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Board of Directors' Meeting

TODAY
December 2004

Engro Foods

Introduction

Engro Foods

Vision

Engro Foods will continue to make investments


aimed at impacting lives and delighting
consumers each day, every day, in a multitude
ways.

Mission

To build food business to improve quality of life


by offering tasty, affordable and high nutritional
products to our consumers while maximizing
stakeholders value

Stage 1

Strategy
formulation

Engro Foods
EXTERNAL FACTOR ANALYSIS
Key Strategic Factors

Weight

Rating

Weighted Score

0.9

0.4

0.05

3
4
3

0.22
0.32
0.3

2
3
3
2
2

0.16
0.21
0.15
0.1
0.1
2.91

OPPORTUNITIES
Trend of cattle farming increase by 20%
0.3
Competitor across town slow down their
0.1
operations
Diversification opportunities increased by
0.05
5%
Reduction in Exports Restrictions
0.07
Demand for UHT milk Growing by 9%
0.08
Milk Consumptions Increased
0.1
THREATS
New Entrants
0.08
Increment of Sales Tax
0.07
Economic & Energy Conditions
0.05
Fresh Milk market
0.05
Small Target Market
0.05
Total
1
4= Superior

3=Responses above average 2= average response

1=poor response

Engro Foods
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
4= Major Strength

3= Minor Strength
2= Minor Weakness
Weakness

1=Major

COMPETITIVE PROFILE MATRIX (CPM)


OLPERS
Critical Success Factors
1

Research& Development

Financial Position

Market Share

Product Quality

Price Competitiveness

Management

Customer service
Sales And Distribution
Network

8
9
10

Production Capacity
Customer Loyalty
Total

NESTLE

HALEEB

Weight

Rating

Score

Rating

Score

Rating

Score

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

2.93

3.28

1.99

SPACE MATRIX STRATEGIC MANAGEMENT


Financial
Position
+7
+6
+5
Conservative

Aggressive

+4
+3
+2

Competitiv
e Position

+1

-6

-5

-4

-3

-2

-1

+1

+2

+3

+4

-1
-2
Defensive

-3
-4
-5

Competitive

+5

+6

Industr
y
Position

SPACE MATRIX STRATEGIC MANAGEMENT


Y
A
xi
s

INTERNAL STRENGTH POSITION

EXTERNAL STRENGTH POSITION

Competitive Position(CP)

Industry Position(IP)

(Worst -7,Best -1)


-1 Product Quality
-1 Product Life Cycle
-3 Market Share
-2 Brand and image

Average Score =-1.75

(Worst +1,Best 7)

+5
+4
+4
+6

Barriers to entry
Growth Potential
Access to Financing
Consolidation

Average Score =4.75

Financial Position (FP)


(Worst +1,Best +7)

+5 ROA
+5 Leverage
+4 Leverage
+6 Cash Flow
Average Score = 5

Stability Position(SP)
(Worst -6,Best -1)
-2 Inflation
-1 Technology
-2 Demand Elasticity
-4 Taxation
Average Score =-2.5

