Engro Foods Limited Strategic Marketing Project.

Engro Foods Limited Pakistan
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Summary
Engro Foods is subsidiary of Engro corporation which is currently workin
in 7 different industries with diversified skill and knowledge. Engro Foods
was recognized in 2006 and in short time it has market share of 51% in
dairy products and 38 % of packed milk market. it has made acquisition in
North America which shows that it planning to go globally.
In Pakistan it competed the big giants like Haleeb, Nestle and gave a very
tough time to them showing phenomenal growth rate. It introduced very
prominent brand as well. Now a day there is trend of shifting from
unpacked dairies products to packed dairy products due to health issues and
hygiene food awareness programs. To exploit the opportunity Engro Foods
is working hard to increase its market. The there is huge market in gulf
countries where it can be successful. In this report we have tried best to
analyze the company and than in accordance with the companies core
competencies recommend it what to do.
Major findings in the reports are that quality of raw dairy is not as well as it
should be especially goods collected from indirect sources. Plants are in
Sindh whereas most of the collection centers are in Punjab. Brand did not
own the color although in the success of Olperss milk there was a key
factor of packaging color. Huge market dairy products is in gulf countries.

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Madarba and Musharika can enable it to have more investment base with
low leverage.
To cope with these issues the Engro Foods should increase better control
over its suppliers dairy farms this can be done through licensing and
franchising which it has already done still need to revise the policy. This
can be by offering financial services to these farms in order to gain control.
It should also invest into daisry farms to own atleast a margin of the farms.
Logistics system should also be improved to have cost effectiveness. Gulf
countries should also accessed whereas countries in South Asia can also be
good market of the Engro Foods. At last it should have a very effective MIs
and Quality assurance department which include the cross functional teams.

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Introduction
Engro is one of Pakistans most modern, development focused
organizations. Engro Foods different variety of organizations signifies
Engro Foods healthy heritage of advancement and development. Engro
Foods is among the biggest and fastest growing conglomerates in Pakistan

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with a vision to cater to local needs with products conforming to global
standards.
Highly passionate about providing millions of people across the length and
breadth of Pakistan and beyond with the ultimate brand experience, Engro
Foods product portfolio comprises some of the country's biggest and best
selling brands.
But whether it is Engro Foods thick, creamy all-purpose milk, scrumptious
ice-cream high on nutrition content or refreshing range of fruity beverages,
Engro Foods approach remains largely the same as it strive to keep product
innovation at the forefront of Engro Foods guiding philosophy and
consumer satisfaction at the heart of its operational strategy. Fueled by a
vision to bring to the fore innovative food products packed with quality,
value and nutrition, Engro Foods' made its foray into the consumer foods
business in 2006 with the launch of Olper's, Engro Foods flag-ship all-
purpose milk, which soon became a house-hold name widely known for its
rich, creamy freshness, high nutrition content and exciting, vibrant
packaging.
Since then, it has surpassed all expectations and given the foods business in
Pakistan a new direction and a different spin with brands that go beyond the
conventional and the ordinary by forging new standards in product
innovation.

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Engro Foods, derives success from the combined expertise, knowledge and
skills of Engro Foods leadership representing a group of highly successful
and dynamic professionals, who bring in a italth of knowledge and
experience and steer the company to great ideas that pave the way for new
product innovations - and Engro Foods continued success. t Engro, it
support Engro Foods leadership culture through unique systems and
policies which ensure open communication, foster an environment of
employee and partner privacy, and guarantee the well being and safety of
Engro Foods employees.
Engro Foods core values form the basis of everything it do at Engro; from
formal decision making to how it conduct Engro Foods business to spot
awards and recognition. At Engro it never forget what it stand for.

Following are core values:

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Ethics and integrity
It does care how results are achieved and will demonstrate honest and
ethical behavior in all Engro Foods activities. Choosing the c Engro
Foodsse of highest integrity is Engro Foods intent and it will establish and
maintain the highest professional and personal standards. A well-founded
reputation for scrupulous dealing is itself a priceless asset.
Health, safety and environment
It will manage and utilize resources Engro Foods and operations in such a
way that the safety and health of Engro Foods people, neighbors,
customers, and visitors is ensured. It believe Engro Foods safety, health
and environmental responsibilities extend beyond protection and
enhancement of Engro Foods own facilities.
Innovation and risk-taking
Success requires us to continually strive to produce breakthrough ideas that
result in improved solutions and services. It encounters challenges to the
status quo and seek organizational environments in which ideas are
generated, nurtured and developed. Engro appreciates employees for well
thought out risks taken in all realms of business, and for the results

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achieved due to them, acknowledging the fact that not all risks will result in
success.
Engro Foods people
It strongly believes in the dignity and value of Engro Foods people. It
must consistently treat each other with respect and strive to create an
organizational environment in which individuals are fairly treated,
encouraged and empowered to contribute, grow and develop themselves
and help to develop each other. It does not tolerate any form of harassment
or discrimination.
Community and society
It believes that a successful business creates much bigger economic impact
and value in the community, which dwarfs any philanthropic contribution.
Hence, sustainable business development is to be anchored in commitment
to engage with key stakeholders in the community and society.
Products
At Engro Foods, enhancing customer lifestyles continues to be Engro
Foods main concentrate, first and major. All attempts are designed towards
developing food stuffs that can effect customer lifestyles in a significant

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way, guaranteeing their health, pleasure and well-being day after day...and
that is accurately what makes Engro Foods manufacturers a

Olpers milk
Sheer indulgence in every sip comes only with the rich creamy thickness of
Olper's. Give Engro Foods day a fresh start with Olper's!

