ACKNOWLEDGEMENT

We would like to express our gratitude to all those who helped us during the whole of our project. We gratefully acknowledge the help of my supervisor, Mr. Fareedy who offered us invaluable advice throughout the project. He has spent time and energy to aid in the completion of this project and none of this would have been possible without his patient instructions, insightful criticisms and expert guidance.

We would also acknowledge the enormous support and advice received from my Ms. Hadia Yasir, without whom this project would not have been of the quality that it is now.

Table of Contents
Chapter I: An Insight into Shezan .............................................................................................................................5 Introduction ...............................................................................................................................................................6 Brief History..............................................................................................................................................................6 Vision ........................................................................................................................................................................8 Mission statement......................................................................................................................................................8 Values........................................................................................................................................................................9 Product Mix .............................................................................................................................................................10 Objectives................................................................................................................................................................15 Industry Structure ....................................................................................................................................................16 Porters five forces model .......................................................................................................................................17 Juice Positioning .....................................................................................................................................................19 Competitive strategy ...............................................................................................................................................20 Chapter II: Functional Areas ................................................................................................................................... 21 Research & Development........................................................................................................................................22 Supply Chain ...........................................................................................................................................................22 Procurement ............................................................................................................................................................25 Operations ...............................................................................................................................................................26 Logistics ..................................................................................................................................................................26 Marketing and sales .................................................................................................................................................28 Information systems ................................................................................................................................................30 Human Resource .....................................................................................................................................................31 Organizational Structure .........................................................................................................................................32 Organizational Culture ............................................................................................................................................33 Chapter III: Financial Performance ........................................................................................................................ 34 Financial Analysis ...................................................................................................................................................35 Analysis of Income statement .................................................................................................................................36 Analysis of Balance sheet .......................................................................................................................................38 Profitability ratios analysis ......................................................................................................................................40 Overall Profitability analysis ...................................................................................................................................43 Liquidity Ratio Analysis .........................................................................................................................................44 Financial Leverage ..................................................................................................................................................45 Activity Ratio Analysis ...........................................................................................................................................48 Chapter IV: Analysis of Strategic Viability............................................................................................................. 50

SWOT Analysis ......................................................................................................................................................51 External Factor Analysis Summary .........................................................................................................................54 Internal Factor Analysis Summary ..........................................................................................................................55 Strategic Factor Analysis Summary ........................................................................................................................56 Internal-External Matrix ..........................................................................................................................................57 SPACE Matrix ........................................................................................................................................................57 Plotted SPACE Matrix ............................................................................................................................................58 TOWS Matrix..........................................................................................................................................................59 Value Chain Analysis ..............................................................................................................................................60 Grand Strategy Matrix .............................................................................................................................................61 Portfolio Analysis....................................................................................................................................................62 BCG Matrix .............................................................................................................................................................63 Chapter V: Shezan Strategic Plan ............................................................................................................................ 65 Strategic Plan Overview ..........................................................................................................................................66 Vision ......................................................................................................................................................................67 Mission ....................................................................................................................................................................67 Objectives................................................................................................................................................................68 Corporate Development Stage.................................................................................................................................68 Positioning ..............................................................................................................................................................69 Research & Development........................................................................................................................................71 Procurement ............................................................................................................................................................72 Operations ...............................................................................................................................................................72 Marketing and Sales ................................................................................................................................................73 Logistics ..................................................................................................................................................................74 Human Resource .....................................................................................................................................................75 Organizational Structure .........................................................................................................................................76 Organizational Culture ............................................................................................................................................76 Information Systems ...............................................................................................................................................77 Applied Models .......................................................................................................................................................78 New BCG Matrix ................................................................................................................................................78 McKinseys 7-S Framework ...............................................................................................................................79 References .................................................................................................................................................................. 81 Annexures ................................................................................................................................................................... 82

