Report On:

STRATEGIC MANAGEMENT ANALYSIS OF

Engro Foods Limited

Submitted to:

Maam Sadia Parveen

Federal Urdu University (Abdul Haq)
Department of Commerce

Submitted by:
Abdul Latif (1204101)
Muhammad Waseem (1204136)
Syed Tufail Haider (1204177)

Dated:
November 05, 2015

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Acknowledgement
Countless Thanks to He Who Is Lord of Lords

At first instant, humbly we bow our head with all the

feeling of our heart and soul before the Almighty Allah,
the beneficent, the omniscient who bestowed us with
all the mental abilities to work out this project.
The report being submitted today is a result of
collective effort. There are innumerous helping hands
behind who have guided us on our way. Writing this
report appeared to be a great experience to us. It
added a lot to our knowledge. This report is one of our
memorable experiences in student life. Though words
are inadequate in offering thanks to our teacher but we
owe our profound gratitude to Maam Sadia
Parveen for stimulating our creative abilities by
assigning this project to us and for his able guidance
and useful suggestions, which helped us in completing
the project in time. Whatever we have learnt from her
and this report has put indelible impression on our
minds and it is our conviction that this learning
experience will always be a source of help in our
practical life and professional career.
Finally, yet importantly, we would like to express our
heartfelt thanks to our beloved parents, for
cooperation, help, kindness and blessings, our family
and friends for their help and wishes for the successful
completion of the work.

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S.NO

Topics

Page
No

An Overview

06

2
3
4
5

Introduction & history

Brand Portfolio

07
08
09
10

Income Statement & Balance Sheet

11-13

Porters Five Forces Model

14-16

SWOT Analysis

17-20

EFE & IFE Matrix

21

10

CPM

22

11

Space Matrix

23-25

12

BCG Matrix

26

13

IE Matrix

27

14

QSPM

28-30

15

Vision, Mission & Core Values

Facts & Figure Strategic objectives

Organization Structure

31

16

Suggestions & Recommendation

32

17

References

33

T ABLE O F C ONTENTS

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A N O VERVIEW
This is the project about Strategic Management analysis of a
company. In this regard the company which we chosen to be analyzed
areENGRO FOODS LIMITED. The company is dealing in food business
for many years. The company is well reputed in the market and deal
in a wide range of healthy food products. Its product line contains
products such as milk, tea whitener, cream, ice cream, juices,
flavored milk and many others. The company has strong marketing
strategies to come up with in a competitive market. It has targeted all
of its customers no matter they are of what age. The company is
running its business so well. ENGRO FOODS is the 1st company which
is using Bactofuge technology. The company has not been in this
business for as long as NESTL is, but the way it has grown up is
appreciable. It has come up with innovative features in its products.
The company has capability to pay it liabilities on time and to keep its
assets managed. ENGRO FOODS not only provide incentives to its
stockholders but also to its employees. It offers its employees much
outdoor training so that they can work in a healthy environment and
dont get tired of their hectic routine. That is why it has many loyal
employees to work with..

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I ntroduction:
Engro Foods Limited was officially launched as a fully owned subsidiary of
EngroCorporationin2004.Using dairy as a stepping stone to enter into the
food business, the Company has establishedstate-of-the-art processing
units in Sukkur and Sahiwal, along with an ice cream productionfacility in
Sahiwal. Top quality brands like Olpers, Olpers Lite, Tarang, Omore and
Olpers Cream have beensuccessfully launched under the helm of
Companys dairy products. To support these brandsand their highest
standards of quality, Engro Foods has invested heavily in milk processing
andmilk collection infrastructure. Engro Foods has also venture beyond
the dairy sector. In thispursuit, grain and fruit markets have been
analyzed in great detail. Engrohas launched its newbrand in fruit juices
called as Y-frooter. EngroFoods purposeis to Elevate
Elevate Consumers Delight
Worldwide
Worldwide and the Company aims to generate a significant portion of its
revenuefrom foreign operations.

