PROJECT REPORT

PACKAGES LIMITED- Imagination Beyond Edges

www.packages.com.pk
Packages Limited Shahrah-e-Roomi, Amir Sidhu, Walton, Cantt, Lahore, Punjab, 54760 Pakistan +92-42-35811541 +92-42-35811195 5/24/2011

ACKNOWLEDGEMENT

We would like to express special thanks of gratitude to our professor Madam Aqsa Akbarm who gave us this opportunity to do this project on the Analysis of an Organizations Management Practices. For the purpose of this project report we chose Packages Limited to evaluate their management process. We are grateful to our professor for providing us with the opportunity to get hands on insight into the management processes of an actual company.

We would also like to thank our parents and friends who helped us to complete this report successfully and within time. They have provided us support and care to let us complete this report. We are grateful to all those who helped us in some way throughout the course of writing this report.

Regards, Elina Pasha Zakia Noreen Syed Raza Abbas Zaidi Amna Tabassum Waqas Abid Hamid Akram Arslan Arshad

INTRODUCTION

In light of the topic given to us for this project report, we have covered the various management practices undertaken by Packages Limited for their decision making process. There multiple different choices that a manager has to make on day to day basis to ensure that the operations of each business unit is running smoothly. In order to cover some of the major details of the operational plans of Packages limited we visited the Packages Limited Factory and conducted an interview with a manager and some surveys with the employees.

OVERVIEW OF THE ORGANIZATION

History of Packages Limited Packages Limited was born out of a dream to set up an industry of excellence based on local raw material and talent. Packages Limited is a leading packaging manufacturing company of Pakistan. It is one of the largest industries in Pakistan serving about 35% needs of the country. Syed Baber Ali Shah, who was the first managing director of Packages Limited, went to Sweden in 1954 to negotiate the contract with AB Akerland & Rausing of Sweden, who were the leading paper converters in Europe. Pakistanis needed technical collaboration with their Swedish partners. In the beginning, the first problem was the selection of the site. Finally, Lahore was selected due to the following reasons: Easy availability of workers. Easy availability of raw material. Easy transportation all over the country.

A B Akerlund & Rausing packaging company brought machinery and expert technicians while the Ali Family provided the necessary capital, land, labor, local expertise and management. Packages Limited started operating in May 1957 with a paid up capital of Rs. 4.94 million as a joint venture between the Ali Group and Akerland & Rausing of Sweden. Initially, Packages produced cartons for the cigarette, tea, confectionery, soap, pharmaceutical products and other consumer products. These cartons were produced from paper and board supplied from mills in Chittacong, Khulna, Charsadda and Peshawar. However the quality and quantity of paper and board supplied was inadequate. Over the years, the company continued to enhance

its facilities to meet the growing demand of packaging products. Additional capital was raised from sponsors, International Finance Corporation and from the public in making the total paid up capital to Rs. 31 million in 1965.

Over the Years

As a first step, Packages commissioned its own paper mill in 1968 having production capacity of 24,000 tons of paper & paper board based on waste paper, agricultural waste, wheat straw and kahi grass. As the demand continued to grow, it led the company to expand and by the end of 1998 its annual capacity was increased to 50,000 tons of paper & board and corresponding converting ability. Since 1982, Packages Limited has a joint venture in Tetra Pak Pakistan Limited with Tetra Pak International to manufacture paper for liquid food packaging and to sell Tetra Pak packaging equipment. After Tetra shape, it also introduced brick shape packing. Both shapes are very popular among liquid preservation industries. The main industries covered by Packages Limited are, Tea Industry, Tobacco Industry, Food Industry, Pharmaceutical Industry, Sweets & Confectioneries, Soap Industry, Shoe Industry, and Tissue Industry. In Tetra Pak Pakistan Limited Packages Limited has 45% shares, 6% shares owned by Syed Baber Ali Shah and 49% shares are owned by Tetra Pak International. Since 1957, Packages has been producing inks for its own consumption. In 1993, the company agreed to form a joint venture with equity participation from Coates Lorilleux, worlds second largest printing ink manufacturer to produce inks for Packages Limited and the general market. Packages Limited own ink manufacturing facilities now transferred to new company, Coates Lorilleux Pakistan Limited. In July 1994, Coates Lorilleux Pakistan Limited; in which Packages limited has 55% ownership, commenced production and sale of printing inks. Also in 1993, a joint venture agreement was signed with Mitsubishi Corporation of Japan for the manufacturing of polypropylene films at the industrial estate in Hattar, NWFP. This project, Tri-Pack Films Limited, commenced production in June 1995 with equity participation by Packages Limited33%, Mitsubishi Corporation, Altawfeek Company for Investment funds, Saudi Arabia and general Public. Another important service department of Packages Limited is its Power Plant. In 1967 they set up 6 MW power plant, but to ensure a continuous and dependable supply of power for its production lines, Packages has also established its own 10 MW power plant in 1991, the cost of which was 180 million rupees. Packages Limited saved a lot of money from this investment. For example, if they get power from WAPDA, then WAPDA charge more than 6 rupees per unit but the expenses of its own production are almost 2 rupees per unit.

In the field of consumer products, Packages Limited has shown tremendous potential and commendable talent. Consumer Product Division provides 12% share of the Packages total sales. The consumer products of the company are Rose Petal Tissues. The producti on of Rose Petal was first introduction of tissue paper industry in Pakistan. Rose Petal is now the market leader of tissue paper industry in Pakistan. Rose Petal has more than 80% share of tissue paper industry in Pakistan. Other consumer products are paper Cups, paper Plates, Paper Napkins, Paper Hot Cups and Wet tissues of Rose Petal have been introduced in the market in 1992. Now Packages Limited is exporting its managerial skills & technical expertise to the third world countries like Indonesia, Tanzania, Kuwait, Saudi Arabia, Nigeria, Zambia, Somalia & Russia. It has also started the export of tissues to Iran, Bangladesh, Sri Lanka, Indonesia, United Arab Emirates and Maldives. Packages Limited has a large workshop. This workshop is capable of making, repairing and replacing the damaged parts. The RD & Control Department were also established to ensure the quality and standard of the products. Starting with a work force of 500 workers, now Packages Limited is having 2674 employees. In this regard, a separate Personnel Department is there, to look after the problems of the workers. Today Packages Limited is considered to be a leader in Packaging field in Asia. Packages Limited has established an Effluent Treatment Plant because it is concerned about the environment and wants to keep it clean. Packages Limited has completed the balancing, modernization, replacement and expansion program, which began in 1994. This has enabled the company to minimize capacity constraints and improve quality to meet local and foreign competition as well as improve its environmental protection facilities.

Nature of the Organization

Packages Limited is a manufacturing business entity. In manufacturing it is renowned specifically for its unique ideology behind packaging. Company chose this business because the evaluation of packaging in essence is the evaluation of mankind. It seems that the earliest cues were provided by the nature. The form and shape of natures packaging varies from rigid to flexible, simple to complex. The classic example of natures packaging is an egg. Basically, Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserve, transports, informs, and sells. It is fully integrated into government, business, institutional, industry, and personal use.

Packages limited have extended its expertise to a number of Third World countries in the 1972. Management and Technology was sent to Tanzania, Indonesia, Kuwait, Saudia Arabia, Somalia and Nigeria where packaging companies required assistance in running and managing their operations. Packages Limited has also provided technical assistance to Tetra Pack for general packaging in Kuban, Russia and looking forward to expanding its horizons for more multicultural experiences. For the expansion purposes, plans for Syria, Iran and USA are in pipeline. Joint Venture Partners
Name of Joint Venture Tetra Pak Pakistan Limited Coats Lorilleux Pakistan Limited Tri-Pack Limited Packages Lanka(Private) Limited Joint Venture With Tetra Pak International DIC Asia Pacific Pvt. Limited Mitsubishi Corporation of Japan Print Care Group of Sri Lanka

Global Partners One of the best ways for a business to leverage its products and increase growth is through association. Our business alliances help us manage our business more effectively, as well as helping us and our partners develop and diversify our interests. Customers also benefit from the increased knowledge base, as we transform our market awareness and shared technology into innovative and cost effective solutions for customers.

PRODUCTS OF PACKAGES LIMITED

Paper and Bored: Packages Limited has been producing high quality paper and board since 1965 using environment friendly manufacturing processes. They specialize in making a variety of duplex boards and paper. Their products are tested for high performance in terms of strength, stiffness

and gloss. From coffee cups to books we read, from Tetra Pak juice containers to huge shipping containers, paper and board products touch our lives in a thousand ways every day. Paper: Paper quality and weight is determined by the clients specific requirements and Packages ensures this is carried out to the exact specifications provided. Some of the paper produced by Packages Limited includes: High gloss writing paper Special poster paper/ machine glazed Liner for shipping cartons Wood-free writing/ printing paper Board: Packages Limited manufactures several types of boards. Food Board, a basic raw material in liquid food packaging, is being manufactured since 1979 for Tetra Pak Pakistan Limited. This material is used for making aseptic packaging for milk, cream, oil, fruit juices and other perishable food items. Some of the board products of Packages Limited include: Liquid packing board Food grade board Duplex board/chipboard Bleached board/liner board Cardboard/ tobacco board Carton Business Unit: The carton business unit is an integral part of the manufacturing facilities at Packages Limited. Constant improvements in technology help the customers exert exact control over each stage of manufacturing process. The foundations of this business line were laid about 50 years ago with the formation of the offset printing department. The total board consumption of the carton line is around 18-20 thousand tons per annum. Following are a few industries that are customers of the carton business unit. Food and Beverages Soap/detergent Pharmaceuticals Electronics Shoes Tobacco Paper cup

Flexible Business Unit:

With improved barrier properties and lower cost compared to rigid packaging, flexible packaging is steadily gaining importance in the packaging industry. The flexible line makes high quality packaging films and laminates, and offers other specialized services such as rotogravure printing and sleeve-making. Flexible packaging combines different plastic films, aluminium foil and paper to produce laminates of two or more layers for providing layered protection against moisture, gases and odours. Used where colourful package design and preserving product quality are important, such as in the food and pharmaceutical industries, flexographic printing offers economy with quality. Some of the products where the flexible packaging is used are as follows.