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Olpers lite
Embrace the lighter side of milk and feel years lighter with Engro Foods
low-fat milk Olper's lite, for a guilt-free existence!

Olpers badam
Savor the flavor of tradition and enjoy the rich, aromatic flavors of badam,
zafran and rose in every sip of milk with Olpers' flavored milk!

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Olpers cream
Enhance the culinary experience with Olper's Cream - a rich celebration of
life at its creamy best.

Olpers tarang
Experience sheer bliss in a tea-cup with Tarang, Engro Foods special tea
creamer for that perfect cup of tea.

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Omung dobala
Get nutrition and the best value for money with omung dobala

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Olfrute

Enjoy Engro Foods heavenly nectars extracted from pure fruits to
revitalize you with a much-needed boost, anytime anywhere. Only with
Olfrute.

Dairy Omung
Rise up to a better life with Engro Foods all purpose dairy brand Omung
available at the ultimate price and in the best quality.

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Olpers tarraka
A dash of Tarrka in your favorite cuisine is all it takes to bring out the
flavor of you food and leave you craving for more.

Omore
With its rich, creamy taste, high nutrition content and wide-range of chunky
flavors get more from your ice-cream with Omore!

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Omung LASSI
Enjoy home-made Lassi in the convenience of a Tetra Pak. Refresh your
day with Engro Foods two delicious flavors.

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Omung LASSI
Enjoy home-made Lassi in the convenience of a Tetra Pak. Refresh your
day with Engro Foods two delicious flavors.

Vision
" Engro Foods vision is to become a fast expanding mega foods company.
To achieve our vision, the company will initially focus on dairy by
investing a substantial amount in plant, milk collection capability and
marketing. We are making concrete efforts to expand in and beyond
Pakistan; through strategic international alliances, to eventually become
global."

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Most Critical Strategic Issues affecting the Organization
Marketing analysis is an important phase when a new item is to be released
into the industry. There are many threats associated with that new item and
especially when a company chooses to broaden into an absolutely new
industry that it was not formerly serving. Thus to be able to decrease the
scale of the threats and to be effective, huge organizations with a analysis
and growth division performs the marketing analysis. Even those
organizations that do not have a R&D division can perform marketing
analysis through other organizations that are offering the service of selling
analysis.
One such company is A.C Nielson that performed the promotion research
for ENGRO foods when the idea of expanding into a new market was
presented. Marketing research is the methodical style, selection, research
and confirming of information to the appropriate events. ENGRO desired to
create a new fertilizing place but due to certain restrictions from the govt.
was not able to do so. Therefore, the company made the decision to shift
into a new market. They came up with several choices such as telecoms and

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pour place but they discovered out that the food market organized the
biggest guarantee. It was an exploratory research that is the primary
objective was to highlight the real characteristics of the problem in this
case, variation into a new market, and to choose possible new alternatives
and concepts such as the food market. They also went though the list of at
least 1,200 titles before they made the decision to present Olpers. Olpers
is marketed as the dairy for all-purposes. The reason for this is that while
performing research, they discovered out that people want dairy that could
be used for all reasons such as consuming, tea whitening etc.
Once the item was presented the company desired to add more items to it.
Therefore they performed another promotion analysis to discover out the
achievements of Olpers. The researchers began off with extra information
that was available. They tried to locate the stage of complexness engaged in
such a choice and the scale of achievements. But that was not enough so
they began to gather main information through the use of different methods.
The first began with study analysis to comprehend the individuals' values,
choices and main needs that can be pleased by presenting extra items. The
researchers also performed observational analysis to notice the individuals
in different configurations. They used it to discover out which item the
individuals really purchased, where did they take more time in buy
procedure and where did they look when they were shopping for grocery.
This assisted them to see the shelf-space that can be used. They used the

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technique of following their every move that is they noticed individuals
while using the item. They also performed unfocused categories where they
questioned a different set of individuals to discover concepts about the item
and what more they want in the food industry to be available to people.
The researchers performed surveys to discover the reactions of clients about
Olpers. They got a beneficial reviews from the clients who also motivated
them to get further and to create a new place in Sahiwal. Through different
analysis techniques the company was also able to discover out the number
of faithful of competitors brand.
Once all the information has been gathered, it is further examined to draw
out results from the information. The researchers used all kinds of
mathematical techniques such as regularity submission to now the number
of individuals purchasing the product, regular and actions of dispersions for
significant factors. They also used some choice designs for additional
findings
After the research of information researchers existing the results to the
choice creators who successfully pass the ultimate judgment. Due to the
beneficial reactions of customers, the Decision makers decided to go
forward with the idea of presenting more items to the food Olpers product.
It can be said that effective marketing research allows the promoters to
comprehend the costumers needs that are still unsatisfied. The two new

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items of Olpers in the market are Olwell diet milk items and Olpers
cream. The company has further programs to flourish more in this industry
and existing more items relevant to milk items.

