Chinese Restaurant

Research Report on
Feasibility Study of
Opening a New Chinese
Restaurant in Karachi
Institute of Business Administration, Karachi.

Feasibility Study of Opening a New Chinese Restaurant in Karachi
METHODS IN BUSINESS RESEARCH

Fall Semester 2007
FEASIBILITY STUDY OF OPENING A NEW CHINESE

RESTAURANT IN KARACHI
Prepared for
Mr. S.M. Saeed
Course Instructor
Methods in Business Research
Prepared by
Maria Taqi
M. Zeeshan Khan
Raazia Bari
Zarmeena Riaz
November 19, 2007

TABLE OF CONTENTS
Table of Contents.............................................................................................................III
Letter of Transmittal.........................................................................................................1
1 acknowledgement...........................................................................................................2
2 EXECUTIVE SUMMARY.....................................................................................................3
3 Why we have chosen this industry?................................................................................4
4 LITERATURE RESEARCH .................................................................................................5
4.1 Strategy - what is strategy?.....................................................................................5
4.2 Mission.....................................................................................................................6
4.3 The Five Competitive Forces That Shape Strategy...................................................7
4.4 Forces That Shape Competition: ( by Micheal E. Porter HBR)...................................8
4.5 Porter’s Thinking....................................................................................................10
4.6 The shortcomings of the traditional approach........................................................11
4.7 Six Critical Success Factors....................................................................................11
5 Edible Oil Industry.........................................................................................................12
5.1 Brief history about the edible oil industry...............................................................12
5.2 Present Situation of edible oil industry in Pakistan.................................................12
5.3 Consumption..........................................................................................................12
5.4 Edible oil industry (3 segements)...........................................................................13
5.4.1 Group 1(Premium Segment)............................................................................13
5.4.2 Group 2(Popular Segment)..............................................................................13
5.4.3 Group 3 (Lower Segment)................................................................................13
5.5 Market share analysis of the overall industry.........................................................14
5.6 Branded versus unbranded....................................................................................15
5.6.1 Market share information of tier 1 segment....................................................15
6 What is edible oil...........................................................................................................16
6.1 Manufacturing process...........................................................................................16
The procedure that is adopted by all manufacturers of edible oil is given as follows.
However organizations modify the processes to suit their requirements.....................16
Step # 1: Blending of different oils in different quantities...........................................16
Step # 2: Refining the blended oil...............................................................................16
Step # 3: Packaging....................................................................................................16
Step # 4: Marketing and Sales....................................................................................16
6.2 Source of edible oil.................................................................................................16
6.3 Important facts regarding oil seeds........................................................................17
6.4 Categories of oil.....................................................................................................17
7 Components of Macro Environment..............................................................................20
7.1 Why porters five forces?.........................................................................................20
7.2 Threat of new entrants:..........................................................................................21
7.2.1 Is a lot of capital needed to enter you industry? .............................................21
7.2.2 Are there any proprietary product differences in your industry?.....................22
7.2.3 Does the new comer face any problems in obtaining the necessary skills or
people?.....................................................................................................................22
7.2.4 Are there any established brand identities in your industry?...........................22
7.2.5 Does your customer incur significant cost in switching supplier?....................22
7.3 Bargaining power of Buyers...................................................................................22
7.3.1 Are there a large number of buyers relative to the firm?.................................22
7.3.2 Is your buyer very aware and knowledgeable?................................................22
7.3.3 Is your buyer aware of the need for additional information?...........................22
7.3.4 What is the purchasing power of your consumers?..........................................22
7.3.5 Is it easy for your buyers to switch?................................................................23
7.4 Rivalry among firms...............................................................................................23
7.4.1 Is the industry growing rapidly?.......................................................................23
7.4.2 The fixed costs of the business are relatively low portion of total cost? .........23
7.4.3 Are their any significant product differences?.................................................23
7.4.4 Are their any established brand identities?......................................................23
7.4.5 Is the product complex and requires detailed understanding on the part of
customer?.................................................................................................................24
7.5 Threat of Substitutes..............................................................................................24
7.6 Bargaining power of Suppliers................................................................................24

7.6.1 Suppliers..........................................................................................................24
7.7 Other stakeholders (government)..........................................................................25
8 PEST ANALYSIS..............................................................................................................26
8.1 Economic Factors...................................................................................................26
8.2 Technological Factors.............................................................................................26
8.3 Political Factors......................................................................................................27
8.4 Legal Factors..........................................................................................................27
8.5 Socio cultural Factors.............................................................................................28
8.6 Government...........................................................................................................28
8.7 Pakistan Standard Institute (PSI)............................................................................29
8.8 Encountering the Environmental Uncertainty.........................................................29
8.9 In the edible oil industry, the environmental changes that can be foreseen are....29
9 KEY DRIVING FORCES....................................................................................................30
9.1 Globalization..........................................................................................................30
9.2 Changing lifestyles and habits:...............................................................................30
9.3 Technological Changes...........................................................................................31
9.4 Marketing Innovations............................................................................................31
9.5 Health Consciousness.............................................................................................31
9.6 Strategic Issues in the Macro environment.............................................................31
9.6.1 ISSUE # 1........................................................................................................32
9.6.2 ISSUE # 2........................................................................................................32
9.6.3 ISSUE # 3........................................................................................................33
9.6.4 ISSUE # 4........................................................................................................34
9.6.5 Issue # 5.........................................................................................................34
9.6.6 ISSUE # 7........................................................................................................35
9.6.7 ISSUE # 8 .......................................................................................................35
10 EXTERNAL FACTOR EVALUATION MATRIX....................................................................36
OPPORTUNITIES...........................................................................................................36
11 OPPORTUNITIES AND THREATS FACING THE INDUSTRY..............................................37
11.1 Opportunities existing in the industry..................................................................37

11.1.1 Health Consciousness...................................................................................37
11.1.2 Pakistan’s improved Infrastructure helps in wider coverage.........................37
11.1.3 Expansion into international markets...........................................................38
11.1.4 Increasing Population: .................................................................................38
11.1.5 Celebrity endorsement:................................................................................38
11.1.6 Backward integration....................................................................................38
11.1.7 Strategic alliance with bakeries and hotels...................................................38
11.1.8 Creating awareness......................................................................................39
11.2 Threats existing in the market..............................................................................39
11.2.1 Fluctuating Oil Prices internationally............................................................39
11.2.2 Increasing Health Consciousness..................................................................39
11.2.3 Political instability and international relations..............................................39
11.2.4 Devaluation of our local currency.................................................................40
11.2.5 Expectations by buyers to meet International Standards.............................40
11.2.6 High taxes and tariffs on the import of raw material.....................................40
11.2.7 Intense competition......................................................................................40
11.2.8 Smuggled oil.................................................................................................40
11.2.9 Counterfeiter product...................................................................................40
12 KEY SUCCESS FACTORS (KSF).....................................................................................43
12.1 Clever marketing and advertisement tactics.......................................................43
12.2 Strong brand name.............................................................................................44
12.3 Proper Segmentation...........................................................................................44
12.4 Promotional activities .........................................................................................45
12.5 Competitive prices .............................................................................................45
12.6 Good distribution network...................................................................................46
12.7 Resources (financial and human)........................................................................46
12.8 Product quality....................................................................................................47
12.9 Research and development.................................................................................47
13 Comparative strength assessment of the major players.............................................48
13.1 Habib Oil Mills.......................................................................................................48

13.1.1 History...........................................................................................................48
13.1.2 Corporate Philosophy.....................................................................................49
13.1.3 Product .........................................................................................................49
13.1.4 Pricing............................................................................................................50
13.1.5 Placement – distribution network...................................................................50
13.1.6 Promotion......................................................................................................50
13.1.7 Positioning – critical success factor................................................................50
13.2 Soya supreme......................................................................................................51
13.2.1 Soya Supreme-the product............................................................................51
13.2.2 Pricing............................................................................................................52
13.2.3 Placement......................................................................................................52
13.2.4 Promotion:.....................................................................................................52
13.2.5 Positioning/Unique Selling Proposition (USP) – critical success factor............52
13.3 Dalda....................................................................................................................53
13.3.1 Dalda-the product:.........................................................................................53
13.3.2 Pricing ...........................................................................................................53
13.3.3 Distribution....................................................................................................53
13.3.4 Promotion:.....................................................................................................54
13.3.5 Positioning of Dalda – critical success factor:.................................................54
13.3.6 Positioning of Dalda – critical success factor:.................................................55
14 COMPETITIVE PROFILE MATRIX...................................................................................56
14.1 Comparison of three companies on KSF...............................................................57
14.1.1 Marketing and advertisement.......................................................................57
14.1.2 Brand loyalty................................................................................................58
14.1.3 Promotional activities....................................................................................59
14.1.4 Competitive prices........................................................................................60
14.1.5 Good distribution network:............................................................................61
14.1.6 Human resources:.........................................................................................62
14.1.7 Product quality.............................................................................................63
14.1.8 Research and development:.........................................................................63

14.1.9 Market share:................................................................................................65
15 Internal competencies of the company for addressing the key success factors:.........66
15.1 Competencies building for improved marketing and advertisement...................66
15.2 Competency building for strengthening the loyal customer base........................66
15.3 Competency building for promotional activities...................................................66
15.4 Competency building for competitive pricing:.....................................................67
15.5 Competency required for building good distribution network..............................67
15.6 Competencies required for acquiring human resource........................................67
15.7 Competencies required for maintaining product quality......................................68
15.8 Competency for building research and development..........................................68
16 STRENGTHS AND WEAKNESSES OF HABIB OIL MILLS..................................................70
16.1 The strengths of Habib Oil Mills are:.....................................................................70
16.2 The weaknesses of Habib Oil Mills are:.................................................................73
17 INTERNAL FACTOR EVALUATION MATRIX....................................................................74
Strengths.....................................................................................................................74
18 VALUE CHAIN ANALYSIS..............................................................................................75
18.1 What is value chain..............................................................................................76
19 GENERIC STRATEGY OF THE COMPANY.......................................................................82
20 RECOMMENDED CORPORATE STRATEGY.....................................................................85
20.1 Market Development............................................................................................85
20.2 Product Development:..........................................................................................85
20.3 EXISTING STRATEGY.............................................................................................86
20.4 MODIFICATION IN THE STRATEGY.........................................................................86
21 EVALUATION OF THE ALTERNATIVE STRATEGIC RECOMMENDATIONS IN THE LIGHT OF

INPUT/MATCHING/DECISION MODEL.................................................................................87
22 Tows matrix................................................................................................................88
23 SPACE MATRIX HABIB OIL...........................................................................................90
24 QSPM FOR HABIB OIL.................................................................................................94
OPPORTUNITIES...........................................................................................................94
Strengths.....................................................................................................................96
25 Balanced Business scorecard...................................................................................101
26 Financial Measures....................................................................................................103
27 Operational Measures...............................................................................................103
28 RECOMMENDATIONS AND ACTION PLAN (IMPLEMENTATION)....................................110

LETTER OF TRANSMITTAL
December 15 2008
Mr. Javaid Ahmed
Strategic Management
IoBM.
Dear Sir,
Here is the report based on “Edible Oil Industry”, which you had authorized and is ready for your
perusal.
Through this report we’ve had a chance to investigate the strategic management practices at Habib
Oil Mills and to evaluate the attractiveness of the edible oil industry.
If there be any clarification demanded, we would appreciate a call from you to our group members.
Sincerely,
Mustafaina Akif (5448)
Maryam Cassim (5272)
Shahzaib Hasan (5283)
Bilal Mustafa (5377)
Maryam Saeed (5474)
Maryam Arif (5387)
Maheen Hira Sherwani (5914)

1 ACKNOWLEDGEMENT
All praise is to Allah who makes everything possible in the universe and beyond.
First of all, we would like to thank Allah, who helped us with everything and made everything come
together, then our parents and family who have always supported us in every good thing that we do.
We are greatly thankful to our course instructor for Strategic Management, Mr.Javaid Ahmed, who
provided us clear concepts and a strong foundation of understanding for the subject. He made the
course a valuable learning experience for all of us and made us grow as learned individuals.
Secondly we would like to thank
Mr. Ijaz Hussain Malik – Group Executive Director – Habib Oil Mills,
Mr. Akram Chaudhry – Head of sales operations - Habib Oil Mills
Ms. Farheen Zehra – Senior Assistant Brand Manager – Habib Oil Mills
for taking out time and helping us in providing useful information for our project
We would also like to thank our college; The Institute of Business Management, it has been a great
learning place with different academic and extra-curricular experiences, all contributing to our growth
as students.
Lastly we would like to thank our fellow classmates for making this learning experience a thoroughly
productive and enjoyable one.
Hopefully this report will serve a good purpose.
Thank you,
Mustafaina Akif (5448)
Maryam Cassim (5272)
Shahzaib Hasan (5283)
Bilal Mustafa (5377)
Maryam Saeed (5474)
Maryam Arif (5387)
Maheen Hira Sherwani (5914)

2 EXECUTIVE SUMMARY
In this report we have tried to conduct an in depth analysis of the oil industry in Pakistan, focusing
mainly on Habib oil along with its competitors Dalda and Soya supreme of Agro Processors &
Atmospheric Gases. We have tried to derive the nature of competition existing in the edible oil
industry and have observed that the competitive pressures in the industry are very intense. In the
premium segment of oil industry, Dalda is the market leader having around 25% with Habib as its
closest competitor having a market share of about 20% and Soya supreme having a market share of
16%.these companies try to engage in head to head rivalry. We have also extensively analyzed the
external factors in the industry and how it is affecting the companies within the industry. How the
awareness of health, changing lifestyles, worsening economic conditions and environment affects an
individual’s life forms the crux of this report. It is the prime responsibility of these firms to create health
awareness among masses, which will in turn lead to their increased sales.
The report also focuses on the internal activities and value chain management done by Habib in
making its brand improved and in creating a competitive advantage. Habib oil mills has constantly
evolved, innovated and changed with times. It product line includes different oil variants and ghee
thus offering a complete range of cooking solution for house hold as well as industrial consumers .In
order to gain a sustainable competitive advantage, the generic strategy used by Habib is broad
differentiation. The two corporate strategies we have recommended for the company is product
development (i.e. launching olive oil) and market development (i.e. entering into Afghanistan and
Iran).Finally have given a brief action plan for the implementation of the recommended strategies.
This world is the survival for the fittest, so it is an advice for all strategic managers that if they want to
run their companies successfully they have to sustainable competitive advantage which cannot be
matched by rivals. This is just the beginning for strategic managers.
3 WHY WE HAVE CHOSEN THIS INDUSTRY?
The edible oil industry has a growing market in Pakistan and its usage is expanding rapidly. Due to its
increasing consumption and oil being a basic food commodity, the edible oil industry has attained
critical importance .The consumption of edible oil has increased from 0.3 million to more than 2 million
tons during the last two decades. There are some consumers who use ghee and are hard core loyal
of this product as they feel that the particular taste of ghee can never be obtained if food is cooked in
oil. While most of the consumers use oil, they are basically health conscious individuals who are of
the opinion that having food cooked in ghee will raise their cholesterol level and thus cause any kind
of deadly disease.
A phenomenon that has been noted is that the basic manufacturing process for all edible oils in
Pakistan is the same but still the surprising part is that all companies have different claims for their
brands. Some claim that it is light on heart, while others claim that it makes food tasty, yet few
companies, particularly that old ones, claim that it reflects traditions and values of the family. Thus the
point of differentiation between the various brands does not lie in the product features as such, but
rather in the projected positioning/ USP and the prices at which they are offered.
Pakistan is not really self-sufficient in this particular area. It has to import quite a few seeds from
abroad that are essential in the manufacturing process, like Soya seed and palm oil seeds. At the
same time in few areas it cultivates more than its requirement thus it also exports them to foreign
countries, example cotton seed and sunflower seed is produced in abundance. The funds generated
from exports art utilized in importing the seeds.
4 LITERATURE RESEARCH
4.1 S T R AT E G Y - W HAT IS S T R AT E G Y ?
Johnson and Scholes (Exploring Corporate Strategy) define strategy as follows:
"Strategy is the direction and scope of an organization over the long-term: which achieves
advantage for the organization through its configuration of resources within a challenging
environment, to meet the needs of markets and to fulfill stakeholder expectations".
How Strategy is Managed - Strategic Management:
In its broadest sense, strategic management is about taking "strategic decisions" - decisions that
answer the questions above.
In practice, a thorough strategic management process has three main components, shown in the
figure below:
Strategic Analysis:
This is all about the analyzing the strength of businesses' position and understanding the important
external factors that may influence that position. The process of Strategic Analysis can be assisted by
a number of tools, including:
• PEST Analysis - a technique for understanding the "environment" in which a business

operates
• Scenario Planning - a technique that builds various plausible views of possible futures for a
business
• Five Forces Analysis - a technique for identifying the forces which affect the level of
competition in an industry
• Market Segmentation - a technique which seeks to identify similarities and differences

between groups of customers or users
• Directional Policy Matrix - a technique which summarizes the competitive strength of a

businesses operations in specific markets
• Competitor Analysis - a wide range of techniques and analysis that seeks to summaries a
businesses' overall competitive position
• Critical Success Factor Analysis - a technique to identify those areas in which a business
must outperform the competition in order to succeed
• SWOT Analysis - a useful summary technique for summarizing the key issues arising from an
assessment of a businesses "internal" position and "external" environmental influences.
Strategic Choice:
This process involves understanding the nature of stakeholder expectations (the "ground rules"),
identifying strategic options, and then evaluating and selecting strategic options.
Strategy Implementation:
Often the hardest part. When a strategy has been analyzed and selected, the task is then to translate
it into organizational action.
4 . 2 M IS SIO N
Mintzberg defines a mission as follows:
“A mission describes the organization’s basic function in society, in terms of the products and
services it produces for its customers”.A clear business mission should have each of the
following elements:
4 . 3 T H E F I V E C O M P E T I T I V E F O R C E S T H AT S H A P E S T R AT E G Y
Awareness of the five forces can help a company understand the structure of its industry and
stake out a position that is more profitable and less vulnerable to attack.
In essence, the job of the strategist is to understand and cope with competition. Often, however,
managers define competition too narrowly, as if it occurred only among today’s direct competitors. Yet
competition for profits goes beyond established industry rivals to include four other competitive forces
as well: customers, suppliers, potential entrants, and substitute products. The extended rivalry that
results from all five forces defines an industry’s structure and shapes the nature of competitive
interaction within an industry.
As different from one another as industries might appear on the surface, the underlying drivers of
profitability are the same. The global auto industry, for instance, appears to have nothing in common
with the worldwide market for art masterpieces or the heavily regulated health-care delivery industry in
Europe. But to understand industry competition and profitability in each of those three cases, one
must analyze the industry’s underlying structure in terms of the five forces. (See the exhibit “The Five
Forces That Shape Industry Competition.”)
If the forces are intense, as they are in such industries as airlines, textiles, and hotels, almost no
company earns attractive returns on investment. If the forces are benign, as they are in industries
such as software, soft drinks, and toiletries, many companies are profitable. Industry structure drives
competition and profitability, not whether an industry produces a product or service, is emerging or
mature, high tech or low tech, regulated or unregulated. While a myriad of factors can affect industry
profitability in the short run—including the weather and the business cycle—industry structure,
manifested in the competitive forces, sets industry profitability in the medium and long run. (See the
exhibit “Differences in Industry Profitability.”
Differences in Industry Profitability:
Understanding the competitive forces, and their underlying causes, reveals the roots of an industry’s
current profitability while providing a framework for anticipating and influencing competition (and
profitability) over time. A healthy industry structure should be as much a competitive concern to
strategists as their company’s own position. Understanding industry structure is also essential to
effective strategic positioning. As we will see, defending against the competitive forces and shaping
them in a company’s favor are crucial to strategy.
4 . 4 F ORCE S T H AT S HAPE C OMP ET IT ION : ( BY M I CH EAL E. P O RT ER HBR)