Soap Tobacco Tea Food Diary Ice-Cream Milk powder Confectionery Shampoo Pesticide Pharmaceutical

Consumer Products: A range of products for those annoying problems in life: The Packages Limited consumer products feature great ideas for making everyday living easier and more comfortable, both indoors and out. Tissue Products Personal Hygiene Paper Products Reflecting the core values of exceeding customer expectations through innovation, leadership and teamwork, the Rose Petal and Tulip brands continue to hold over 80% of the domestic market share of the tissue paper market in Pakistan. Packages limited also has a leading market

share in the away-from-home business: they supply custom-printed boxes, table napkins, coasters and paper cups to institutions such as hotels, fast food chains, restaurants, businesses and the airline industry.

CORPORATE SOCIAL RESPONSIBILITY

As Packages Limited is a major player in the corporate market, it has a social responsibility towards the general people. Packages limited: A plant in Kasur to overcome the growing needs without further disrupting the city environment Established schools, medical centre with female doctor to facilitate needs in rural areas Ali Institute of Training: At first it was a training institute for vocational training but is now focused on teacher training to ensure quality education Waste Collection and Paper Waste School Campaigns

RESPONSIBILITY TOWARDS ENVIRONMENT ISO 14000: Realizing its responsibility toward environment, Packages started its ambitious comprehensive program on "Environment, Health and Safety". In the past few years, over US$100 million have been invested on new processes and technology out of which US$20 million were spent exclusively on environmental projects including a chemical recovery plant. Under this program, they are focusing to improve: Energy Conservation Water Management Effluent Management ENVIRONMENT, HEALTH AND SAFETY (EH & S) POLICY Packages LTD. belief that they must do everything practically possible to lessen the load they place on the environment and make every effort so that sustainable development becomes a reality. It has formulated its environment, health and safety ( EH&S) policy to address these issues in a more effective way. It is very clear to them that these objectives cannot be realized by the efforts of the Management alone. Management along with the help of all the employees will be required to transform these ambitions into reality. Packages Limited shall: Minimize its environmental impact, as is economically and practically possible Save raw materials including energy and water, avoid waste

Ensure that all its present and future activities are conducted safely, without endangering the health of its employees, its customers and the public Develop plans and procedures and provide resources to successfully implement this policy and for dealing effectively with any emergency Provide environmental, health and safety training to all employees and other relevant persons to enable them to carry out their duties safely without causing harm to themselves, to other individuals and to environment Ensure that all its activities comply with national environmental, health and safety regulations

ORGANOGRAM

Board of Directors
Advisor Managing Director General Manager Deputy G. Manager H.R.D Manager
Commercial Manager

Executive Board

Marketing Manager Store Manager I.R Manager M.I.S Manager R&D Manager Power Manager Mechanical Manager Mill Manager Production Manager Admin.Manager E.H&S Manager Cost & tax Manager Finance Manager

DEPARTMENTS
In the company, there are various productions, service, support divisions and their respective sub-departments, which are as follows: i. Paper & Board Division Straw and Linter Preparation, Cooking House, Bleaching House, Chemical House, Waste Paper Plant, Beater House, Machine House, Quality Control, Finishing House, Maintenance and Instrument. ii. Business Unit- Carton Offset, Cutting & Creasing including Dye making, Laminating, Folding & Gluing, Planning Cell and Offset Department. iii. Business Unit- Prepress and Logistics Art & Camera, Reproduction, Paper Stores, Coating, Dispatch Section, Planning Cell- Prepress Departments iv. Business Unit- Flexible Flexible Packaging, Paper Conversion Departments and Planning v. Corrugated Division Planning, Conversion Section & Sheeting Section Vi.CPD Production PM-IV, Tissue Conversion vii. Technical- Power Electrical Department, Air Conditioning Department, Steam Power Plant and Diesel Power Plant viii. Technical-Mechanical Mechanical Workshops & Design Department, Civil & Carpentry ix. Marketing Division Sales Office Lahore, Karachi, Islamabad x. Consumer Products Sales Office Lahore, Karachi, Islamabad & Multan xi. Finance Department Financial Accounts, Cost and Tax, Internal Audit, Accounts and Shares Department Karachi xii. Commercial

Local Purchase Section, Imports Section and Commercial Office, Karach xiii. Stores & Inventory Central Stores Packaging and Paper Board, Waste Disposal and Transport xiv. Industrial Relations Industrial Relations, Labor Welfare, Time Office/Establishment and Legal Section xv. Human Resource Development Administration & Liaison, Public Relations, Gate Office, Security, Fire Fighting / Safety and Horticulture xv. Information Technology Operations, Development and Network xvi. Quality and Environment System Industrial Performance, safety, Health and Environment xvii. Research Development and Control Laboratory, Rubber Section & Quality Control xviii. Medical Unit Packages Dispensary, 23-Gulber-III, Lahore

VISION STATEMENT
To position ourselves to be a regional supplier of quality packaging and tissue products. To improve on contemporary measures such as cost, quality, service, speed of delivery and mobilization. To keep investing in technology, systems and human resources to effectively meet the challenges every new dawn brings.

To develop relationships with all our stakeholders based on sustainable co-operation, upholding ethical values which the shareholders, management and employees represent and continuously strive for.

MISSION STATEMENT
Packages Limited strives to be: A market leader by providing quality products and superior service to our customers, while learning from their feedback to set even higher standards for our products. A company that continuously enhances its superior technological competence to provide innovative solutions to cater to customer needs. A company that attracts and retains outstanding people by creating a culture that fosters openness and innovation, promotes individual growth, and rewards initiative and performance. A company which combines its people, technology, management systems, and market opportunities to achieve profitable growth while providing fair returns to its shareholders. A Company that endeavors to set the highest standards in corporate ethics in serving the society.

EXTERNAL ENVIRONMENT ANALYSIS

There are two types of external environment factors that affect a business; micro and macro. Micro are direct and macro are indirect factors that affect the business and the macro factors are not within the control of the management. There are three ways to conduct an external environment on the business and following are the Packages external environment analysis.

PEST ANALYSIS
Political and Legal Environment Packages Ltd. has good relationships with government as they pay taxes regularly. They share their companys information with government through annual reports. Packages initiated Green Field Project in Kasur. The plan is to shift Paper and Board Mill to Kasur by the end of this year(2004) because people nearby complain that hazardous chemicals are emitted in the environment which is effecting the health of the people .The government, for this reason is pressurizing the Owners to make Pulp and Paperboard Mill shift to Kasur.

Environmental Laws Paper industry is one the most pollution causing industry in Pakistan. The effluent that flows out of the production processes contains toxic chemicals that can cause damage to crops. The paper industry has been insensitive to these factors until recently and same has been the case for Packages. In the last few years there has been growing concern about environmental damage caused by industrial production processes all over the world. In Pakistan many people are becoming more conscious about environmental factors and that is why the rules and regulations of the government are getting more and more strict day by day and Packages is facing some problems related to their processes. Stable Governments Too often turmoil in the Government causes uncertainty in the Government policies and are often viewed as not favorable for the market. As far as the paper industry is concerned there are serious implications for Government policies. For example 1. Throughout the history of Pakistan the governments have not allowed any manufacturing for newsprint paper fearing that it would cause growth in the Newspaper industry; a threat to the undemocratic Government in Pakistan. 2. Governments have also used import duty on imported paper (newsprint) to pressurize newspaper industry. 3. In future the decision of the Government to import paper from India can have serious complications for the paper industry. Packages produce most of the paper they require themselves, but these implications have adverse effects as a whole. ECONOMIC ENVIRONMENT Market requires purchasing power as well as people. The available purchasing power in an economy depends upon current income, prices, savings, and debt and credit availability. Marketers must pay close attention to major trends in income and patterns in consumer spending. Followings are the major influencing factors of paper industry. Packages Limited has always tried its level best to cope with the Economic instabilities whenever and however. An example which proves the statement is when in 1971, Pakistan was involved in an unfortunate war with India, which resulted in the loss of half of the country through the creation of Bangladesh. The government that took over in 1972 had a strong socialist agenda and one of its first orders was the immediate reinstatement of all industrial workers irrespective of the cause of their dismissal. The service of about 100 workers of Packages Ltd. had also been terminated over the years due to reason of gross indiscipline. Later, authorities provided assurance of their peaceful behaviors and the company was obliged to reinstate all workers again. In this and other similar occasions, the situation was controlled through proper management without causing any anxiety to the staff.