EXECUTIVE SUMMARY
Shezan International Limited was incorporated in 1964 as Pioneer in juices in Pakistan, having mission to produce the largest food processing unit to meet the countrys local as well as export needs. Since then it has continued to provide quality products to its customers with products and packaging innovations. This report covers broad areas of marketing, finance, management and operations of Shezan international limited. An important part of this report comprises of financial analysis of Shezan international limited with its two major competitors Nestle and Tops. The analysis of the company is done through different measures and tools of analysis used by analysts in order to analyze companies. These measures include the analysis financial statements, short-term liquidity analysis, capital structure and solvency ratios, return on invested capital ratios, asset utilization ratios and analysis of profit margin ratios etc. The study covers all the aspects usually considered by the stakeholders of the company. The profits and losses, liquidity position, changes in owners equity, movements in assets and liabilities, and all such factors will discussed later in the report. Another important portion of the report comprises of the current operations of the company, which is the strategic management. A comprehensive detail is provided about the companys strategies devised to maintain and develop the product line of juices. The results have been interpreted and critically analyzed to propose new strategies for the improvement of Shezan international. We also have analyzed the current business strategies of Shezan international and based on the results of financial ratios and other market and industry analysis, we have proposed some new strategies. These new strategies aim to build a better image for Shezan international. In addition to its image, the proposed strategies will also help in achieving lower costs through better distribution, efficiency in operations and revamped marketing plan to better position and sell Shezan juices. The strategies will help Shezan juices to compete with firms like Nestle.

Chapter I:

An Insight into Shezan

Introduction
Shezan International Limited is a Private Limited Company, with the main objective to set up an industrial undertaking for manufacturing of juices, squashes, sherbets, jams, pickles and preserves from fruits and vegetables. Shezan International Limited was conceived as a joint venture by the Shah Nawaz Group of Pakistan and Alliance Industrial Development Corporation of U.S.A. The agricultural background of the Pakistani sponsors induced them to establish this agro-based industry. Taking advantage of abundance of fruits available in Pakistan and the advanced technology provided by the American partners, Shezan became a pioneer in the field of converting fruits into pulps, concentrates and juices. Today Shezan is the largest food processing unit having developed and installed the capacity to meet the country's local as well as export needs

Brief History
Shezan Company was incorporated on May 13, 1964 as a private limited company, with the objectives as set out in the Memorandum of Association in general and in particular to set up an industrial understanding for manufacture of juices, squashes, sherbets, jams pickles and preserves from fruits and vegetables. Nature has blessed Pakistan with an ideal climate for a wide range of delicious fruits. Over the centuries Pakistani experts have acquired and developed unique strains of exotic fruit varieties, unmatched for their rich flavor and taste Shezan International Limited was conceived as a joint venture by the Shah Nawaz Group of Pakistan and Alliance Industrial Development Corporation of U.S.A in1964. The agriculture background of the Pakistani sponsors induced them to establish this agro-based industry. Taking advantages of abundance of fruits available in Pakistan, and the advanced technology provided by the American partners, Shezan became pioneers in the field of converting fruits into pulps,

concentrates and juices. Today Shezan is the largest food processing unit having developed and installed the capacity to meet the countrys and export needs. In 1971 the Shah Nawaz Group purchased all the shares of Alliance Industrial Development Corporation with the permission of the Pakistan Government. The Company has since shown sustained growth in both the domestic and exports fields. The Company has been steadily expanding its production capacity over the years. In1980-81 a separate unit was installed in Karachi which now caters for Karachi, Sindh and export demand. A new bottle filling plant was set up in1983 in Lahore unit increased the capacity five-fold. An independent Tetra Brick Plant was commissioned in 1987 making us the leading manufactures with comprehensive range of production in the fruit processing field in Pakistan

Vision
To be known as leader of quality products in the region. Dedication to quality is a way of life at our company. In its activities the company will pursue goals aimed at the achievement of profitable business .these results will be derived from the dedicated efforts of each employee in conjunction with supportive participation from management at all levels of the company. To pay its role in the economic development of the country and to enhance quality of life of its people The vision statement should be brief and simple enough to understand by the stake holders. It should be specific and depict the clear picture of the company.