The configuration of the five forces differs by industry. In the market for commercial aircraft, fierce
rivalry between dominant producers Airbus and Boeing and the bargaining power of the airlines that
place huge orders for aircraft are strong, while the threat of entry, the threat of substitutes, and the
power of suppliers are more benign. In the movie theater industry, the proliferation of substitute forms
of entertainment and the power of the movie producers and distributors who supply movies, the
critical input, are important.
The strongest competitive force or forces determine the profitability of an industry and become the
most important to strategy formulation. The most salient force, however, is not always obvious.
For example, even though rivalry is often fierce in commodity industries, it may not be the factor
limiting profitability. Low returns in the photographic film industry, for instance, are the result of a
superior substitute product—as Kodak and Fuji, the world’s leading producers of photographic film,
learned with the advent of digital photography. In such a situation, coping with the substitute product
becomes the number one strategic priority.
Industry structure grows out of a set of economic and technical characteristics that determine the
strength of each competitive force. We will examine these drivers in the pages that follow, taking the
perspective of an incumbent, or a company already present in the industry. The analysis can be
readily extended to understand the challenges facing a potential entrant.
Competitive Strategy: The Core Concepts:
Competition is at the core of the success or failure of firms. Competition determines the
appropriateness of a firm's activities that can contribute to its performance, such as innovations, a
cohesive culture, or good implementation. Competitive strategy is the search for a favorable
competitive position in an industry, the fundamental arena in which competition occurs. Competitive
strategy aims to establish a profitable and sustainable position against the forces that determine
industry competition.
Two central questions underlie the choice of competitive strategy. The first is the attractiveness of
industries for long-term profitability and the factors that determine it. Not all industries offer equal
opportunities for sustained profitability, and the inherent profitability of its industry is one essential
ingredient in determining the profitability of a firm. The second central question in competitive strategy
is the determinants of relative competitive position within an industry. In most industries, some firms
are much more profitable than others, regardless of what the average profitability of the industry may
be.
The Structural Analysis of Industries:
The first fundamental determinant of a firm's profitability is industry attractiveness. Competitive

strategy must grow out of a sophisticated understanding of the rules of competition that determine an
industry's attractiveness. The ultimate aim of competitive strategy is to cope with and, ideally, to
change those rules in the firm's favor. In any industry, whether it is domestic or international or
produces a product or a service, the rules of competition are embodied in five competitive forces: the
entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining
power of suppliers, and the rivalry among the existing competitors.
Generic Competitive Strategies:
The second central question in competitive strategy is a firm's relative position within its industry.
Positioning determines whether a firm's profitability is above or below the industry average. A firm that
can position itself well may earn high rates of return even though industry structure is unfavorable and
the average profitability of the industry is therefore modest.
Each of the generic strategies involves a fundamentally different route to competitive advantage,
combining a choice about the type of competitive advantage sought with the scope of the strategic
target in which competitive advantage is to be achieved. The cost leadership and differentiation
strategies seek competitive advantage in a broad range of industry segments, while focus strategies
aim at cost advantage (cost focus) or differentiation (differentiation focus) in a narrow segment. The
specific actions required to implement each generic strategy vary widely from industry to industry, as
do the feasible generic strategies in a particular industry. While selecting and implementing a generic
strategy is far from simple, however, they are the logical routes to competitive advantage that must be
probed in any industry.
Cost Leadership:
Cost leadership is perhaps the clearest of the three generic strategies. In it, a firm sets out to become
the low-cost producer in its industry. The firm has a broad scope and serves many industry segments,
and may even operate in related industries -- the firm's breadth is often important to its cost
advantage. The sources of cost advantage are varied and depend on the structure of the industry
Differentiation:
The second generic strategy is differentiation. In a differentiation strategy, a firm seeks to be unique in
its industry along some dimensions that are widely valued by buyers. It selects one or more attributes
that many buyers in an industry perceive as important, and uniquely positions itself to meet those
needs. It is rewarded for its uniqueness with a premium price.
Focus:
The third generic strategy is focus, This strategy is quite different from the others because it rests on
the choice of a narrow competitive scope within an industry. The focuser selects a segment of group
of segments in the industry and tailors its strategy to serving them to the exclusion of others. By
optimizing its strategy for the target segments, the focuser seeks to achieve a competitive advantage
in its target segments even though it does not possess a competitive advantage overall.
Stuck in the Middle:
A firm that engages in each generic strategy but fails to achieve any of them is "stuck in the middle." It
possesses no competitive advantage. This strategic position is usually a recipe for below-average
performance. A firm that is stuck in the middle will compete at a disadvantage because the cost
leader, differentiators, or focusers will be better positioned to compete in any segment. If a firm that is
stuck in the middle is lucky enough to discover a profitable product or buyer, competitors with a
sustainable competitive advantage will quickly eliminate the spoils. In most industries, quite a few
competitors are stuck in the middle.
Source:
CREATING AND SUSTAINING SUPERIOR PERFORMANCE, By Michael E. Porter
Institute of strategy and competitiveness
4 . 5 P ORTE R ’ S T HI NKI NG
Porter's thinking on strategy has been supported by precision research into industries and companies,
and has remained consistent as well as developmental. He has concentrated on different aspects at
different times, spinning the threads together with a logic that is irrefutable.
Before Competitive Strategy, most strategic thinking focused either on the organization of a
company's internal resources and their adaptation to meet particular circumstances in the
marketplace or on increasing an organization’s competitiveness by lowering prices to increase market
share.
In Competitive Strategy, Porter managed to reconcile these approaches, providing management with
a fresh way of looking at strategy - from the point of view of industry itself rather than just from the
point of view of markets, or of organizational capabilities.
To be able to survive competition and supply what customers want to buy, the firm has to ensure that
all these value-chain activities link together and fit, as a weakness in any one of them will impact on
the chain as a whole and affect competitiveness.
Porter describes two different types of business activity - primary and secondary. Primary activities
are principally concerned with transforming inputs (raw materials) into outputs (products), and delivery
and after-sales support. These usual line management activities include Inbound Logistics (materials
handling, warehousing), Operations (turning raw materials into finished products), Outbound Logistics
(order processing, and distribution), Marketing and Sales (communication and pricing), and Service
(installation and after-sales service).
Secondary activities support the primary and include Procurement (purchasing and supply),
Technology Development (know-how, procedures and skills), Human Resource Management
(recruitment, promotion, appraisal, reward and development), and Firm Infrastructure (general and
quality management, finance, planning).
The New Strategic Wave
Somewhere between 1980 and 1990 strategic planning came unstuck. Old theories no longer worked
as customers became more demanding and changeable, and markets and technologies rose and fell
ever more rapidly. Even industries that were once distinct with definable products and services now
converged and became blurred.
4 . 6 T HE S HO RT CO MIN GS OF T HE T RADI TI ON AL APP RO ACH
At the heart of the traditional strategy framework lies a microeconomic model of industry. The Porter
model, which combines exogenous forces (such as technology and regulation) that act on an industry
with endogenous ones. More important, it makes three tacit but crucial assumptions. First, an industry
consists of a set of unrelated buyers, sellers, substitutes, and competitors that interact at arm's length.
Second, wealth will accrue to companies that can erect barriers against competitors and potential
entrants; in other words, structural advantage is the source of value. Third, uncertainty is low enough
to permit you to make accurate predictions about the participants' behavior and to choose a strategy
accordingly. Even if any one of these assumptions were correct, the likelihood of all three being so
would be low. Let us examine their validity.
Source:
Kevin Coyne is a director in McKinsey's Atlanta office, and Somu Subramaniam is a director in the
New York office. This article was originally published in The McKinsey Quarterly, 1996 Number 4.
Strategic Cost Management:
Strategic cost management not only leads to incremental performance improvement but also to
transformational change across the value chain. Strategic costing is viewed as part of a larger
business process to influence decisions on pricing and profitability across several dimensions:
product, customer, region, and distribution channel. Learn how your costing process aligns with
industry best practices, and be on the leading edge of emerging practices such as value chain
costing, shared services costing and outsourcing. Understand how German Cost Accounting and
Resource Consumption Accounting are being put into practice.
4 . 7 S I X C RI TI CAL S U CCES S F ACT ORS

• Critical Success Factor 1:
Move out of your comfort zone—today’s paradigms—and use new and wider boundaries for thinking,
planning, doing, evaluating, and continuous improvement.
Differentiate between ends (what) and means (how).
Use all three levels of planning and results (Mega/Outcomes; Macro/Outputs; Micro/Products).
Prepare all objectives—including the Ideal Vision and mission—to include precise statements of both
where you are headed, as well as the criteria for measuring when you have arrived. Develop
“Smarter” Objectives.
Use an Ideal Vision (what kind of world, in measurable performance terms, we want for tomorrow’s
child) as the underlying basis for planning and continuous improvement.
Defining “need” as a gap in results (not as insufficient levels of resources, means,
or methods).
5 EDIBLE OIL INDUSTRY
5 . 1 B RI EF HI ST ORY ABOU T TH E EDIBLE OI L INDUS TRY
In 1972 the edible oil industry was nationalized and a ghee corporation of Pakistan (GCP) was
established .Since 1988, private sector has also been allowed to enter this industry. With the passage
of time most of the units which were previously controlled by GCP have been privatized (93-95%).
5 . 2 P RES EN T S I TUATI ON OF E DI BL E OI L INDUS TRY IN P AKI ST AN
The cooking oil and vegetable ghee industry is another large manufacturing sector. A shortfall has
been witnessed over the last two decades.
This shortfall is made up through the import of cooking oils, which are added to the local production.
Pakistan spends 2nd largest amount of foreign exchange on the import of edible oil which puts a lot of
strain on the economy and it is still increasing. The gap is widening constantly as the population
increases and standards of living improve.
Vegetable oil is obtained from edible oil seeds grown especially for this purpose. Pure butter oil is
produced in small units; many people prefer to use this instead of cooking oil or vegetable ghee.
Vegetable ghee is formed when edible oil is hydrogenated. The market for vegetable oil and ghee is
spread all over Pakistan. The manufacturing units are also widely distributed.
The number of vegetable oil and ghee plants operational in the country is about 183 with a capacity
exceeding two million tons.
The edible oil market is about 2.5 million tones (65% of total oil industry), out of which Vanaspati
market accounts for 1.5 million tones and Edible oils for about 1 million tones.
5 . 3 C ON SUM PT IO N
Per capita consumption in 2002 was 15 kgs. Because of growth in population in increase in
consumption it is expected that the per capita income of edible oil will reach 24kgs in 2010.
5 . 4 E DI BL E OIL IN DU ST RY (3 S EG EME NT S )
The oil industry is subdivided into three segments according to target market i.e. according to
preferences, buying habits, price structure, nature of product; income group .
5.4.1 Group 1(Premium Segment)
Group 1compromises of 6 oil companies that have formed an oligopoly.
This group includes Dalda, Seasons Canola, Habib, Soya Supreme, Eva, Foreign
Brands
 Brand loyalist in this segment account to 50%.

 Consumers do not switch to other brands easily due to strong positioning.
 They are not price conscious in-fact they prefer quality.
 Upper class/health conscious people mostly contribute to this segment.
 Consumers are willing to pay a high price for this product backed by a higher income group.
5.4.2 Group 2(Popular Segment)
This group includes, Kisan, Kashmir, Manpasand, Sufi, Meezan and Rafhan
 Upper middle/lower middle class mostly prefer such brands.

 price conscious consumers form a major part of the segment
 5% of consumers are brand loyal.
 They keep on switching to other brands due to price instability.
5.4.3 Group 3 (Lower Segment)
This group includes Loose oil,, Family, A-1, Gulab, Zaiqa and Sultan.
 Consumers who are not at all health conscious add to this segment.
 They are highly price conscious.
 In this segment the product is more or less a commodity and there is no concept of branding.
 This segment mostly covers poor people and rural consumers.
5 . 5 M ARKE T SH ARE AN AL YS IS OF T HE O VE RALL IN DU ST RY
The Pakistani edible oil industry overview of the major players is shown as follows by means of a pie
chart is:
Market share analysis of overall indstry

Dalda
Habib, 7%
Habib
Dalda, 9%
Soya Supreme, 4%
Soya Supreme
Seasons Canola, 1%
Seasons Canola
Foreign brands
Foreign brands , 5%
Eva
Tullo, 3% Eva, 2%
Non branded/Small
local brands, 69%
Tullo
Non branded/Small
local brands
The analysis reveals that most of the market is non-premium segment taken by a large number of
very small regional brands, as shown above that the other small /non-branded market amounts to
69%.The analysis also reveals that Companies with national presence dominate the premium
segment. Dalda is the market leader in the vanaspati and edible refined oil market in Pakistan with a
significant market share position.
The statistics of the total edible oil market with a clear indication of the market leader is as follows:
 Dalda– 9%
 Habib Cooking Oils – 7%
 Soya Supreme – 4%
 Tullo -3%
 Seasons – 1%
 Non branded/small local brands – 69% % (includes all those companies that either do not
have a brand name as such, or they do have a name but it is not established)
5 . 6 B RAN DE D VERSU S UNBRANDE D
Analysis of the total market reveals that about 43% of the market is unbranded. Of the
remaining 57% market is branded oil.
BRANDED VERSUS UNBRANDED OIL
100%
90%
80%
70% 57%
60%
43% mkt share
50%
40%
30%
20%
10%
0%
branded oil unbranded oil
5.6.1 Market share information of tier 1 segment
In the tier segment 1, Dalda is the market leader having around 25% with Habib as its closest
competitor shaving a market share of about 20%.and Soya supreme having a share of 16% .The rest
of the market share in this category is captured by the some local brands as well as some
international companies in the market including Seasons canola, Eva and foreign brands.
Market share analysis of premuim segment
Tullo
Eva Dalda
8%
9% 25%
Foreign brands Dalda
14% Habib
Soya Supreme
Seasons Canola
Seasons Foreign brands
Canola Eva
8% Habib Tullo
20%
Soya Supreme
16%
6 WHAT IS EDIBLE OIL
Edible oil is the blend of various seeds oil. These seeds include:
 Cotton Seed
 Soya beans
 Sunflower seeds
 Castor seeds, etc.
6 . 1 M ANU FACT URIN G P RO CE SS
The procedure that is adopted by all manufacturers of edible oil is given as follows.
However organizations modify the processes to suit their requirements.
 Step # 1: Blending of different oils in different quantities.
 Step # 2: Refining the blended oil.
 Step # 3: Packaging.
 Step # 4: Marketing and Sales
A variety of seeds are used in the manufacturing process which includes Soybeans, Cottonseeds,
Ground seeds, Rapeseeds, Sesame seed, Linseed and Castor seed. The blend of the seed depends
on the oil. The differentiation of oils/vanaspati is created by altering the proportions of the seeds that
are added in producing the oil/vanaspati.
6 . 2 S OU RCE OF EDIBLE OIL
The countries main source of edible oil is cottonseed. The major oilseeds include traditional crops like
cotton, rapeseed, canola and mustard, and non-traditional crops such as soybean, sunflower and
safflower. There are two kinds of crops:
 Rabi crops:
These include rapeseed, mustard, linseed, sesamum, sunflower and safflower.
 Kharif crop:
Under this category are cottonseed, groundnut and soybean. Their maturing period extends
over three to four months. It should be noted here that cotton is cultivated for fiber and not for
oilseed.
6 . 3 I MP ORTANT F ACTS RE GARDIN G OIL S EE DS
 Due to shortage of locally available seeds, imports of edible oil, palm oil and soybean oil have
continued since the early 1970's, mostly from Malaysia.
 During the 1970's, it was less than half million tonnes rising to one million tonnes by the end
of the 1980's.
 By the 1990's the imports ranged between 1 million and 1.4 million tonnes.
 Between 1995-96 and 1998-99, increase in import was 5 % annually.
 From 2000-2005 the increase in imports were 7 to 8% annually.
 At this rate, by 2010 the import will exceed 2 million tonnes, putting extraordinary pressure on
the balance of payments.
The position can be summed up in the words of the report of the National Commission on Agriculture
of 1988.
"The past performance of oilseeds production stands in sharp contrast to

the rest of the agriculture sector; gross output of all agricultural products
has quadrupled since independence, but the production of oilseeds has
stagnated. As demand in the past decade has grown by about 9 per cent
per year, import of edible oil has climbed sharply. Import costs have grown
to a level which, if left unchecked in the years ahead, will exert
considerable pressure on the balance of payments".
6 .4 C ATEGORIES OF OIL
 The first is “loose oil” which has no name on it and

is sold in plastic bags.
 The second category includes “brands”, which do
have a name but are not established and occupy a very
small share in the he market.
 The final category of oils are called “branded”,
under which only three brands are mainly included – Soya
Supreme, Habib and Dalda along with various other brands,
Types of customers in the edible oil industry:
Category of Oil Category Specification Customer Defined
A Highly Refined & High Price oil Health Conscious with medium to
upper income class
Average Refined & Average Price Health conscious as well as price

Oil conscious with medium to lower
B income group.
C Low Refined & Low Price Oil Price Conscious with lower middle to
lower income group.
Po
l
le itic
ga al
lf
Feasibility Study of Opening a New Chinese Restaurant an Karachi
or in
ce d
s
7 COMPONENTS OF MACRO ENVIRONMENT
There are 25 different variables in the external environment.
Managing these 25 different variables helps us to create a competitive advantage.
For e.g. the economic force would be affecting all five forces of porter (threat of new entrant,
bargaining power of buyer, bargaining power of supplier, threat of substitute and rivalry),similarly the
social force would be affecting all 5 forces of porter and so on.
5 x 5 = 25
Managing these 25 different variables helps us to create a competitive advantage.
7 . 1 W HY PO RT ERS FIVE FO RCES ?
Two fundamental questions in developing a strategy are the attractiveness of industry and the
company’s position within the industry. Therefore the essence of formulating competitive strategy lies
in relating a company to its environment. Although the relevant environment is very broad, the key
aspect of the firm’s environment is the industry in which it operates. The state of competition in an
industry depends on porters 5 forces. The strongest force out of these becomes important from the
point of strategy formulation. The strength of these forces also determines the profit potential of the
industry.
PORTER’s 5 FORCES
Potential
Potential
Rivalry
Rivalry Entrants
Entrants
High
High
Industry
Industry
Mediu
Low
Competit
Competit m
Suppliers
Suppliers Buyers
Buyers
ors
ors
Mediu
m
Substitut
Substitut
es
es
7 . 2 T H RE AT OF N EW E NT RANT S :
7.2.1 Is a lot of capital needed to enter you industry?
The industry is classified as labor intensive industry and there is not much use of extensive capital
requirements. The machines that are used in the manufacturing process are quite inexpensive. In the
processing stage the majority of processing units are pipes and vessels that are locally made. The
content of local parts being used is high and the reason being that these parts can be easily
manufactured in Pakistan. The machines required in packaging of the finished product also cost very
less.
7.2.2 Are there any proprietary product differences in your industry?
There are no such proprietary product differences in the edible oil industry.
7.2.3 Does the new comer face any problems in obtaining the necessary
skills or people?
Secondly the skill requirement for labor in the processing of edible oil industry is very basic. According
to Habib oil the skill required is very nominal and types of employees are usually skilled or semi
skilled.
7.2.4 Are there any established brand identities in your industry?
There are about some very strong branded companies existing in the market. The top players in the
edible oil industry include Dalda, Habib oil, Soya Supreme. Some others include Rafhan corn oil.
Kissan oil, Corroli, Tullo, Planta, Meezan and Seasons canola cooking oil.
7.2.5 Does your customer incur significant cost in switching supplier?
Buyers have the flexibility to fill their needs by switching brands because that does not require any
significant cost. Therefore a new comer can easily get customers when he enters the market.
Therefore we can conclude that the Edible oil industry is such an industry where there are less
entry barriers for any new entrant to come and make their place. For this reason the threat of
potential entrants in this industry is quite high.
7 . 3 B ARG AI NI NG P OW ER OF B UYERS
7.3.1 Are there a large number of buyers relative to the firm?
There are a very large number of buyers of edible oil as it is a basic food commodity and therefore it is
required by every household and family.
7.3.2 Is your buyer very aware and knowledgeable?
The consumer is basically illiterate when speaking of knowledge about the edible oil industry, they
have no knowledge regarding the processes used in manufacturing and the fact that how important it
is to consume an oil which has undergone proper refining, blending, heating and boiling.
7.3.3 Is your buyer aware of the need for additional information?
There are some health conscious people who are trying to be more aware and more knowledgeable
consumers so that they can make a right decision of choosing that brand which is best for health.
Majority of them are not aware are not even interested.
7.3.4 What is the purchasing power of your consumers?