Awards
Eman won Pakistans InfoComm Technology (ICT) Award (Karachi, Oct
2011)
Eman won Merit Award in the regional Asia Pacific InfoComm
Technology Award (APICTA)(Thailand,Nov 2011)
Engro Corporation being named The most preferred graduate employers in
Pakistam, 2011 by engage consulting
Engro Vopak tops the list at the Vopak Asia Awards 2010
Engro Rupiya Certificates declared the best transaction award of 2010 by
CFA Association of Pakistan
Engro Corp awarded the KSE top 10 companies award for the year 2008-
2009
Engro Zarkhez won the coveted title of Brands of the Year award

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Engro Corp won the Investor Relations Award by CFA Association of
Pakistan
Corporate offices of Engro Corporation & Engro Fertilizers received
Green Office Certifications- becoming one of the only three companies in
Pakistan to receive Green Office Diploma
Engro Polymer & Chemicals won Best Annual Report- 2nd in chemical
sector by ICAP
Engro Corp and Engro Polymer & Chemicals won living the global
compact Responsible business award 2010-11 by Global Compact
Engro Corp won the Best Sustainability Report Award 2010 followed by
Merit Certificates for reporting under GRI framework by ICAP
RAW MATERIAL PROCUREMENTS
Raw material procurement performs the most important part in the success
of any supply sequence. The reason being, that it is the primary level action
and if there are faults in it, the efficiency focus on the high company's raw
materials acquired and at the same time developing and keeping long
lasting connection with their providers. This way Engro Foods is playing a

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significant part to generate and industry a range of top high quality milk in
a country where a huge variety of this product is lost each year due to
ineffective farm-to-market facilities.

Raw material
The various types of raw components required for the dairy and cream
manufacturing at Engro foods include
Raw Milk
Other ingredients like SNF and fats
Packaging material
RAW MILK
The raw milk items which are further prepared in the production plant at
Sahiwal and Sukkur is the primary raw content at Engro foods because their
item profile involves all milk centered items. The raw milk items which is
mainly the buffalo grass milk items is acquired from the various milk farms
across the nation with most of these milk vegetation being situated in Sindh
and Punjab region

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Other Ingredients
There are several other components that are included at the various levels
of the development procedure at Engro Foods and their specific amounts
rely on the dishes of the products being produced. These include SNF that
are shades not body fat and body fat which are modified to get the preferred
levels. For example, the Olpers milk products includes 3.5% fat whereas,
Tarang milk products which is the tea whitener and more frothy in
characteristics has 7% fat, therefore, during the development procedure,
more fat is included to the milk products to generate Tarang.
Furthermore, SNF in dairy is to be maintained at 8.9% which is also
adjusted during the procedure depending on the quality of dairy. Another
product of Engro Foods, Olwell dairy which is great calcium mineral and
low fat dairy targeting the health-conscious section, requires great calcium
mineral level that is modified during the procedure.
Packaging Material
The packaging material used by Engro Foods is provided from Tetra Pak
Ltd. It is in the form of combined linens of aseptic appearance coming at
the manufacturing facility directly from the provider. The aseptic offers are
sterilized prior to filling of UHT (Ultra Heat Treated) dairy, leading to a 6-
layered Tetra Pak Stone Aseptic appearance, with a 3 months shelf-life.

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Sources of milk supply
At Engro Foods provide of raw dairy material is supplied through two
main sources
Direct sources
Contractor base collection
Direct sources
The method of milk selection through direct sources can be defined as milk
selection done through various milk farm owners residing in different
towns. A villager called Dhoti is responsible for collecting milk from his
specific area and delivers milk every morning and evening to the Milk
Collection Centre. The volume of milk supplied by the milk farm owners
varies hugely depending on both the size of the are covered by the milk
cultivator and the availability of milk and at times could be as low as two
liters a day.
The technique of milk collection from direct source is the most
recommended one by Engro Foods mainly because of the low probability
of adulteration of the milk by milk farm owners. The reason bookkeeping
for this is that it is easier to recognize adulteration in low amounts of milk

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in contrast to high volume provided by the other technique. However the
overall quantity of milk gathered through this technique is very limited.
Milk Collection Center
Engro Foods preserves a full fledged Dairy Selection Department to
manage milk collection through direct sources. It started off with hundreds
of Dairy Selection Centers in March 2006 and now in 2008 has over five
hundreds of and fifty Dairy Selection Centers operating across the nation.
Today, Engro Foods can be regarded as having one of the largest milk
collection networks in the nation which is unrivaled in size, productivity
and performance to meet the self-imposed dedication to top quality. The
vast network consists of town milk centers which are equipped with chillers
to preserve the top quality prior to long stretches to the industries provided
by specially designed tankers.
Primary of Dairy Selection Center is to deal with small amounts of milk
provided by the town dairy farm owners. On one hand, it has proved
regular earnings for farm owners through an assured and growing earnings
as a result of the sale of their milk, and on the other, it has allowed Engro
Foods to gather better top quality milk in the amounts it needs. At the Dairy
Selection Center a trained milk collection agent who tests and records every
supply for top quality and fat content gathers the milk and denies the milk
that does not comply with their top quality requirements or is adulterated.