High Interest Rates Inflated interest rates reduce the buying power and obtaining loan becomes expensive which affects the industry adversely. Devaluation of Rupee Since Packages imports a lot of chemicals and machinery so any devaluation tremendously increases the operating and fixed costs. High Inflation High inflation also reduces the purchasing power of the customers. In Pakistan the inflation rate has been in the double digits for the last many years so it has affected the sales of the Packages as well as for other similar industries. Trade with India Trade with India can also have serious implications. As India enjoys economies of scale in some industries so if the government allows import of paper from India the Pakistani Paper industry can suffer a lot. However if only the raw material import is allowed than the paper industry can flourish. Same is the case with Packages and the Indian products even after import are cheaper, that finishes the advantage of having own Paper and Board Mill.

High Electricity Prices One of the major problems faced by the industry is that the electricity prices are very high. The Packages has their own electricity plant that saves a lot of money, taxes and provides maximum consistency in their power supply. Consumer References In Pakistan the usage of paper has not picked up because of low literacy rate and less spending on books and stationery as compared to other consumer items such as food. SOCIAL AND CULTURAL FACTORS One of the biggest consumer groups comprises of students, teachers and people related to publishing industry. Since in Pakistan, the literacy rate has been very low, the market has not grown much. Due to this factor the industry could not get the desired growth in this regard but the section of FMCGs and consumer products have increased the demand.

TECHNOLOGICL FACTORS Improved production process will accommodate increased productions at lower costs. This will have a positive impact on industry. In Pakistan there is no attention given to improve the production systems and we have to rely on the technological innovations of the west. This trend can be changed by increased interaction of Govt., industry and technical people. For example Heavy Mechanical Complex can introduce new production systems for the Pakistan industry. Still the machinery of most of the organizations is imported from abroad which specifically has increased the costs for Packages. Packages Ltd. has invested heavily in technology and it has become a basis of competitive edge for the company. It has the gearless printing press, which uses an inbuilt electronically driven and controlled PLC system to print. It is the eight colors Flex Press. After the installation of this latest technique customers change their designs and include the latest 3D (dimensional) graphics and vinniarts that were not possible earlier. For instance, National Foods launched its Table Salt and Iodized bags with entirely new designs on this Flexo; Sufi Soap, Unilever Pakistan, Nestle, Colgate Palmolive and a few tea customers followed it. Furthermore, they have the latest and costly software installed which their competitors cannot afford. For instance, earlier they had Electronic Data Interchange (EDI) but now they have the latest version of it i.e., SAP which is keeping information flow to and from all directions of the organization. Moreover the Company has latest technology for inventory management like VMI (vendor Managed Inventory) that eliminates the excess cost of inventory from the whole supply chain management system. LEGAL FACTORS Packages Limited is a law abiding company and as such follows any new rules or regulations affecting the industry, either directly or indirectly.

DEMOGRAPHICS Packages Limited faces a few issues as far as geographical and demographics are concerned. The factory in Shahrah-e-Roomi, was established over a few decades ago and since then the Cantt area around it has progressed greatly. To facilitate and respect the wishes of people, Packages has shifted some of its load to a secluded area in Kasur. Other than that since Packages has no direct link with the customer market, it faces no other demographic problems and issues.

PORTERS FIVE FORCES MODEL

THREATS OF NEW ENTRANTS Major players in the industry are well-established firms and have technological advancement from their experience. The paper industry is already in crisis due to ruthless imports and unfavorable government policies. However we can still conclude that there is a threat of new

entrants as the overall demand of paper is more as compared to its supply. This is evident from the high import of paper in Pakistan. THREAT FROM EXISTING RIVALRY Since Packages is involved in using all its paper and board production for its packaging division no other firm is involved in a similar whole process chain. Quality in such an integrated set-up is a competitive advantage, which faces no competition from the existing players. The industry is in troubled waters as most existing paper and board mills are closed down due to financial reasons and lowering of tariffs for imported paper and board from 145 % some 10 years ago to nearly 45% at present. There is therefore rivalry with imported paper and board so that to protect ones standing it has to continuously upgrade its production facilities and be better cost efficient. THREAT OF SUBSTITUTES The raw material for the paper and board mill constitutes a major portion of imported materials for maintaining quality, as wood pulp is not obtained locally. A substitute for paper or a decrease in use of paper could affect this industry. Substitutes could be use of electronic means rather than printing paper and use of polythene, which could be biodegradable for packing or more emphasis on the use of recycled paper. BARGAINING POWER OF SUPPLIERS A major constituent of the paper industry, wood pulp, is not locally available and thus has to be imported from USA, Canada, Indonesia, Chile, Dubai etc. Wheat straw is easily available in the market as well as sugarcane and cotton linter. These are usually a by-product waste of the sugar industry and textile industries and therefore do not bargain a competitive situation. Being close to these sources is the only advantage that can be availed and is, by Packages Limited. BARGAINING POWER OF CUSTOMER The bargaining power of the customer regarding this industry is not very much high. Local production cannot sustain its present status if major turnarounds are not undertaken to improve productivity and reduce wastage. Imported paper is available in large amounts yet supply does not exceed demand and all that is available in the market is readily consumed. The two customer segments existing are the consumer and industrial buyers. In the consumer segment offset printing and books require the availability of paper to be used whether of good quality or bad. Those in this segment that ask high quality opt to use imported paper. In the industrial segment packing paper, board paper, craft paper is produced far less than the

demand. And specifically for Packages, demand is high, thus the bargaining power of the customers is almost negligible.

COMPETITORS ANALYSIS
There are a number of small scale emerging competitions in the market that Packages Limited has to deal with. Almakkah Press and Saima Packaging are two of the many small scale packaging industries emerging. Industrial customers can get packing of their products at relatively lower prices from other organizations. So why most of the clients are ready to pay a bit higher prices at Packages Ltd? Why is it so that customers perceive its products better in quality, variety, style and uniqueness? It is all because of the differentiation strategy, which Packages Ltd is using to have an edge over its competitors. The company is trying to compete through the ability to offer unique or customized products that can command a premium price on a broad scope using new and latest technology. One of the reasons for customer loyalty is that Packages Ltd recruits professionals and specialized personnel (who prepare carefully the products for the customers by having check on departments every time) and provides them with extensive training in related fields. Employees Knowledge as well as their ability to interact with customers, is the key to hip image & quality of products that keeps customers coming back. Employees at Packages constantly interact with their customers throughout the process from order taking to order fulfillment- so that customers can have what they exactly want. Company is continuously having meetings among its managers of different departments to explore new and innovative techniques to use technology for the sake of increasing customer satisfaction as well as productivity. Packages Ltd is as strong as ever. Companies that have tried to compete have had a tough time. Differentiation strategy which is working and is successful requires a number of costly activities such as R&D has to be well equipped, both in terms of human resources and equipment, to provide technical support to the production and to the external customers, high tech plants, etc. Its employees are given resources and time to seek novel ideas. There is a strong horizontal linkage among departments as elaborated above. Employees at different departments and levels communicate with each other about ideas they have and are awarded if their idea works because differentiation strategy requires that employees be constantly probing for uniqueness. Hence, Packages Ltd is trying to gain market share and customer satisfaction by focusing on its technology and employees.

Competitors
We cannot imagine about a business without competition. Packages Limited has also some competitors for its consumer products. In facial tissues no competitor was exist in 1987 except the foreign brands. Then companies like FAY competed for some time but Packages Limited

superseded them very soon and starts enjoying their monopoly. Then it was FLYING TISSUES which came and captured a lot of market. Flying officers are really giving tough time to Packages Limited. So far as the Wet Tissues, there is no big competitor. The same is the case a unique thing as the tissue is imported from Scotland and here they only cut, pack and market. Packages Limited has defined and identified its target market for its consumer products.

Approach of Competitors
Since Packages Limited holds the status of being the benchmark in the industry the threat of competitors is low key. However the approach that the small scale companies have adopted is to offer the services for lowered costs to their customers. Packages limited being the experienced and market leader has top brands as its customers and therefore the quality, quantity and prices are all extensive. This is the approach that competitors are adopting to lower the costs of the clients in such a turbulent economic scenario. This has led to Packages ltd. loosing up some of its clientele to these businesses.

Competitive Advantage
The competitive advantage that Packages Limited holds over any of the emerging competition is the one roof solution. Packages ltd. offers all the products to its customers under one roof. Small printing or packaging companies provide either packaging solutions or printing but Packages ltd offers all of the services under one roof. The target market of Packages Limited is not the consumer market or the small scale market; it targets the huge market base and as such is slightly high on costs, prices, quality and quantity.

INTERNAL ENVIRONMENT ANALYSIS

Internal environment are the conditions, entities, events and factors within an organization that influence its activities and choices, particularly the behavior of the employees. Factors that are frequently considered part of the internal environment include the organizations mission statement, leadership styles and its organizational culture.

Value Chain Analysis

The value chain is a systematic approach to examining the development of competitive advantage. The chain consists of a series of activities that create and build value. The organization is split into Primary Activities Support Activities.