As far as purchasing power of buyers are concerned there are two types of buyers. One category
includes those who have low purchasing power and this category constitutes the major segment of
edible oil consumers .They prefer to buy loose unbranded edible oil. These buyers are targeted by the
unbranded oil manufactures. As their purchasing power is low they have a high power over the edible
oil firms
The other category includes consumers having high purchasing power.(premium segment/tier 1) This
segment is targeted by branded oil manufactures. The users of branded oil have low price sensitivity
and therefore their power is low over the firms
7.3.5 Is it easy for your buyers to switch?
The users of branded edible oil are hard- core loyal, they won’t switch because of the price
differentials but they may switch because of the quality. However it is very easy for the buyers of the
unbranded oil to switch as they are very price sensitive and are not all concerned with the brand. They
just go for the company which is offering them the lowest price.
Conclusively We also know that the buyers of edible oil cant investigate or confirm that the
manufacturing processes used by the company were following quality control criteria or not.
Therefore theses branded buyers from the point of view of the ultimate consumers remain
uneducated about the oil manufacturing processes, thus the power is not that strong. But we
also observed that the buyers are getting health conscious with the passage of time therefore
we can conclude that the buyer power is moderate.
7 . 4 R I VALRY AM ONG FI RM S
7.4.1 Is the industry growing rapidly?
The industry is not growing rapidly because it’s almost on the maturity stage.
7.4.2 The fixed costs of the business are relatively low portion of total
cost?
The machines that are used in the manufacturing process are quite inexpensive. The machines
required in packaging of the finished product also cost very less. The fixed costs out of total cost are
not a very significant portion.
7.4.3 Are their any significant product differences?
The manufacturing process used by all the oil manufactures is very similar and there is no such
product difference with respect to features or ingredients.
7.4.4 Are their any established brand identities?
There are about 13 large and medium sized firms competing on the basis of quality, price and
marketing. These include Dalda, Planta, Habib, Soya supreme, Seasons canola, Sundrop, Kissan
,Corolla, Pure cooking oil and Rafhan cooking oil
There is a great deal of rivalry persisting among the top players of the industry – Dalda, Habib and
Soya Supreme. All of them are struggling to either become the market leaders (Habib and Soya
Supreme), or if they already are the market leaders then to maintain their current position (Dalda).
The companies also engage in head-to-head rivalry with each other through price wars and
advertising. Habib for example some years back ran a campaign against Dalda Melange that it is
mainly a deception and is not really ghee cum oil. Habib fiercely attacked the product, by advertising
that oil should be very smooth and if it is not smooth and dilute, then it cannot be oil. Dalda Melange
was very thick and thus this led its customers to believe that Dalda Melange is actually ghee and not
oil. In order to counter this argument, Dalda Melange responded by saying that their product is “itna
refined jitna zaroori hai”.
Besides, there are also companies that simply copy/imitate the market leaders and continue their
business safely. For instance, Soya Supreme follows the “risk-free-texture”, that is they introduce
products that are similar to oil/ghee that have been launched by either Habib or Dalda and are selling
in the market, thus avoiding any kind of risk associated with the product.
7.4.5 Is the product complex and requires detailed understanding on the

part of customer?
No, the edible oil is a very basic product and there are no such technicalities involved in its usage.
Therefore it is a very simple product and does not require and detailed understanding.
Conclusively we can say there is a great deal of rivalry going on in the edible oil industry.
7 . 5 T H RE AT OF S U BS TI TU TE S
There are no direct substitutes of oil/ghee; as such in this market thus the threat of substitutes is quite
low. However, a few of them that can be potential substitutes include the following:
 Butter/margarine
 Desi ghee
 Flora margarine has been recently introduced in the market – this product claims that it is for
the health conscious consumers and also claims that food can be cooked in it therefore we
can say that it is a emerging substitute of cooking oil
7 . 6 B ARG AI NI NG P OW ER OF S UP PLI ERS
Suppliers of the industry can be categorized in to Domestic and Foreign Suppliers
The foreign suppliers usually import at a lower price than the price demanded by local suppliers. For
this reason the power of local suppliers is low over the firm.
7.6.1 Suppliers
Suppliers of the industry can be categorized in to Domestic and Foreign Suppliers.
 Domestic Supplier
The local supplier can be divided into two categories.
1) Agriculturist: Provider of cotton oil seed, maize, etc for oil extraction.
2) Provider of other supporting raw material to companies which includes supplier of chemicals,
flavors, tense, tin and plastic bags used in packaging of oil.
 Foreign Suppliers:
This includes supplier of imported seeds. Following are the names of some countries though are
regular supplier of oilseeds:
• U.S.A.,
• Argentina,
• Vietnam,
• Germany,
• Nether land,
• Brazil,
• South Korea,
• India,
• Bulgaria,
• Ukraine,
• Poland and Australia
7 . 7 O TH ER ST AK EH OL DE RS ( GO VE RN ME NT )
Government has establishes Pakistan Standards Institute (PSI) to monitor the standards that are
specified are met or not. These standards are relating to the level of refining or the type of packaging
that is appropriate. However, government is not all that strong to impose their rules/standards on the
organizations, and companies tend to break the rules/regulations frequently in order to save costs at
the expense of the lives of the consumers.
8 PEST ANALYSIS
Forces outside the industry in the mega environment are significantly primary relative in a sense,
since outside forces affect all firms in the industry, the key is found in differing abilities of firms to deal
with them. The Pakistani environment has made a major impact on the procedures and strategies of
the local firms as well as the multinationals operating here, as they have to formulate their tactics
according to the customer psychology and culture that are prevalent in this country. Some major
environments that affect the edible oil industry are discussed below:
8 . 1 E CON OMI C F ACT ORS
Pakistani economy kept on fluctuating with the passage of time. In Musharaf’s era we could see
stabilizing of economy and gradual removal of trade barriers, thus helping the Pakistani business
enterprises as well as the MNC’S to enjoy the benefits of rapid growth. The accelerated growth in
GDP coupled with the positive economic environment of the country had enabled the edible oil
manufacturers to reap the benefits of increasing their production every year. This had also impacted
the edible oil industry in the sense that the buying power of people had improved. At present Pakistani
economy is again facing a downturn. From the last year the economic conditions are getting of for
worse and the economic crises in the country is affecting everybody. The GDP this year has declined
to 5.8% and the country witnessed terrible inflationary pressures with food inflation reaching to around
15%. In such a situation the lower income strata and the middle income strata are founding it almost
impossible to make their both ends meet. Only the purchasing power of higher income strata are not
affected much. Additionally the government has increased the sales tax by 1% that worsen the
situation because through this price of the single tin of oil increases.
8 . 2 T E CH NOL OGI CAL F ACTO RS
Pakistan is not very advanced while talking on the technological aspect. However during the last
decade we have seen a rapid growth in the technological industry that has impacted every industry.
Office automation systems have become a necessary part of office operations. Production has also
become easy, quick and accurate with the help of technology. With the advance in technology the
expectation of the people has increased. . The Local manufacturers face the problem of adopting new
technological advancements because they don’t have enough resources available with them to
acquire new and mechanized machineries very often. Multinationals get benefited from their parent
company with respect to technology and resources.
The basic techniques used in production of edible oil are rather similar for all the companies. The
difference lies in the projection of the brand by the company and the image that they want their brand
to acquire in the consumers’ minds. In most of the companies having branded oils, automated
methodology is adopted to manufacture the oil. A few oil manufactures have acquired ISO 9000
certification and some are passing through the implementation phase, other still lag far behind. The
management of major oil companies alike Dalda and Habib are keen to take environmental initiatives
but most of the unbranded manufactures don’t have the resources to do so.
Since it is perceived that environmental protection calls to large extent for technological investments
with low or nil payback, it is natural that most of the companies tend to postpone the environmental
protection act as long a possible. There is an intense need for new methodologies so we can reduce
the environmental hazards.
. Some of the dangerous environmental hazards include
 Wastewater – this is generally caused directly from processes, mainly from neutralization of
oil. Wastewater results in pollution load and concentration on the atmosphere.
 Solid waste – solid waste generations from the oil mills are mainly in the form of spent earth,
filter cloth, and spent catalyst. Though most of this is used in by-products, however, the
carbon oil extracted from theses elements can be harmful to the surroundings.
 Soil contamination – this can be seen around oil storage tanks in oil mills due to spillage on
uncovered ground. This also poses the risk of contaminating the ground water.
 Air emissions – major sources of air emissions are generator exhaust and emission from the
gas cracking unit. From both the sources carbon monoxide is emitted in high concentration.
 Noise emissions – industrial equipment and machinery create high noise levels during
operation. The main noise sources in edible oil industry include: steam ejectors, tin can
manufacturing unit, gas cracking unit, boiler building, hydrogen compressor and ammonia
compressor. The noise levels from some of the above sources are higher than the
permissible limit given by ISO 14000
There can be in-house improvement measures related to waste reduction at source and adoption of
environment friendly processes. At the same time, a number of cleaner production technologies also
need to be implemented in order to minimize the level of pollution as well as increase the efficiency of
energy use.
8 . 3 P OL ITI CAL F ACTO RS
As Pakistani environment is not very stable every time there is some or other things happened that
can rejuvenate already existing problems. Secondly Government policies changes every now and
then, which further give, rise to these problems.
Sometimes Govt. allows imports, which is a bad signal for the local manufacturers but a good point for
the foreign manufacturers. All these things together make problems to the sale of the local products
manufacturers because due to this instability nobody wants to create any trade relationships with
Pakistan
Thirdly because of the political instability in Pakistan especially during the past decade and the rapid
changes in government without even completing their tenure, a negative image has been created in
the minds of the investors coming from abroad
8 . 4 L EG AL F ACTO RS
The industry is expected to be very much affected by the government regulations as the government
plans to increase excise duties and rebates on the imports of the raw materials in order to protect the
local oilseed cultivators or farmers..
There are a number of laws designed by the government to ensure that the standards are met by the
companies in the edible oil industry. With the promulgation of Pakistan environmental act 1997, the
Pakistani edible oil industry is required to comply with the regulations of environmental protection.
However, the instability of the government and the lethargic attitude of the people controlling these
laws enable the companies to violate the laws without any penalties.
Majority of the laws are regarding environmental effects and few are regarding quality specifications of
the edible oil industry because the environmental effects are quite disastrous.
A few of the terrible environmental effects are mentioned on the following page:
8 . 5 S O CI O CU LT URAL F ACT ORS
Water – this is generally caused directly from processes
Solid waste – solid waste generations from the manufacturing process.
Air emissions – major sources of air emissions are generated exhaust and emission from the
manufacturing unit.
Noise emissions – industrial equipment and machinery create high noise levels during operation
which is harmful for both the factory employees and the people working around it.
As the attitudes of people towards products and services change, the demand for those products also
changes
It has been seen that the health awareness among masses is also increasing day by day; therefore
people are shifting from oil to ghee. Previously a large chunk of the population was hard core loyal of
ghee/vanaspati. Under no circumstances were they willing to settle for a taste less than what was
produced by ghee. however this major segment of loyal ghee lovers have been transforming into a
minor segment with a majority of people shifting from ghee to oil .majority of the population has now
become health conscious individuals who prefer oil and have discarded the use of ghee/vanaspati in
preparation of food, due to health related reasons. Thus there is a huge demand for oil this part of the
world. For the small segment that prefers using ghee, the manufacturers have launched extensions of
their brands that is to produce oils as well as ghee.
Besides, the increasing trend in population has also ensured that the sales of the oil/ghee continue at
a steady or rather increasing pattern.
8 . 6 G OVERNM EN T
All the laws applicable in Pakistan is Subjected to Edible Oil Industry. The government of Pakistan
has established some supporting organizations for the development of different industries of Pakistan,
such as Export Promotion Bureau and Federal Board of Statistic. These governmental bodies help the
edible oil/ghee manufacturers in supplying information regarding the oil trends in various parts of the
world. They provide data relating to those countries that have demand for oil/ghee but a shortage in
the local market, and about those countries that are the largest exporters of oil/ghee and pose a threat
to the Pakistani market.
As already mentioned that large amount of seeds are imported to be used in the manufacturing of
edible oil. Custom duty on Palm Oil, Soybean Oil, etc is very high plus high sales tax has made it
difficult for the manufacturers to compete and make profits out of their business. The major drawback
of the industry is that small players try and evade the taxes, which imposes a huge burden on the
large companies. As their prices offered to the ultimate consumer increases and thus people are
attracted towards lower priced oils/ghee which are also of a lower quality.
8 . 7 P AKI ST AN S TANDARD I NS TI TUT E (PSI)
Provides the list of standards to be maintained by the manufacture of edible oil for example three
years back there was no concept of keeping the batch number, or expiry date on the packed finished
goods, but now all the manufacturers are supposed to maintain that.
Government has establishes Pakistan Standards Institute (PSI) to monitor the standards that are
specified are met or not. These standards are relating to the level of refining or the type of packaging
that is appropriate. However, government is not all that strong to impose their rules/standards on the
organizations, and companies tend to break the rules/regulations frequently in order to save costs at
the expense of the lives of the consumers.
8 . 8 E N CO UN TE RI NG T HE E N VI RO NME NT AL U N CE RT AI NT Y
There are a lot of situations where organizations find themselves at the mercy of the uncertain
environments and they have to formulate their strategies such that they can make the most of
environmental changes. There are indicators whether the organization should avoid, react, influence
or anticipate the environmental changes.
8 . 9 IN T HE E DI BL E OI L INDUS TRY , TH E EN VI RO NM ENT AL CH AN GE S T HAT CAN
BE FO RE SE EN ARE
 Firstly, the regulations of World Trade Organization to have liberal import policies. These
regulations may affect the local industry
 Growth is the main issue regarding the edible oil segment, which is growing at a rate of 12.4%
per year.
 Catering to the needs of diverse, demanding and aware consumers and the employees, so
as to keep them satisfied and to keep them from running away or switching.
 Moving with the ever-changing technological advancement and adopting the new technology
rapidly.
 Foreseeing changing customer attitudes, trends and tastes, so as to remain alive in the
market.
 To be the pioneers and innovators of any new product, which caters to the mass market of
the Pakistani population
9 KEY DRIVING FORCES
Industry and competitive conditions change because there are forces that create incentives or
pressures for change. The most dominant forces are called driving forces because they have the
biggest influence on what kinds of changes will take place in the industry’s structure and competitive
conditions.
As a company you first need to identify the driving force and then assess the impact of the driving
force on the firma s well as industry
9 . 1 G LOBAL IZ AT IO N
All the industries in the world are moving towards globalization. A nationally prominent firm may
launch an aggressive long term strategy to win a globally dominant market position. Also many
multinationals are entering in many different parts of the world. As a part of the globalization scenario,
Pakistan has reduced trade barriers and has also opened up once closed markets to foreign
competitors. Previously the government of Pakistan had strict regulation to protect the domestic oil
industry but now there are no such restrictions. There are liberal import policies. Tariff reductions,
large scale de-regulation and privatization of government owned enterprise bring local competitors
eyeball to eyeball with ambitious global companies. Multinational companies with the ability to transfer
their production, marketing and management know how from country to country at a very low cost can
sometimes gain a significant competitive advantage over pure domestic competitors. For example:
Multinationals like Unilever first had their brand Dalda, but they later sold it in 2005 as a part of their
strategy to cut down on brands.
Global competition is affecting the pattern of competition among industry’s key players like Dalda,
Habib and Soya supreme who are constantly trying to improve quality and doing extensive research
and development to come up with new products that are suited for the emerging health conscious
consumers .this will help them to deal with the foreign competition and cope up with the rapid
challenges of the globalization era.
9 . 2 C H AN GIN G LIFE ST YL ES AN D H ABIT S :
Growing physical fitness concern and health conscious concern has emerged as a major driver of
change in the edible oil industry. Consumers growing concern about saturated fat, cholesterol and
nutritional values .this has forced the edible oil manufacturers to revamp their oil processing
techniques, redirect their research and development efforts to use healthier ingredients. Increased
interest in physical fitness has also affected the edible oil manufacturers to come up with oils with low
contents of saturated fats.
With the increasing social concerns about air and water pollution, the consumers are developing a
sense that the natural environment should be protected. This has forced the edible oil manufacturers
to incorporate expenditures for controlling environmental pollution in their cost structure.
Those players who respond quickly to the changing trends and lifestyles are usually successful in the
long run.
9 . 3 T E CH NOL OGI CAL C H AN GE S
This is an era of rapid technological advancement and it is affecting every industry in the world. The
new technology has made possible many new things. There can be in-house improvement measures
related to waste reduction at source and adoption of environment friendly processes. At the same
time, a number of cleaner production technologies also need to be implemented in order to minimize
the level of pollution as well as increase the efficiency of energy use
Large technological investments by the edible oil manufacturer will help in environmental protection.
The management of major oil companies alike Dalda and Habib are keen to take environmental
initiatives but most of the unbranded manufactures don’t have the resources to do so. The new
technology evolving has made possible for the edible oil manufacturers to make one time big
investments and ten produce new and better products at lower cost and opening up new industry
frontiers.
9 . 4 M ARK ET IN G I NN OVAT IO NS
Now a day we can see that many companies are using creative and innovative marketing techniques.
In the edible oil industry the basic differentiation lies in branding and the way companies market their
products. This is because the consumers are illiterate regarding the procedures used in
manufacturing, processing, blending and refining. Thus the main weapon used by the edible oil
companies to attract the customers is advertisement. Customers prefer to stick to their brands, yet
there is an uncertainty in the market because the consumer is flushed with so many different ads. The
oil companies are confusing the consumers by telling how one company’s processing is better than
others, but in reality it’s the same.
Companies who used the most innovative marketing ways and show the most creative ads are the
ones who are able to capture the biggest market share in the edible oil industry
9 . 5 H EALT H C ONS CI OU SN ES S
With the changing trends consumers likes and dislikes have immensely changed. Today people are
more health conscious then it was before. This is due to more awareness as well as more and more
interaction with media through advertisement, and informative programs telecasted on T.V
Now a day there is a shift from ghee to oil. Today all the oil manufacturers are playing with the
consumer psyche, and increasing the demand of their product by doing informative advertisements
and how their brand of oil is good for health.
9 . 6 S T RATE GI C I SS UE S IN TH E M ACRO E NVIRON MEN T
The biggest food item of Pakistan is currently edible oil even than the Edible Oil Industry is very
backward in term of technology, research and development, innovation etc. The reason for this
backwardness is lack of government’s attention and companies focus towards the development of this
sector. Almost all the companies with good quality product are playing on the low margins and finds
the industry unattractive.
We have tried to cover the various issues prevailing in the industry and affecting the firms operating in
the edible oil industry. Following are some of the issues and recommendations for the Edible Oil
Industry as a whole.
9.6.1 ISSUE # 1
Substandard processing and product
Due to the fact that there are no such strict government regulations on the edible oil manufacturers, a
lot of local oil manufacturers are using substandard processes. The packaging machines used in the
edible oil industry are quite cheap. This has encouraged the small investors to invest in this
market/industry and produce low quality Product.
The producers generally purchase the packaging equipment, while the other process is done in a
substandard manner. That is, the manufacturers just boil/heat the oil on a normal stove, without
undergoing any kind of refining or blending and using the packaging machine to pack the oil/ghee sell
off their product. These sellers are selling this low quality, least refined oil at a market price or slightly
lower than the markets rates prevailing in the mark. This has hindered good reputable companies to
sell there product in the market because the customers are not so literate. The cost of production of
these companies is very high because they are fulfilling the standards determined by the Pakistan
Standard Institute. The customers don’t really know that the companies though are selling at a slightly
lower prices are not selling the right product.
Recommendations
The players of the Edible Oil Industry need to educate the public/consumer that why are they charging
a high amount as compare to loose and low brands. The companies have to create market
awareness, as already discussed that consumers are becoming health conscious. This can be a
company effort or combine efforts of the premium quality edible products, may be via Pakistan
Vanaspati Association. This kind of a strategy can avoid easy entrants in the industry .this will also
discourage the local manufacturers who do not follow the quality specifications.
9.6.2 ISSUE # 2
Dependence on imported oil
(Low production of edible oil seeds, high amount of foreign exchange is invested in importing crude oil
and increasing crude edible oil prices)
A very important aspect here to mention is that until 1970,s we were self sufficient in edible oil
production but after that the share of imported oil has been increasing rapidly to meet the growing
demands .Pakistan spends second largest amount of foreign exchange on the import of edible oil
(average 700 million $ per year) and 70% our demands requirements are met through imported oil.
Our local farmers are hesitant to cultivate oil seeds because they are not sure that whether their
product will be sold in the market at the right price or not, because the imported edible oil price is
lower than local oil price. This indicates that are edible oil manufacturers are largely dependent on
imported oil which is not good and economically viable in the long run.
Recommendations
The edible oil industry is agro based and Pakistan being an agrarian economy lacking in oil seed
cultivation seems to be a shocking thing. There is a strong need for the government to Pakistan to
protect the local suppliers of oil and farmers and provide subsidies to them so that they cultivate the
oil seeds in sufficient amount and thus we can at least we can again try to become self sufficient in
our edible oil production and save our foreign exchange. The government already knows the
importance of this matter. The government has taken various steps regarding this issue and formed
certain association to encourage the production of oil seeds. But the current situation (Data form SBP
annual report, Economic survey and other sources) reflects that issue is still unresolved.
The government needs to consult industry specialist of our country and other countries though can
assist the government to come over with this issue. The Pakistani farmers and manufacturers also
have compromise on some of their benefits in order to get a long term gain for the country.
9.6.3 ISSUE # 3
Counterfeiter brands
Because of the fact that edible oil sector is unorganized and entry is easy there are Counterfeit oil
brands existing in the industry. These counterfeiters copy the product of existing market leaders and
sell them with inferior quality. These counterfeiters just by charging a little low price are playing with
the lives of consumers. This also affects the sales of the original companies.
Recommendations
The companies should try to create brand awareness and make the consumers knowledgeable about
these counterfeiter brands, so the consumers don’t get fooled by these counterfeiters.
9.6.4 ISSUE # 4
Environmental hazards
The Edible Oil Industry has created great hazards to the environment. This issue is already in the
notice of the government but the government is not taking any action right now. The companies have
certain important responsibilities towards the environment and need to take concrete measure in
order to gain long term benefits.
Recommendation
It is recommended that in-house improvement and adoption of cleaner technologies be undertaken