Mission statement
Our mission is to provide the highest quality fruit and vegetable related juices and products to retail and food services customers. We will accomplish this by maintaining a tradition of pride in our products, growth through innovation, integrity in the management of our business and commitment to team management and quality improvement process. The current mission statement of Shezan international is very market oriented where as in recent perspective the use of customer oriented mission statements are better to understand by the customers as well as they are easy to attach with them emotionally.

Values
Integrity & Ethics Shezan has an open disclosure policy and transparent processes. All business activities transactions are carried out honestly and with fairness; results are achieved through demonstration of honest and ethical behavior People Have passionate people with intelligent and firm approach towards business. To facilitate these people Shezan gives them challenging opportunities, training, and fun loving environment, necessary resources and facilities. Public recognition of talent is a priority. Innovation Innovation is the way of life at EFL. It is valued, encouraged and rewarded in all aspects of operations. Safety, Health & Environment Shezan manages and utilizes resources and operations in such a way that the safety and health of their people and neighbors.

Product Mix
Shezan International offers variety of products. Shezan is one of the giant in the business and its portfolio consist several products. It majorly operates in the Pickles, Sauces, Salad dressing sector, Juices, Ketchups and Jams. The company is involved in the processing, manufacturing, trading and selling of these items. AllPure: ALL PURE is a new series of juices of Shezan international, it is filled with the all pureness of natural fruits. Shezan International range of All Pure juices claim to enrich the senses of the consumers with the new, healthy and fresh taste of 100% pure juice. To experience true essence of nature All pure is the best option because it helps you to embark your taste buds with the sensation of sweetest fruits. It is available in the following flavors, ORANGE MANGO GRAPES PINEAPPLE TROPICAL APPLE

Bottled Juice: Shezan International bottle juice is very popular and is liked by all age groups particularly children. Shezan bottle juice claims to reenergize and revitalize the body, mind and soul of the

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consumers. It is Pakistans most favorite and iconic juice drink that provide ultimate pleasure and freshness. Regular Juices: Shezan international is providing the perfect balance of good taste. Their regular juices are available in variety of flavors and they are considered as a good choice by the consumers to complement a light snack. It is available in five flavors. Twist: Twist is Shezan International another juice brand that is available in attractive, slim and easy packaging, Twist juices are considered as a must have in ones house. It is available in the tasty six flavors. APPLE RASPBERRY PINEAPPLE FRUIT PUNCH MANGO-STRAWBERRY MANGO ORANGE LYCHEE APPLE PUNCH LEMON BARLEY

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Syrups: Shezan International has a variety of flavors for their syrups. They can be mixed with water to provide flavorsome and quench thirsting refreshment. These are available in the following flavors. SAMARKAND SANDAL POMEGRANATE ROSE LIME CORDIAL

Vinegar: Shezan International produces good quality synthetic vinegar which is available in the market in various sizes. Sauces: Shezan International has very reputable sauces (ketchups) in the market. Their tomato ketchup is a must for every meal. They are available in different sizes starting from sachet to 10 kg drum. Green Chilly and tomato onion sauce is also produced by them. Jams: Shezan international made their Jams and Marmalades from the fresh and handpicked fruits and that is the reason why Shezan International has been known in the market for its quality.