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Contractor Based Collection
It specialist centered dairy selection involves collecting dairy from
approved providers who are aware of the quality requirements implemented
by the firm. The companies are responsible for dairy selection from a large
area and can bring about ten thousand liters of dairy a day from dairy farm
owners. This method of specialist centered selection leads to the most to the
overall quantity of dairy selection. However, the company worries
adulteration on part of companies because it is harder to investigate when
the volume is high.
Once this dairy is tested for the protein, lactose and butterfat content it is
sent to the chiller containers which protect dairy from air, light and heat.
This dairy is then transferred to the plant. These refrigerator bins are
aseptically cleaned before dairy is stored in them.
Transportations of raw milk
The raw dairy is transferred from the dairy selection center to the
production plants via protected tankers. The protected tankers maintain the
heat range of dairy around f Engro Foods levels Celsius. The reason why
the tankers are protected is to prevent the dairy from getting hot in the
summer or lock up in the winter. The showing surface of the vehicles also
provides protection against infra-red radiation and decreases the degree of

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heat on the tank. Also the cool heat range prevents the production of viruses
while the dairy is transferred over long stretches to the production site.
Normally the capacity of the regular tankers used for the transport of dairy
from the dairy selection center to the plant differs between 10,000 and
35,000 ltrs.

The transport fleet at Engro foods is partially possessed and partially
shortened that is they make use of third party logistics . Moreover, the
transport tracks from dairy selection centers to the manufacturing sites at
Sahiwal and Sukkur are developed in a way to prevent the actual of tracks
which otherwise would add up to the improved cost of transport. The raw
dairy is normally transferred between four to six hours to prevent loss of
quality.
External Analysis:
Political factors:
Engro foods is operating in an environment which is politically very
unstable. Strikes and road blocks happen frequently. This creates on time
delivery problems. Government policies about pour supplies change very
frequently. Government conditions are very uncertain. No one is obvious

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whether this government will complete its tenure or midterm election will
be held. It has been seen that due to change in government, policies of
previous government are also changed. So political risk is seems to be high.
Pakistans business relation with other countries are not strong as it have
India and Afghanistan are Engro Foods neighbors with whom either
Pakistans relations are not good or there is not high demand of Pakistani
products. In European countries there other big players who are operating
and competing with them is not easy as well as export quota of Pakistan is
also small. Trade unions in Pakistan are not much strong so there impact on
the organization is very minor. As Pakistan supports privatization and
upcoming time there would be no threat of nationalization, so with this
regard this is safe.
Economic/demographic:
Inflation rate is in double figure in Pakistan which is being very
problematic. Purchasing pour of target customers is decreasing day by day
due to high inflation. Unemployment rate is very high in Pakistan, this
creates problem in terms of lower purchasing pour of target customers and
opportunity in terms of availability of competent human resource.
Availability of credit is high but cost of debt is comparatively high due to
high interest rate because credit rating of companies is also very good.
Growth rate of GDP was 3.59 percent in 2013 and it is expected to grow

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3.6 percent in 2014 according to The Express Tribune. Per capita income in
Pakistan has grown marginally up by $783.3042 to $802.4507. It means
that income of households is also increasing but not in accordance with
inflation.
Rural of urban migration is very high due to lack of facilities like education
health and other services in rural areas. Population of Pakistan is
193,238,868 estimated in 2013. And it is growing at 1.52 percent. Urban
population is 36.2 percent and rate of urbanization is 2.68 % annual rate of
change. Where as rural population is 63.8 percent. There is 44.68%
Punjabi, 15.42% Pathan, 14.1% sindhi, 8.38% saraiki, 7.57% muhajir,
3.57% Balochi and 6.28% others.
Packed milk companies are facing rigorous direct and indirect competition,
there are many domestic players in the dairy and food sector and there are
many who are planning to invest in this sector e.g. Nirala, Good milk.
Pakola.
Socio-cultural Factors:
Pakistani milk users are now shifting towards packed milk due to
awareness programs and advertisements of Tetra Pak, Nestle and Haleeb.
Literacy level in Pakistan is growing day by day which increases awareness
of population, now people are becoming more health conscious and they