immediately. The in-house improvement and adoption of cleaner technologies have the potential to
reduce the pollutant.
Environmental Management Systems (EMS)
Edible oil mills in Pakistan should implement Environmental Management Systems (EMS) in their
industries for a better, environment Friendly management. The companies need to hire management
though have experiences in some what same area, because the release of gasses during the process
is the normal phenomenon in many industries, for example Textile Industry.
9.6.5 Issue # 5
Unaware consumers
The consumers don’t know have the proper knowledge about the storage and usage of the edible
products, thus creating an unethical stance for the organizations in this industry.
Recommendation
The consumers should be educated about how to store a product. Some precautionary measures
should be communicated either through advertisements or print material on the package or tin. The
ads should also tell the consumers that Vanaspati (Ghee) should not at all be consumed by the heart
and blood pressure patients but none of the organizations teaches this to the consumers. Mostly
consumers get to know about this from their doctors. The reason the company needs to educate their
consumers because the companies, otherwise, are damaging the trust of innocent consumers. We
have the example of cigarette industry who clearly state in their advertising as well as on their
cigarette packets that how important the health issues are.
9.6.6 ISSUE # 7
Market saturation
The edible oil industry seems to be very saturated with about 183 small and medium size enterprises
operating. There are about 10 big players with Dalda, Habib and Soya Supreme Being the top three.
Recommendations
The best way to differentiate is to be exceptional in value addition. Only making the oil tin or package
more attractive is not enough. The companies should try to communicate that how their particular
brand of oil is of a greater value as compared to other brands by mentioning the health benefits which
the consumers would get by using the product. This can be ensured through heavy promotional
campaigns and bright new selling ideas.
9.6.7 ISSUE # 8
Smuggling
Smuggling is also an important factor which affects this industry. Government estimates that .87
million tones of oil is smuggled into Afghanistan every year
Recommendation
The companies can export oil to the areas where oil is being smuggled .if the demand of local people
in the smuggled areas will be fulfilled in the right way they wont need to smuggle oil for Pakistan. Also
the Recent developments in Afghanistan have allowed the oil companies to export their oil to
Afghanistan .this was only possible due to the improved road link.
10 EXTERNAL FACTOR EVALUATION MATRIX
Weight Score Wt Score
OPPORTUNITIES
1) Increasing health consciousness 0.16 4 0.64
2) improved Infrastructure leading to deeper market 0.05 3 0.15

penetration into local areas
3) Expansion into international markets 0.14 1 0.14
4) Increasing Population 0.1 3 .30
5)Celebrity endorsement 0.07 2 0.14
6) Backward integration 0.02 1 0.02
7) Strategic alliance with bakeries and hotels 0.04 1 0.04
8) Creating awareness 0.03 3 0.09
THREATS
1) Fluctuating Oil Prices 0.03 2 0.06
2)Increasing health consciousness 0.07 4 0.28
3)Political instability/poor international relations 0.02 1 0.02
4) Devaluation of our local currency 0.03 1 0.03
5) buyers expectations to meet international standards 0.03 3 0.09
6) High taxes and tariffs on the import of raw material 0.05 1 0.05
7)intense competition 0.1 3 0.3

8)smuggled oil 0.02 2 0.04
9)counterfeiter product 0.04 2 0.08
Total 1.00 2.47
11 OPPORTUNITIES AND THREATS FACING THE

INDUSTRY
11.1 O PP ORTU NI TI ES E XI ST IN G IN TH E INDUS TRY
Pakistan’s GDP is growing. This is coupled with a growing population with rising per capita income
leading to distinct change in consumption pattern which have resulted in huge growth opportunities.
There are a number of opportunities for edible oil industry for future growth in the Pakistani market in
order to supplement the historical performance of the sector. The opportunities and how they can be
capitalized upon by the edible oil manufacturers are discussed below
11.1.1 Health Consciousness
The consumer are becoming health conscious they want to shift to the low fattening foods .these
consumers are interested having a oil or ghee which is light for body and equally good and tasty when
food is cooked in it. Therefore the edible oil manufacturers can very well capitalize on the fact that an
increased number of people are getting health conscious and can come up with new variants of their
brand with greater health benefits and lowest saturated fat levels. This will also help them in
increasing the profits in the long run.
11.1.2 Pakistan’s improved Infrastructure helps in wider coverage
Pakistan’s new infrastructure is creating connectivity between different regions and

different cities. There has been an improvement in the road networks both within Karachi
and from Karachi to other areas of Pakistan. The leading companies say that the
improvement in the roads infrastructure will help them their products to all parts of
Pakistan. Thus an opportunity has been created for companies to sell there product
where the product was/ is not available. Transportation cost for edible oil companies
accounts for 5% of their cost and this figure is higher for the northern areas and extreme
parts of Baluchsitan, so when the road links will improve the cost will go down further.
11.1.3 Expansion into international markets
There is a great opportunity for the edible oil manufacturers to enter into new international markets
such as Afghanistan and Iraq. This is because the political conditions existing in these countries have
destroyed the countries’ own resources and therefore they are relying on the other countries for
satisfaction of there needs. This industry also has the opportunity to enter in these markets. Secondly
due to improved infrastructure and improved road links easier of the local or MNC’s operating in
Pakistan to enter into these new markets
11.1.4 Increasing Population:
Currently the population of Pakistan is approximately 160 million. There is a continuous increasing
trend in the population of Pakistan which ensures that as the population will increase the demand of
edible refined oil and the edible vanaspati. Cooking oil is a basic commodity and every household
needs it to cook food.
11.1.5 Celebrity endorsement:
Another opportunity of which Habib oil can fully make use of is celebrity endorsement – this can be
used in a way that they can take some famous chef in their advertisement campaign who becomes
the brand ambassador of their product. That chef can be used to convince people that the food
cooked in Habib oil is healthy and tasty.
Habib’s major competitor used Mrs. Zubaida Tariq as its brand ambassador to promote their product.
11.1.6 Backward integration
As we know that the edible oil manufacturers are largely dependent on imported oil. The company can
set their own local farms where they can cultivate oil seeds and thus they can get rid of the
dependency on foreign suppliers. in this way the company can even ensure that the quality criteria are
being fulfilled while cultivating the seeds.
11.1.7 Strategic alliance with bakeries and hotels
Bakeries and hotels are amongst the highest industrial consumers of oil. They comprise of about 17%
consumption of edible oil in Pakistan. Bakeries consume about 60,000 tons of edible oil per year and
hotels consume about 52,000 tons of edible oil per year. Therefore the edible oil companies can make
strategic alliance with renown bakeries and hotel and can do combined marketing and promotions. in
this way they can even save cost on part of their promotion For e.g. they can advertisement to show
that the chefs cook the food in their brand of oil because it is very good for health and also makes the
food very tasty
11.1.8 Creating awareness
The companies can utilize the opportunity of creating awareness among consumers that how
important it is to use that good quality pure oil. The consumers are basically illiterate when speaking
of knowledge about the edible oil industry. They are not aware of the fact that how important it is to
consume an oil/ghee which has undergone proper refining, blending, heating and boiling otherwise it
could be harmful for health and heart
The companies need to tell the consumers about the counterfeiter brands that how theses
counterfeiter brands are playing with the lives of consumers. Just by charging little low price they are
selling the lowest quality oil very harmful for health.
11.2 T H RE AT S EXIS TI NG IN T HE M ARKE T
Some of the major threats existing in the edible oil industry are given below:
11.2.1 Fluctuating Oil Prices internationally
The prices existing in the international market has shown an fluctuating trend. This has created the
problem for the edible oil manufacturers. Although the branded manufacturers prices do not fluctuate
on daily basis with the international oil prices but they are to some extent affected by it. As far as the
unbranded oil manufacturers are concerned their oil prices fluctuate on daily basis with the change in
international oil prices. Therefore the unbranded manufacturers are more prone to price fluctuations.
11.2.2 Increasing Health Consciousness
Health conscious customers are also a threat for the industry as the consumers now demand superior
quality oil with heart and health benefits. This will be a major threat for companies who do not respond
to the growing sophisticated needs of buyers.
11.2.3 Political instability and international relations
Pakistan relationship with the foreign countries is highly unpredictable and mostly strained. This
industry is relying highly on the international market for its raw material, which is the crude oil.
Therefore international relations are one of the extreme threats for this industry.
11.2.4 Devaluation of our local currency
Constant devaluation of the rupee is increasing the cost of imports and taking forward cover premium
from banks does not make much of a difference
11.2.5 Expectations by buyers to meet International Standards
International Standards are much higher than Pakistan’s oil standards determined by the Pakistan
Standard Institute. Some of the International Standards include the process which is followed, the
working condition under which the company workforce is supposing to work. Meeting these standards
is very expensive for the companies. The local Pakistani buyers are trying to be more knowledgeable
and are requiring our local companies to follow the international standards
11.2.6 High taxes and tariffs on the import of raw material
The edible oil industry is relying highly on the international market for its raw material and 70% of
our demand is met through imported oil. These high taxes and tariffs are increasing the cost by
significant amounts for the local oil manufacturers
11.2.7 Intense competition
There is an intense competition in the edible oil industry as there are many players in the market there
are about 13 competing firms in the edible oil industry. These are the firms that are operating on large
and medium scale and are competing on the basis of quality, price and marketing. These include
Dalda, Planta, Habib. Dalda, Soya supreme, Seasons canola, Kissan cooking oil and Rafhan corn oil.
11.2.8 Smuggled oil
Smuggled oil brands available in the market can further aggravated the problem because these
smuggled brands are available in the market at a cheaper rate and people prefer using that s as they
are foreign brands. Due to that, local brand manufacturer suffers because of the higher prices they
charged from their product
11.2.9 Counterfeiter product
Another threat prevalent in the industry is of counterfeit a product which is very difficult for the
organization to trace and because of this the local firms like Habib and Soya Supreme are incurring
great losses.
12 KEY SUCCESS FACTORS (KSF)
For any industry to be successful in the market needs to focus on its critical success factors. The
success factors can be the manpower, the strong company name, its popular products and their
images in the minds and hearts of the consumers, the strong financial background, the profitability if
the company, the brand recall, the marketing and pricing strategies. These KSFs spells the difference
between profit and loss and ultimately between competitive success and failure. The purpose of
identifying key success factors is to make judgments about what things are more important to
competitive success and what things are less important. A company with clear understanding of KSFs
can gain a sustainable competitive advantage by training its strategies on industry’s KSFs and
devoting its energies to being better than its rivals on any one or more of these factors.
Along with explaining the key success factors of the edible oil industry we have also mentioned with
examples that how the leading players in the edible oil industry are dealing with the key success
factors to be the best in industry.
12.1 C LE VE R M ARKE TI NG AND ADVE RTI SE ME NT T ACTI CS
The basic key success in the edible oil industry is to create a difference in the product by
means of clever marketing/advertising tactics. This is because the market is basically illiterate and
has no knowledge about the process that is adopted in the manufacturing of oil. Basically the success
depends on how effectively is a company able to establish a unique positioning in the minds of
customers. It is not important for the product to meet all the claims that companies have done in the
advertisements, since the consumers are basically illiterate in this area and will accept any kind of
deception. Therefore if the company has enough budgets to invest into advertisements, then they
have mind and heart shares of their consumers
For example; it is easy for a consumer to judge the quality of tea by its taste and aroma but it is not
easy or possible for a consumer to determine the quality of oil. Although a consumer can satisfy itself
by saying that the texture of oil is very pure and smooth so it is good quality oil but he never know that
the company might have used some substandard procedures in the manufacturing stage.
For example: Looking at all the three major companies who have positioned their brands differently.
Dalda – Jahan Maamta, wahan Dalda
Habib – Kyunkai yeh dil ka maumla hai
Soya Supreme – Lazat ka khazana, sehat mand gharana
All the three companies have managed to create a point of differentiation amongst their brands which
gives them a clear embarkation from the rest. Although it is quite ironic that there is no basic
difference between each of the brands as the basic manufacturing process in the Edible Oil industry is
the same. .
12.2 S TRON G BRAN D N AM E
It plays a very important role in the edible oil industry because sometimes people have very strong
association with the company and its products. For any company in the edible oil industry who wants
to make a place in the minds of consumers and to attract a huge number of customers, they should
make an innovative USP and associate it with the brand name.
A very common concept used by the major players in the edible oil industry is that the brand which is
being used by the family passes from it generation to generation
Consider the example of Dalda:
They have been associating their brand with ‘Mamta’ since their establishment
“Jahan Mamta Wahan Dalda”
12.3 P RO PE R S EGM EN TATI ON
It is very important to do proper segmentation because we have seen some of the company’s
products fail just because they haven’t done enough research for their product, and due to that, target
consumers would be wrongly calculated. Most of the brands of edible oil are sold in sold markets but
niche selling is very common in this industry. Some of the brands are only developed so as to focus
on market niche
For example when Unilever was handling Dalda they launched Dalda Melange claiming that its
texture is like oil but it tastes like ghee. They allocated a huge advertising budget assuming that even
that will be a hit; however Dalda melnage was a failure. Habib oils put an allegation against Dalda that
this claim is a deception. Dalda mélange is basically ghee and is not good for health. So when there is
a problem in the segmentation then it gives rise to wrong positioning and so the whole process goes
wrong just because of one factor and that is segmentation.
12.4 P RO MOT ION AL ACTI VI TI ES
It is another important factor after segmentation because most of the times these promotional
activities increase willingness to purchase the product from the buyers perspective. Especially when a
product is a consumer food product than letting the costumers try it free or at lower rates is a very
attractive way to introduce your product to them. It is a general tendency of Pakistani population that
they always try when the products are available at a low rate and then if they likes it, they will further
used it in the future. So the purpose for doing these activities is to make people’s attitude to use the
product once, and then if the product gets the acceptance then may be it will increase the sales.
12.5 C OMP ET IT IVE P RI CE S
There is one strategy in edible oil industry which is common to all companies in the industry. The
pricing strategy of all the companies revolve around the same concept .the concept is basically that all
the firms try their best to sell their products at the lowest possible price so as to attract customers.
Also the competition provided by the small scale operators pose a problem for the big players and
they are forced to set competitive prices.
Setting a competitive price means that the company in order to be competitive has to set the price
range up to the market not very high neither not very low. In order to set the price range according to
the market it is difficult for the manufacturer to charge high for their particular differentiating
characteristics, for that they have to reduce the per oil tin margin in order to be at the market.
Example of Soya Supreme’s pricing strategy:
The prices of the Soya Supreme products are also set in compliance with their immediate competitor,
Habib. Mostly Pakistan
Habib also varies its price in different localities of the area. A tin of Soya Supreme will be sold at a
slightly higher price in Defence and a slightly lower price in Malir
Example of Habib’s pricing strategy:
The basic strategy that is adopted is that the price that Unilevers sets for its brand, a figure slightly
lower than that is adopted as the price for Habib.
For any company to maintain its established name in the minds of the consumers it is favorable for
them to have a good distribution network available for them. This helps company’s to make their
product available at every nock and corner where ever they want to reach. For this reason some
multinationals like P&G, Unilever are so active in the market because they have their own distribution
networks and they can able to reach each and every possible place
12.6 G OO D DIS TRIBUT IO N N ET WO RK
For edible oil company to maintain its name in the minds of the consumers it is very important for
them to be always available in as many retail stores as possible and also covering an ample space of
the retailer’s shelves. A strong network of whole sale distributors is the best was to gain access to as
many retail outlets as possible. A strong distribution network also helps company’s to make their
product available at every nock and corner of the country where ever they want to reach.
For this reason some multinationals like P&G, Unilever are so active in the market because they have
their own distribution networks and they can able to reach each and every possible place
Example of Dalda:
There is a supply chain manager who is responsible to dispatch products to warehouses, and then
goods are transported to distributor, retailer and wholesaler. One distributor covers more than one
area. Dalda has a network of 350 distributors across Pakistan that makes sure that product is
available in every corner, village, town and city of Pakistan. Dalda products are available in far flung
coastal areas of Balochistan like Gwadar, Pasni Rural areas of interior Sindh and Mountainous
regions of N.W.F.P like Swat, Chitral and manshera
Dalda also has a very wide distribution network in all the main commercial, industrial and agricultural
cities of Pakistan. for this reason Dalda has a high sales volume in cities like Karachi, Hyderabad,
Quetta, Peshawar, Islamabad and Rawalpindi.
12.7 R ES OU RCES ( FI NANCIAL AND HUM AN )
Resources are another very important factor because through that company can achieve its
objectives and can give competitive edge to its competitor. Secondly in this competitive environment
Human resources are extremely important in the edible oil industry because the industry is presently
classified as a labor intensive industry and therefore the labor force is very important. It is basically
the people who can make every impossible action into possible, through their knowledge and
technical skill they have. For that reason companies are now hiring fresh graduates with new idea and
creative mind and can train them through Management Trainee programs to make them effective for
the company.
Example of Habib :
Habib oil mills us very much supportive and concerned about their labor force. It employs a workforce
of about 350 employees in different departments.
12.8 P RO DU CT QU AL IT Y
Company’s product should try to supersede the expectations of the users and tries to give more value
to the people to make them attached with the company and its products. Product quality is a very
important factor in edible oil. Oil that does not clog or thickens is considered to be good quality oil.
12.9 R ES EARCH AND DE VE LO PM EN T
Many companies in the edible oil industry are carrying research and development at the corporate
level. Habib and Soya supreme have specialized research and development departments. These
specialist departments are focusing on improving the processing of oil and to remove impurities in the
edible oil so as to be more health friendly and consumer friendly. These companies are trying to
increase customer sophistication and brand loyalty, by improving the quality of their cooking oils by
extensive R & D.
Due to the highly developed Research and Development centers they are able to perceive in much
better way what is in the consumer’ s mind and what are the consumers looking for.
13 COMPARATIVE STRENGTH ASSESSMENT OF THE