X-Axis

SPACE MATRIX STRATEGIC MANAGEMENT


CP = 1.75
FP = 5
SP = 2.5
IP = 4.75

Financi
al

Positio
n

X- Axis
1.75 + 4.75 = 6.5
Y- Axis
-2.5 + 5

= 2.5

2.
5

-2

+
7
+
6
+
5
+
4
+
3
+
2
+
1

-1

Aggressive

Industr

y
Positio

BCG Matrix Model


1- Question mark

2- Star
3- Cash Cows
4- Dogs

Internal External (IE) Matrix


IFE
IFE

High
High
33to
to44

EE
FF
EE

Mediu
Mediu
m
m
22to
to
2.99
2.99

Low
Low
11to
to
1.99
1.99

Strong
Strong
33to
to44

Average
Average
22to
to2.99
2.99

Weak
Weak
11to
to1.99
1.99

II

III

Grow and Build

Grow and Build

Grow and Build

IV
Grow and Build

V
Grow and Build
ENGRO

VI
Harvest

VII

VIII

XI

Grow and Build

Harvest

Harvest

Stage 2

Strategy Selection

QSPM of Tarang
Internal External Factor
Strengths

AS

MARKET PENETRATION

TAS

AS

TAS

Brand Image

0.08

3.00

0.24

2.00

0.16

Growing Trend of Sales

0.03

1.00

0.03

1.00

0.03

Market Share

0.05

3.00

0.15

1.00

0.05

Distribution Channel

0.08

4.00

0.32

4.00

0.32

Product Quality

0.07

Innovation

0.04

Customer Oriented

0.06

Qualified Work force / Excellent Employee Moral

0.02

1.00

0.24

1.00

0.24

2.00

Weaknesses

DIVERSIFICATION (TARANG
POWDER)

Weight

0.04

3.00

0.06

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

Internal External Factor

DIVERSIFICATION (TARANG
POWDER)

Weight

Opportunities
Trend of cattle farming increase by 20%

AS

MARKET
PENETRATION

TAS

AS

TAS

0.3

1.00

0.30 3.00

0.90

operations
Diversification opportunities increased

0.10

3.00

0.30

3.00

0.30

by 5%

0.05

4.00

0.20

1.00

0.05

Reduction in Exports Restrictions

0.07

Demand for UHT milk Growing by 9%

0.08

1.00

0.08

4.00

0.32

Milk Consumptions Increased

0.10

4.00

0.40

4.00

0.40

Competitor across town slow down their

Threats

New Entrants

0.08

4.00

0.32 4.00

0.32

Increment of Sales Tax

0.07

2.00

0.14 3.00

0.21

Economic & Energy Conditions

0.05

4.00

0.2 3.00

0.15

Fresh Milk market

0.05

2.00

0.1 2.00

0.1

Small Target Market

0.05

Total

1.00

3.97

4.31

QSPM of Olpers
Internal External Factor
Strength
Brand Image

Weight

0.08

2.00

PRODUCT
DEVELOPMENT
AS
TAS

0.16

1.00

0.08

Growing Trend of Sales

0.03

Market Share

0.05

2.00

0.10

1.00

0.05

Distribution Channel

0.08

4.00

0.32

2.00

0.16

Product Quality

0.07

Innovation

0.04

2.00

0.08

4.00

0.16

Customer Oriented
Qualified Work force / Excellent

0.06

1.00

0.06

3.00

0.18

Weakness

0.17

No Sales on Credit

0.21

High Price

0.07

Related Diversification

0.12

Centralized Decisions

0.02

Employee Moral

MARKET
DEVELOPMENT
AS
TAS

1.00

2.00

0.42

1.00

0.21

1.00

0.12

1.00

0.12

QSPM of Olpers
Internal External Factor

MARKET
DEVELOPMENT

Weight

Opportunities

AS

0.30

Trend of cattle farming increase by 20%


Competitor across town slow down their

PRODUCT
DEVELOPMENT

TAS

AS

TAS

3.00

0.90

1.00

0.30

4.00

0.40

1.00

0.10

0.10

operations
Diversification opportunities increased by 5%

0.05

Reduction in Exports Restrictions

0.07

4.00

0.28

2.00

0.24

Demand for UHT milk Growing by 9%

0.08

3.00

0.24

2.00

0.16

0.1

2.00

0.20

2.00

0.20

Milk Consumptions Increased


Threats

New Entrants

0.08

1.00

0.08

2.00

0.16

Economic & Energy Conditions

0.05

3.00

0.15

2.00

0.1

Increment of Sales Tax

0.07

Fresh Milk market

0.05

Small Target Market

0.05

Total

1.00

3.00

0.15

2.00

0.1

3.66

2.32

Stage 3

Strategy
Implementation

SBUs Structure
CEO
Chief

Finance
officer

Chief
operating
officer

VP of HR

Brand head of
olpers

Subordnate

Brand head
tarang

VP of HR

Brand head of
omang

VP of HR

Brand head of
omore

VP of HR

VP of
Marketing

Chief
management
officer

Conclusion