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Shezans sweet, yummy and delicious Jams can be had at breakfast, Lunch, Dinner or any time. Shezan Jams are available in the following flavors. PLUM ORANGE MANGO MIXED FRUITS STRAWBERRY APPLE

Quench: Quench is a product of Shezan International that provides a solution to heat in seconds, open the sachet, mix with cold water and get instant rejuvenation. It is available in the following two flavors. LEMON & LIME ORANGE

Squashes: Shezans quick mix squashes are present in every household particularly in summers. They provide the immediate revitalization to the consumers and are available in the following flavors MANGO LEMON BARLEY POMEGRANATE ORANGE

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Mango Nectar: Mango nectar by Shezan is extracted from Pakistans premium and best quality mangoes. It is delicacy fit to savor, It is 100% pure and is best alternative to sodas and soft drinks. Pickles: Shezans pickles and delicious chutneys provide something special and extra to every meal in every household. It is available in different sizes and many flavors. Ispaghol: Shezan International has also started to produce Husk because it is very good for the health. It is used by the consumers for two reasons one being it slows down the absorption of food during digestion therefore minimize the intake of calories and second being it takes the edge off hunger. It makes you slim, smart and healthy and that is why it has been number one choice by the consumers.

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Objectives
Objectives are the steps which you take in practical to get or achieve short term as well as long term goals. The objectives can be of three categories depending upon the time frame attached or associated with that goal, it may be short range, medium or intermediate range and long range. As it has been so clear by the mission statement of Shezan international that what are their major and prime objectives but let us list them here again to make it quite clear, simple and easy to understand. To put its all efforts to become industry leader in the industry. To keep focused and determined to provide best quality fruits and vegetables product To be committed to provide excellent and quality juices and nectars to their consumers To keep an eye on the fruitful investments and opportunities in new projects To achieve better production facilities To manage the operations of the company in effective and efficient way To cope up with the technological advancement and keeping up to date

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Industry Structure
The beverage industry of Pakistan has seen many rise and fall but one can say with full assurance that it has growing with the years. The industry consists of the product categories such as soft drinks, juices, syrups, milk and squashes, although Shezan international doesnt have all these mentioned categories yet it falls under the beverage industry. According to the Stats there are currently 170 units operating and both upstream and downstream industries have on rise and are growing significantly. There is very high profit margin in the industry and has witnessed a significant increase over the years. The growth of this sector has been hit badly with the decrease in purchasing power of the consumers. Inflation and conditions of Pakistan has caused the growth a bit slow. Poverty has been increasing in Pakistan and thus the purchasing power is decreasing with the years. The competition has also increased in few years due to easy import of the products. Research has also shown us that the term of health consciousness is widening its arms very rapidly and just because of this consumer prefers to have low calorie and diet juices or squashes rather than the regular ones. Future growth of this sector and industry is more likely to rise on a slower pace because of the intense competition between the local and imported products. The more innovative products will come up in the market making consumers to think twice to purchase a product. Distribution of the products is more likely to increase up to the far rural areas with time and this factor is very important in the growth of this industry. It is more logical to think in a way that people will get aware and aware about the products and thus the increase in sales and revenues will occur which in turn will make this industry grow.

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The overall industry attractiveness and industry structure is better illustrated by Porters five forces model:

Porters five forces model

Potential entrants Low switching costs economies of scale favourable government policy Other stakeholders Unions, government etc.

Suppliers Large number of buyers like nestle, tops, country. Low switching costs Substitute raw material

Degree of rivalry Many competitors (nestle, country, tops etc)

Buyers Large no. of buyers Substitutes like

Low product
differentiation Growing industry

nestle, country
available Low switching costs Threat of

Substitutes Similar tasting juice (country, tops, nestle)

Same price
Same identity.

The juice industry is attractive for new market entrants. The reason being that due to high demand it is easy to achieve economies of scale. The government policies are also favourable for the industry and the exit barriers are not too high as well.

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The buyer strength in the industry is however is high. Many substitutes are available and the switching costs are low. The same is for supply side which is good for producers as it means less bargaining power of suppliers. Supplier switching costs are low and firms can and do forward integration. As far as substitutes are concerned, there are number of substitutes available. These juices are really close substitute offering the same benefit. The competing brands also have a similar product identity or perception. The industry is growing as new entrants are continuously coming in. This has increased the competition to a great deal.