H istory:
Engro Foods Pvt. Limited (EFL) has beenestablished in 2005 as part of a
diversification process attheEngro Group. The plant located at Sukkur on
23acre land, has the raw milk reception capability of more than
300,000liters per day and UHT milk capacity of more than 200,000liters
perday. The plant has been established at a cost of Rs. 1billion which
provides direct employment to 750people.Engro Foods has entered the
Food businessthrough milk processing and sale with the companys vision
to pursue growth opportunitiesbased on country fundamentals and own
strength. It also positions the company to leverage itscorporatesocial
responsibility initiatives and work closely with rural communities to
promoteintegrated farming and livestock development. This effort is
expected to play vital role inpoverty alleviation and improving livelihoods
of the poor in the milk collection areas. Engro Foods will work with the
Pakistan Poverty Alleviation Fund and its three partnerorganizations to
help implement sustainable business models that increase farmers

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profitability and develop a positive social and business climate for growth
and expansion oflivestock and other forms of value added agriculture.

V ision:
Engro Foods will continue to make investments aimed at impacting lives
and delighting consumers each day, every day, in a multitude ways.

M ission:
To build food business to improve quality of life by offering tasty,
affordable and high nutritional products to our consumers while
maximizing stakeholders value.

C ore V alues:

Ethics and integrity

Safety, Health and Environment
Innovation& Risk Taking
Our People
Community & Society

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F acts & F igures:

12 Million Consumers nationwide use Engros products each day.

More than 1600 milk collection points spread throughout the country.
Ranked2nd in ice-cream business.
Holds more than 50% market share in UHT milk business.
Providing livelihood to 350,000 farmers across Pakistan.
2 state of the art processing plant and a production farm.
Growing Market Share covers more than 310 cities in Pakistan.
FT/IFC Transformational Business Award 2014 for achievement in

inclusive Business.
The first Pakistani company to produce 1 billion tetra packs in a single
year.
Engro Foods 2012 Annual Report secured 2nd position for the Best
Corporate Report Award in its category.

S trategic O bjectives (4Ds):

DIVERSIFY: Moving beyond the traditional dairy portfolio and
explore new categories to delight consumers.
D E C I P HE R : bringing clarity in approach within our dairy portfolio to
encompass a wider consumer segment.
DISTANCE: The brand portfolio to allow further expansion.
DEVELOP: Extending physical reach to other geographies for
exploring the untapped possibilities

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B rand P ortfolio:

Sheer
indulgence
in every sip
Enhance
the culinary
comes
only with
theOlpers
rich
experience
with
creamy
thickness
of Olpers. of
CreamA rich celebration
Give
day
a fresh
start with
lifeyour
at its
creamy
best.
Olpers!

Get nutrition and the best value

for money with omung dobala.

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2014

2013

Sales

43,027,377

37,890,688

Cost of sales

(34,926,132)

(29,747,587)

8,101,245

8,143,101

Distribution and marketing expenses

(4,692,502)

(5,063,279)

Administrative expenses

(1,282,240)

(1,041,254)

(103,770)

(188,729)

304,854

324,301

Operating profit

2,327,587

2,174,140

Other expenses

(596,328)

(881,456)

(1,236,904)

(784,904)

Profit before taxation

494,355

507,780

Taxation

394,476

(296,820)

Profit for the year

888,831

210,960

(Rs. In Thousands)

Gross profit

Other operating expenses

Other operating income

Finance costs

I NCOME S TATEMENT

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B ALANCE S HEET
2014

2013

15,021,51
9

14,504,77
1

Biological assets

858,680

716,465

Intangible assets

112,208

122,838

Long term advances and deposits

109,174

93,132

Compensation expense

112,581

168,865

Assets
Property, plant and equipment

Long term Investment

427,288

Investment in subsidiary
Non Current Assets

16,214,162

16,033,359

Stores, spares and loose tools

788,141

739,671

Stock-in-trade

3,697,78
7

3,083,58
3

95,962

153,573

Advances, deposits and prepayments

113,501

181,080

Other receivables

2,865,60
7

2,354,28
0

90,430

136,153

1,637,01
8

636,588

170,000

Cash and bank balances

196,900

557,266

Current Assets

9,485,346

8,012,194

Total Assets

25,699,5
08

24,045,5
53

Trade debts

Deferred employee share option compensation expense

Taxes recoverable
Short term investments

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2014

2013

7,665,961

7,665,961

Share premium

865,354

865,354

Employee share option compensation reserve

399,740

407,133

Hedging reserve
Re-measurement of post employment benefits Actuarial loss
Inappropriate profit

