Introduction of Engro Foods

Engro Foods Limited is subsidiary of Engro Corporation Which is one of the most reputed enterprises in Pakistan with more than 40 years of diversified business operations in the areas of fertilizer and chemicals. Engro was formerly Exxon Chemical Pakistan Limited until 1991, when Exxon decided to divest their fertilizer business on a global basis and sold off its equity of 75% shares in existent company.

The Employees of Engro, in partnership with leading international and local financial institutions bought out Exxons equity and the company was renamed as Engro Chemical Pakistan Limited.
Engro Foods started its business operations in 2005-06. Top quality brands like Olpers, Olpers Lite, Tarang, Omore, Olfrute, Dairy Omung, Al Safa, Tarraka and Omung Lassi have been successfully launched

Introduction of Engro Foods

Engro Foods has already set up two processing plants at Sukkur and Sahiwal and a Dairy Farm at Nara.

Engro Foods is now venturing into North American market starting from Halal Foods category and acquired a company launched Meat products with name of AL SAFA.

Vision & Mission Statement

Vision Statement To be the premier Pakistani enterprise with a global reach, passionately pursuing value creation for all stakeholders Mission Statement Our mission is twofold, to help farmers maximize their farm produce by providing quality plant nutrients and technical services upon which they can depend. To create wealth by building new businesses based on company and country strengths in petrochemicals, information technology, infrastructure, food and other agriculture sectors.

Diversified Portfolio of Engro Pakistan

Engro Fertilizers Limited (Fertilizer Manufacturing and Marketing Company) Engro Polymer & Chemicals Limited (Manufacturer and Marketer of PVC Chemicals)

Engro Vopak Terminal Limited

(Chemicals and Petrochemical Storage Company)

Engro Foods Limited (Foods Company)

Engro Powergen Limited (Power Generation Company)

Diversified Portfolio of Engro Pakistan

Elengy Terminal Pakistan Limited

(LNG Storage and Marketing Company)

Engro EXIMP (Pvt.) Limited

(Exporter & Importer of Micro-Nutrients and Fertilizer)

Products Portfolio

Quick Facts & Figures

12 Brands 1,243 Employees

45% Market Share of Dairy Products

Market Share in 310 Cities in Pakistan 18 states in USA 4 Provinces in Canada 18th Largest Customer of Tetra Pak World Wide

2nd Largest Company of Chilled Milk Collection of Pakistan

900 Milk Collection Centers 35,000 farmers directly linked with EFL

Quick Facts & Figures

2 Milk Processing Plants

One Production Farm having 2,615 cattles (16% Milk Produce of Total Production)
Milk Production Capacity is 700 Thousand Liters per Day.

Profit Growth 406% in 2011

Revenue Growth 42.6% 2011 30 Billions Revenue for 2011 EPS Rs.1.22 for 2011 Total Assets Rs.16,639 Millions

SWOT ANALYSIS
Strengths

Efficient milk collection system. Keeping high quality standards. Successful diversification. Product Innovation Strong Financial Position Huge Capacity for Production Growing Sales Worldwide fame of Engro. Qualified Work Force Market Share Better Integrated distribution and warehousing facilities. Engro food has the third-generation UHT milk plants in the country.

SWOT ANALYSIS
Weakness
Engro Foods is having only one its own dairy farms. Centralize Decisions High Price Less Promotion Activities Selective Target Market High milk collection & distribution costs. The competitors like Nestle and Haleeb Foods have a much diversified line of dairy products then Engro Foods Unable to fulfill the demand of local powder milk market. Local Company

SWOT ANALYSIS
Opportunities

Flexible government policies for food industry. Expansion of Food Business

Awareness of Packed Milk

Availability of Raw Material Market Capitalization Diversification

Export Opportunities
May merge with other global businesses to eliminate competitors. Having Capable of expanding into other markets of the world Has the potential to innovate and differentiate the company's products to sustain a Competitive advantage Increase in the consumption of processed milk will lead to increase in sales for the company.

SWOT ANALYSIS
Threats

Competition with Nestle, Haleeb, Walls. and the new entrants, Mature Market High inflation rate. International Marketing Standards Change in prices might create certain barriers in terms of the profit margins Low purchasing power. Recessionary period in business cycle. High Taxes Seasonal Factors Economic Condition Price Consciousness of consumers Suppliers Behavior

EFE MATRIX
KEY STRATEGIC FACTORS
Raw Material Availability Market Capitalization Diversification Awareness Expansion Flexible Govt. Policy Innovation & Technology Exports Joint Ventures