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Juice Positioning
Positioning is the perception of a product or service in the mind of the people. Positioning of a product allows it to be seen or perceived in a certain way by the target audience. To have a successful strategy and product, effective positioning must be done. Without strong positioning no matter what the product is, its going to fail. Shezan international has positioned Shezan as a low quality affordable juice drink. The perception has been created in the minds of consumers that Shezan is an affordable juice with good taste. To support this positioning strategy, Shezan has been priced reasonably well below the competing high quality juices like nestle. The target market for Shezan is the middle income group and lower middle. The people Shezan is targeting are mostly young adults and teenagers. The placement of the product has also contributed to its low quality positioning. Mostly Shezan juices can be seen at small retail stores, school cafe and canteens. The presence of Shezan in superstores and big markets is nonexistent. This may be due to the placement strategy or due to the shelf space in stores. The company has also created this perception through various advertisements showing young teenagers drinking and getting refreshed by the juice. These school and college going students also symbolise that its not expensive and is pretty affordable. The price of the juice is also one of the lowest in the market hence making its perception of low quality juice. Another factor contributing to this perception is the taste. The juice is made from artificial flavours and sweeteners thus making its taste give a perception of cheap low quality juice. The packaging has also contributed to this type of positioning. The juice pack are very basic in design and lack any creativity.

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In todays juice industry, companies have started increasing their fruit concentration as the people are demanding it. The juices with high concentration of pulp are perceived as better quality. In case of Shezan people associate it as low quality because of this low concentration of fruit pulp.

Competitive strategy
Shezan has the highest production capacity as compared to its competitors. Shezan is very strong name and can afford to have super production facilities. Shezan international is using cost leadership strategy in which all of the efforts are made to minimize the costs and to provide the masses with your low cost product. Shezan with this strategy is quite successful in the market and is able to cope up with the competition quite effectively and efficiently. On the other hand Nestle uses the differentiation strategy. It attacks the market with differentiated products but on high price thus providing room for Shezan to sustain in the market with targeting low income segment massively. The strategy of Shezan gives advantage as there are number of suppliers in the market that supply material to the industry. But Shezan gets its raw material from its on farms to get the advantage over its competitors and to reduce the suppliers bargaining power (Backward integration). Shezan provides the same product as its competitors are providing, as bargaining power of buyer is low and many

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Chapter II:

Functional Areas

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Research & Development

At Shezan International, the company uses the best technology and continues to strive towards acquiring best technology. The companys major objective is to have sustainable technological advantage over their competitors. For this reason they continually search and research for improvements in their manufacturing practices and technologies. They also want their plant to be of international standard so they can support their claim of being an international firm. Shezan has excellent manufacturing facility for juice productions. Their machines are not outdated. They also have world class packaging system bought from tetra pack. This ensures their product to remain safe and healthy. The R&D department in Lahore continuously works on developing new product offerings. They also continuously work on improving their current product by changing ingredients.

Supply Chain
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. Supply chain comprises of all the activities necessary for making and delivering the product to consumers. A basic model of supply chain can be seen in the following diagram.

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The Shezan international uses a similar supply chain model for its juice manufacturing. The supply chain of Shezan consists of raw materials, supplier, manufacturer, distribution and customer. In juice manufacturing, acquiring of raw materials is a key task. To make the juice of highest quality, the raw materials that are being acquired must be of the highest quality as well. The main ingredient in making juice is obviously the fruit pulp. Getting the best quality pulp at affordable rates is very important. Shezan international for this purpose have set up their own farms from where they get the most of their pulp. This ensures them the quality they required and cut the costs as they dont have to pay to any third party. This backward integration has allowed shezan to have a competitive advantage. The raw materials take usually 1-3 days, while materials other than pulp take longer. Apart from the pulp, juice manufacturing requires other raw materials such as citric acid, concentrates, colour, preservatives, sugar and packaging. The company usually stores 7 days worth of raw materials and adjust it as per demand.