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avoid to use unpack milk, hence there is chance of success of packed milk
companies.
There is myth in Pakistan of supremacy of fresh milk. These packed milk
companies are trying to break that myth due to which most of milk used is
unpacked. Another factor is the pricing, unpacked milk is comparatively
less expensive i.e. average Rs.70/kg whereas packed milk is Rs. 92/kg.
Whereas inflation has increased the operation cost of packed milk
companies.
Over the years, Nestle and Haleeb, as well as Tetra Pak have been making
active efforts to convince loose milk users to switch to processed milk. In
the last six years, Tetra Pak has launched three major campaigns aimed at
changing consumer perceptions to address the misconception that processed
and packaged milk has preservatives. These campaigns talked about the
benefits of Tetra Paks six-layered packaging material and innovative
technology that keeps milk safe for a long time. It takes time to change
attitudes, especially in a culture where the concept of fresh milk is healthier
option.
Technological factor:
Now a days technology is changing and improving day by day. This has
impact on not only companies as well as the behavior of consumers. The

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technology brings competitive advantage to any organization. By using
technology the milk yield per animal can be increased. Engro is using
modern technology for storage and processing of milk which keeps it from
losing its quality. They are also educating its human recourse with is
associated with dairy sector to increase the yield of milk and to maintain
the high quality of milk. Before getting milk from the farmers the Engro
representative checks the quality of milk before getting it into the further
processing, which insures the quality of milk for the company. Engro is
also taking energy saving schemes which can enhance its plants capacity
and which lead to increased yield of their milk.
Qualified food technologists at Engro ensure that highest quality
parameters occur through all steps of production and that the product
reaches the consumers as per promise of high quality and nutritious milk.
As it discussed earlier the loose milk might replace the packed milk if the
customer believe that packed milk contain preserves or is unhealthy to
drink. As it all know that Engro is the well-known company which is
famous for its innovative food products packed with quality, value and
nutrition. Engro has achieved this by using superior technology in all steps
to ensure its product is of high quality and serve its customers better and to
avoid them to switch to other substitute products.

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Enological:
Being a developing country in Pakistan ecological and environmental
aspects needs special concentration. Engro is playing its role by internally
implementing the environmental favorable laws, regulations and standards
like safety, workplace health, risk assessment, hygienic conditions to work,
and building plants away from populated areas to avoid pollution problems.
Engro also building hospitals, schools and colleges for their employees and
their families which is not very expensive, just to support health friendly
environment.
As we knows the current status of pour supply in Pakistan is very unstable.
Many companies are affecting badly due to short fall of energy which
includes supply of electricity and gas. Cutting off of pour supply results in
low yield, less working hours, high operating cost, this results in difficult
for companies to minimize its cost of production. Many companies are also
afraid of expanding their capacity of production through new plants
because they afraid they might not get the pour supply from the government
and their huge investment may return into only losses nothing else. Engro is
making deals and negotiating with government, to ensure the consistent
pour supply. Engro is also making contracts with different farmers for the
supply of milk to ensure the availability of sufficient milk which is needed.

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Legal:
Recently business legislations have helped the country to be suitable for
international investments. A 13% decline in finance cost to Rs586 million
and 38% decline in tax expenses to Rs502 million provided support to the
falling profit. The finance cost fell due to low interest rates while ongoing
capital expenditures resulted in a decline in effective tax rate to 29%
compared to 33% in nine months of 2012.
In case of Engro, Lowered interest rates brought finance costs down to
Rs397 million for the half year period, down from Rs440 million
previously while a reduced effective tax rate lowered tax costs to Rs454
million from Rs518 million.
Corporate Tax Rate: 0 upto 35% depending on company size and net tax
profit. In case of loss(Section 113): 0.5% of Turnover (specific exemptions
may be available.)
The Nawaz Sharif government wants an increase of between 22 and 25
percent in tax collections at any cost and the budget being announced
proposes a variety of new taxes, an increased sales tax, more withholding
tax on many items and many changes in excise duties.

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The 35 percent corporate income tax would remain unchanged in Budget
(2013-14) to avoid any revenue shortfall. The further reduction in the
corporate income tax is not possible in current situation.
To rationalize the taxation of the companies, the rate of initial
depreciation to be reduced from 50% to 25% for Plant and
Machinery.
During 1992-93, banking, public, and private companies were taxed at the
rate of 66 percent, 44 percent, and 55 percent, respectively. These rates
have been reduced significantly over time. Currently, there is one uniform
corporate tax rate of 35 percent for all three types of companies except for
"small" companies that are taxed at a lower rate of 25 percent.
Market:
Due to the recent problem arises due to the distribution of Engro, net sales
fell to Rs18.9 billion for the half year period, down 4% from Rs19.7 billion
for the corresponding period last year, due to problems in the distribution
network. The company is currently in the process of constructing a
powdered milk plant to further expand its product line. The plant is
expected to come online in 2014. However Engro Foods was able to raise
profit margins by 3.5 percentage points to 28% due to higher prices in the
dairy and ice-cream segment.