PRIMARY ACTIVITIES
Inbound Logistics Inbound logistics are essential for the production at Packages Limited and to ensure proper safety and arrival of the raw material, Packages has taken serious steps to ensure safety. Oil, gas and wheat are some of the most essential raw materials for Packages Limited. Considering how environmental factors affect the crops and plants and how the political factors affect the price hikes and supply shortages of Oil and Gas, this is a very serious issue for Packages Limited and they need to plan ahead and store enough of these resources safely to ensure that the company suffers no set back. Operations This is where goods are manufactured or assembled. Different departments at Packages work separately unless required join operations, therefore, it is hard to monitor the progress and locate issues or problems in the chain of processes. The production department works separately but collaborates with the sales department for orders, the customer relation department for customer feedback, logistics department for receiving raw material and delivering products and the waste management department to ensure that any waste accumulated during production is disposed off without raising any red flag to the environment. Similarly other departments of the company work individually and collaborate resources information whenever and wherever necessary. Outbound Logistics The finished goods need to be sent along the supply chain to the final consumers. Packages Limited has two different types of outbound logistics; both come under the department of Logistics Finished Goods. One is the finished packaging goods to be sent to clients for further processing such as packaging for ice cream or cigarette and the other are the consumer goods such as Rose Petal Tissue.

Marketing and Sales and After Sales Services At this stage the organization prepares the offering to meet the needs of targeted customers. For the consumer goods this department entails marketing their products and otherwise attracting corporate customers to avail their packaging services. Once the sales are done, sometimes customers are dissatisfied or need some sort of modifications, in such cases Packages Limited is always there to help its customers out.

SUPPORTING ACTIVITIES
Procurement, Human Resource Management and Technology Development These are supporting activities of Packages Limited. Procurement means to get all the raw materials of the highest quality for lowest costs. Technology is very essential as far as Packages is concerned because they need the latest equipment for their arts and design department as well the production department. The human resource is a very important and expensive resource to manage as the human needs and wants are endless and it is essential to satisfy the employees in order to maximize their output. Also constant and regular training of employees is also necessary to make sure they are up to date with the advancements in the market.

SWOT ANALYSIS

STRENGTHS Packages Limited enjoys an educated and skilled work force to perform its operations e.g. in Industrial Marketing Department all new hired sales executives are MBAs. On technical side Packages has 2-Ph. Ds., 99- engineers and 314-diploma engineers. To meet the quality requirements of its customers Packages contains the latest paper producing and packaging technology and most of machinery is imported from different countries like Germany, USA, Switzerland, etc. They are having the most advanced sophisticated & up to date machinery in Pakistan and even in Asia. Packages Limited occupies a respectable and trustable image and market reputation, serving as a valuable asset for the Packages. In Packages employees are given necessary and comprehensive orientation before starting the job. Moreover other training programs are also arranged to keep the skills of employees up-to-date. Packages ltd. has its own Paper & Board Mill. They are producing all types of paper and board packaging. They are having the best positive image & reputation for quality packaging products in Pakistan. They have ISO 9001 quality assurance certificate. In compliance with worldwide standards, the ISO-9001 certificate has been awarded to Flexible line and Carton line of Packaging division.

Packages having their own Research, Development & Control department. They are having their own Power Generation Plant. Since Packages is a giant setup, so it enjoys the economies of large-scale as well e.g. its fixed cost is reduced as it is spread over more number of units. In most of the cases and especially from new customers, Packages deals with the payments in advance. So it has to put fewer efforts to recover the payments.

WEAKNESSES

Information flow between regional offices (of Karachi, Islamabad) and production lines
(Lahore) is not very quick, improper and manual i.e. by post normally.

Packages production facility is inflexible, in a sense that it is unable to operate for small
orders due to increased fixed cost. In this way, a lot of small orders are rejected.

Packages deserve to charge high prices for its quality products but in this way, the
companies who are not financially sound or in development stage cant have access to the Packages.

Due to a lot of work load, the lead times are mostly longer so creating frustration in
customers and causing dissatisfaction. Lack of motivation & intrinsic reward orientation among the management.

OPPORTUNITIES

Business activity and investment flow in also increasing day by day, so causing new
business opportunities for whole packaging industry.

Consumers and companies are becoming more conscious about the quality of the
products and Packages is quality leader in Pakistans packaging industry and having continuous development plans for quality. So in near future it can bring huge revenues in the Packages.

Demand for flexible packaging is increasing day by day.

 There is a gradual increase in the awareness about Packaging importance among the
industrialists and they are really considering the packaging as the final sales person for the products. So this awareness will bring more customers to the door of Packages.

THREATS

Packaging (especially flexible or poly packing) negatively influences the environment

by increasing the wastes. So this is a real threat for Packages.

Due to latest printing technology, the demand for offset printing is decreasing day
by day which is a traditional printing mode used in Packages.

Packages are facing a strong competition from the Cottage Industry in Karachi
producing corrugated cartons.

PLANNING PROCESS
As we know that if we want to increase our efficiency, we should plan with excellence. At Package Limited, each department has its own profit and loss, own planning and implementing strategies. In this report we will discuss the planning process of a few departments.

STRATEGIC AND OPERATIONAL PLANS

PLANNING DEPARTMENT Planning department is one of the most important departments in an organization. Its main functions are to plan huge operations. In Packages the planning department is also playing an important role. The Planning Manager controls the department. The two main functions of the Planning Department are following:

Link between Marketing Department and Production Department

The Planning department acts as a link between Marketing department and the production department as there is no direct contact between the two departments. Planning receives marketing information from the Marketing department and converts it into the Production language i.e. when the orders are placed to the marketing department, the information

regarding the order is transferred to the planning department where they design and plan the product according to the specifications required by the customers.

Optimizing the Available Capacity

To optimize the capacity means to utilize the manpower, machines working hours and material Educate ultimate objective of the Planning department is to improve and maximize the profitability. Yearly targets are set during the annual Sales Conference that is held in the month of December. In the sales conference the next five-year targets are set and the last years performance is reviewed. The next years projections are also set in the conference. In the five year plans the shortfalls which are manpower, materials and machinery are reviewed. Top management is involved in long term planning short term plans which constitute a year and are reviewed every quarter.

Functions of the Planning Department The work of planning department is initiated from the industrial marketing department. When the orders are placed to the marketing department, they send out the Internal Sales Order (ISO) to the planning department. An ISO is an internal document on which the information regarding the sales or order is mentioned. Its main function is to transfer the information to the various departments involved. The contents of the ISO provide the following information. 1. Whether it is a new job or old one. 2. Specifications of the routine order i.e. color, size and quantity etc. If it is a new order then this order is first sent to the Art and Camera Department for designing the artwork of the new job. If the job is repeated then there is an approved sample by the customer. The planning department after receiving this ISO along with the sample sends it to the production department. The planning department also provides information regarding production machines, their capacity, numbers of colors size etc. to marketing department. Information regarding any machine, which is out of order, is also provided to the marketing department, so that any orders related to that particular machine may not be expected. They also provide the information regarding the production capacity so that they are in a good position to analyze the order. Other Functions The other functions, which are carried out by the planning department, are as follows: Maintenance of machinery etc. To sent daily production reports to the top management. Overcoming the complaints of the customers and marketing department.

To plan the long term and short term plans for minimizing loss. Pursuance of jobs i.e. the current condition of the job. To set the production targets for different departments on the basis of invoices. Procurement of raw materials. To organize the daily program i.e. completion of jobs from shift to shift.

MARKETING DEPARTMENT
The marketing department is responsible for carrying out all the activities necessary to market the company products; this includes sales promotion coordination and evaluation of the performance of its sales force and formulating marketing policies and strategies. They also carry out market surveys for new as well as existing products. The Marketing Department of Packages Limited, also known as the Sales Department is believed to be the bread earner of the company. This department is responsible for the sale of industrial as well as consumer products. The Marketing Department of Packages limited is headed by the Marketing Manager, Mr. Sulat Said. Packages Limited has divided the country into three regions that is Lahore, Karachi and Rawalpindi. Lahore region is responsible for the sale in Lahore and its civility. Rawalpindi region covers Rawalpindi, Islamabad, NWFP, and Azad Kashmir. While the Karachi Region covers Karachi, Sindh and Baluchistan. Every regional office is headed by an Area Marketing Manager. There are two Regional Sales Managers in Lahore under the Area Marketing Manager. One for industrial sales and one is for the consumer products. Then there are Senior Sales Officers and Sales Officers. Marketing Strategy Marketing Strategy includes the various marketing tools that a company uses to satisfy the needs of its target customers. Marketing mix has four elements: 1. PRODUCT 2. PRICE 3. PLACEMENT 4. PROMOTION