MAJOR PLAYERS
Selected 3 players out of the Edible Oil industry
The companies that we have chosen out of the edible oil industry of Pakistan are as follows.
 Dalda
 Habib Oil Mills (Habib)
 Agro Processors and Atm Gasses (Pvt.) Ltd. (Soya Supreme)
The details of respective companies are also mentioned. We have chosen the following players
because they have the highest market share in the market are well known by the industry and the
customers
13.1 H ABIB O IL M ILLS
13.1.1 History
Incorporated in 1954-55, Habib Oil Mills (Pvt.) Limited was initially established as an oil expelling unit.
The present management took over the unit in 1978 when it was producing only 5000 metric tons of
cooking oil annually.
The new management has carried over major expansion and modernization of the unit over the years,
and has converted it into an integrated unit for edible oil refining, cooking oil blending and production
of hydrogenated cooking mediums. The unit after subsequent expansion and modernization has now
an installed production capacity of 58,000 metric tons of cooking oil and Vanaspati per annum
The products enjoy vast popularity and brand loyalty and stands first in terms of market share in this
sector nationwide. The company has achieved a growth of over 500% in last ten-year period, which is
primarily attributed to its consistent quality care and driving successes from application of needed
market strategies.
13.1.2 Corporate Philosophy
Customers
HOM is customer driven. We strive to provide products and services of superior value to meet the
expectations of our internal and external customers
Innovation
HOM constantly strives to be creative and innovative in all its endeavors. All HOM employees are
encouraged to bring forth new and better ideas for improved performance, whatever our
responsibilities.
Ethics
HOM demands openness and honesty throughout its operations to engender trust, and integrity
underscores everything we do. We believe that every activity must be able to pass the test public and
internal scrutiny at all times.
People
HOM employees are all partners, working together in the pursuit of the mission and strategy. We
strongly value teamwork, and we want every employee to be motivated to succeed.
13.1.3 Product
Habib Cooking oil and ghee is a premium quality product which enjoys a market share of 7% (second
in the industry). The various products of this company are as follows:
 Habib Cooking Oil

 Habib Vanaspati
 Super Habib
 Friyo (industrial use)
 Handi Vanaspati/cooking oil (regional brand)
 Nayab Vanaspati (regional brand)
Among the various oils/ghee manufactured by the company each of them has its own unique blend of
oils and seeds. Habib cooking oil is a blend of Palm oil, Soya oil and Canola oil.
Habib Oil Mills are the pioneers in introducing pet bottles in part of the world. They are very particular
that the best quality of oil/ghee should be provided to their customers.
13.1.4 Pricing
The pricing of the product is compatible with Soya Supreme and lower than the market leader Dalda.
The basic strategy that is adopted is that the price that Unilevers sets for its brand, a figure slightly
lower than that is adopted as the price for Habib.
13.1.5 Placement – distribution network
The product is made available in all retail outlets that stock oil/ghee. The company also tries its level
best to keep its product just besides Dalda oil/ghee because it is an immediate competitor of the
brand.
13.1.6 Promotion
Since quite a few months Habib has not indulged in any kind of promotional activities. This is because
it feels that it has a solid customer base and all its customers are loyal towards the brand. For this
reason any kind of promotion is not necessary for Habib to sell its brand in the market. At Habib they
believe that “Consumer pull” should be the tactic for a good quality product. And that is what Habib
primarily enjoys, that is the consumers themselves demand the product and in case of a shortage
they refuse to purchase any other brand.
The last promotional activity that Habib conducted was in Ramadan which was called “Ramadan
Khazana ”. Besides there was also an Eid offer called “Eidi Lakhon Ki ”.
13.1.7 Positioning – critical success factor
Habib entered the edible oil industry in the year 1954-55. When they launched their product Habib
Cooking oil/ghee the market for this kind of a product was already established and ready to accept
any new entrant. The initial tough work of educating the market was already done by Unilevers. At the
time of launching Habib, the management decided a different kind of positioning for their product.
They said “Kyunkay yeh dil ka muamla hai”. The reason behind this is that Habib realized that now the
customers are fully aware of the product features and its pros/cons. Thus the best method to attract
people towards Habib was to make them realize that ghee affects the heart, and since a human heart
has extreme importance so people should not settle for anything lesser in quality. They attached a lot
of family values and traditions to their product claiming that Habib is a family product, a family
ghee/oil.
The positioning adopted by Habib was yet another emotional strategy which created a point of
differentiation from the market leaders – Dalda. Presently the scenario is that Habib has a market
share of 7%. Inspite of the fact that there is no crucial difference between Dalda or Habib, yet Habib
managed to develop a difference through their advertising and positioning strategies.
COMPETITOR PROFILE
13.2 S O YA SU PREM E
Agro Processors & Atmospheric Gases (Pvt.) Ltd., established in 1980, is a leading manufacturer of
edible oil in Pakistan. In 1991, in its quest to provide the best Cooking Oil and Vanaspati, the
company made huge investments in research and product development and launched the famous
brand of Soya Supreme Oil and Vanaspati. Today, Soya Supreme is a household brand used by
health conscious consumers all over Pakistan
Soya Supreme is a comparatively newer product and entered the Pakistani market in 1989. At the
time of their launch the problem that Soya Supreme faced was that the Pakistani industry already had
established players in the market that had high market shares and were dominating the edible oil
industry. In such a situation Soya Supreme had to develop something different than its competitors in
order to attract customers.
They did manage to create a difference through advertising. Soya Supreme claimed that it is only their
product that is UHT (ultra heat treatment) treated and is absolutely free from cholesterol.
Their positioning statement was “Lazat ka khazana sehat mand gharana.”
This was a unique feature being offered in the market. Soya

Supreme developed this strategy keeping in view the growing
awareness regarding health problem and how ghee is harmful for
the heart. They claim that their oil/ghee is treated at 255 degrees
centigrade which is unique in the market as the two top players –
Dalda and Habib, process their product at 180 degrees centigrade.
13.2.1 Soya Supreme-the product
The ingredients for manufacturing Soya Supreme are imported from US and Brazil. The basic product
is such that it resembles the two market leaders – Habib and Dalda. Soya Supreme claims that they
use the “risk-free texture” thus avoiding any kind of problems/risks associated with the product. The
risk free texture concept is that Soya Supreme tends to adopt the texture that the two market leaders
are using in their manufacturing process. In this way it is free from any possible risk associated with
the failure of the variant, as it is already accepted by the consumers. The different products of Agro
Processors are:
 Soya Supreme oil

 Soya Supreme ghee
 Champion
 Taqat
13.2.2 Pricing
Habib. Mostly Pakistan Vanaspati and Manufacturing Association (PVMA) determine the prices for
companies. An interesting feature is that the prices of Soya Supreme oil/ghee vary according to the
area. Example in the area of Clifton it is available at a slightly higher price which in Malir the price will
be lower
13.2.3 Placement
Soya Supreme is placed at all retail outlets that carry oil/ghee, as well as in hotels, and bakeries. Care
is taken that at least few of the fast moving stock keeping units (SKU) are available at all retail outlets.
Soya Supreme has more than 250 distributors all over the country.
13.2.4 Promotion:
Agro Processors use a great deal of sales promotion for their products example 25% off schemes,
Jeetiye chaphar phar kai schemes, free spoons, cutlery sets, dinner set and kitchen tools. This serves
as a cushion to the customers. The different media on which advertising is done are – TV, Radio and
Outdoor (Billboards).
13.2.5 Positioning/Unique Selling Proposition (USP) – critical success

factor
Soya Supreme is the only company in the industry that uses UHT treatment in its products. This is a
method which eliminates the cholesterol element totally from the oil. It employs a continuous
deodorizing process. This is a feature that is unique to the product Soya Supreme. Agro Processors &
Atmospheric Gases (Pvt.) Ltd. is one of the few edible Oil and Vanaspati units in South Asia that
process oil at 255° - C using UHT or Ultra High Temperature heating system and continuous
deodorizing. Most manufacturers use batch deodorizing with conventional heating systems which
process oil only up to 180° - C
13.3 D ALDA
Dalda as a brand has a strong heritage in Pakistan. It is synonymous with assured quality, which is
why the business has been able to charge a premium over its competitors year after year. The Dalda
brand is one of the three leading top brands in the Pakistan.
Dalda as a brand has a history of 50 years. Previously, Dalda was a brand of Unilever and contributed
to 25% of the total revenue of Unilever. Dalda got separated from Unilever two years back and thus
has embarked on a journey of its own. Divesting Dalda was part of Unilever’s international strategy to
pull out of cooking oil sector from the South Asian region as part of their long term goals. The new
directors who took over the company were former employees at Unilever and headed the Dalda
brand. Their task was made easy as Dalda was already a household name and was a popular brand.
They just had to maintain the quality and live up to the expectations.
Dalda is a premium quality that has the highest market share of 8%. They are the price market
leaders as well as the price initiators. They are the innovators who introduce new product variants
time after time. However not all their products have been a success. Like for example Dalda Melange
was a failure product and could not sell
13.3.1 Dalda-the product:
The variants of the product Dalda are:
 Dalda Cooking Oil

 Dalda Vanaspati
 Dalda Melange
 Dalda Planta Cooking Oil
13.3.2 Pricing
It is price initiators in the he industry. They prices of Dalda Cooking Oil and Dalda ghee are
comparatively higher than the competitors. This fact is attributed to the excellent product quality and
well established name of the company
13.3.3 Distribution
There is a supply chain manager who is responsible to dispatch products to warehouses, then goods
are transported to distributor, retailer and wholesaler. One distributor covers more than one area.
Dalda has a network of 350 distributors across Pakistan that makes sure that product is available in
every corner, village, town and city of Pakistan. Dalda products are available in far flung coastal areas
of Balochistan like Gwadar, Pasni, Turbat and Omara, Rural areas of interior Sindh like Thatta,
Khairpur, Badin and Rohri, Mountainous regions of N.W.F.P like Swat, Chitral, Mardan, Nowshera
and Balakot, Tribal areas like Khuzdar, Bajur and Loralai, agricultural terrains and outstations of
Punjab like Khaniwal, Okara, Chakwal and Sahiwal.
Distributors are supplied the products using a dynamic replenishment model. The model is based
among other things on preset safety stock levels, sales of retail outlets, promotional activities and
competitor activity.
13.3.4 Promotion:
The company does not believe in giving trade discounts on their product as they feel in
this way control over the product is lost. However they have various sales promotion
schemes like “khul ja sim sim” in year 2002 in which they distributed over 100,000
prizes. Besides in the same year they also raised money for the Shaukat Khanum
Memorial Hospital by increasing the price of their products and also making a note of the
same on the tin/bottle that this is for a social cause. The most successful of the schemes
was cross promotion with Lux which raised the volume of purchase by 30%!
13.3.5 Positioning of Dalda – critical success factor:
UPL’s competitive marketing strategy is primarily drawn from the trust and emotive attachment of
people to its established brands. The brand story for Dalda has revolved around the core of Pakistani
society:” A mother’s love”. Whether it be an upscale urban family from Karachi or the more traditional
eastern setup in the north, the mother symbolizes all that is pure. Dalda’s slogan “Jahan Maanta,
wahan Dalda” became a synonym for this purity and quality and has been the platform for the brand
for many, many years. The language may have changed, the pictures may have altered but the core
of this message still rings true. This symbolism was of course established over the years with well-
crafted and executed communication campaigns across the different medias, touching consumers
everywhere.
Another important aspect which has been used quite effectively by the company is their name –
Unilever. This name has an established brand equity which has been a major reason behind the
strong trust of the consumers towards Dalda. Unilevers were the pioneers in this part of the world.
They started their operations in the edible oil sector in 1948 with their product “Malta”. Later the name
was changed to “Dalda”. Unilevers has actually educated the market regarding the features and
benefits of using branded ghee/oil for cooking purposes. They have the first mover advantage which
mainly provides them with the loyalty of their customers. It was at that time when they decided to
associate mothers love to their product and since then till today the customers relate the product to
that aspect and purchase it. This is the secret behind the success of Dalda; presently it is the market
leader and had a market share of 8%.
13.3.6 Positioning of Dalda – critical success factor:
Dalda has been in this part of the world since a very long time. Unilevers Pakistan Limited has
developed a positioning of their product keeping in mind the importance of a mother in the life of a
child. They have tried to tap the emotional side of a mother saying that if she loves her children, then
she will give them the best which is Dalda. The English translation of the tagline “Jahan mamta
wahaan Dalda” is “Mothers love is Dalda”. They have managed to utilize this strategy in a very
effective manner as people have come to realize that it is only Dalda that provides high quality
features thus making food tasty/delicious.
Another important aspect which has been used quite effectively by the company is their name –
Unilever. This name has an established brand equity which has been a major reason behind the
strong trust of the consumers towards Dalda. Unilevers were the pioneers in this part of the world.
They started their operations in the edible oil sector in 1948 with their product “Malta”. Later the name
was changed to “Dalda”. Unilevers has actually educated the market regarding the features and
benefits of using branded ghee/oil for cooking purposes. They have the first mover advantage which
mainly provides them with the loyalty of their customers. It was at that time when they decided to
associate mothers love to their product and since then till today the customers relate the product to
that aspect and purchase it. This is the secret behind the success of Dalda; presently it is the market
leader and had a market share of 8%.
14 COMPETITIVE PROFILE MATRIX
DALDA HABIB SOYA SUPREME
Weighted Weighted Weighted

Critical Success
Weight Rating Rating Rating
Factors Score Score Score
Marketing and
0.20 4 0.80 4 0.80 3 0.60
advertisement
Brand loyalty 0.15 4 0.60 3 0.45 2 0.30
Promotional
0.10 4 0.40 2 0.20 3 0.30
activities
Competitive prices 0.10 3 0.30 2 0.20 2 0.20
Distribution
0.10 3 0.30 4 0.40 2 0.20
network
Human resource 0.05 3 0.15 3 0.15 1 0.05
Product quality 0.10 4 0.40 4 0.40 3 0.30
Research and
0.15 4 0.60 3 0.45 2 0.30
development
Market share 0.05 4 0.20 3 0.15 3 0.15
Total 1.00 3.75 3.2 2.4

14.1 C OM PARI SO N OF T HREE CO MP AN IE S ON KSF
The critical success factor of the three companies depends on their brand name, their clever
marketing tactics, proper segmentation, promotional activities, Competitive pricing effectiveness of
distribution network and availability of resources.
As all these three companies are the top three players and they have developed a very good image
in the consumer’s mind. Consumers trust on their brand. Further more any product launched by these
companies get popular fast among the consumers as in comparison launched by other small brands
or local brands. This is because of the low brand image and quality of the other local products in the
consumer’s mind.
14.1.1 Marketing and advertisement
The more innovative and heart capturing the advertisement is, the higher it will induce the customer to
purchase a particular brand. All the three companies have managed to create a point of differentiation
amongst their brands through unique positioning and USP, which gives them a clear embarkation
from the rest. Although it is quite ironic that there is no basic difference between each of the brands as
the basic manufacturing process in the Edible Oil industry is the same.
Dalda:
Dalda marketing strategy is primarily drawn from the trust and emotive attachment of people to its
established brands. The brand story for Dalda has revolved around the core of Pakistani society:” A
mother’s love”. Whether it is an upscale urban family from Karachi or the more traditional eastern
setup in the north, the mother symbolizes all that is pure. Dalda’s slogan “Jahan Maanta, wahan
Dalda” became a synonym for this purity and quality and has been the platform for the brand for
many, many years. The language may have changed, the pictures may have altered but the core of
this message still rings true. This symbolism was of course established over the years with well-
crafted and executed communication campaigns across the different medias, touching consumers
everywhere.
Due to the fact that they have associated their brand with ‘Mamta’ since their establishment,
their advertisement concept has been the most effective concept out of all.Dalda has associated
its image as a family’s possession where mothers pass Dalda to their daughters who are future
mothers and are the foundation of another family. Thus, Dalda has been able to position itself as a
family health need for which there is no compromise.
Habib
The advertisement messages of Habib is also very effective and emotional.
The positioning used by Habib for their product is as follow:
“Kyun kay yeh dil ka muamla hai”.
The reason behind this is that Habib realized that the best method to attract people towards Habib
was to make them realize that ghee affects the heart, and since a human heart has extreme
importance so people should not settle for anything lesser in quality. They attached a lot of family
values and traditions to their product claiming that Habib is a family product, a family ghee/oil. The
positioning and adopted by Habib is yet another emotional strategy which has created a point of
differentiation from Dalda.
Habib managed to develop a difference through their advertising and positioning strategies.
Soya Supreme
Soya Supreme also tries to bring an emotional touch in the advertisement message.
The advertisement message of soya suprme is :
Lazat ka khazana, sehat mand gharana
The different media on which Soya supreme advertise include– TV, Radio and Outdoor (Billboards).
14.1.2 Brand loyalty
For any company in the edible oil industry who wants to make a place in the minds of consumers and
remain there they have to establish a strong loyal base of customers. We have seen that most of the
families in Pakistan are very loyal towards their particular brand of oil. If a family has been using habib
for years then they will pass on this trend to their daughters as well.
Dalda
A high brand loyalty has been seen in Dalda consumer. Many mother said that they mothers pass on
this the trend of cooking oil to their daughters and it goes on. the reason behind this is that the Mamta
concept is considered to be a very basic element of Pakistan’s culture and tradition and most of the
mothers have been loyal to Dalda because they are emotionally attached to this brand and this
sensitive concept.
Habib
Habib has a strong customer base. This is because habib has been always maintaining its strict
quality standards. The products enjoy vast popularity and brand loyalty and stands second in terms of
market share in this sector nationwide. The company has achieved a growth of over 500% in last ten-
year period, which is primarily attributed to its consistent quality care and driving successes from
application of needed market strategies
Secondly the positioning adopted by Habib is yet another emotional strategy which has captured the
heart of many consumers. The marketing concept of habib revolves around the health element and
we have seen that the health consciousness trend is of the most significant trends emerging in the
Pakistani society. This is one reason that is contributing to the highest brand loyalty of Habib
consumers
Soya supreme
Soya supreme has a small loyal base of customers as compared to Dalda and Habib. One reason for
its low brand loyalty among its competitors is that it basically imitates what its other two competitors
are doing. It never comes up with a new product variant or a new strategy on its own. This has
created a negative feeling in the minds of consumers and many of them have switched to Dalda and
habib
14.1.3 Promotional activities
Promotional activities are a very attractive alternative for the company in the case of consumer food
product. Through these activities the customers can try the product for free or at lower rates and thus
it become a very is a very attractive way to introduce your product to them So the purpose for doing
these activities is to make people’s attitude to use the product once, and then if the product gets the
acceptance then may be it will increase the sales
Dalda:
Dalda stand first in promotional activities. the owners of Dalda strongly believe that promotional
activities are the one of the most feasible alternatives to attract consumers and a huge budget is
spend on theses activities. The Company does not believe in giving trade discounts on their product
as they feel in this way control over the product is lost. However they had various sales promotion
schemes like “khul ja sim sim” in which they distributed over 100,000 prizes. They also raised money
for the Shaukat Khanum Memorial Hospital by increasing the price of their products and also making
a note of the same on the tin/bottle that this is for a social cause
When Dalda was under Unilever one of the most successful schemes was cross promotion with Lux
which raised the volume of purchase by 30%!
Habib:
Habib is rated low in promotional activates relative to its competitors because the management of
Habib rarely indulges in any kind of promotional activities. The reason is that its management believes
that Habib has a solid customer base and all its customers are loyal towards the brand. For this
reason any kind of promotion is not necessary for Habib to sell its brand in the market. At Habib they
believe that “Consumer pull” should be the tactic for a good quality product. And that is what
Habib primarily enjoys, that is the consumers themselves demand the product and in case of a
shortage they refuse to purchase any other brand.
Some of the promotional activities conducted by Habib include Ramadan Khazana. In Eid season
they sometimes come up with an Eid offer called “Eidi Lakhon Ki”.
One of the recent promotional activities conducted by Habib is that they place convertor girls in
supermarkets whose job is to convince the customer to buy their products.
In December 2008 they plan to come up with some new promotional activities.
Soya supreme:
. Agro Processors use a great deal of sales promotion for their products example 25% off schemes,
Jeetiye chaphar phar kai schemes, free spoons, cutlery sets, dinner set and kitchen tools. This serves
as a cushion to the customer
14.1.4 Competitive prices
The pricing strategy of all the companies revolves around the same concept that all the firms try their
best to sell their products at the lowest possible price so as to attract customers. Setting a competitive
price means that the company in order to be competitive has to set the price range up to the market
not very high neither not very low. Mostly Pakistan Vanaspati and Manufacturing Association (PVMA)
determine the prices for companies
Dalda:
Dalda is the price initiators in the he industry and considering the fact that it is the market leader, it still
charges lower price than Habib therefore we can say that it has competitive prices... They prices of
Dalda Cooking Oil and Dalda ghee are set comparatively with the price of competitors.. The company
still tries it best to resist the price increase as they are aware of the fact that the market is price
sensitive
Habib
As far as competitive pricing is concerned habib charges more than Dalda. This is one flaw in its
pricing strategy. We know that Habib is striving to be the market leader so a suitable pricing strategy
for Habib would be to set its prices lower than the market leader Dalda, which it is currently not doing.
Pricing strategy of Habib is as follows:
Habib is available at different prices in various localities of Pakistan at different prices..
Soya Supreme:
Habib. Mostly Pakistan
As Soya supreme management has the habit of imitating Dalda and Habib, they also vary their price
in different localities of the area. A tin of Soya Supreme will be sold at a slightly higher price in Clifton
and a lower price in Korangi.
14.1.5 Good distribution network:
A strong network of whole sale distributors is the best was to gain access to as many retail outlets as
possible. A strong distribution network also helps company’s to make their product available at every
nock and corner of the country where ever they want to reach. For this reason some multinationals
like P&G, Unilever have their own distribution networks.
Dalda:
Dalda has a network of 350 distributors across Pakistan covering 400 towns that makes sure that
product is available in every corner, village, town and city of Pakistan. The Dadla distributors even
don’t mind using cycles to reach those areas where there is high traffic or roads are two narrow for
trucks and Suzukis, so you can very well imagine how good distribution network Dalda has.
Dalda also has a very wide distribution network in all the main commercial, industrial and agricultural
cities of Pakistan. for this reason Dalda has a high sales volume in cities like Karachi, Hyderabad,
Quetta, Peshawar, Islamabad and Rawalpindi
The distributors use trucks to transfer goods to major stores where Dalda is required in more quantity.
They use vans or Suzuki to supply Dalda to small stores or in areas where trucks are
unreachable.Another means of distributing Dalda is the use of comet (bicycles) by distributors. These
are used in places like Sunday Bazaar, Friday Bazaar, Exhibitions, Fairs, Tradeshows, Mela and to
reach out to customers. The advantage of using these bicycles is that consumer can buy the desired
quantity pack required at his doorsteps.
Habib: (450 towns)