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The suppliers of Shezan international are the people from whom they acquire the raw materials. These include their own farms, other ingredient suppliers and packaging company i.e. tetra pack. The juice making process is a continuous process so the inventory is usually ordered in advance. Sometimes delays are caused due to lack or delay in supplies. This can be due to late orders or lack of quality of raw materials. Therefore shezan has to keep more inventories then required. The manufacturing is done at the various plants in different areas of the country. Shezan has a separate packaging plant as well. The manufacturing process is continuous flow process. The factories operate as per demand. Manufacturing plants uses several supplies and convert them into finished product. The process of manufacturing will be explained in detail in operations section. This finished product is then packed using the tetra pack machinery and is then thoroughly checked for quality. Packaging is done in different sizes from 250ml to litre packs. Then these completed units are stored in local facility before being distributed to their customers and wholesalers. The next step in the supply chain is distribution. This is perhaps the most important of the steps and requires great planning. Shezan international has set up their distribution offices in large cities like Lahore, Multan, Faisalabad, Peshawar and Karachi. Reason for having more offices in Punjab province is due to its demand and population. Shezans distribution is partially done by the company itself and rest is outsourced. In Lahore the company has its own distribution network and handles all by itself. For all other cities they have outsourced distribution. The regional offices in other cities are responsible for acquiring the supplies and getting them distributed through the use of third party distributor.

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The distributors in Faisalabad and Multan use their own warehouses for the storage of Shezan juices and
they reserve the distribution rights in respective cities. These distributors further give these products to small distributors which causes various problems. It increases the cost of distribution making the juice expensive and also causes the delays in the supply chain. When the product doesnt gets on the retail shops in time then Shezan has to bear stock out cost. The last step in the supply chain is the customer. The customer of Shezan is the distributor and large wholesalers. Shezan supplies directly to them and they are further responsible for providing the end consumer. Shezan also directly supplies to some large supermarkets and retailers. The end consumers get their juice from every location where the distributors supply the product. This also increases costs and delays distribution.

(The individual elements of the supply chain are explained)

Procurement
Procurement refers to the all set of activities that take place in the purchasing of goods or services. Shezan international has its own fruit farms for the raw material that is used in the production of their products. All of the raw material is purchased by procurement department after strong quality check and assurance. The raw material coming for their most of the products is fruits and vegetables. It takes two to three days to reach Shezan international from the farm. All of the department working at Shezan international are well integrated and well-coordinated thus planning department and store department quite effectively perform their tasks and the activity of procurement is sufficiently performing with the collaboration and integration of different departments.

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Operations
The manufacturing process of juices at Shezan International takes place from the raw materials, First of all the raw material which is fruit is brought to the factory premises, from there the raw material after checking and inspection by the team is done. The fruits are graded before they can send further. Only the fruits which are up to the requirement of Shezan are moved ahead to the production area. The raw material is sent to the boiler to extract pulp from it, the process of heating makes pulp from the fruits which is essential element for the making of juice. From here the pulp just made is sent to the plate heat exchanger where the process of cooling takes place, the temperature is lower down to 4degree Celsius allowing pulp to dry, cool and get soft. The dry, soft and cooled pulp is stored to the pulp storage tank. It is then further moved ahead to the mixing tank where the process of mixing takes place, in this area sugar, preservatives, food colours and citric acid is mixed with pulp to make the final product. The mixing process takes place for relatively long time so that the true essence and taste should be achieved. After mixing the products are sent to the packaging area where attractive packaging of Shezan juices takes place and are shipped out of the factory to distributors and retailers.