Product
The Marketing Department of Packages Limited is divided into two divisions with respect to their products. 1. Consumer Products Division (CPD) 2. Industrial Products Division THE CONSUMER PRODUCTS DIVISION (CPD) Since the inception of Packages Limited, it dealt only with industrial goods. In 1981, company entered into a new era and started dealing in consumer goods as well. Initially, it was decided that the Industrial Sales Division will also look after the affairs of consumer products. In 1985,

the distribution functions of the consumer products were handed over to TETRA PAK. But in 1986, Packages Limited got back the distribution facility from Tetra Pak and established a new division with the name of CONSUMER PRODUCT DIVISION (commonly known as CPD). Since then CPD is responsible for the consumer products. Major products Of CPD are as follows. a. Tissue products Facial Tissues Perfumed Tissues Wet Tissues Pocket Packs Perfumed pocket packs Table Napkins Coffee Napkins Kitchen Rolls Party Pack Tissues Toilet Rolls Handy Packs b. Paper Products Paper Plates Paper cups with handle (Hot Cups) CPD is responsible from the production to the distribution of all these products. Before the establishment of CPD products used to take 12-15 days before reaching to the customer who had placed the order. After its establishment this problem was removed and CPD has around more than 100 distributors which covers the whole country. Competitors Packages Limited has also some competitors for its consumer products. So far as facial tissues are concerned, there used to be no competitor in early 80s except the foreign brands. Then companies like FAY, MOVITA competed for some time but Packages Limited superseded them very soon and started enjoying their monopoly. Then it was Flying Tissues which came, and captured a lot of market. Flying people are really giving tough time to Packages Limited but CPD staff was reluctant to accept this reality. There are no major competitors for paper products but many small scale manufacturers cater for a lot of market share. Target Market Packages Limited has defined and identified its target market for its consumer products. Target market for facial tissues includes all classes. Market for napkins, and tissues includes all the restaurants, hotels and some industrial markets. Paper cups and plates are aimed for the people who are either at picnics or engaged in some sort of recreational activities. Branding Every company tries to establish its brand in order to maintain a brand loyalty. A good brand name is the good will of the company. Again the selection of the brand

name is the responsibility of the marketing people. Packages Limited has the policy of separate family names for each of its product line, for example in case of facial tissues the family brand name is Rose Petal and Tulip.

THE INDUSTRIAL PRODUCTS DIVISION

Industrial Product Division is responsible for the industrial goods that is, the packaging industry. This division is concerned with the packaging needs of printed cartons of various industries. The sale people are responsible for all the sales. There have two types of orders: 1. Repeated Orders 2. New Orders In case of the repeated order, what the sales people do is that they get the order from the customer who already buys from Packages Limited and all the terms are already settled. So the major job is to get the order and produce it and deliver it. As far as the new orders are concerned, sales people will go to the new client and will try to sell their products to him. If the customer agrees to buy from Packages Limited then it is the job of the sales people to coordinate with the customer and the ART & CAMERA DEPARTMENT for the design of the new order. First priority is to develop according to the ideas of the customer, in other cases the sales people use their own expertise and design a suitable package for the customer. The industrial sales in Packages Limited accounts for more than 70% of the total sales. It is their primary concern. Packages Limited is the market leader of the packaging industry of Pakistan by having 30% market share of the packaging industry. It manufactures a wide range packaging material which covers paper & board, corrugated board, plastic packing etc. Major clientele of Packages Limited consists of multinationals as their major concern is quality. The key customers of industrial products of Packages Limited are: Pakistan Tobacco Company Lever Brothers Service Shoes Bata Pak Elektron Company LU Biscuits Lipton Brook Bond etc

Industrial goods of Package Limited serve the following industries: Cigarette Industry

Soap/Detergent Industry Food Industry Shoe Industry Match Industry Etc.

Market Share According to Packages people they have more than 30% of the total market share as a result they are the single largest packaging unit of Pakistan. There are a lot of small manufacturers which are much cheaper. Although their quality is not of that far, but due to low prices they are there. However, in case of ROTO GRAVURE PRINTING, Packages Limited has the absolute monopoly. As it is the latest addition in the packaging industry of Pakistan and only Packages Limited has machines to make it. It is very expensive and 70% of the raw material is imported. Packages Limited is the market leader and enjoys an excellent rapport in the market. Maintenance of this status quo is not an easy task. They have to find, develop and add new types of packaging material to their product lines. Apart from this fact, they have to pay special attention on the quality standards. The market of Pakistan is expanding over the period of time so as the demand of the products of Packages Limited. Marketing people are well aware of this fact and they are emphasizing to expand the production facilities in order to bridge the gap. . QUALITY VARIATION A margin of 10% of variation in the quality is considered as a normal variation and the customer has to accept the order as such. CLAIMS The customer can only claim for his order if the rejections of the supplied goods exceed 2% of the total order and the claim should be made with in period of two weeks.

PRICE
PRICE DETERMINATION The basic formula for price determination is: COST + PROFIT = PRICE The first aim is to cover the cost. After this a reasonable amount is charged in the name of profit. There are certain factors which affect this profit margin. These are: a) Quantity of the order b) Number of color to be used in printing c) Time of completion

d) Future prospects The basic objective behind the price determination of consumer products is to maximize the market share. The company actually wants a higher turnover. Prices are set by the marketing people by considering the following factors. Cost of Production Consumers Purchasing Factor Pricing Policies of Competitors Government Taxes Area Pricing

PLACEMENT
DISTRIBUTION STRATEGIES We know that channel of distribution means: "the sequential linkage of the organization and relationship through which a product flows from the producer to consumer" Distribution Policy for Industrial Products In case of industrial goods no middleman is involved. Company's sales force directly goes to the final customer and gets order form them. In this regard, Packages Limited has a direct marketing approach. Packages people believe that direct marketing is quite cheap for industrial goods. In case of repeated order or routine job the customer can acknowledge his order through phone, fax etc. Distribution Policy for Consumer Products As far as the consumer products are concerned, Packages Limited uses dealer or distributors. The company believes that the use of middleman is much more economical for the consumer products. Packages Limited has a net work of distributors, which covers the whole country. At present Packages Limited have more than 100 distributors, in more than 100 cities. Only in Lahore, there are two distributors. Company has a policy to sell its products to all those cities having population more than 200000 through its distribution system. The distributor then, supplies these products to the whole seller, who in turn supplies the stuff to the retailer. And finally, the retailer sells the product to the final consumer.

PROMOTION

PROMOTIONAL STRATEGIES It is the job of Marketing Department to promote the business of the organization. In Packages Limited, marketing people have different promotion plans for industrial and consumer products. A. PROMOTIONAL POLICIES FOR INDUSTRIAL PRODUCTS So far as the promotion of the industrial goods is concerned, Packages Limited has not assigned any budget for it. And in a way they don't promote the industrial sales. But no organization can survive without promotion. The only promotional strategy which Packages Limited undertakes is personal selling. The company does not need to fix any promotional budget because it is the job of sales officers. Moreover, The Industrial Sales Division is successful enough to keep the production process always working, so the management thinks that there is no need for any other promotional activity. B. PROMOTIONAL POLICIES FOR CONSUMER PRODUCTS Without promotion, no consumer product can be successful. Promotional activities are an integral part for marketing consumer products. The objectives behind the promotional activities are:

Increase the sales Outpace the competitor Increase the market share Higher turnover Informing the consumers Building of goodwill

The management fixes the promotional budget. The basic premise is that whether the organization can afford the budget or not. Apart from this fact, there are a lot a of other factors which the marketing people have to consider, these are; Cost of media The number of products already in the market The number of new products the company is going to launch

1. ALLOCATION OF THE PROMOTIONAL BUDGET There are number of tools that are used to promote a business. These include; i) ADVERTISING

Advertising accounts for about 80% of the total promotional budget. Advertising is the most popular and effective media to the advertising campaign of Packages Limited and which includes the following a) BROAD CAST MEDIA The largest share of advertising budget is allocated to the media because it is the most interesting media with far reaching effects. Although, it is the most expensive media, but the nature of the products requires its use. It includes; TV Radio

Packages Limited extensively uses the TV while radio is not used very much. The budget for TV is about 65% of the advertising budget. b) PRINT MEDIA Print media is also an important part of promotional technique. it includes; Newspapers Magazines Direct mail etc. Packages Limited only places its advertisement in the magazines. Normally, newspapers are not used. It accounts for about 20% of the total advertising budget.

c) OUT DOOR MEDIA Marketing people normally don't prefer its use because they think that it is not very effective. It has a very nominal share in the budget. It includes billboard, road side signs etc. Personal Selling Public Relations

POLICIES

PERSONNEL DEPARTMENT Personal department is another one of the most important departments in an organization. The success of an organization is dependent upon a successful personnel department. All the progressive organization give a great attention and importance to their personal department. The prime objective of this department is to manage and utilize the human resources in a fruitful manner. It is obvious that if the employees are good then the pre determined objectives can be easily achieved with efficiency and effectiveness. This department deals with the selection of

employees and their working performance. The most important objective of any personal department is how to improve the performance of employees at work. The functions performed by personal department are: Recruitment & Selection of Employees Training and Development of Employees Planning Work for the Employees Performance Evaluation and Appraisals Keeping Attendance Record Keeping Employees Record In the Organization Compensation Management Management Labor Relation Discipline Welfare of Employees Packages Limited possesses a well organized and systematically operated Personnel Department. The success and effectiveness of this departments policy and programs can be judged from the fact that no problem has come to surface in the recent years. The Personnel Department is headed by Personnel Manager. The above mentions functions are performed by the four wings of the personnel department. Personal Staff Wing Establishment Wing Law Wing Welfare Wing

PERSONNEL POLICIES The main personnel policies are given below. 1. Recruitment Policy Packages Limited is more inclined towards employing fresh graduates than highly experienced persons. The main reason behind the policy is that they believe in developing a person on their own grounds keeping in view organizational objectives. 2. Workers Selection All the workers are taken on the designation of apprentice trainee. After the expiry of probation period if the performance of the trainee is found to satisfactory, then he is absorbed in the work force. Efficient and effective workers are promoted regularly after fixed periods upon the recommendation of the superiors. 3. Executive Selection For the selection of executives if any junior executive is found competent, then he is promoted to grade E-III. For selection of executive outside the organization, jobs are advertised in the news papers and candidates are called for the interview. After taking a written test and brilliancy interview the selected candidates appear before the top management for the final selection. 4. Training