As far as the effectiveness of distribution channels is concerned Habib has the best distribution
network as compared to its competitors. Habib products are available in far flung coastal areas of
Balochistan like Gwadar , Pasni Rural areas of interior Sindh and Mountainous regions of N.W.F.P
like Swat, Chitral and Manshera. The company tries its best to make sure that the product is made
available in all retail outlets that stock oil/ghee.
Habib Oil Mills is using Hino Pak Trucks and Mazda trucks for its distribution purposes.
Soya supreme:
Soya supreme distribution is not as effective as Dalda and Habib’s distribution markets. . Inspite of
the fact that it offers the s highest margin to its distributors it is still behind Dalda and Soya supreme..
The reason behind this is that it wants aggressive sales in order to reach the top position. Soya
Supreme has more than 250 distributors all over the country. The management tries to ensure that
the product is placed at all retail outlets that carry oil/ghee, as well as in hotels, and bakeries. Care is
taken that at least few of the fast moving stock keeping units (SKU) are available at all retail outlets.
14.1.6 Human resources:
Human resources are the most valuable assets because it is basically the people who can make
every impossible action into possible, through their knowledge and technical skill they have. Human
resources are extremely important in the edible oil industry because the industry is presently classified
as a labor intensive industry and therefore the labor force is very important.
Dalda:
The management of Dadla has stringent hiring policies and they hire only those people who they
believe have the right attitude and skills matching the job. Thus Dalda has a very talented, motivated
and hardworking staff.
Habib :
Habib oil mills employ a workforce of about 350 employees in different departments. Its employees
are very dedicated, motivated and hardworking being a Pakistani firm Habib faces problem of not
easily getting skilled personals to their company. Most of the professional prefer to work in MNC’s and
they do not prefer local companies at all. In order to attract highly skilled candidates habib has
designed attractive compensation packages
HOM treats all employees as partners, working together in the pursuit of the mission and strategy.
The company strongly value teamwork and it wants every employee to be motivated to succeed
Soya supreme:
It is placed third as far as its hr is concerned. The reason is there is no department of Human
Resource at Agro, and most of the HR matters are handled by the top management. There is no
formal training imparted to the employees of Agro. They are taught by their respective supervisors on-
the job. Performance Appraisal/Assessment of the employees is also done by the supervisors.
14.1.7 Product quality
Product quality is a very important factor in edible oil. Oil that does not clog or thickens is considered
to be good quality oil.
Dalda :
Dalda is offering the most premium quality oil. Dalda’s slogan “Jahan Maanta, wahan Dalda” has
become a synonym for purity and quality and remained the platform for the brand for many, many
years
Habib:
The management of Habib is very strict about quality control criterias. . it is evident form the fact that
habib is the First Edible Oil & Food Company to achieve ISO 9001:2000 (E) & ISO 14001: 1996 (E).
Another milestone which has been achieved through continuous quality improvement and efforts of
each individual of HOM in the shape of ISO 9001:2000 (E) and ISO 14001:1996(E) certifications. The
achievement of the same shows an indication of continuous growth featuring Key parameters of
Quality as well as Environment
Soya supreme:
The quality of Soya supreme are inferior as compared to competitors. .Soya Supreme claims that they
use the “risk-free texture” thus avoiding any kind of problems/risks associated with the product. The
risk free texture concept is that Soya Supreme tends to adopt the texture that the two market leaders
are using in their manufacturing process. In this way it is free from any possible risk associated with
the failure of the variant, as it is already accepted by the consumers
14.1.8 Research and development:
Many companies in the edible oil industry are carrying research and development at the corporate
level. These companies are trying to increase customer sophistication and brand loyalty, by improving
the quality of their cooking oils by extensive R & D.
Dalda:
The technology used for manufacturing Dalda is the best in the market. the Dalda process in
Pakistan to be approved from the research center at Holland. Dalda has to receive a technical
clearance and health & safety clearance. For this reason all processes are scientifically proven and
tested. It is ensured that there has been no bacterial growth in the product. It has been identified by
the Holland research center that Trans fatty acids are harmful for the heart. Dalda is virtually free from
this element; it has less than 1% of Trans fatty acids. While the other products contain almost 20% of
this acid
They are the innovators who introduce new product variants time after time. However not all their
products have been a success. Like for example Dalda Melange was a failure product and could not
sell. This was because of some wrong research findings on the part of Dalda team
Habib:
HOM constantly strives to be creative and innovative in all its endeavors
Research and development at Habib is outsourced to different agencies. There are mainly two
agencies that have been given the contract by Habib to research new products and blends of
oils/seeds. They are
 Gallop Oasis
 A C Neilson
Example:
Habib’s research and development alters the texture and composition of same oil for two different
regions of Pakistan. In Punjab as people prefer using thick oil whose texture resembles to ghee, the
oil manufactured for Punjab is made thick and viscous. On the other hand the people of Karachi prefer
using light oil so for them Habib manufactures light oil with less viscosity and thickness Also we can
see that now Habib is expanding in a wide variety of products including masla mixes.
Soya supreme:
There is not any strong research and development activities carried out by Soya supreme. However
one good research development unique to Soya supreme is that they are the only company in the
industry that uses uht treatment in its products. This is a method which eliminates the cholesterol
element totally from the oil. It employs a continuous deodorizing process. This is a feature that is
unique to the product Soya Supreme. Agro Processors & Atmospheric Gases (Pvt.) Ltd. is one of the
few edible Oil and Vanaspati seeunits in South Asia that process oil at 255° - C using UHT or Ultra
High Temperature heating system and continuous deodorizing. Most manufacturers use batch
deodorizing with conventional heating systems which process oil only up to 180° - C(including Dalda
and Habib).
14.1.9 Market share:

Dalda being the market leader has the highest share in the premium market segment that is of 25%,
Habib oil mills come at number two with the market share of 20% where as the market share of Soya
supreme amounts to 16%.
15 INTERNAL COMPETENCIES OF THE COMPANY FOR

ADDRESSING THE KEY SUCCESS FACTORS:
15.1 C OMP ET EN CI ES BU ILDIN G FOR IMP RO VE D MARK ET IN G AN D
ADVE RT IS EM EN T
The company should try to recruit the most creative marketing people who think out of the box. Such
people will have the ability to come up with most attractive, persuasive and eye catching ads and
promotional campaigns. The marketing people should have the ability to be extremely responsive to
the market rend and demand of people
For example: the company can initially launch teasers on bill boards and then later they can come up
with whole advertisement. This is a very good way to make the advertisement attractive.
For example: Habib can use a famous heart specialist as a celebrity endorser in their advertisement.
The appearance of a DR in the advertisement would easily persuade consumers that Habib is very
good for heart with low levels of cholesterol and Trans fat.
15.2 C OMP ET EN CY BUIL DI NG FO R S TREN GT HE NI NG TH E LOYAL CU ST OM ER
BAS E
To further strengthen it already strong base of loyal customers the company needs to come up with
some kind of schemes or offers on continuous bases that makes the customer feel good and they
remain strongly attached to the brand.
For example: Habib can come up with royalty card for its most favorite customers who buys the
product most frequently and in largest quantities. This royalty card can have features like price
discount and free product delivery to the door steps.
15.3 COMPETENCY B U I L DI NG FO R P RO MO TIO NAL ACTI VI TI ES
Habib pays less attention to promotional activities because it believes in the pull strategy. Habib
should increase the budget allocated to its promotional activities because it is important for Habib to
use promotional activities, to remain competitive in market as its other two competitors Dalda and
Soya supreme are making a wide use of promotional activities
For example. :Habib can televise a show like the best cook in town, going to various localities of
Karachi and giving housewives their cooking oil to use to make a dish. Habib can choose a panel of
judges consisting of the most famous chefs like chef Zakir, Zubeida TarIq and Rahat.
For example: Habib can open up a cooking institute for girls where it can charge reasonable rates
and training girl to cook tasty dishes using Habib oil
15.4 C OMP ET EN CY BUIL DI NG FO R COM PE TI TIVE P RI CI NG :
In order to achieve the objective of competitive pricing, the company needs to pay attention to its
value chain activities and constantly manage cost along the value chain by modifying its processes.
For example: Habib can consolidate its operation and reduce the number of manufacturing plants. It
can modify its manufacturing plants in such a way that a whole family of products can be
manufactured and processed on a single plant. This will save the machine maintenance cost as well
as the electricity and energy cost required to run the plant.
It can use pure plastic for packaging as it cost low rather then using metal or tin cans.
15.5 C OMP ET EN CY REQ UI RE D FOR BU ILDIN G GOO D DIS TRIBUT IO N
N ET WO RK
A comprehensive and modernized information system seems to be good option which will help Habib
in improving the effectiveness of distribution system. lets see how it works.
For example: Habib can built a Comprehensive and affective information system connected to the
super markets and distributors that will help them to know in which retail store and super market their
product stock is required and then they can directly order their distributors online to deliver the
product to that specific super market.
15.6 C OMP ET EN CI ES RE QU IRED FO R ACQ UI RI NG HU MAN RE SO URCE
It has been obvious by experience that if a company has talented and highly skilled human resource
that company is bound to succeed. The c hr department of Habib should develop best skills in
choosing employee with the right attitude whose skills and capabilities match with the job
requirements. Secondly choosing the right kind of employee largely eliminates the need to hire
outside personnel for higher post because when the time comes for the senior executive to retire, the
junior executives are so capable that they are promoted to these higher post.
For example: Habib can send its HR department personnel on regular training and workshop so that
they keep on polishing and improving their skills when it comes to recruiting employees fro the
organization. it can provide attractive compensation packages and salary and wage rate above the
industry pay rates level.
15.7 C OMP ET EN CI ES RE QU IRED FO R M AIN TAIN ING P RO DU CT QU AL IT Y
The company needs to stick to the strict quality standards as set by the control department who
needs to constantly keep a check over all the manufacturing processes and procedures. the members
of quality control department can have surprise quality checks by visiting the manufacturing processes
and the activities of the labor working in the factory that whether all quality control criteria are being
met or not. In order to motivate the employees to strictly adhere to these quality policies the
management can keep incentives like a 2500 RS bonus to the employees each month if no customer
complains regarding is received during a particular month.
15.8 C OMP ET EN CY FO R BUIL DI NG RES EARCH AN D DEVEL OP ME NT
When asked from the mangers of Habib they said that one of their weaknesses was research and
development .We know that research and development at Habib is outsourced to different agencies.
Now obviously these research agencies won’t have the same level of interest for the company as
compared to what the company will have FOR itself.
Therefore it is strongly recommended that Habib should build a strong research and development
department inside the company. if Habib is facing difficulty in managing research and development
alone it can partner with some international research agencies so as to get their resource and
technology access . Habib can even get approvals from some international research agencies in order
to makes research and development practice better and authentic
16 STRENGTHS AND WEAKNESSES OF HABIB

OIL MILLS
16.1 THE ST RE NG TH S OF H ABIB O IL M ILLS ARE :
• Established Brand:
The company is established for the past 50 years so it has created its image in the eyes of people –
its loyal customers are one of the major strengths. Its reputation is a very strong asset. They have an
innovative USP which they associate it with the brand name.
In other food items people taste and then rate the product but when it comes to cooking oil they
usually go for the reputation of the brand, as they are sure that if the company has good reputation
then they must be using good manufacturing processes, ensuring the safety of the consumers.
• Strong customer loyalty:
Habib has the strongest customer base among its two major competitors. This is because Habib has
been always maintaining its strict quality standards. Dalda had the strongest customer base but after
being separated from Unilever, it had a slight decline in its loyal customer base which created an
opportunity for Habib and they capitalized over it. The brand itself is very strong in the mind of the
consumer as they feel that it’s a family possession. The trend in Pakistani culture is that the brand of
cooking oil used by a family is passed on from generation to generation – thus reflecting a very strong
customer loyalty base.
• Strong Distribution Network:
Habib Oil Mills has one of the strongest distribution

networks all over Pakistan – it is available in almost 450
towns across Pakistan. There are 8 ware-houses of habib
oil all over Pakistan. This distribution network ensures that
the products are delivered to the end customers just in time
and shelves are never empty in any of the retail stores.
• First ISO certified company:
At Habib Oil quality is of prime importance – there is no compromise on the quality – therefore it goes
through certain quality control measures and standards and most of its process are ISO 9001 certified
– In fact HOM was the first one in the edible oil industry to be ISO certified. HOM has been an ISO
9002:1994 certified company since November 1997. Recently another milestone has been achieved
through continuous quality improvement and efforts of each individual of HOM in the shape of ISO
9001:2000 (E) and ISO 14001:1996(E) certification. The achievement shows an indication of
continuous growth featuring Key parameters of Quality as well as Environment.
• Socially Responsible Firm:
Another major strength that we see is that Habib oil is a major supporter of the corporate social
responsibility- they have
Some of the activities include
• Habib Water ”Habib Oil Mills Will supply 100,000

Liters of Water to National institute of Child Health
Every Month
• Habib Oil Mills Donates School Van to J. S.

Academy for Deaf
• This year HOM has donated a complete operation

theatre in the new complex of Civil Hospital
• Traffic Signs and Direction Boards City Government with the sponsorship of Habib Oil Mills
has placed numerous traffic signs and direction
boards.
• Strong Product Advertising:
The advertisement messages of Habib rates 2nd when compared with the advertisement of Dalda. A
major reason for this is because Dalda has hit the viewers of its ad on the moist sensitive concept
(THE MAMTA CONCEPT)
The positioning used by Habib for their product is as follow:
“Kyun kay yeh dil ka muamla hai”.
The reason behind this is that Habib realized that the best method to attract people towards Habib
was to make them realize that ghee affects the heart, and since a human heart has extreme
importance so people should not settle for anything lesser in quality. They attached a lot of family
values and traditions to their product claiming that Habib is a family product, a family ghee/oil. The
positioning adopted by Habib is yet another emotional strategy which has created a point of
differentiation from Dalda.
Habib managed to develop a difference through their advertising and positioning strategies.
• Strong Research and Development
The research and development department of Habib Oil is very strong. STRONG RESEARCH IS
CARRIED OUT USING MODERN EQUIPMETNS AND TECHNOLGYIES. The strong R&D of Habib
has lead habib to become the market leader in the cooking oil industry
HOM HAS installed the latest and most modern European plant in Pakistan for Edible Oil processing.
This is the most modern technology employed for Oil processing
• Regional Product Range:
Habib Oil Mills has a wide product range to be offered in various areas – they cater to different areas
with different products – For example they have different products for Karachi and then if we look at
the interior areas of Sindh and Pubjab they have other brands like Handi and Nayab to be sold there –
In Skardu and Gilgit their brand super Habib is very popular.
16.2 THE WE AK NE SS ES OF H ABI B O IL M ILL S ARE :
• Olive oil not included in the product range:
Today the consumers are becoming more health conscious and aware of various diseases, and one
of the major causes of this is the eating lifestyle of people. Many consumers are switching over to
olive oil which has less fat as compared to the normal oil or ghee – One of the weakness of HOM is
that at the moment they are not offering Olive Oil as a part of their product range although the
demand for that exists.
• Centralized Management:
HOM is a family owned business and in most of such business there organization is usually Seth
governed where they practice the traditional centralized system. Most of the people do not want to
work with such organizations today as that hinders their individual growth – because in centralized
system employees have do to as they are directed and they do not have a chance to contribute their
ideas to the management.
• High Cost of Operation:
As the rates of everything including the basic resources like electricity, gas, fuel etc are rising today so
the cost of operations have gone up which is also a weakness for HOM. They need to work over it
and reduce these expenses.
• High Employee Turnover:
If the employees get opportunities from multinational firms they prefer leaving the job and going
because multinational promote the growth of a person as an individual as well and the exposure is
also greater in those companies. The employee turnover increases in such a scenario as people
leave the local firm if they get an opportunity to work for a multinational or a global firm.
17 INTERNAL FACTOR EVALUATION MATRIX
Weight Score Wt Score
STRENGTHS
1) Established brand 0.075 3 0.225
2) Strong Distribution Network 0.15 4 0.60
3) First ISO certified company 0.075 3 0.225
4) Regional product range 0.025 4 0.10
5)Socially Responsible firm 0.05 3 0.15
6) Strong R and D 0.2 4 0.8
7) Strong customer loyalty 0.1 3 0.30
8) Strong product advertising 0.1 3 0.30
Weaknesses
1) Olive oil not included in product range 0.125 1 0.125
2) Centralized management 0.05 2 0.10
4) High operating expenses 0.025 1 0.025
5) High turnover of employees 0.025 2 0.050
Total 1.00 3.00
We need to jealously guard the two strengths which are
• The strong distribution network