(27,736)

(9,581)

(35,715)

(34,839)

2,710,013

1,821,182

11,577,617

10,715,210

5,476,993

7,126,994

1,185,717

1,538,583

2,516

9,410

6,665,226

8,674,987

Current portion of long term finances

1,605,597

1,032,008

Trade and other payables

3,222,661

3,369,182

41,397

14,517

* long term finances

194,025

229,312

*short term finances

61,092

10,337

Short term finances

2,331,893

7,456,665

4,655,356

25,699,508

24,045,553

Equity & Liabilities

Equity
Share capital
Advance against issue of share capital

Non-Current Liabilities
Long term finances
Obligations under finance lease
Deferred taxation
Deferred liabilities- pension scheme
Deferred Income

Current Liabilities

Derivative financial instruments

Accrued interest / mark-up on

Contingencies and Commitments

Total Equity & Liabilities

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PORTERS FIVE FORCES MODEL

1-

THREAT OF NEW ENTRANTS:

The average entrepreneur can't come along and start a large food
company. The threat of new entrants lies within the food industry itself.
Some companies have carved out niche areas in which they underwrite
dairy supply. These food companies are fearful of being squeezed out by
the big players. Another threat for many food companies is other food
services companies entering the market.

Capital requirements
Competing in a new industry requires resources to invest. Production of
packed products requires huge investment of financial, human, technical,
and marketing resources. At the moment EngroOlpers have some threats
like from new entrants goodmilk product of shskargang food and Cupshup
of Dalda.

Economy of scale
Economy of scale determines entry because they force potential
competitors either to enter on a large scale bases (a costly and perhaps
risky move) or to accept a cost disadvantage. Moreover, new entrants in
the pasteurized milk business may encounter scale related barriers not
just in the production, but in the advertising marketing, distribution,
financing, and raw milk purchasing as well, Engrofoods achieved its
breakeven in 2010
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2- BARGAINING POWER OF SUPPLIERS:

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

Number of suppliers
Raw milk is standard commodity and is available in the open market from
a large number of milkmen. If anyone refuses to sell its product then
company can buy it from others who are already willing to sell to
company.

Importance of volume to supplier

Suppliers also have less leverage to bargain over price because the
company is purchasing the large volume of their milk and suppliers dont
have much option to sell milk to others.

3- BARGAINING POWER OF BUYERS:

The individual doesn't pose much of a threat to the food industry. Large
clients have a lot more bargaining power with food companies. Large
corporate clients like airlines and retailers pay millions of dollars a year.
There are large numbers of distributors, who are buying and distributing
the product, so their bargaining power is low and company have leverage
to dictate implement its terms and conditions to distributors.

Backward integration
Another reason of low bargaining power is that no buyer/distributor has
the resources to start involve in backward integration.

4- AVAILABILITY OF SUBSTITUTES:
This one is pretty straight forward, for there are plenty of substitutes in
the food industry. Most large food companies offer similar suites of
services. Companies focusing on niche areas usually have a competitive
advantage, but this advantage depends entirely on the size of the niche
and on whether there are any barriers preventing other firms from
entering.

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5- COMPETITIVE RIVALRY:
The food industry is becoming highly competitive. The difference between
one Food Company and another is usually not that great. As a result, food
industry has become more like a commodity - an area in which the food
company with the low cost structure, greater efficiency and better
customer service will beat out competitors. Food companies also use
higher investment returns and a variety
of food investment products to try to lure in customers. In the long run,
we're likely to see more consolidation in the food industry. Larger
companies prefer to take over or merge with other companies rather than
spend the money to market and advertise to people.
Not only local but attempts by cross border competitors or companies to
gain stronger foot hold in each others domestic market boosts the
intensity of rivalry, especially when the foreign rivals have lower cost or
very attractive products. In case of Engro foods so far nestle and hale are
the only diverse rival and another players that has just joined the UHT Milk
sector is goodmilk, no doubt the competition between Engrofoods and
Haleeb is quite intense both are engaged in consistent homework just to
break and attract the customer towards each other but goodmilk is adding
to the competition between the sector.