Training is very important to increase the employee performance. At the beginning of the new jobs, or if the organization adopt the new technology the employees are trained to meet the changes. Packages provide training facilities, which include on job training and of job training and also arranged refresher courses. 5. Organization The selected candidates are utilized for the contribution in the organization. It is referred as compensation and includes monetary rewards and other facilities. Following are the grades in the organization. Workers Grade Executive Grade Managerial Grades Retirement age for the employees is 58 years and no extension in services allowed. The needed employees are hired on contract basis. Attendance cards are issued by the time office to the workers. The cards are punched twice a day in their respective department whereas attendance record of monthly employees is kept in attendance register. Hourly rate workers are paid at the end of paid every fortnight while the monthly staff is given their salaries at each month end. The employees are also given the following allowances. 1. House Rent. House rent is 50 percent of the basic salaries which in some cases is 60 percent of the basic salaries. More than 60 percent of the employees have their own houses. 2. Conveyance Allowance Conveyance allowance is given to the all employees. Loans are provided to the employees to get their own conveyance. Monthly allowances to employees are also given for maintenance of their conveyances. Employees who bring their conveyances to the factory are also given an additional allowance.

MANAGERIAL POLICIES The major managerial policies as adopted by Packages Limited are as follows: The price of the Companys products is same for all areas of Pakistan. The Company accepts only large orders of high monetary value. An order, which has once been confirmed by the customer, can only be canceled at the will of the company and not the customer. In case of consumer product, agreement with customer is made once and for all. No discounts are offered to the customers. Goods are sold against 100% advance payment. The company does not pay freight when its industrial products are shipped to the customer.

Punctuality is strongly emphasized. Once the goods are in transit, they become the property of the customer. Customer can only claim for defective goods if they exceed 2% of the total order and the claim is made within two weeks after the delivery. For routine purchases, multiple suppliers are maintained to reduce dependency on any one particular supplier. Any alteration in the approved sample shall be charged extra. Workers are encouraged to produce more through a well-organized incentive system. Selection of executives is done strictly selected on merit and no approach is entertained in this regard. Investment is made in those projects, outside the line of the company, which can later improve the sales of the company. In all the production processes both quality and quantity are emphasized upon. Workers are encouraged to reduce the wastes and costs. Only those workers are recruited who have some relationship with the current employees of the company. Smooth relationship between supervisors and the subordinates is emphasized. Company makes capital investment equal to the depreciation every year.

ACCOUNTING POLCIES The following are Packages Limited major accounting policies: Taxation: The charge for current taxation is based on taxable income at the current rates of taxation after taking into account tax credit and rebates realizable, if any. The company accounts for deferred taxation, using the liability method, on all major timing differences. Fixed Capital Expenditure and Depreciation: Operating fixed assets except land is stated at cost less accumulated depreciation. Land and capital work-in-process ate stated at cost. The management carried out a comprehensive review of the useful lives of major items of plant and machinery in1985. Depreciation in respect of such assets is charged in annual installments so as to write off their yearend book value over their remaining re-estimated useful lives.

Long Term Investment: These are stated at lower of cost and market value determined on a portfolio basis. Provision is made for permanent diminution in the value of any investments. Stores and Spares: Usable stores and spares are valued principally at moving average cost, while items considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. Stock in Trade: Stock of raw materials, except for those in transit, work-in-process and finished goods are valued principally at the lower of average cost and net realizable value. Cost of work-in-

process and finished goods comprise cost of direct materials and labor and appropriate manufacturing overheads. Materials in transit are stated at cost comprising invoice values plus other charges paid thereon. Foreign Currencies: All assets and liabilities in foreign currencies are translated at exchange rates prevailing at the balance sheet date except for foreign currency long-term loans covered under State Bank of Pakistan risk cover scheme. Exchange differences on loans utilized for the acquisition of plant and machinery are capitalized up to the date of commissioning of the assets.

Staff Retirement Benefits: Contribution Pension Fund scheme administrated by the Board of Trustees and covers all the management staff. The scheme is funded and is approved by the Central Board of Revenue. Contributions by the company included in salaries, wages and immunities are based on actuarial valuation using the projected benefits valuation method. Gratuity Fund is administrated by the Board of Trustees and covers all the employees with qualifying service period of ten years. There is an approved contributory provident fund for all employees. Retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. Revenue Recognition: Revenue is recognized on dispatch of goods or on the performance of services except for management fees which are recognized on receipt. Long Term Loans, deposits and Repayments Loans to employees are secured by joint registration of scooter or motor cycles in the name of the employees and the company. The remaining loans are unsecured. No loans to employees outstanding for a period exceeding three years. Trade Debts: All debts are considered good and include secured debts of Rs.6.864 million (1997: Rs. 3.665 million). Trade debts include amounts due from associated companies Rs. 52.136 million (1997: Rs. 62.510 million) and the maximum aggregate amount outstanding against them at the end of any month during the year was Rs. 81.887 million (1997: Rs. 72.554 million).

STANDARD OPERATING PROCEDURES

PRODUCTION DEPARTMENT The role of production department in a manufacturing concern is very important. The goods for the customers are manufactured according to the desired standards in this department. This department is responsible to plan and organize the allocation of jobs to various machines in a way that their maximum capacity is utilized and that the delivery is given to the customer by stipulated date. The head of the production department is the production manager. The planning department also assists the department. The working procedures are based on week basis i.e. the total no of

weeks in a year. The Production Manager looks after the production while the Planning Manager supervises the planning section. The heads of following departments are directly answerable to production manager and they have to present their special problems to him for advice and help: Paper Converting department Off-set Printing Coates Lorilleux (Ink Factory) Art Department Flexible Packaging Division Camera Department Coating Department Cutting & Creasing Department Lamination Department Folding & Gluing Department Dispatch Department Quality Control Department The Production, Planning and control unit is also directly under the Production Manager and acts as the brain cell for him. Production Manager prepares internal planning of whole Paper & Board Division. It takes into account the total capacity of the machinery, and manpower. It also arranges the resources to attain maximum utilization. The other goal is to reduce the wastage of resources. The planning department acts as a coordinator between the Marketing and production Departments. This is very important in the sense that if there is communication between the Marketing and Production Departments, a lot of confusion will be created. PRODUCTION PROCEDURE The sale staff is in direct touches with the customers and solicits business. After the business has been finalized, an Internal Sales Order (ISO) is sent direct to the Production, Planning and Control Departments for checking and planning out the production schedule. The planning officer and his staff communicate and correspond directly with sales staff. Sales staff also deals with Art Department in the initial stages of the business negotiations for the approval for the customer. The direct link of the Art Department ceases after the customer has approved the comprehensive for submitting proofs of the made job reference to the Planning Department for finalizing the ultimate shape of the product. The order received by the customer to Marketing Department may be: New job Modify the old job Repeating job Production department is further integrated into two divisions namely: 1. Packaging Division 2. Paper and Board Mill

The Paper & Board Mill works under the planning department. Marketing Department projects it prospective sales for the coming year. These projections are then sent to Planning Department which plans the production schedule for the Mill. In the Paper & Board Mill this whole year plan is broken into monthly plans. The Mill staff then, fined out financial needs and these needs are passed to the Finance Department. Following are three sections of Paper & Board Mill. 1. Pulp Section 2. Paper Section 3. Utilities Section

DISPATCH DEPARTMENT This department dispatches the goods produced by Production Department to the respective clients. The motivation of this departments workers is enhanced due to the incentive scheme. This section has three main functions: Store of Paper Finishing of Paper Dispatching Paper & Board

QUALITY CONTROL DEPARTMENT This department examines the quality of products producing by Production Department. They make tests about the quality of printing of paper or board and compare them with customer specifications and prepare reports about results. Quality Control Various tests, e.g. water and oil absorption test, bursting strength test, are done in this section to ensure the desired quality of paper and board. This section is also responsible for keeping the Mill working. Its jobs are: Replacement Maintenance New Installations TECHNICAL DEPARTMENT This department is responsible for the repair and maintenance of machines and construction of building and roads in the factory. There are 130 employees in this department. It works in two shifts. In case of emergency third shift is carried out. It provides the necessary spare parts and machinery to different departments. Technical Department is responsible for making tools and spare parts. Some time it works for other industries. It normally accepts the orders of Roll Grinders. These orders are accepted only on cash basis. It is divided into small departments, which do specific work. These are: Mechanical Workshops

It is concerned with the manufacturing of spare parts and the installation and maintenance of new machines. Lately it has installed the new Paper Machine 4 (PM4) successfully. The Design Office is directly under this section. Design & Development The design & development department of Packages Limited is under the Technical Department. This department designs buildings, roads, spare parts and machines. For this purpose, several draftsmen are working in this division. This department is responsible to develop and update new and second hand imported machines. The design department of Packages Limited has successfully made various machines. In this department designing is done both by manually and on computers. For this purpose they are using AutoCAD. Workshop It works under the design department. The machines designed in the design department are manufactured in the workshop. The work in the workshop is carried in two shifts of eight hours. Over time is given to the workers but no special incentives are given. Civil Department This department is concerned with the construction of building and roads. Packages Limited is growing day by day. So it also needs new buildings and plants. The building and roads constructed by the Civil Department. Export architectures are working in this department, they work on building by keeping in view the future needs. Air Conditioning & Electricity Technical Department is responsible for the supply of electricity and maintenance of airconditioning system. Technical Department also leads its services to other industries. If any industry calls Packages Limited for any type of maintenance or construction, the Technical Department provides its services with open heart.