• Research and development
Habib Oil Mills currently has a very strong distribution network with almost 450 distributors – they
should come up with strategies like forming strategic alliances with distributors that the distributors
will only work for them and not for the competitors at the same time – this would prevent them from
being copied by their major competitors.
At the moment Habib has an in house research department– to jealously guard this strength they
should seek affiliation with recognized international research institutes.
18 VALUE CHAIN ANALYSIS
FIRMS INFRASTRUCTURE
Habib has highly developed information systems to connect with suppliers and
distributors
HUMAN RESOURCE MANAGEMENT
The HR department is trying to improve salary packages for employees. strict

recruitment processes to hire competent employees and also regular training programs
TECHNOLOGICAL DEVELOPMENT AND R & D
Largest budget is allocated to be invested in R& D and technology. Through R & D it

focuses on improving the processing of oil and to removing the impurities in the edible oil
PROCUREMENT
Habib purchases raw material from the suppliers who uses the finest oil seed
INBOUND OPERATION OUTBOUND MARKETING

LOGISTICS: LOGISTICS AND SALES
Habib follows the

Habib Oil is using policy consistent A fleet of delivery Strong
the latest manufacturing of vehicles consist of coordination
Information system good quality Hino Trucks and between R & D.
to coordinate with products meeting Mazda Trucks to marketing dept
their local suppliers the changing cover its entire and product dev
so that the raw preferences of routes. The dept ,helping it to
material is available buyers distribution introduce new
to them just in time staffing is products as per
What is a value chain? In the designed to have the demands of
manufacturing a strong link consumers.
process the between the
quality is ensured senior sales staff Good personal
as there is no and the end relationship with
1 8 . 1 W HAT I Scompromise
VALU E CHAIN on industrial buyers
consumers. This
the quality staffing is further including re
Every firm is a synthesis of activities performed to design, produce, market, deliver andknown
supporthotels.
its
reinforced with
product. The primary activities in value delivery chain cover the sequence of bringing materials into
the business (inbound logistics), converting them into final product (operations), shipping out final
products (outbound logistics), marketing them (marketing and sales) and servicing them (service).
Purchased supply and inbound logistics:
Habib Oil is using the latest Information system to coordinate with their local suppliers so that the raw
material is available to them just in time - the raw material imported from abroad is stored in the 8
warehouses that HOM has all over Pakistan. Habib has some fixed suppliers from which it procures
the supplies. The prices charged by international suppliers are low but still habib only imports 40% of
the raw material from imported supplier because of government regulation in order to protect the local
suppliers
Operations:
In operation habib follows the policy consistent manufacturing of good quality products meeting the
changing preferences of buyers. There are 2 types of plants HOM has in Pakistan - batch type plants
and 5 to 7 automatic refining plants. Once the raw material is brought to the plants then it goes
though the manufacturing process in which the quality is ensured as there is no compromise on the
quality. The crude oil is obtained from the suppliers .this crude oil then refined and neutralized. In the
refining process it is treated with alkali and phosphoric acid to remove gums and fatty acids. In the
next stage bleaching is done in order to remove pigments and color. In the next step we have
filtration. After filtration, the next stage is de-odorization in which the odor is removed. After this stage
we have polish filter and chilling stage and then the product is finally packed and dispatched to
distributors. Packing is first done in the form of respective packing and then in the cartons and then it
is sent to the various distributors
Distribution and outbound logistics:
Habib has rapid and timely product deliveries to is customers. A fleet of delivery vehicles consist of
Hino Trucks and Mazda Trucks to cover its routes. The distribution staffing is designed to have a
strong link between the senior sales staff and the end consumers. This staffing is further reinforced
with CSF (customer sales force) to enhance the contact with the customers and the market. It sells its
product to the distributors on cash. Its other two competitors sell the product to distributor on credit
basis.
Sales and marketing:
Habib has developed strong relationship with its large industrial buyers like owners of renown hotels
thorough strong partnering programs. It also has Strong coordination between R & D and marketing
dept and product development dept. a large budget is allocated to its marketing department because
it knows that the marketing and advertisement are the two most critical success factors in the industry.
The marketing concept of habib revolves around the health concept (KYUN KA YEH DIL KA MAMLA
HAI). Thus Habib has managed to develop a difference through their advertising and positioning
strategies
Service:
Habib is lacking in this service element of value chain as they have no advisory service. We can see
that its competitor Dadla has its advisory service with the name Dalda advisory service lead by the
reknown lady ms Zubeuida Tarik.
Technology and Product research and development:
Habib allocates the largest budget to be invested in research and development and investment and
t4echnolgy so that it comes up with highly differentiated products responding to customers need
HOM constantly strives to be creative and innovative in all its endeavors. Research is carried out
using modern equipments and technologies. It has a strong research and development department
which constantly tries to come up with new product variant, and tried to respond to the changing
market trends and consumer preferences. It has installed the latest and most modern European plant
in Pakistan for Edible Oil processing.
Human resource management:
The HR department of Habib Oil is constantly working hard to improve their compensation and salary
packages for employees.They have a very strict recruitment selection process to hire competent
employees and also regular training programmes for employees. The employees of each and every
department of Habib are working relentlessly with dedication to get the best out puts in their
departments, thus the combined efforts of all helps the company to deliver high value added products
to its customers.
Firms infra structure:
Habib has highly developed information systems to connect with suppliers and distributors.
Core competency:
A core competency is something that a company does well relative to its other internal activities. it is
basically combination of resource and capability It is central for the company’s competitiveness and
profitability.
We did and internal assessment of Habib to see whether it was using its core competency and how it
was using it. The core competency of Habib as derived from our analysis is the strongest distribution
network as compared to its competitors.
Resource capability Core competency
Financial resources Research and development
Modern equipment and Good communication and Using the specialized sales
manufacturing plant interaction skills forces who have the
capability of good
communication skills they
have made the strong
distribution network as their
core competency
Well connected information Product innovation skills

system
Highly specialized sales force Ability to foresee new market

opportunities
Advance Technology
Brand name
Resources:
Some of the most valuable resources of Habib are advance technology, modern manufacturing
plants, strong brand name, human resource, innovation and well connected information system.
Some of the resources like manufacturing plants and computerized systems are easy to copy how
resources like a highly specialeized salesforce; innovativeness and a strong brand name are not at
easy for rivals to copy. Using theses unique resources, Habib combines it with some of its unique
capabilities to deliver its core competency.
Capability:
Some of the most important and unique capabilities possessed by Habib is a strong research and
development department and good communication skills.Habib is trying to increase customer
sophistication and brand loyalty, by improving the quality of their cooking oils by extensive R & D.
Core Competency:
Habib has the strongest distribution network which is unmatched by the rivals. The distribution
network also helps the company to make their product available at every nock and corner of the
country where ever they want to reach.
Habib products are available in far flung coastal areas of Balochistan like Gwadar , Pasni Rural areas
of interior Sindh and Mountainous regions of N.W.F.P like Swat, Chitral and Manshera
Using the specialized sales forces who have the capability of good communication skills they have
made the strong distribution network as their core competency.
19 GENERIC STRATEGY OF THE COMPANY
Differentiation Cost Leadership
Broad
Narrow
• At Habib we get the competitive advantage by providing buyers with a value they perceive as
superior i.e. we basically provide a superior product line to our customers that is worth paying
more.
• We can see that Habib’s differentiating strategy is successful because it creates buyers value
in a way which is not at easily matched by rivals
.
Habib Oil is following the broad differentiation strategy – we can conclude this by the following
evidences:
Research and Development:
Habib allocated a large budget to its R & D department. It has a strong research and development
department which constantly tries to come up with new product variant, and tried to respond to the
changing market trends and consumer preferences. This we can conclude from the fact that now they
are expanding in a wide variety of products including Masla mixes. In order to reduce the
environmental hazards they have made
In-house improvement measures related to waste reduction at source and adoption of environment
friendly processes. Thus their strong R & D serves as a differentiation attribute for them.
Region wise product:
Habib Oil is not only catering to the major cities but also to the other cities and towns in the interior
areas of the 4 provinces – It is almost available in 400 towns – they have region wise product which
clearly emphasizes that they are broadly differentiating – For big cities they have brands like Habib
Cooking Oil – Habib Banaspati Ghee, Super Habib etc and for the smaller towns and cities they have
brands like Handi and Nayab.
Habib has come up with different products for different regions because they understand the
purchasing power and preferences of the people from different places. By purchasing power here we
mean that the standard of living of rich in a rural area and the standard of living of rich in Karachi are
different.
The value Habib is being delivered through its wide product range and healthy products. Their target
Market comprises up of the health conscious people who are aware about the major diseases like
cholesterol and heart diseases which are caused by the use of Ghee. This is one very major point of
differentiation and the target market should understand the value of the brand and should be willing to
pay the premium price for the brand and hence Habib is successful in this area.
Outbound Logistics:
Habib has highly skilled sales force who are responsible to go to various hotels and restaurants in
order to convince them to use Habib Oil.
Habib has a very good distribution network which differentiates it from its competitors – it caters to
almost 400 towns with about450 distributors all over the country.
Operations:
In the edible oil industry the processes which are used to refine oil are such that they produce a lot of
pollution and waste substances that isn’t good for the environment. So in order to do that Habib Oil
has differentiated itself and now it is using systems that do not cause harm to the environment. They
have made huge technological investments in this area.
Habib Oil has also made production methods which are safe for the environment. This is being done
as they are quite aware that how important it is to be socially responsible these days.
Pros and cons:
Pros:
• When there is intense competition in the industry then its differentiating attributes helps it to
stand out among the industry players and also helps it to maintain a good profitable growth.
• Sometimes the differentiating factor is so unique that it becomes a symbol or creates a major
association in the mind of consumers.
Cons:
• One of the major cons of differentiation is that most of the features are easy for rivals to copy.
• Sometimes in an effort to differentiate the company comes up with an attribute which is not
perceived as valuable by the buyer and therefore he is not willing to pay the cost and hence
the company has to face losses.
• Over differentiating sometimes creates a product or a service that is not needed by the buyer.
20 RECOMMENDED CORPORATE STRATEGY
The two corporate strategies that we recommend for Habib Oil Mills in order to gain a competitive
advantage are:
• Market development
• Product development
These two strategies are basically intensive strategies and would be requiring intensive efforts by the
company in an attempt to increase the firm’s competitiveness.
20.1 M ARK ET D E VE LO PM ENT
In the market development strategy of Habib, it would involve introducing the present product line into
new geographic areas of Afghanistan and Iran.
As we observed that a lot of oil is being smuggled to Afghanistan and Iran as the need of the local
people are not at all being fulfilled – the major reason for this was the war going on and the
destruction of the whole country and the destruction of the local industries as well.
According to our analysis, right now it would not be a viable idea for Habib to install a plant over there,
as the conditions of both the countries are very unstable right now but it would be a much better for
Habib to export its products right now and once the conditions gets stable then a manufacturing plant
can be set up.
The reason why we think that Habib should go for this market development strategy is that Habib has
the needed capital and the human resource to manage this expanded operation. Secondly we have
seen that there has been a lot of improvement in the infrastructure and the transportation system,
which has made it less expensive and easier to access these new markets.
20.2 P RODUCT D EVEL OP MEN T :
As we have seen that the health awareness among the masses is increasing day by day, thus we can
predict that in the coming time there could be a huge demand for products which are safest for health
and heart. Therefore we recommend that Habib can launch an extension of the brand by introducing
olive oil in the market. The increasing trends of health consciousness also ensures to a large extent
that the sales of olive oil would continue to grow.
Another strategy which Habib can employ is to increase its market share externally through
acquisitions or via joint ventures with another firm in the same industry.
Like it can enter into a joint venture with soya supreme.
20.3 EXISTING STRATEGY
The existing strategy focuses on the fact that through using differentiating attributes they are coming
with different product variants like ghee for taste conscious consumers, oil for health conscious
consumers and lower parts products for interior part of the provinces.
Frontal Assault:
Habib has followed this offensive tactic as it competes head to head with Dalda. It matches them in
every category
20.4 MODIFICATION IN THE STRATEGY
One of the aspects which we think that should be modified in the existing strategy is that they should
eliminate the lower price products for the interior parts of the provinces – Majority of the people in
interior have no sense of brands and they are not at all brand conscious and therefore these people
are willing to buy loose oil even if there is not much price difference in the loose and branded oil.
For example if Habib is charging Rs.100/ liter and the loose oil is for Rs.90/litre the consumers would
definitely prefer to buy the loose oil and would not be willing to spend Rs.10 extra just for the sake of
the brand name.
Although there are some people who are brand and health conscious in the interior parts as well but
this is a very small chunk of the entire market of the interior.
The company should not change its existing strategy because if it wants to be a major player
in the edible oil industry it has to differentiate itself from the other major players in the
industry. Habib Oil is following the broad differentiation strategy at the moment which it
should follow in the future as well – with huge technological investments in research and
development and also high operating expenses it is very difficult for them to cut down their
expenses and when they cant cut down the expenses it is near to impossible for them to
become cost leader.
21 E V A L U A T I O N O F T H E A L T E R N A T I V E
STRATEGIC RECOMMENDATIONS IN THE
LIGHT OF INPUT/MATCHING/DECISION MODEL
• 1st Stage – Input Stage:
In the input stage we have used the EFE, CPM and IFE matrix. These matrices summarize the basic
information required to formulate the strategy.
• 2nd Stage – Matching Stage:
In the matching stage we have made the TOWS and the SPACE matrix. These matrices have
generated the feasible alternatives by aligning the internal and external factors.
• 3rd Stage – Decision Stage:
Here we have used the quantitative strategic planning matrix. We have derived the attractiveness of
the alternative strategy and it provided us a base to choose a strategy.
.
22 TOWS MATRIX
STRENGTHS WEAKNESSES
• Established Brand No focus on Olive Oil

• Strong Distribution Centralized Management
Network High Operating Expenses
• Socially responsive firm High Employee Turnover
• Regional product range
• Strong R&D
• Strong Customer
Loyalty
• Strong product
advertising
• First to get ISO
certification
OPPURTUNITIES SO STRATEGIES WO STRATEGIES
• Increasing Health • As HOM is a established • With the increase in no of

Consciousness brand, they can grab the health concious buyers,
• Improving Infrastructure opputunity to expand in the HOM can focus on the Olive
• Expansion into International Mkt S1,O3 oil Sector to grab the
International Market opputunity. W1,01.
• Alliances with Bakers &

Hotels • As it got a strong distribution
network, with the improving
infrastructure it can now
reach to those areas where it
wasnt possible earlier. S2,02
THREATS ST STRATEGIES WT STRATEGIES
• Fluctuating Oil Prices • As Habib is aestablished • With the increase in no of

• Increasing Health brand it can counter the Health concious buyers,
Consciousness threat with of fluctauting Oil HOM can counter this threat
• Political Instability Prices by making contracts by focusing on the Olive Oil
• Devaluation of Local with the oil exporters. S1,T1 Sector. W1,T2
Currency
• Buyers expectations to
meet International • With good customer loyalty • Cost of production can be
standards and CSR practices Habib can controlled if Habib starts
• Illegal smuggling of oil show in its advertisements exporting oil. W3,T6
that it would not
comprosmise with customers
23 SPACE MATRIX HABIB OIL
FINANCIAL STRENGTH Ratings
• Their debt to equity to 70:30, this means its not a high leveraged
company, so not taking high risk. 5.0
• ROI is showing increasing trend since last 4 years. This means

2.0
company is very efficiently utilizing its assets to increase income.
• Gross profit margin ratio is also increasing and company showing a
good profitable growth. 2.0
• Company has sufficient amount of cash for any uncertain situation.

4.0
-------
13.0
INDUSTRY STRENGTH
• Growth opportunity for oil industry expected as population is

increasing. The consumption of edible oil rose from 0.3 million to 2
million tons during the last two decades.
4.0
• It is unorganized sector so competition is intense.
2.0
• 70% of domestic production is met through import of edible oil.
• The government is also making efforts through a pilot project to 4.0
grow palm trees along the coastal belt of Thatta in Sindh.
1.0
• High research and development due to technology know-how.
• Ease of entering into the market. 2.0
• Government has deregulated this industry, no regulation on imports.

3.0
1.0
17.0
ENVIRONMENTAL STABILITY
• Pakistan is experiencing high inflation and political instability.

• Global prices of oil have fluctuated in recent years.
• Edible oil industry in Pakistan is fully dependant on Malaysia and
Indonesia for palm oil as they are the only producers in the world. -4.0
Therefore, risk is involved. -4.0
• Improvement in country’s infrastructure helps for easy distribution
-5.0
throughout the country.
• Competition is very tough with big brands like Dalda but now we see -2.0
the trend that smaller regional brands like Sultan are giving tough
time and making big brands run for their money.( because of big -2.0
number of lower income group) -2.0
• Habib prices are highest in the market and there is a lot of pressure
from competitors. -2.0
• Resource and capital utilization is optimal due to high demand of

----
edible oil.
-21.0
COMPETITIVE ADVANTAGE
-3.0
Habib has the 2nd highest market share in premium oil market after Dalda.
-1.0
• Habib has large customer base and customers are loyal to the brand -2.0
• First ISO9000 certified company, product quality is high.
-5.0
• R & D is very strong.
• Strongest distribution network of around 450 distributors. -1.0
• Socially responsible firm
-2.0
---
-14.0
CONCLUSION
• ES Average is -21.0 ÷ 8 = -2.62

• IS Average is + 17.0 ÷ 7 = 2.43
• CA Average is -14.0 ÷ 7 = -2.00
• FS Average is + 13.0 ÷ 4 = 3.25
• Directional Vector Coordinates:
x-axis: -2.00 + (2.43) = +0.43
y-axis: -2.62 + (3.25) = +0.63
• The bank should pursue Aggressive Strategies.
Aggressive strategies should be followed by Habib. . When a firm's directional vector is located in the
aggressive quadrant (upper-right quadrant) of the SPACE Matrix, Habib is in an excellent position to
use its internal strengths to (1) take advantage of external opportunities, (2) overcome internal
weaknesses, and (3) avoid external threats. Therefore, market penetration, market development,
product development, backward integration, forward integration, horizontal integration, conglomerate
diversification, concentric diversification, horizontal diversification, or a combination strategy all can be
feasible, depending on the specific circumstances that face Habib.
• It can diverse in the market of olive oil by using its financial strength to capture opportunity of
health awareness among people.
• It can go to international markets like Afghanistan etc which will take it to market
development.
• It can penetrate into market by extensive marketing and introducing lower price products
also.
• It can also go for harvesting the raw material itself so it can overcome threats and pressures
of high global market prices of palm oil etc, this can be backward integration.
24 Q S P M F O R H A B I B O I L
Expanding to Expanding to
international olive oil
markets like segment
Afghanistan, Iran
Weight AS TAS AS TAS
OPPORTUNITIES
1) Increasing health 0.16 2 0.32 3 0.48

consciousness
2) improved Infrastructure 0.05 - 1 0.05

leading to deeper market
penetration into local areas
3) Expansion into 0.14 4 0.56 2 0.28

international markets
4) Increasing Population 0.1 2 0.2 2 0.2
5)Celebrity endorsement 0.07 1 0.07 1 0.07
6) Backward integration 0.02 2 0.04 2 0.04
7) Strategic alliance with 0.04 3 0.12 1 0.04

bakeries and hotels
8) Creating awareness 0.03 2 0.06 3 0.09
THREATS
1) Fluctuating Oil Prices 0.03 2 0.06 1 0.03

2)Increasing health 0.07 1 0.07 3 0.21

consciousness
3)Political instability/poor 0.02 3 0.06 -

international relations
4) Devaluation of our local 0.03 3 0.09 1 0.03

currency
5) buyers expectations to 0.03 3 0.09 2 0.06

meet international standards
6) High taxes and tariffs on 0.05 2 0.10 2 0.10

the import of raw material
7)intense competition 0.1 3 0.3 2 0.2
8)smuggled oil 0.02 4 0.08 1 0.02
9)counterfeiter product 0.04 2 0.08 2 0.08
Total 1.00 2.3 1.98

Weight AS TAS AS TAS
STRENGTHS
1) Established brand 0.075 4 0.3 4 0.3
2) Strong Distribution 0.15 3 0.45 3 0.45

Network
3) First ISO certified 0.075 4 0.3 3 0.225

company
EXPLANATION
4) Regional product range 0.025 - -
OF QSPM:
5)Socially Responsible firm 0.05 3 0.15 2 0.10
6) Strong R and D 0.2 3 0.6 3 0.6
7) Strong customer loyalty 0.1 - 3 0.3
8) Strong product 0.1 2 0.2 2 0.2

advertising
Weaknesses
1) Olive oil not included in 0.125 2 0.25 4 0.5

product range
2) Centralized 0.05 2 0.1 -

management
4) High operating 0.025 2 0.05 2 0.05

expenses
5) High turnover of 0.025 2 0.05 1 0.025

employees
Total 1.00 2.45 2.48
SUM TOTAL 1.00 4.75 4.46

ATTRACTIVENESS
• QSPM recommends that both the strategies i.e. entering into markets of Afghanistan and Iran
are strategically more or less desirable. The sum total attractiveness is a little different
showing preference towards the strategy of international market expansion.
• The major contributor towards the favorability of international expansion strategy is the
opportunity in international market. Also a lot of foreign exchange is used in importing oil so
the export can help it balance a bit.
• Strong R & D is also a contributor towards this strategy as it can help to filter and purify oil
according to the needs of people over there.
• The ISO certification, socially responsible behavior and good brand name can help HABIB to
enter into these markets easily.
• High tax tariffs on imports can also be minimized by exporting as it can help in getting export
incentives. So it leads to decrease in costs.
• As we have seen in SPACE matrix also that HABIB falls in aggressive quadrant so market
development is a preferable option due to good financial conditions and industry structure.
• It may lead to product development also due to changes in product according to target market
in those countries.
• Entering in olive oil sector is also a viable option due to increase in health consciousness of
people and good brand name. so it can help habib to settle in that sector easily.
• Entering into foreign markets is the most viable option from strategic and long-term
perspective. It will increase the ROI of the company at the end.
As we have come up with two major corporate strategies of MARKET DEVELOPMENT (entering into
Afghanistan and Iran) and PRODUCT DEVELOPMENT (adding olive oil to product line). The generic
strategy should not be changed; they should continue to follow DIFFERENTIATION WITH BROAD
AUDIENCE. To implement these strategies
• Habib should link its budget to its strategies.