Weights Opportunities
0.06 0.05 0.07 0.05 0.05 0.04 0.04 0.06 0.05

Rating
3 3 4 3 3 2 2 3 2 3 4 2 2 2 3 3 2 3 3

Weight Score
0.18 0.15 0.28 0.15 0.15 0.08 0.08 0.18 0.10 0.18 0.28 0.08 0.10 0.1 0.15 0.15 0.10 0.18 0.15

Threats
High Taxes New Entrants Seasonal Factors Low Purchasing Power of consumers Change in prices might loss sales Suppliers Behaviors Economic Conditions Price Consciousness of consumers Mature Market International Market Standards 0.06 0.07 0.04 0.05 0.05 0.05 0.05 0.05 0.06 0.05

EFE MATRIX RESULT

According to above EFE Matrix the EFL average score is 2.82, which seems to be good from the minimum average score 2.50, but Engro should more work hard to be the market leader in food industry.

EFLs major opportunity is Diversification.

CP MATRIX
Critical Success Factors Research and Development Advertisement Financial Position Market share Product Quality Price Competitiveness Management COMPETITIVE PROFILE MATRIX ENGRO FOODS NESTLE Weight Rate Score Rate Score 0.08 0.08 0.09 0.07 0.08 0.08 0.08 3 3 4 3 3 3 4 0.24 0.24 0.36 0.21 0.24 0.24 0.32 3 4 4 3 3 3 4 0.24 0.32 0.36 0.21 0.24 0.24 0.32

HALEEB
Rate 3 2 3 2 3 3 3 Score 0.24 0.16 0.27 0.14 0.24 0.24 0.24

Global Expansion
Certifications Diversification

0.08
0.06 0.05

2
2 4

0.16
0.12 0.20

4
3 3

0.32
0.18 0.15

2
2 2

0.16
0.12 0.10

Customer Services
Sales & Distribution Network Production Capacity Alliances

0.06
0.06 0.07 0.06

3
3 3 3

0.18
0.18 0.21 0.18

3
3 3 3

0.18
0.18 0.21 0.18

3
2 3 2

0.18
0.12 0.21 0.12

TOTAL

3.08

3.33

2.54

CP MATRIX RESULT

According to above CPM Matrix, EFL s Average Score is 3.08 EFLs strong competitor is NESTLE which Average score is 3.33. EFL has high average score than HALEEB FOODS. Nestle is better than EFL in Advertisement and Global Expansion. While EFL has strong Diversification strength than Nestle.

Strategies in Action

Market Penetration Market Development Product Development

Backward Integration
Forward Integration

Diversification

Financial Evaluation of EFL

Strategy Evaluation stage includes measuring organizational performance and taking corrective actions. We can measures EFL performance through following key facts.

S.NO.
1 2 3

Key Factors
Return on Investment (ROI) Return on Equity (ROE) Profit Margin

2011
5.70% 12.31% 2.92%

2010
1.41% 3.43% 0.84%

4
5 6

Market Share
Debt to Equity Earnings Per Share (EPS)

45%
51% 1.22

31%
51% 0.31

7
8

Sales Growth
Asset Growth

42.6%
33.53%

25.8%
27.23%

FINANCIAL AUDIT

Recommendations/ Suggestions

Engro Foods should have much diversified bi-product line of dairy products like Nestle & Haleeb.

They should introduce new promotions to get customers attention

EFL should expand its dairy farms so that they can get competitive advantage.
EFL should focus on Market Penetration, Market Development and Product Development strategies with more efforts to be the market leader.

They should go expand its capacity to enter into in international market like Nestle. Engro Foods can be into Co-branding with other brands like Olpers with Lipton tea bags, Olpers with different biscuits etc. to increase their sales

They can also move towards other foods products like Nestle launch Kit Kat Chocolate, Meggi Noodles, Sweets Candies etc.

Conclusion

Engro is going to be a market leader due to different reason like its financial position, product quality, R & D, market share, sales growth etc. Its price is more or less equal to its competitors, it matches its quality with its competitors and capturing its competitors share from market. Engro is using its brand name and its packaging is good to promote its products and EFL is becoming very popular as compared to its competitors. Company has planned to make Omore world class premier quality brand like existing brands of Engro Foods. Company is also working on cereals in coming years. They has planned to move other dairy products as are offering by its competitors Nestle like yogurt, flavoured yogurt (raita), cereal for babies etc. Foods competitors Nestle and Haleeb are biggest threat. There are opportunities and doors for new players are open who can be the future competitors. Consumer is aware now, there is need to maintain the quality of products. Consumers perceptions and price differentials can cause threat for the company, Consumers preferences changes timely and prices might create certain barriers in terms of the profit margins for ENGRO FOODS. In short Engro Foods should grow and maintain its position. That is why EFL is increasing Market Penetration, Market Development & Product Development strategies.

THANK YOU
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