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S WOT A NALYSIS
Strength
Olpers is a brand of ENGRO foods. This means that consumers can relate
their former image of ENGRO foods to Olpers. ENGRO is a well
established brand name in Fertilizer, IT and infrastructure business. The
brand is well known so customers will automatically have a brand
association with Olpers and see it as a premium quality product. ENGRO
is world renowned so it can easily attract foreign investors in backing it
against other competitors such as Nestle. ENGRO foods can easily afford
research and development costs for Olpers have in order to introduce
new products. It can also distribute the brand through better channels
because of its long term relationship with distributors in the agriculture
sector.

PR with farmers
ENGRO has been interacting with the farmers for fertilizers and has gained
quite a good reputation over the years. It has led to a strong bond and
long term relationship with the farmers who are willing to supply milk to
the company. This is an added advantage and strength for the company
because it will never be short of milk production. The farmers also wont
have to look elsewhere to sell their milk.

Positive response from customers

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

Strong consumer & product research

Olpers done a strong consumer & product research before and after
launching the product. This has provided them the perfect launching pad
to eventually emerge as a global player in the food industry. To develop its
future portfolios, EFL has hired various global research partners like AC

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Nielsen, Mindshare, JWT Asiatic and MARS marketing and advertising

agencies.

Third-Generation Plant
EFL only, has the third-generation UHT milk plant in the country. EFL plant
is the only plant in Pakistan that uses Bactofuge technology to virtually
eliminate bacteria and ensure premium quality and hygiene. Moreover, it
is also setting up another milk processing plant in Central Punjab (Sahiwal)
with an investment of Rs. 2 billion (US $ 33 million).

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Worldwide fame of Engro.

Efficient milk collection system.
Keeping high quality standards.
Integrated distribution and warehousing facilities.
Successful related diversification.
Generic brand name of Olpers
Large market share of Engro innovative and chemicals.
Having Good reputation in the market by strong brand name i.e.
Engro

Weaknesses
Owning Red Color
The company has not owned the color red like Nestle has a green Milkpak;
Haleeb has a blue carton etc. This may create problems because when a
consumer enters a grocery shop, then he/she might have problems in
recalling the brand because there is no color association attached to
Olpers. The company may need to find a suitable color in which to focus
its upcoming marketing strategies.

Low Quality Milk

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

Packaging
EFL is dependent upon Tetra Pak for the packaging of its entire dairy
products. Tetra Pak is the only option available to Olpers for packaging
because it is having monopoly in the packaging sector in Pakistan. Due to
this reason, Tetra Pak can charge them higher and it could increase the
production costs.

Milk collection & distribution costs

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EFLs 34 out of 40 milk-collection centers are located in Punjab, where as

its only milk processing facility is situated near Sukkur (Sindh). It increases
the milk collection & distribution costs; and also increases the chances of
milk getting spoiled because of increased traveling time.

Narrow brand portfolio

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

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

Under-utilization of the capacity.
Unable to fulfill the demand of local powder milk market.
Not yet ISO certified

Opportunities
Increased funding by Government
Government has decided to increase farmers funding. This is an
opportunity for ENGRO foods because previously due to weather
conditions and other reasons there was lots of wastage of milk but now
that can be reduced as farmers will be better able to store milk for longer
time periods.

Awareness
Growing dissatisfaction with loose milk and increasing awareness about
health and hygiene issues have led to increased processed milk
consumption.