PLANNING TOOLS AND TECHNIQUES

THE RESEARCH DEVELOPMENT AND CONTROL DEPARTMENT Planning ahead is what keeps Packages Limited on top of its game. The research, development and control department assists in this section of the planning process at Packages Limited. If the industry wants to grow not just survive, then it should take care of its Research and Development Department. Development in Packaging material is a continuous process. New materials, films, fibers, chemicals, adhesives and coating always are researched and developed. As Packages Limited wants to retain clients, stay out of court and improve profits, so it gives much consideration on quality of the product. To keep up with new demands, Packages Limited has a Research, Development and Control Department. This department works in close collaboration with Production and Marketing departments. This department has well equipped laboratories and pilot machines, which are used to test various chemical raw materials and machines. It enables Packages Limited to provide better quality and latest packaging to the consumer industry, enabling

it to introduce new product lines an develop new materials. The Research, Development and Control Department have three major areas for its activities:

RESEARCH: This section is directly responsible to the Production Manager about his research. In Research, work is done with on the idea, experiment is divided into parts and on each part attention is focused and conclusions or suggestions are given. Packages Limited tries to get as many information and technology which is possible and beneficial to the organization. All such information is collected for research. Some time they receive reports of customers problems and complaints from Marketing Department and advice to them through the same channels. DEVELOPMENT: Development is a continuous process in any organization. A lot of development is the result of feasibility studies, study of new production methods and new products. Packages Limited has a Paper & Board Mill, so it uses largest number of chemicals. The Environment Protection Agency has some standards for reducing pollution. The R,D & Control Department developed new way of reducing pollution and always tries to meet EPA standards. CONTROL: Packages Limited R&D & Control Department divides term CONTROL into two areas: Quality is synonymous with Packages limited. Every package made by Packages Limited guarantees the use of quality materials and processing. This is all due to the strict quality Control Standards, observed at every stage of the production, from raw materials to dispatch Department. This department makes stringent requirements on quality control, which help in working consistently towards attaining better results for customers. To ensure constant quality and improvement this department managed by qualified scientists. Quality Control section has satellite laboratory in every department, which constantly monitor and report. There is on the spot checking and corrective treatment is given to the operators. If the percentage of defective material goes above the permissible limit, the supervisor and machine operator is given a signal to take corrective action. In Process Control, the process of production is carefully monitored. Samples from every department, e.g. Pulp Section, Beater House etc. are taken to quality control department and tested for standard. R&D & Control Department is divided into different sections for copying different types of problems. The sections are: Rubber Section Physical Paper & Polly Packing Section Pulp Section Chemical Section Development Section Microbiology Section

Library

CONTINGENCY PLANNING
There is always a need for a backup plan in case of sudden changes in any factor. In our visit to the factory of Packages limited we talked to the Logistics Manager, Finished Goods and this is what we found out about the contingency planning in the logistics department. LOGISTICS DEPARTMENT Each department of Packages Limited operates under its own rules and regulations and has control over the planning of their own departments. The logistics department is basically responsible for transferring the goods from the factory to the customers. At times the transportation is unavailable due to the drivers not being present or the vehicle not in a position, in such cases the logistics have back up vehicles ready to ensure that the products reach the customers on time.

CONTROLLING
Types of Control
Each department of Packages Limited works under its own management and has its own finances and management to control. The company uses the System Application Procedure (SAP) system to organize, control and communicate within the department and outside each department. This system software enables all of the departments to coordinate with one another in a computerized system. All of the data about the production, the orders, inventory, customers, logistics and all the details are entered into the system. The managers and other personnel have their own system log in that gives them the access to the information in the system. Each person has their own level of clearance to the system depending upon the job requirement. FEEDBACK CONTROL There are two areas where Packages Limited adopts the feedback control in order to better the management of their organization. Customer Feedback Staff Feedback

Customer Feedback
Packages Limited inquires about their products and services from their clients in order to measure their satisfaction and to find out about any improvement required in their management and efficiency. Most of the customer base of Packages limited has been loyal for years and therefore quality is not something to compromise over. When each new contract is entered or each delivery

is made any issues faced by the customers are informed to the subsequent department immediately to rectify the problem.

Staff Feedback
Through the use of the System Application Procedure (SAP) system throughout packages the managers can easily communicate and coordinate with one another and the feedback of each department is recorded within the system. This way any changes that need to be made can be acted upon accordingly. EMPLOYEE DISCIPLINE SYSTEM There are numerous different ways to keep a check and control on the employees and their performances. Packages Limited ensures that employees are rightly motivated and work hard to achieve success.

Performance Appraisal- Rewards System

At packages it is the responsibility of HR&D department to develop a questionnaire and distribute among the employees at the beginning of each year. Employees are asked to set their individual and team performance goals or next year. At the end of the yea r, employees actual performance is evaluated and compared with the set objective. These are then analyzed to how much extent employees have been able to meet their self-maintained goals about their performance. Eventually according to this evaluation, employees are rewarded, either in the shape of bonuses or promotions. FINANCIAL CONTROL Financial control in any organization can be adopted by reviewing and analyzing the financial statements of the organization. The cost, profits, expenses and revenues can all be evaluated and kept under check with the help of financial statements and also allocating the budget.

Budgets
In Packages, managers use budgets to plan for future and to reduce uncertainty about the availability of human and material resources to perform departmental tasks. The operating budgets are used to set the financial targets for a specific period for each department in Packages Limited. Managers also use budgets to allocate the resources to each departments to perform and attain objectives and operating goals of the organization.

COST & TAX DIVISION

Packages Limited is engaged in producing two types of products: Paper & Board Packaging Containers and Corrugated Cartons Both products cost differently, so these are two separate units for Paper & Board Mill Division. Costing of Paper & Board Division:

Costing of Paper & Board Mill Division deals with process of costing. Paper & Board Mill produces one product with different quality and the production of Paper & Board is even, the manufacturing costs are calculated with help of process costing system. This method is particularly very helpful where units produces are unidentifiable and one departments finished goods become the raw material of another department. Cost per ton is determined at each process and it is figured out by dividing the total cost by the number of tons for a particular period. To determine the exact cost, the manufacturing costs are calculated with sum of direct material, direct labor and factory overhead costs, also to see that for how long the machine worked and for how long it remained idle? So they prepare an hourly summary on which the total hours of work along with the idle time are mentioned. On the basis of this report, the actual cost of production is calculated. Costing Division also prepare the cost summary. This division also prepares a summary report of profit month wise. INVENTORY CONTROL Packages Limited has enough backup resources to be able to handle small crisis if ever faced. The recent floods resulted in a slight rise in the demand of the consumer products and hence the packaging industry also had to increase its supply. However there was enough backup inventory to keep the demand under control while steadily increasing their production. INVENORY MANAGEMENT Packages Limited maintain their inventory under the auspices of supply chain department ISO 90001 and 14001 are implemented FIFO (First in, First Out) is the order Stocks are managed through SAP (System Application Procedure) Materials dealt include: raw materials, spare parts, production supplies and general items A demand is generated when requisition is made by any stake holder, followed by a computerized stock-check leading to issue or purchase order Lead time is 3-4 months for imported materials i.e. mostly production supplies/ raw materials, 30-45 days for local items 1000-1500 general items are termed as store items and re-ordered by inventory Corporate target is min 45 days inventory Materials are inspected on delivery from vendor. In case of quality rejection, returned to local market; for international suppliers, rebate is collected and items are sold out in local market In case of undesirable delay for consumption of material and high probability of expiry, it is also auctioned in local markets GIR (Good Issuance Recognition) and GRN (Goods Receipt Note) are implemented to for timely acknowledgement of issuance and receiving Inventory is kept at desired conditions of temperature and humidity to ensure safe storage Fork Lifter are used for movement of inventory

Total raw materials inventory is about 1200-1300 million Rs.

PRODUCTION AND OPERATION MANAGEMENT

Areas in Focus
Location, Design and Layout Quality Inventory Management Customer Satisfaction Environment Policy Easy availability of workers Easy availability of raw materials Easy transportation all over the country

Lahore was selected as the site for Packages Limited in 1956 due to three major reasons:

The site continued to serve the objective for more than five decades but due to population density in vicinity, the paper mill has now been shifted to a rural area near Qasur.

Quality Policy
Packages Limited is committed to producing quality products which conform to their customer requirements and strengthen their position as a quality-managed company. Their pledge is to provide the market with the best quality products at competitive prices through a customerdriven and service oriented, dynamic management team. To meet this obligation, the company will continue updating skills of its employees by training, acquisition of new technology and regular re-evaluation of its quality control and assurance systems. Appropriate resources of the company will be directed towards achieving the quality goals through employee participation. Packages Limited: Complies with the ISO 9001 standard 6th company in Pakistan to adopt the ISO series as its quality standard Maintains 57 quality improvement teams in various departments to ensure continuous improvement focus in the organization Nurture Key performance indicators (KPI) concept; Each division in the company sets SMART targets for the annual improvement of its key process parameters, reviewed by the management every quarter Maintain a comprehensive set of engineering tools, rules, processes, training materials, guidelines, best practices and other supporting documents to make sure our products comply with every possible customer requirement.