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The people in rural areas still prefers using loose milk as they have their
own animals which provides them with sufficient milk. They dont need
extra milk in the shape of tetra pack milk. As they think loose milk is fresh
and good for health. As urban population is 36.2% so the Engro have to
focus on that percentage. Where availability of loose milk is not pure,
people prefer using tetra packed milk. The perception of people is changing
day by day towards tetra pack milk. And the need of tetra pack milk is
increasing day by day. So Engro might be thinking of establishing new
plants to grab the market share, and serving other segments of the market
where Engro foods products are not available. Milk is a kind of product
which is used by rich as well as poor people, in every season. So there is a
huge market in dairy product industry.
Competitors:
Haleeb and Nestle are the main competitors of Engro foods. There are only
these big players in the market. But there are still other companies who are
in the diary product industry but they are not a threat for Engro. But there
might be chances of new entrant in the market as Milk industry has a huge
market and customers of this industry are increasing day by day. The
difference between products is not much, hence companies try to compete
in terms of low cost, customer satisfaction and good quality.

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Strenghts and weaknesses of competitors:
Nestle:
Objectives: Nestles objective is to be the leading health, wellness, and
nutrition company in the world
Strategy: this leadership can only be achieved by the trust and behavior of
customers to Engro Foods product. And this trust and behavior can be
achieved by consistent delivery of Engro Foods promises.
It are seeking to achieve leadership and earn that trust by satisfying the
expectations of consumers, whose daily choices drive Engro Foods
performance, of shareholders, of the communities in which it operate and of
society as a whole. It believe that it is only possible to create long- term
sustainable value for Engro Foods shareholders if Engro Foods behavi
Engro Foods, strategies and operations are also creating value for the
communities where it operate, for Engro Foods business partners and, of
course, for Engro Foods consumers. It calls this Creating shared values.
It is investing for the future to ensure the financial and environmental
sustainability of Engro Foods actions and operations: in capacity, in
technologies, in capabilities, in people, in brands, in R&D. Engro Foods
aim is to meet todays needs without compromising the ability of future

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generations to meet their needs, and to do so in a way which will ensure
profitable growth year after year and a high level of returns for Engro
Foods shareholders and society at large over the long-term.
Earning after tax is Rs4,668 millions in 2011 and Rs5,865millions in 2012.
Strenghts:
1) Unmatched product and brand portfolio
2) R&D capabilities
3) Distribution channels and geographic presence
4) Competency in mergers and acquisitions
5) Brand reputation valued at $7 billion.
6) Brand image
7) Marketing strategies are innovative
8) Ability of acquiring weaker firm and throw them out of the
competition
9) Skilled labor
10) Educated staff
weaknesses:
1) Inability to provide consistent quality in food products
2) Weak implementation of CSR

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3) Because of low marketing and advertising Milk pak is position in the
minds of customers in decision making process.
Haleeb:
Objectives: to improve the quality of life by offering tasty, affordable and
highly nutritional products to its customers while maximizing stakeholders
value
Strategy:
Build branded food business to improve quality of life by offering tasty,
sage, hygienically processed, affordable, highly nutritional food products
through environment friendly processes to Engro Foods customers while
maximizing stake holders' value.
Meet the requirement of all relevant legislation and regulation related to
consumer satisfaction & safety, environment and other applicable laws etc.
To prevent pollution through controlling levels of harmful emission,
effluents and other wastes.
Contribute to safe and healthy environment for Engro Foods country.
Promote mutual trust with customers, suppliers, employees, shareholders
and community.
Provide all the necessary resources for the continual improvement in
quality, safety of Engro Foods products, processes and environment.

38
In order to provide best quality products to its consumers, HFL has a well-
developed supply chain infrastructure. It has heavily invested in a vast
network of company operated milk collection centers across the country.
HFL has a strict and stringent quality policy regarding intake of raw milk. It
is the only company that conducts 21 rigorous quality tests to ensure that
only fresh milk of the highest quality is accepted at the plant premises.
Strenghts:
1) The thickest milk
2) Taste
3) Nutritious
4) Hygeinic
5) Strong brand loyalty of customers of Haleeb compnay.
6) Haleeb boods have best distribution channel in all ove the pakistan
7) Management team of Haleeb company is very strong and educated
8) Strong positioning in customer mind
9) Focus on research and develpment
Weaknesses:
1) Focus shifted from main product to other products
2) Less product awareness in customer mind
3) Low promotional activities

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4) Dependence on 3rd party for supply of milk

Porters five forces:
Threat of new entrants:
Capital requirement is high, requires huge investment of financial, human,
technical and marketing Resources. its difficult for new companies to
achieve economies of scale. So threat of new entrants is low
Bargaining pour of suppliers:
There are large number of suppliers for the Engro foods, as large volume of
milk is bought from large number of milkmen. Company can buy it from
any suppliers, if someone refuses to sell. Also company is purchasing the
large volume of milk from them so suppliers dont have much option to
negotiate on price or sell to others, so bargaining pour of suppliers is less.
Bargaining pour of buyers:
An individual buyer cant affect the company while large number of buyers
has more power with the company. As there are large number of
distributors for Engro foods who is distributing Engros food products and

40
non of them have enough Resources to start its own backward integration,
so bargaining pour of buyers is less here.
Availability of substitutes:
There are many substitute products available in the market. Loose milk is
also a substitute, others competitors products for instance. There is more
competition in the food industry so threat of substitute product is more.
Competitive rivalry:
The dairy food industry is highly competitive. Companies try to compete
with low cost, quality and customer satisfaction.
Nestle have other products like, mineral water, yougurd, cream, cereals,
noodles, polo, and juices.
Haleeb have flav Engro Foodsed milk, juices, desi ghee, tea max, cream.
Engro should also consider these products to launch their own new brands
and grab their market share too.