Third largest producer of milk

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Pakistan is the Third largest producer of milk in the world with a total
production of 32 billion liter of milk a year, whose value is more than that
of the combined value of wheat and cotton, from a total herd size of 50
million milch animals (buffaloes and cows). Livestock accounts for 46.8
percent of agricultural value added and about 10.8 percent of the GDP.
Milk is the largest commodity from the livestock sector accounting for 51
percent of the total value of the sector. Due to the steps taken by the
government and private sector, countrys annual milk production is
expected to grow at an additional 3 billion liters in the next few years. This
is quite an opportunity for ENGRO foods as there is lot of growth in this
part of the sector.

Improving Economy
Population growth rate.
High urbanization rate.
High literacy rate.
Flexible government policies for food industry.
Have significant growth opportunities
Has sufficient capital to expand.
Has the potential to innovate and differentiate the company's
products to sustain a competitive advantage
May merge with other global businesses to eliminate competitors.
Having Capable of expanding into other markets of the world

Threats
Competition
Competition may pose a threat because the company will have to
maintain its leadership in an expanding market so that it doesnt lose its
market share to its competitors. For Olpers it might be difficult to
penetrate in a market where the loyalties exist for such brands as Nestle
and Haleeb. These brands have been in the milk industry far too long and
have left a mark in the minds of consumers in terms of quality.
Competition seems to be getting tougher as a result of new players
entering the dairy market.

Perceptions and Price Differentials

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EXTERNAL FACTOR ANALYSIS

Key Strategic Factors

Weight

Rating

Weighted Score

OPPORTUNITIES
Trend of cattle farming increase by 20%
0.3
3
0.9
Competitor across town slow down their
0.1
4
0.4
operations
Diversification opportunities increased by
0.05
1
0.05
5%
Reduction in Exports Restrictions
0.07
3
0.22
Demand for UHT milk Growing by 9%
0.08
4
0.32
Milk Consumptions Increased
0.1
3
0.3
THREATS
New Entrants
0.08
2
0.16
Increment of Sales Tax
0.07
3
0.21
Economic & Energy Conditions
0.05
3
0.15
Fresh Milk market
0.05
2
0.1
Small Target Market
0.05
2
0.1
Total
1
2.91
Consumers perceptions and price differentials can cause a threat for the
company. It is important that Olpers comes up to the expectations of the
customers and fulfills its conformance quality that is the company meets
its promised specifications. Consumers preferences change with time and
prices might create certain barriers in terms of the profit margins for
Olpers. For example, lose milk is still cheaper than packaged milk and
that is also one factor that people still prefer to buy lose milk.

High inflation rate.

Low purchasing power.
Decrease in GDP growth rate.
Increasing interest rates.
Decreasing investment.
Recessionary period in business cycle
Competition with Nestle, Engro Foods and the new entrants.
Engrofoods is currently facing are increase in Sales Tax

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INTERNAL FACTOR ANALYSIS

Key Strategic Factors

Weight

Rating

Weighted Score

4
2
3
2
3
3
3

0.32
0.06
0.15
0.16
0.21
0.12
0.18

0.03

2
2
2
1

0.34
0.42
0.14
0.12
2.25

STRENGTHS
Brand Image
0.08
Growing Trend of Sales
0.03
Market Share
0.05
Distribution Channel
0.08
Product Quality
0.07
Innovation
0.04
Customer Oriented
0.06
Qualified Work force / Excellent Employee
0.02
Moral
WEAKNESSES
Centralized Decisions
0.17
No Sales on Credit
0.21
High Price
0.07
Related Diversification
0.12
Total
1

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C OMPETITIVE P ROFILE M ATRIX (CPM)

OLPERS
Critical Success
Factors

Research&
Development

Financial Position

Market Share

Product Quality

Price
Competitiveness

Management

Customer service
Sales And
Distribution
Network

8
9
1
0

Production Capacity
Customer Loyalty
Total

NESTLE

HALEEB

Weig
ht

Rati
ng

Scor
e

Rati
ng

Scor
e

Rati
ng

Scor
e

0.12

0.36

0.48

0.24

0.13

0.39

0.52

0.26

0.09

0.36

0.27

0.09

0.08

0.24

0.24

0.16

0.11

0.33

0.22

0.33

0.12

0.36

0.48

0.20

0.06

0.18

0.18

0.12

0.09

0.18

0.36

0.18

0.07

0.14

0.21

0.28

0.13

0.39

0.32

0.13

1.0

2.9
3

3.2
8

1.9
9

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SPACE MATRIX STRATEGIC MANAGEMENT