Quality Control

Quality Assurance (QA): the pro-active approach to avoid reoccurrence of problem in the future. Quality Control (QC): the reactive approach to the damage borne. Correction: Reject clients undesired object Corrective Action: Laboratory Tests, Quality Audits Preventive Action: QA planning to avoid future rejects

Quality Assurance Department

Customer Satisfaction in terms of Quality Trainings for management and Staff Quality Inspections Laboratories Supplies Quality Assurance Quality Improvement Projects Quality Conferences

ORGANIZING
The organizing of each department is done separately as each department is responsible for their own unit. The division of work in Packages Limited is done by allocating the right human and financial resources to the right department. Being an organization of as high a stature, there are departments to cover all aspects of the business. From production, planning, marketing to human resource departments as well as Industrial Relations, Logistics, Legal and procurement. The specific design elements of the formal structure of the organization chart depend upon the departmental technology in Packages and vary from department to department.

Organizational Structure
FORMALIZATION Formalization is high in departments with routine technology like sales and production. People carry out their specialized tasks that are governed by formal rules, whereas in Research and development, strategic planning, and human resource and development departments, structure is less formal. These departments have o perform activities with a lot of variety so lesser number of formal procedure is followed. STANDARDIZATION Uniformity in work activities varies from department to department. As mentioned above, Departments like R&D, Marketing and HR&D have routine plus non-routine activities to perform but in operations departments, there is more of the same work to be done by the employees, hence most of the tasks to be performed are standardized.

ISO 9000 certification also indicates that the manufacturing procedures adopted by the organization are standardized. Initially due to the size of the operations, it was decided to seek individual certifications for each product line, instead of organization as a whole but by the year 2000, the whole organization was certified under ISO9001.Packages was the 6th organization in Pakistan to have ISO certification. To maintain the standardized quality, Packages, to the date has 57 Quality Improvement Teams (QIT) working in the various departments of the company on the Japanese Principle of Continuous improvement, called Kaizen. This edge of standardized procedures makes Packages leading Printing and Packaging Company of Pakistan. SPECIALIZATION Each employee in Packages has specified task to perform. For these tasks, people in each department are specialized and have to perform only the related activities. For example a Production Engineer has to supervise people like Shift in charges and lower staff supervisors and has to ensure efficient working of the machines. Similarly all employees in other departments have to manage their own work and allied activities. IT and Manufacturing departments of the organizations are epically equipped with highly specialized personnel, hence ensuring quality management and products. So it can be rightly said that the specialization in the organization is extensive CENTRALIZATION The decision making in the organization is rested mostly with the manager of each department. For corporate decisions, top management is involved. But for day to day decisions, General Managers, Finance, Commercial executives, Technical mangers and supervisory staff take decisions as per requirement and urgency. Hence the concentration of power is at top and Middle management levels therefore a moderate level of Centralization is there. DECENTRALIZATION The departments where work is in routine such as production and sales, decision making authority lies with management. Whereas in Research and development, human resource and development departments the power is delegated to employees and decision making authority is granted to employees. SPAN OF CONTROL Span of control also varies from department to department depending upon the departmental technology, since in production departments span of control is wide and HRD department span of control is very narrow. COMMUNICATION AND COORDINATION Communication and coordination is also very high in Packages Limited within and among the departments. In R&D and HR&D departments communication is horizontal (and is normally in the form of face-to-face direct contact, telephone calls and meetings) because they perform a wide

range of tasks. And it is vertical in production and sales departments as task variety is low here and is in form of formal memos and written reports.

Human Resource Planning Process

Human Resource is perhaps the most essential resource for any organization. Regardless of the advancement in technology the need for human resource can never be denied. Even the most complex machineries need at least that one push to the button to make it work; and for that human resource is necessary. To not only keep the employees happy and motivated but also to keep them committed to their job, Packages Limited offers numerous different benefits to its employees. The Packages Limited has given many benefits to its employees. A number of facilities are provided by Packages Limited for the training and welfare of its employees. Few projects are also working in this context. Ali Industrial and Technical Institute To maintain the technical level of the employees, an institute naming "ALI INDUSTRIAL TECHNICAL INSTITUTE " was established. This institute trains about 200 technicians annually. The duration of the course is two years and training is provided in different fields. Preference is given to the children of the employees of Packages limited. The students are provided free uniforms, subsidized books, food and milk and a scholarship. After passing out from the institute the technicians are free to seek job in any industry of their choice. Food Food is provided to the employees of packages limited. The food is prepared under most hygienic conditions and is subsidized at highly subsidized rates. There are four messes, which provide meals to the employees These are as follows: 1. VIP Mess 2. Manager Mess 3. Supervisor Mess 4. Workers Mess The food is provided at very less cost to employees. The rates are highly subsidized in the each mess. Uniform and Locker Facility Every worker is provided with two uniforms yearly. They are also provided with the locker facility. The company also arranges laundry service. Two soaps are also given to the workers for maintaining their personal hygiene. Provident Fund Each employee of the organization contributes 10 % of the basic salary and the company for the provident fund contributes the same amount. The employees receive this amount at the time of their retirement or when they leave the organization.

Pension There are two pension categories organization. One is for the management staff and the other for the worker employees. The first category contributes 13% of their salary whereas the other category contributes 4.5% of their salary. The amount is deposited in the government securities. The employees are entitled to receive this amount after 58 years of age. The employee gets 100% pension up to his life. After employee death his widow gets 50% of pension amount. After wife death the children can take 20% of pension until he is less than 21 years. Bonus All the employees get handsome bonuses every year, which varies from grade to grade. Group Insurance Companys policy is to have its employees safe and sound financially. The company insures so all the workers and the premium amounts are also paid by the company. Recreational Allowances The company encourages and supports recreational activities. Employees in groups are encouraged to go excursion trips and the expenses towards their transportation etc. are paid by the company. Employees can also use the rest use owned by Packages Limited in Murree. Overtime Workers who work more than regular hours are paid twice of their pay that includes basic pay and the dearness allowance. Employees of E III and E II grade are also entitled for overtime. Welfare Fund It is the duty of the organization to establish a welfare fund in which both company and the workers contribute equally. The heirs of employees are entitled to receive money from this fund. Social Security Social Security is applicable to all workers of Packages Limited who are drawing up to Rs. 1800. Medical facilities are also given to the employees and their families. Medical facilities are also available in the factory's premises. Employees receive free medical treatments from the company's specified clinics and dispensaries. Fair Price Shop A Fair Price shop is present inside the factory from where basic necessities along with the provision of some basic commodities are available on very subsidized rates. Adult Education All the illiterate employees are required to undergo an education program for two years. All the reading and writing material till primary level is provided free of cost. Hajj Pilgrimage Scheme

Every year three of the employees are selected to go on HAJ. The company pays all the expenses. Any worker who wants to go on HAJ on his own expenses is given one month paid leave. Health Development All the workers are encouraged to participate in sports activities. A sports complex is also available for the employees, which provides sporting facilities of Badminton. Squash Table Tennis, Carom, and Chess etc. Facilities for Hockey, Football, Cricket, volleyball and swimming are also available. Yearly interdepartmental sports competitions are a regular feature. An exclusive children fair is also held every year. Educational Stipends Educational stipends are given to the children of the employees from matriculation to post graduate level. Service Award Employees are awarded different souvenirs after completion of twenty years or more. After twenty-five years of service a valuable wristwatch is also presented to the employees. Loan Facilities For Car/Motor Cycle Loan is granted to the employees for the purchase of cycle, motor cycle and car. These loans are free from interest and all the grades are eligible for these loans. Mosque One beautiful mosque is in the factory area so that everybody can offer his prayers and I observed that considerably large number of employees uses this facility.

LEADING
Leadership
The leadership of any organization reflects the smooth performance, increased sales and overall success of the organization. If the leaders are compassionate about their job and responsibilities to achieve the goals and objectives of the organization to the best of their ability then their leadership is valued and appreciated. Leadership Styles The styles of leadership in Packages limited can be observed from the various tiers of leadership each department practices. The hierarchy of authority can shed some light on the leadership styles practiced in numerous different departments.

HIERARCHY OF AUTHORITY The hierarchy of the organization is somewhat tall but the Top Management is now trying to reduce the tiers in the vertical structure. At present, there are several levels in the hierarchy. Span of control in the organization varies from department to department. It ranges from narrow to moderate. Accountability is transparent, perpetual and both vertical and horizontal. Hierarchy of Production Department

Production Manager

Production Engineer (3)

Planning Engineer (1)

Staff Incharges (4)

Supervisors (12)

Workers (70)

HIERARCHY OF REASEARCH AND DEVELOPMENT

Manager R&D

Incharge Quality Control

Incharge Chemical Lab

Incharge Pulp Lab

Incharge Rubber

Research Engineer R&D Cell

Engineer

Lab Technicians

Supervisor

Supervisor

Supervisor

Technician

Workers

Lab Assistants