41
Internal Analysis:
Engro is a well established brand name in Fertilizer, IT and infrastructure
business and pour sector doing business in 7 industries. The brand is well
known so customers will automatically have a brand association with Engro
foods and see as premium quality products. 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 in order
to introduce new products as it has sound financial background.
Engro Foods is reported to be the one of the fewest companies doing
interest free business using Madarba, Musharka which can attract the
Muslims investors who dont want to invest in companies where interest is
used.
It can also distribute its products through better channels because of its long
term relationship with distributors because it has a old relation with the
distributers in agriculture sector.
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

42
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.
In first year, Engro Foods crossed 1.4 billion sales figure which shows
customers satisfaction upon products. 4. Its taste, quality proposition and
world-class quality proposition system which shows its potential.
Engro Foods did 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, it has hired various global research partners like AC
Nielsen, Mindshare, JWT Asiatic and MARS marketing and advertising
agencies.
Engro Foods has the third-generation UHT milk plant. Engro Foods plant
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). According to company no other competitor has
3G plant.
Engro Foods has produced very strong brands discussed earlier, which
depict they have ability to introduce new strong brands especially Olpers

43
Packaging and color of packaging remained very successful and it is
updated continuously before the competitors can do any breakthrough in
the packaging. Branding is also a core competency of the company.
Engro Foods has very effective advertising marketing campaigns which
also give it upper edge over the competitors.
The company has not owned the color red like Nestle has a green Milk
pack; 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.
Engro Food is not having its own dairy farms; it largely collects loose milk
from farmers & gwalas 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.
Engro Foods is not having its own dairy farms; it largely collects loose milk
from farmers & gwalas 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. It should have its build a system so that companay

44
has more control over the dairy farms either by financing the farms or by
backward integration.
Engro Foods 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. The company must have to resolve the issue
to have its own packaging system so that extra costs must be avoided.
Engro Foods have most of the milk-collection centers located in Punjab,
whereas its only milk processing facility is situated near Sukkhur (Sindh). It
increases the milk collection &
distribution costs; and also increases the chances of milk getting spoiled
because of increased travelling time. Company should have to resolve that
issue.
Engro Foods has a not very wide product line whereas its competitors like
Nestle and Haleeb Foods have a much diversified line of dairy products.
Company has been successful while introducing the new products so the
company should broaden the product line.

45
Strategic Goals and recommendations:
As current market share of Engro foods is 51 %, they should work on
grabbing more market share. They are expecting 55 % in the near future.
As there is increased competition in food industry, as new entrants are
emerging into the market.
Meanwhile, the companys administrative expenses for the nine-month
period rose 24 per cent to around Rs739.8 million, from Rs595.6 million in
2013. They should try to minimize those administrative expenses. It should
work to strengthen its distribution structure.
They should focus on volumetric growth rather than margins. Gross margin
was highest 28.1 % in the history of the company in the final quarter of
2012. They should try to maintain that figure in future years also.
The Debt to equity ratio in 2011 was 43 %, there goal was to achieve 50
percent in 2013, and they achieved it in 2013. I believe that that ratio of
capital structure is optimal. And they shouldnt be go for more dept
financing.
They should lower there dept-financed capital expenditure spending. That
would return in lower financial expenses.

46
They should focus on the strong product mix along with diversification. It
would contribute to a positive performance of the company.
They should also plan to expand internationally and introduce new products
to them.
They should focus on new products/ brands to expand its portfolio in the
dairy industry, after completing consumer and product research.
They should expand in and beyond Pakistan through strategic international
alliances.
In order to become the fastest expanding food company they should invest
a substantial amount in plant, milk collection capability, technology, and
marketing.
Engro has not its own dairy farms. It collects milk from farmers, which
sometimes is of low quality and impure. Engro foods need to have their
own dairy farms so that they can meet the increasing demand of the market.
If they made their own tetra packaging, it could help them reduce unit cost
of their milk. And have competitive edge over pricing. Need to invest for
having own packaging system.
They should also launch new brands which their competitors already have.
And try to cut off their market share.

47
Should also focus on other brands not only milk, by promoting other brands
they could get extra cash inflows from that brands too.
They should made deals and negotiations with the government in order to
have uninterrupted pour supply,
They should make strong positive relationship with other neighbor
countries, which can help them introducing their brands to other markets
also.
As inflation is rising, cost of raw material is also rising, so if Engro wants
to be competitive, it needs to be cost effective in every field of their
operations.
As population of Pakistan is also growing at 1.52% they should invest more
in plants and farms in order to meets the needs of the growing population.
There should be consistency in the promotional campaign which gives the
message promoting packed milk and preferring packed milk over loose
milk.
To get tax shield, Engro should focus on debt financing.
Stock repurchases can help Engro to get away from Dividend obligations.