METHOD
The SPACE matrix is a management tool used to analyze a company. It is
used to determine what type of a strategy a company should undertake.
The Strategic Position & Action Evaluation matrix or short a SPACE matrix
is a strategic management tool that focuses on strategy formulation
especially as related to the competitive position of an organization. The
SPACE matrix can be used as a basis for other analyses, such as the SWOT
analysis, BCG matrix model, industry analysis, or assessing strategic
alternatives (IE matrix).The SPACE matrix calculates the importance
of each of these dimensions and places them on a Cartesian graph with X
and Y coordinates.

Conservative

Competit
ive
Position

-6

-5

-4

-3

Defensive

-2

Financi
al
Positio
n
+
7
+
6
+
5
+
4
+
3
+
2
+
1

-1
-1
-2
-3
-4
-5
-6
-7

+
1

Aggressive

+
2

+
3

+
4

+
5

+
6

Indust
ry
Positio
n

Competitive

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Stabilit
y
Positio
n

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Y-Axis

INTERNAL STRENGTH POSITION

Competitive Position(CP)

EXTERNAL STRENGTH POSITION

Industry Position(IP)

(Worst -7,Best -1)

(Worst +1,Best 7)

-1
-1
-3
-2

+5
+4
+4
+6

Product Quality
Product Life Cycle
Market Share
Brand and image

Barriers to entry
Growth Potential
Access to Financing
Consolidation

Average Score =-1.75

(Worst +1,Best +7)

Average Score =4.75

Stability Position(SP)
(Worst -6,Best -1)

+5
+5
+4
+6

-2
-1
-2
-4

Financial Position (FP)

ROA
Leverage
Leverage
Cash Flow

Average Score = 5

Inflation
Technology
Demand Elasticity
Taxation

Average Score =-2.5

X-Axis

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ENGRO FOODS SPACE MATRIX

CP =
1.75
FP = 5
SP = 2.5
IP = 4.75
X- Axis
1.75 + 4.75
Y- Axis
-2.5 + 5
=

6.5

2.5

2.
5

Competit
ive
Position

-6

-5

-4

-3

-2

Financi
al
Positio
n
+
7
+
6
+
5
+
4
+
3
+
2
+
1

-1

+
1

-1
-2
-3
-4
-5
-6
-7
Stabilit
y
Positio
n

Aggressive

+
2

+
3

+
4

+
5

+
6

+
7

Indust
ry
Positio
n

6.5

Conclusion
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This particular SPACE matrix tells us that our company should pursue an aggressive
strategy. Our company has a strong competitive position it the market with rapid growth.
It needs to use its internal strengths to develop a market penetration and market
development strategy. This can include product development, integration with other
companies, acquisition of competitors, and so on.

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BCG Matrix Model

The BCG matrix or also called BCG model relates to marketing. The BCG
model is a well-known portfolio management tool used in product life
cycle theory. BCG matrix is often used to prioritize which products within
company product mix get more funding and attention.
The BCG matrix model is a portfolio planning model developed by Bruce
Henderson of the Boston Consulting Group in the early 1970's.
The BCG model is based on classification of products (and implicitly also
company business units) into four categories based on combinations of
market growth and market share relative to the largest competitor.

Internal External (IE)Matrix

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

32 | P a g e

IFE

IFE

Strong
3 to 4

High
3 to 4

II

III

Grow and Build

Grow and Build

Grow and Build

IV

2 to 2.99 Grow and Build

Low

Weak
1 to 1.99

Medium

1 to 1.99

Average
2 to 2.99

V
Grow and Build
ENGRO

VI
Harvest

VII

VIII

XI

Grow and Build

Harvest

Harvest

1. Score from the EFE matrix -2.91- this score is plotted on the y-axis
2. Score from the IFE matrix -2.25- plotted on the x-axis
Conclusion

This IE matrix for Engrofoods tells us that our company should hold and
maintain its position. The company should pursue strategies focused
on increasing market penetration and product development.

