG 490-550/Kg 400-470/Kg
Relative Price 4 Years Ago 260-370/kg 280-385/Kg 240-370/Kg
Quality & Price This Business Unilever Tetley
Non Price ranks
Attributes Affecting WEIGHTAGE
Customer Choice %
Product Related 70% 7.84 7.98 5.81
1. Aroma 20 3.6 3.6 3
2. Freshness 20 3.4 3.6 2.8
3.Packaging 10 0.7 0.9 0.6
4.Color 10 0.8 0.8 0.4
5.Taste 10 0.8 0.8 0.6
Service Related 30% 3.36 3.42 2.49
1.Customer Complain
Service
10 0.4 0.8 0.3
2.Availability 10 0.8 0.8 0.2
3. Communication 10 0.7 0.9 0.4
TOTAL 100% 11.2 11.4 8.3
e. Customers Buying Criteria: Price..%, Quality Attributes ..%
Attributes Important to Customer
Relative
Performan
Do not Sweet
Question its Cost Keep it up
Better Taste Aroma
freshness
Same Packaging Color
Communication
Worse Customer
complaints
Availability
10% 20% 30% Improve Fast
f. Impact of Issues on Strategic Profile
Issue Number Issue 1 Issue 2 Issue 3 Issue 4 Issue 5
Issue Name Weak
distributi
on
Increase in
import
duties
Price Shortage
of
electricit
y
HR
department
Customers ++ + ++
Regions ++
Market segments + ++
Products (prices)/services ++ ++ +
Strategic Management ++ + + ++ ++
Product Creation Process + ++ ++
Sales Acquisition Process ++ + +
Operations
(Production/Logistics)
+ + +++
Customer base Management ++
Technology + +++
Plant & Equipment + ++
Distribution Channels ++
4. BUSINESS OBJECTIVE:
a. Vision & Mission:
The management and the employees of Tapal Tea (Private) Limited is committed to:
Satisfy stakeholders and be a benchmark for Quality, Creativity and Ethical values in business
Achieve leadership in all the categories of core business and diversify in areas which compliment
the core business.
Provide products and services that meet customers’ requirements, expectation and agreements
relating to all aspects of Tapal Integrated Management System.
Define and update measurable objectives and continually improve the effectiveness and
performance of the Quality, Health, Safety, Environment, food Safety and IS (Information
system).
Prevention of injury and ill health by continuously identifying hazards and reducing risks to
people, facility and business.
Ensuring that the Tapal processes and products are environment friendly and do not contribute to
polluting the environments in any manner.
Adhere to all applicable legal, statutory and other requirements that relate to Tapal products,
services, health and safety.
Establish effective arrangements for communicating with all stakeholders throughout the food
supply chain regarding all applicable aspects of Tapal Integrated Management System
Suggested Vision:
To be a benchmark of Quality, Creativity and Value Innovation, achieve leadership in the
beverage manufacturing industry which compliment the core business
Suggested Mission:
Provide products and services that meet customers’ requirements, expectation and agreements
relating to all aspects of Tapal Integrated Management System.
b. Objectives:
• To attain market leading position and increase the sales in North Region by 5% in 2012
(specially the strong taste brand).
• Investing to increase production capacity, in order to meet expected demand in coming 5 years.
• To broaden export functions from 19 areas to 22 areas (3% sales to 5%) by 2013 and improve
product existence in International markets.
• Expanding distribution network to 300,000 outlets all over Pakistan.
• Define and update measurable objectives and continually improve the effectiveness and
performance of the Quality, Health, Safety, Environment, food Safety and IS (Information
system).
• Continuous training and development of the employees.
• To make the HR department strong by improving the compensation plans (providing bonuses,
health care facilities and holiday packages).
c. Competitive Innovation
Bring down the cost through horizontal and vertical business partners; optimize the production
capacity to meet the future demand
Apply six sigma in complete business processes in order to attain cost leadership
Computerization of work.
Lower Cost Differentiation
Chenak DustMezban SachetFamily MixtureDanedar Twin Pack
Tezdum 22gmGulbahar
SOG Selection Pack
Tapal Special TeabagDanedar Round TeabagTapal Ice Tea
BroadRange of Buyers
Narrow Buyer SegmentOr Niche
Mezban Dust 125gm
5. KEY ISSUES
• Weak distribution resulting in missed sales usually in northern areas.
• Increase in input cost
• Customer relationship management.
• MTOs introducing new brands at cheaper price.
• Family mixture cannibalization.
The Five Generic Competitive Strategies
Type of Advantage Sought
6. ACTION PLAN ( For next year)
WHAT HAS TO BE
DONE
References HOW RESULT
Customer Complain SWOT analysis
Customer buying
criteria
Should develop
customer complain
centre
Customer satisfaction/loyalty
Improve distribution
network
Distribution
matrix
Competition
matrix
Key issue
Improve relationship
with the distributors
in north and seek new
distributors
Increase sales and brand image in
north and increase market share
Improve
communication with
external customers
Market structure
SWOT analysis
More advertisements
and promotional
activities
Will become top of the mind
Brand awareness
Outlet coverage Objective
SWOT analysis
Should be available
in key areas of cities.
Convenient purchase
Green tea Project market
growth
SWOT analysis
Create awareness by
arranging workshops
in educational
institute, offices and
fitness centers
Can become the cash cow for the
company
Family mixture
cannibalizations
Cause and effect
analysis
Improvisation in taste Sales will increase
Hr department SWOT analysis
Objective
Arrange training
programs for sap and
ERP and other new
technologies being
installed.
Effective output.
Introduction of new
SKU
Cause and effect Introduction of
danedar sachet for
affinity group
New market segment
Related diversification SWOT analysis Join venture with
tarang milk to
introduce new
instant tea
For new customer to make tea in
a convenient way.
Cost effectiveness Competitive
innovation
Six sigma application Wastage reduction
Efficient data sharing
Competitive
innovation
Objectives
Introduction of WAN Decentralization
7. UNORTHODOX STRATEGIES
Introduction of Tea dispensers for Home and offices to make instant tea like previously used for
the filtration of water.
Strategic alliance with Tarang tea whitener for introducing the new sachet with innovative
concept of instant tea.
Introduction of new flavors i.e. tea with essence of ginger, tea with ilaichi and tea with masala.
Introduction of tea bags for strong tea lovers who are convenient seekers as well.