• All departments including HR, IT, Marketing, Finance, and Budgeting etc. should link their
priorities to business strategy.
• Incentives to employees should be linked to strategy
• Strategy should be well articulated to all employees.
• Employees must be clear about the vision of the company.
RESOURCES STRUCTURE CULTURE
• Financial • centralized • Strong grapevine.

resources structure
• Lack of trust in
• Modern • Decision-making middle level
equipment and authority is with employees
manufacturing higher resulting high
plant management. turnover.
• Value based
culture, like
• Well connected • Horizontal
heath, integrity
information structure, many
are basic values.
system lines of reporting.
• Innovative
thinking.
• Human resource • Span of control is
high at lower level
whereas its low at
middle level.
• Technology
• Different business
units, around 10.
• Brand Name
• Regional system.
• Strong R & D
Habib can make use of it resources to implement the strategic goals. The resources like brand name,
strong R & D, technology, machinery can help habib to execute its strategies of product development
and market development. In going to expand market like to Afghanistan etc, brand name, finances
and HR will play a vital role whereas in entering olive to product range, R & D will play the most
important part.
Habib should move to a blend of decentralized and centralized structure, it should give employees
autonomy to perform operational activities and keep a continuous check on strategic goals.
Culture is a most crucial part. The spirit of team-work should be introduced and trust should be
developed. Employees should be motivated and given authority at all levels.
25 BALANCED BUSINESS SCORECARD
The balance scorecard is a management system that helps organizations to clarify their
vision and strategy and put them into action. It provides feedback around both the
internal business processes and external outcomes in order to continuously improve
strategic performance and results.
“The balanced scorecard retains traditional

financial measures. But financial measures tell the
story of past events, an adequate story for industrial
age companies for which investments in long-term
capabilities and customer relationships were not
critical for success. These financial measures are
inadequate, however, for guiding and evaluating the
journey that information age companies must make to
create future value through investment in customers,
suppliers, employees, processes, technology, and
innovation.”
The balanced scorecard suggests that we view the organization from four perspectives,
and to develop metrics, collect data and analyze it relative to each of these perspectives:
Measurers of Balanced Business Scorecard applied at

Pfizer Inc:
26 FINANCIAL MEASURES
26.1.1.1.1.1.1 FINANCIAL : HOW DO WE LOOK TO SHAREHOLDERS?
The inventors do not disregard the traditional need for financial data. Timely and
accurate funding data will always be a priority and managers will do whatever
necessary to provide it. Will achieve Profitable growth within the targets of Growth in
net margin annually, i.e. Yr 1: 50 % and Yr 2: 70% and will also achieve a target of
Return on investment.
27 OPERATIONAL MEASURES
27.1.1.1.1.1.1 CUSTOMERS : HOW DO CUSTOMERS SEE US?
Recent management philosophy has shown an increasing realization of

the importance of customer focus and customer satisfaction in any
business. These are leading indicators: if customers are not satisfied,
they will eventually find other suppliers that will meet their needs. Poor
performance from this perspective is thus a leading indicator of future
decline, even though the current financial picture may look good.
27.1.1.1.1.1.2 INTERNAL PROCESS : WHAT MUST WE EXCEL AT?
This perspective refers to internal business processes. Metrics based

on this perspective allow the managers to know how well their business
are running, and whether its products conform to customer
requirements.
Innovation and Learning:

Learning: Can we continue to improve and create value? This
perspective includes employee training and corporate cultural attitudes related to
both individual and corporate self-improvement. In the current climate of rapid
technological change, it is becoming necessary for knowledge workers to be in a
continuous learning mode.
Four dimensions of a learning organization
Organizational Design
Learning organizations are boundary less. People work in teams. Employees are
sufficiently empowered to take their decisions (MBO).
Organizational Culture
The culture of a learning organization is based on strong mutual relationship. People feel
like one community working for common objective. Every one cares for others. There is
environment of mutual trust and respect.
Information Sharing
In learning organization, the flow of information is open, timely, and accurate.
Leadership
The leadership of learning organization has vision, where he wants to steer the
organization. To achieve this objective he believes in collaboration with others.
Organizational Design
• Boundary less
• Teams
• Empowerment
Organizational Culture
Information Sharing
• Strong Mutual
Relationship THE LEARNING • Open
• Sense of Community • Timely
ORGANIZATION
• Caring • Accurate
Leadership
• Shared Vision
• Collaboration
Area’s Objectives Measures Targets Initiatives
Financial
perspective
• Profitable • Growth in net  Improving
growth Margin Growth in net local
margin market
• Return on • ROI Ratio annually Pakistan
investment.
Yr 1 50 %  Improving
profitabilit
Yr 2 70% y
Customer
perspective
• Also
• Create value for • Through caters to
customers to questionnaires • Surveys health
make conscio
differentiation • Percent of us
from our Service Level consum
competitors. • Highest
Agreements ers
market
• Unique
share in the
• Create/ retain positioni
targeted
loyalty ng
segment
customer • Promoti
loyalty onal
activate
• Improving s
access to the • Perfor
product m
Activiti
es
focuse
d on
educati
on,
public
health,
safety
and
improv
ement
of the
environ
ment
Internal process
• Discovering and • Turn over of • Attractiv

Developing employees • 10% e
New Medicines • Operating decrea compen
expenses se in sation
• Apply advanced • Human operati package
science and resource onal
technology in • Distribution cost
the • Make
manufacture of • Strong R and product
medicines to D availabl
produce cost- e to all
• Develop
effective, high- retail
Corporate
quality stores
performance
products measuremen Ensure
ts that
contract
manufactu
rers and
key
suppliers
have
responsibl
e
environme
nt, health
and safety
managem
ent related
to
production
of
materials
for Habib
Innovation &
learning
. • Hiring
Encourage • Adapting to Continuous fresh
innovation technological learning of all graduat
and changes employee in the es who
promotion of • To create organization have
new idea’s local R&D new
there for Training of the idea’s
department
increasing employees • Manage
under the
organizational supervision ment
learning of regional training
and then program
Skills, s
main
technologie
headquarters
s, and
corporate
culture
needed to
support
your
strategy
Financial perspective:
Habib oil can be classified as a business in sustain stage it is expected to increase and s sustain their
current market share which can be one of their long term financial objective. This is a (Pvt) ltd so the
stakeholders invest in the company and not the general public. In this stage investment is not much
required for growth of the business but for removing the hindrances in the process of expanding the
capacity and enhancing continuous improvement of all processes including value chain. Such
businesses are required to earn excellent ROI which can be seen in the case of HOM that the ROI is
showing an increasing trend since the last 4yrs which shows that HOM is utilizing their assets
efficiently to increase the operating income. The financial objectives are evaluated on Cash flows and
capital budgeting. The basic objective is to earn good returns on investment that is done in the
business.
The financial theme that Habib uses is the Revenue Growth and Mix they should reach new
customers by providing more value added products like canola and olive oil to cater to the needs of
more targeted customers in new market segments. Also the other strategy would be that of exporting
and entering into the markets of Afghanistan and Iran.
Customer perspective:
The market segment identified buy the HOM is that of premium oils.
Consumers do not switch to other brands easily due to strong positioning. They are not price
conscious in-fact they prefer quality. Health conscious people mostly contribute to this segment.
Consumers are willing to pay a high price for this product backed by a higher income group. The
brand loyalty is high.
The generic out come measure include the customer satisfaction which is measured by surveys
conducted by the company HOM tries not to satisfy but Extremely Satisfy their valuable customers
each individual customer is valuable to the company. The market share revels that the company
comes second after Dalda which was previously owned by Unilever. Customer retention HOM is able
to retain their valued customers by exceptional product quality and a strong brand name recently the
Habib oil mils have started BTL activates one of which is called store converters who are girls hired to
stand in different stores and to tell people who purchase the products about the qualities and to
change the views of customers and convince them to purchase Habib oil. This activity helps in both
customer retention and also new customer acquisition. Customer profitability plays a very important
role, it enables the company to be customer focused. It is measured by profitability of business in the
target market.
Customers value the ability of HOM to satisfy their needs through existing and to develop products
that would satisfy the emerging need of people by entering into the olive oil market Habib will cater to
the needs of people who are health conscious because the trend of health consciousness is
increasing.
Product quality is exceptional there are strict regulations and standards are maintain. It is an ISO
certified company. Habib has a very strong brand name and image among the customers the
customer loyalty is high. HOM conducts frequent surveys to make sure that the customers are
satisfied and to take their feedback.
Internal business process:
The critical aspect for HOM is the availability therefore they should concentrate on their distribution if
the product is available readily then the sales would increase and the financial objectives can be
achieved Habib should work on improving the distribution of products. To supports the long term
objectives innovation is the key ingredient they should bring innovation in products to cater the
emerging need of market.
The employment turnover ratio is high in the company which affects the cost this should be reduced
by retaining valuable employees in the company and providing them attractive compensation
packages accordingly hiring the right people can also help in reducing the employee turn over rate.
Learning and growth:
At HOM creative ides are welcomed people are continuously going though the learning process.
People are taught to be flexible and adaptive to change in the environment. Skills are developed by
training the employees. Employees gain knowledge and skill and then put it to use applying it to
increase sales and meet the financial objectives.
To be a learning organization is important to survive in such a competitive environment. By learning

and knowledge the internal processes can also be improved.
28 RECOMMENDATIONS AND ACTION PLAN

(IMPLEMENTATION)
Keeping in view the various issues that engulf the edible oil industry of Pakistan, we would
like to give the following recommendations based on our limited expertise and knowledge
Product Development (olive oil):
The company doesn't contain in its product line anything specifically for the extreme health conscious
or acute heart disease patients. It would be quite feasible, if the company develops olive oil for them,
which should be positioned accordingly. Direct marketing techniques can be used for this purpose and
the company could use extensive marketing techniques at the time of the launch to make the target
market aware.
Focus on existing product (canola oil):
Habib oil is a mixture of three oils namely
• Canola
• Xxx
• Soya bean
How ever the trend indicates that canola oil is becoming more popular in Pakistan for various reasons
canola oil has lesser fat content and is highly recommended by doctors there fore R and D at habib oil
should work to introduce pure canola oil.
Creating awareness:
Communicating value through advertisement:
Keeping in mind the fierce rivalry existing, the most effective thing to do is to differentiate oneself from
the clutter by being exceptional in value added services and also to communicate the value to the
customers. Though only adding features to the product is not enough. People must also know that
how our product is better than competitor and how the consumers can gain benefits from them this
can be ensured through heavy promotional campaigns and bright new selling ideas
Moreover, heavy promotions and marketing campaigns will ensure wide spread coverage and
awareness.
Advertisements play a vital role in promoting the product and its features. They create and promote
brand name advertisements emotionally target the consumers and take up a place in their minds. The
Habib oil add gives the message “ ye dil ka mamla hai” that Habib oil is suitable for all kinds of people
even people who are health conscious it has lesser cholesterol and so is also suitable for people who
might have some kind of heart diseases. This shows that HOM takes care of the consumers and their
needs.
How ever it is recommended that Habib oil should use celebrity endorsement as part of their
promotional campaign so that the recall of their advertisement is higher. To promote the feature that it
is suitable for health conscious people they can also show doctors in their ads certifying this feature of
Habib oil.
Communicate the justification of high price to consumers:
The company need to educate the public/consumer that why are they charging a high amount as
compare to loose and low brands. The company should communicate the value that it is delivering
through its product line, i.e. basically how the Habib oil products are good for health. This can be
matched with the fact that consumers’ theses days are becoming health conscious. This kind of a
strategy can avoid easy entrants in the industry .this will also discourage the local manufacturers who
do not follow the quality specifications
Ghee is not good for health:
The companys ads should also tell the consumers that Vanaspati (Ghee) should not at all be
consumed by the heart and blood pressure patients but none of the organizations teaches this to the
consumers. Mostly consumers get to know about this from their doctors.
Dealing with environmental hazards:
In order to reduce or eliminate the bad environment hazards that result due to the manufacturing
processes used in edible oil manufacturing processes the company can use environmental friendly
system. Habib should try to adopt the safest technologies to reduce the affect of pollutant.
New Market Development (Afghanistan markets):
Currently, the company is only catering to the needs of local market because it is a
Purely local company right now and it has not yet entered any international markets. We have seen
that a lot of oil has been smuggled to Afghanistan in the past years
the companies can export oil to the areas .if the demand of local people in the smuggled areas will be
fulfilled in the right way they wont need to smuggle oil for Pakistan. Also the Recent developments in
Afghanistan have allowed the oil companies to export their oil to Afghanistan .This was only possible
due to the improved road link and improved infrastructure.
Promotional activity:
In order to increase the effectiveness of promotional activities the company can do the following
things:
They can induce the retailers to promote the brand by giving price reduction stickers, which will
enable the consumers to obtain a cash rebate. The retailers can then return these coupons and get
allowances based on the specific number of coupons returned. This will also create more awareness
through excitement.
The retailers can be given extra money for putting their product on the front shelf and simultaneously
given discount on purchase of large bulk
The company can have Point of Sales displays. These PSD’S are very important as they attract
customers and prompt them to buy the product on the spot. These stands should be put up in places
where the sales are decreasing in order to remind the people about Habib
Client service:
Habib can come with up with very sophisticated client services. They can go to urban as well as
suburban cities where they can ask about people’s preferences and find out the consumption of oil in
that locality. After knowing this they can set their strategies while looking at their mind about the likes
and dislikes of people they have surveyed. Through this way they can gather desirable information
about what people wants at what price & what action should be taken to improve the present product
line.
BIBLIOGRAPHY
• www.tutor2u.net/business/strategy/what_is_strategy.htm
• www.imanet.org (institute of management and accounting)

• www.hom.com.pk
• www.soyasupreme.com.pk
• www.google.com
• www.MkinseyQuarterly.com
• Strategic Management Concepts by Thompson and Stickland
• Interviews with:
 Mr. Ijaz Hussain Malik – Group Executive Director – Habib Oil Mills,
 Mr. Akram Chaudhry – Head of sales operations - Habib Oil Mills
 Ms. Farheen Zehra – Senior Assistant Brand Manager – Habib Oil Mills

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Research Report on

Institute of Business Administration, Karachi.

METHODS IN BUSINESS RESEARCH

FEASIBILITY STUDY OF OPENING A NEW CHINESE

Mr. S.M. Saeed

Methods in Business Research

November 19, 2007

3 Why we have chosen this industry?................................................................................4

4 LITERATURE RESEARCH .................................................................................................5

4.1 Strategy - what is strategy?.....................................................................................5

4.3 The Five Competitive Forces That Shape Strategy...................................................7

4.4 Forces That Shape Competition: ( by Micheal E. Porter HBR)...................................8

4.5 Porter’s Thinking....................................................................................................10

4.6 The shortcomings of the traditional approach........................................................11

4.7 Six Critical Success Factors....................................................................................11

5 Edible Oil Industry.........................................................................................................12

5.1 Brief history about the edible oil industry...............................................................12

5.2 Present Situation of edible oil industry in Pakistan.................................................12

5.4 Edible oil industry (3 segements)...........................................................................13

5.4.1 Group 1(Premium Segment)............................................................................13

5.4.2 Group 2(Popular Segment)..............................................................................13

5.4.3 Group 3 (Lower Segment)................................................................................13

5.5 Market share analysis of the overall industry.........................................................14

5.6 Branded versus unbranded....................................................................................15

5.6.1 Market share information of tier 1 segment....................................................15

6 What is edible oil...........................................................................................................16

6.1 Manufacturing process...........................................................................................16

Step # 1: Blending of different oils in different quantities...........................................16

Step # 2: Refining the blended oil...............................................................................16

Step # 4: Marketing and Sales....................................................................................16

6.2 Source of edible oil.................................................................................................16

6.3 Important facts regarding oil seeds........................................................................17

6.4 Categories of oil.....................................................................................................17

7 Components of Macro Environment..............................................................................20

7.1 Why porters five forces?.........................................................................................20

7.2 Threat of new entrants:..........................................................................................21

7.2.1 Is a lot of capital needed to enter you industry? .............................................21

7.2.2 Are there any proprietary product differences in your industry?.....................22

7.2.4 Are there any established brand identities in your industry?...........................22

7.2.5 Does your customer incur significant cost in switching supplier?....................22

7.3 Bargaining power of Buyers...................................................................................22

7.3.1 Are there a large number of buyers relative to the firm?.................................22

7.3.2 Is your buyer very aware and knowledgeable?................................................22

7.3.3 Is your buyer aware of the need for additional information?...........................22

7.3.4 What is the purchasing power of your consumers?..........................................22

7.3.5 Is it easy for your buyers to switch?................................................................23

7.4 Rivalry among firms...............................................................................................23

7.4.1 Is the industry growing rapidly?.......................................................................23

7.4.3 Are their any significant product differences?.................................................23

7.4.4 Are their any established brand identities?......................................................23

7.5 Threat of Substitutes..............................................................................................24

7.6 Bargaining power of Suppliers................................................................................24

7.7 Other stakeholders (government)..........................................................................25

8.1 Economic Factors...................................................................................................26

8.2 Technological Factors.............................................................................................26

8.3 Political Factors......................................................................................................27

8.4 Legal Factors..........................................................................................................27

8.5 Socio cultural Factors.............................................................................................28

8.7 Pakistan Standard Institute (PSI)............................................................................29

8.8 Encountering the Environmental Uncertainty.........................................................29

9 KEY DRIVING FORCES....................................................................................................30

9.2 Changing lifestyles and habits:...............................................................................30

9.3 Technological Changes...........................................................................................31