48
They have to increase the switching cost of the customer to move to buy
products of the competitors. To focus on hygiene of their food products
compare to the sellers who sell unpacked Lassi, Cream and milk. They
improve their bargaining pour from supplier because the product is
available from many suppliers so they can purchase in huge quantity at the
reasonable prices. Bargaining pour should increase they can thread their
supplier to switch to other suppliers if suppliers are not supplying the
quality product at attractive prices. The organization can create barriers for
new entrants by developing the image that business is highly capital
intensive or high legal requirements and it is not easy to enter in this
Industry. Organization should tie up the complementary products and
services with the sales targets higher the sales higher the reward in the form
of complementary services for dealers and distributors.
Engro foods is subsidiary of Engro Corp. and it is currently operating in 7
industries which are fertilizer, polymer and chemical, food, pour and other
which shows that company have diversified knowledge and experience of
the business. It might go into other industries as well because it got the
potential.
Engro Foods is strongly recommended to do backward integration because
especially in summer when the animals are fed heavily green food their
milk quality got effected and milk get very thin as well as in summer

49
season the animals give less milk. Another big reason of low production of
milk in summer is that animal sow rate in summer decreases. To increase
the quantity of milk the supplier use to add water into milk hence the
quality of milk decreases. Engro Foods need to more control over the dairy
farms where milk is collected. This can be done by franchising as buying or
making so huge quality of dairy farms need a very high cost. So a
franchising can be good option for the company to have more control over
the operation of the dairy farms and maintain the quality of the dairy raw
products.
Engro Foods should own a color which increase brand recognition of the
company.
Engro Foods has shown rapid growth since its inception and is growing
continuously due to its quality products which are competing with
international companys brands and it has been successful. It would be not
unfair to say that it has snatched their market share and now it has about
38% market share of packed milk which is 40% with Milk pack of Nestle
and 22% with other market players which shows that being a very new
company it has beaten the Haleeb and the Milk packs market share is also
grabbed by the Olpers same situation cane be seen in other dairy products,
while in ice-cream business its brand is growing ery fast.

50
Encouraged by phenomenal success in the local market, Engro Foods
recently made big leap into the 632 billion dollar global foods business with
the acquisition of Al-Safa, a leading halal meat brand of North America.
A newly formed global venture Engro Foods Canada Ltd and its subsidiary
Engro Foods USA, LLC give it the distinct advantage of being Pakistan's
first local conglomerate to explore the world's fastest growing consumer
segment and acquire a top quality international meat brand.
These facts suggest that Engro Foods should enter the international markets
especially in Arab countries it would be very successful where Nestle is
market leader in dairy products and Engro Foods has once proved itself a
very strong competitor. Another strong point that favors the Engro foods is
that a lot of Pakistanis are there in these countries for them the brand isnt
new and these customers knew the quality of the products by the Engro
Foods. These customers can deliver strong word of mouth to their fellows
in the market that contains a lot of foreigners of South Asian countries. So
the brand will not be totally new and will be seen in usage and acceptance
will increase. Nature of business here will be exporting the product from
Pakistan because these countries do not have the supporting environment or
the supplies for the raw material and they use to export from other countries
among which New Zealand, Australia, America and Switzerland etc.

51
Bangladesh, Sri Lanka, Bhutan, and other south Asian countries can also be
approached but in these countries the business will be localized type of
business. Exports to Afghanistan and other states like Uzbekistan,
Azerbaijan, and Tajikistan etc is also a good option because these areas are
not very mature markets and have potential to grow.
Iran is also a good market it should test the market by exporting if
successful than it might also go to that market.
The above suggestions and recommendations, if implemented are the most
productive ways to leverage the organizations core competencies are.
Organization has Resources and capability as it has a very sound financial
background as well as diversity of knowledge and experience so company
can easily workout the recommendations.
Company need to develop the quality of its dairy raw material supplied. It
might be very difficult to manage this because as mentioned earlier the
huge investment is needed. So this can be eliminated by franchising. While
entering into other markets can be through acquisition as it did in North
America. Because it has the experience as well as financial Resources so it
can easily acquire local setups.
To implement the recommendations its marketing department should gather
market data and best practices which are done all over the world. Free flow

52
of information should be encouraged. Logistics should be improved as
plants are away from the raw material collection centers where as the
distributions are also done allover the Pakistan so their should be a very
good logistics system fully equipped with the latest technology that can
give superiority over the competitor. Research and development department
of the company is very effective its productivity should be sustained. There
should be cross functional information sharing which can be done by
improved management information system (MIS) and cross functional
teams which can assure the quality management of all the processes so that
the quality assurance can be checked.

Engro Foods Limited Strategic Marketing Project.

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