33 | P a g e

Quantitative Strategic Planning Matrix or a

QSPM
The Quantitative Strategic Planning Matrix or a QSPM approach attempts
to objectively select the best strategy using input from other management
techniques and some easy computations. In other words, the QSPM
method uses inputs from stage 1 analyses, matches them with results
from stage 2 analyses, and then decides objectively among alternative
strategies.
Stage 1 strategic management tools...
The first step in the overall strategic management analysis is used
to identify key strategic factors. This can be done using, for example, the
EFE matrix and IFE matrix.
Stage 2 strategic management tools...
After we identify and analyze key strategic factors as inputs for QSPM, we
can formulate the type of the strategy we would like to pursue. This can
be done using the stage 2 strategic management tools, for example the
SWOT analysis (or TOWS), SPACE matrix analysis, BCG matrix model, or
the IE matrix model.
Stage 3 strategic management tools...
The stage 1 strategic management methods provided us with key
strategic factors. Based on their analysis, we formulated possible
strategies in stage 2. Now, the task is to compare in QSPM alternative
strategies and decide which one is the most suitable for our goals.
The stage 2 strategic tools provide the needed information for setting up
the Quantitative Strategic Planning Matrix - QSPM. The QSPM method
allows us to evaluate alternative strategies objectively.
Conceptually, the QSPM in stage 3 determines the relative attractiveness
of various strategies based on the extent to which key external and
internal critical success factors are capitalized upon or improved. The
relative attractiveness of each strategy is computed by determining the
cumulative impact of each external and internal critical success factor.

QSPM OF Engro foods

Based on strategies in the stage 1 (IFE, EFE) and stage 2 (BCG, SPACE, IE),
company executives determined that Engrofoods needs to pursue an
34 | P a g e

aggressive strategy aimed at development of new products and further

penetration of the market. They also identified that this strategy can be
executed in two ways. One strategy is acquiring a competing company.
The other strategy is to expand internally. They are now asking which
option is the better one.
(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 =
probably acceptable; 4 = most acceptable; 0 = not relevant)

35 | P a g e

Internal External
Factor

Weig
ht

STRENGTHS

AS

TAS

MARKET
PENETRATIO
N
AS
TAS

DIVERSIFICATION
(TARANG POWDER)

Brand Image

0.08

3.00

0.24

2.00

0.16

Growing Trend of Sales

0.03

1.00

0.03

1.00

0.03

Market Share

0.05

3.00

0.15

1.00

0.05

Distribution Channel

0.08

4.00

0.32

4.00

0.32

Product Quality

0.07

Innovation

0.04

1.00

0.24

1.00

0.24

Customer Oriented
Qualified Work force /
Excellent Employee Moral

0.06
2.00

0.04

3.00

0.06

0.02

WEAKNESSES
Centralized Decisions

0.17

No Sales on Credit

0.21

3.00

0.63

2.00

0.42

High Price

0.07

4.00

0.28

4.00

0.28

Related Diversification

0.12
1.00

Opportunities
Trend of cattle farming
increase by 20%

0.3

1.00

0.30

3.00

0.90

Competitor across town

slow down their
operations

0.10

3.00

0.30

3.00

0.30

Diversification opportunities
increased by 5%

0.05

4.00

0.20

1.00

0.05

0.08

1.00

0.08

4.00

0.32

0.10

4.00

0.40

4.00

0.40

New Entrants

0.08

4.00

0.32

4.00

0.32

Increment of Sales Tax

Economic & Energy
Conditions
Fresh Milk market

0.07

2.00

0.14

3.00

0.21

0.05

4.00

0.2

3.00

0.15

0.05

2.00

0.1

2.00

0.1

Small Target Market

0.05

Total

1.00

Reduction in Exports
Restrictions
Demand for UHT milk
Growing by 9%
Milk Consumptions
Increased

0.07

Threats

3.97

4.31

QSPM of Tarang

36 | P a g e

Internal External Factor

Weig
ht

Strength
Brand Image

0.08

Growing Trend of Sales

0.03

Market Share

MARKET
DEVELOPMEN
T
AS
TAS

PRODUCT
DEVELOPMENT
AS

TAS

2.00

0.16

1.00

0.08

0.05

2.00

0.10

1.00

0.05

Distribution Channel

0.08

4.00

0.32

2.00

0.16

Product Quality

0.07

Innovation

0.04

2.00

0.08

4.00

0.16

Customer Oriented
Qualified Work force /
Excellent Employee Moral

0.06

1.00

0.06

3.00

0.18

2.00

0.42

1.00

0.21

1.00

0.12

1.00

0.12

3.00

0.90

1.00

0.30

4.00

0.40

1.00

0.10

4.00

0.28

2.00

0.24

3.00

0.24

2.00

0.16

2.00

0.20

2.00

0.20

1.00

0.08

2.00

0.16

3.00

0.15

2.00

0.1

0.02

Weakness
Centralized Decisions

0.17

No Sales on Credit

0.21

High Price

0.07

Related Diversification

0.12
1.00

Opportunities
Trend of cattle farming
increase by 20%

0.30

Competitor across town slow down

their operations

0.10

Diversification opportunities
increased by 5%

0.05

Reduction in Exports
Restrictions
Demand for UHT milk
Growing by 9%
Milk Consumptions
Increased

0.07
0.08
0.1

Threats
New Entrants
Economic & Energy
Conditions
Increment of Sales Tax

0.08

Fresh Milk market

0.05

Small Target Market

0.05

Total

1.00

0.05
0.07

3.00

0.15

3.66

2.00

0.1

2.32

QSPM of Olpers
37 | P a g e

Engro foods Structure (hierarchy)

B
S
C
V
E
r
u
h
P
O
a
ib
n
e
o
d
r
f
d
F
o
h
n
m
M
H
i
p
e
a
R
e
a
t
n
r
r
d
e
a
k
n
a
g
e
c
o
e
t
e
f
im
e
n
o
n
g
f
t
f
o
i
f
o
c
f
ie
f
r
ic
e
c
r
e
r

38 | P a g e

Suggestions and Recommendations

Following are the suggestions and recommendations for EFL.

The co-ordination between different departments of EFL should be

improved it will lessen the bureaucratic cost and increase the
efficiency of the company.

The activities like customer satisfaction day should be performed on

regular basis so the company should know the feedback and
satisfaction level of customers regarding the product and the image
of the company.

The shopkeeper complains that EFL is not providing replacement for

the expired products, EFL should provide proper replacement to the
shopkeeper to enhance the image of the company, and create
better working relations with such an important stakeholders.

EFL has shifted to branding concept but it really has not adopted it
fully, for smoother working of the different brands, the sales teams
should merged with respective brand management.

There is no check on the performance of the distributor, and this

has led to huge problems in the delivery of many products in some
areas of the city

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

the domestic demand and so that it can be helpful in saving the
foreign exchange that is expensed in importing the powder milk
from foreign countries.

The company should explore the market potential in a way, so that

it can utilize its full capacity in order to gain economies of scale in
the production.

At the moment the company is using focus marketing approach that

only that segment is approached which highly attractive for the
company but it should also develop the marketing program that

39 | P a g e

distinguishes the characteristics of existing available substitutes to

their highly quality & hygiene oriented product.

The company should also develop an integrated awareness plan in

order to aware the people about the quality of the UHT milk as
compared to other pasteurized or loose/fresh milk.

40 | P a g e

References

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

edition.
2. Marketing Management by Kotler 11th Edition.
3. www.olpers.com.pk
4. www.engrofoods.com.pk
5. www.engrocorporations.com
6. www.Engro\web search\marketing-sales.aspx.html
7. www.Engro\web search\about-us.aspx.html
8. www.google.com
9. www.wikipedia.com

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