Logistics
According to porters value chain model, logistics can be categorized as inbound and outbound. The inbound logistics consists of acquiring raw materials and outbound logistics are concerned with distribution. Shezan international inbound logistics consists of acquiring raw materials from their farms. The fruit pulp is one of the major inputs and is supplied by Shezans on farms. All other raw materials are

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supplied directly to the manufacturing plant by their respective suppliers. These various other raw materials are preservatives, food colour, flavour enhancer, sugar, and citric acid and packaging materials. The outbound logistics consists of distribution network. Distribution is responsible for making the product available to end consumer. In Lahore Shezan owns their own distribution network and supply through their own vans. Agents are also hired for this purpose so they can acquire and market to new retailers. In all other cities, the distribution is outsourced to third party. Company has formed regional offices in Multan, Faisalabad, Peshawar and Karachi. Shezan supplies juice to large wholesaler in various regions who in turn further give the product to other small distributors. These large wholesalers own the product and reserve rights to distribute. These wholesalers also have their own cold storage where they store the product n their own expense. Agents are also hired for distribution to certain category like retail stores and staple food stores.

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As seen in the above diagram, Shezan uses various methods of distribution to reach final customers. Use of agents and wholesaler as well as their own logistics help them cover vast area but this strategy sometimes also backfires through high costs and delays.

Marketing and sales

The marketing and sales department is responsible for making forecasts, establishing sales target and quotas, making promotional plans, advertising the product and satisfying the end users need. Marketing mainly focuses on the 4Ps which are product, price, promotion and placement. We will be examining each P with respect to Shezan juices. Product The first P that we will discuss is product. The product under discussion is Shezan juice. The product is a revitalizing, fresh and sweet tasting drink. People use juices for the purpose of nutrition, freshness and quenching thirst. Shezan juice provides all these through their product. The product Shezan juice comes in 250ml size packs. The packaging material used is tetra pack which is the best in quality. Shezan offers various varieties of flavours ranging from apple, mango, orange and mix fruit. The shelf life of shezan juice is almost 6 months. Shezan juice belongs to the FMCG category and is primarily aimed at teenagers and young adults. The basic need that it aims to satisfy is quenching thirst and providing freshness. Price The second P is the price. The price is what the seller charges in return to satisfying a need. The shezan juice is reasonably priced and is one of the lowest priced juices in the market. It is currently being sold at Rs. 10/ 250ml pack. Compared to its immediate competitor country, it is competitively priced. Broadly looking at the juice category, shezan is the cheapest juice

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compared to Nestle, Maza, Slice and Fresher. The pricing objectives that shezan juice has established are:

1. To achieve target sales 2. Profit maximization 3. Competitive pricing 4. Increase market share 5. Sell to masses The pricing objectives clearly reflect the low price. The company aims at maximizing profits by selling as many units as possible. They want to capture the price sensitive consumer and want to increase their share by selling to these mass audiences. Another reason for this low price is the competition. Juices like country are a close substitute with similar price. Shezan has maintained its price to compete with it and protect their market share. Placement The placement is the distribution of the product. The distribution of Shezan has been discussed in great detail in the supply chain and logistics model. Promotion The last but perhaps the most important P is the promotion. Promotion is the tool which enables the company to communicate their product and offerings to their target market. It is used to inform, persuade and communicate the target audience members. Shezan is mainly using the following media to advertise:

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o Billboards o Television o Radio o Newspaper o Broachers o internet Shezan has used in stores promotion where they have discounted their juice if purchased in large quantities. Shezan has also carried out free taste sampling in various locations. In addition to this Shezan has been promoting their product through increasing their social reputation and creating value in consumers mind. Shezan has sponsored several events in the past. They also have participated in relief efforts of flood and earthquake victims. They have also participated in building of mosques and printing of Quran so i can be distributed free of cost.

Information systems
The use of information systems has become increasingly important in todays world. Companies need to have the best set of information systems and professional to fully benefit from it. A good information system can provide company with a competitive advantage. The aim of a good information system is to create synergy in the organization. It allows information access to all concerned departments and data availability. Information systems also help in operations, purchasing and marketing activity. Shezan currently uses software like excel, SPSS and some features of oracle software in their research and development. Apart from this they have a computerised system for their inventory control and production handling.

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Human Resource
Human resource department is made to help people and organizations reach their goals and objectives and to facilitate the relationship of organization with its employees.

The activities performed by the Human Resource department at Shezan International are very simple and clear. It is responsible for effectively manage and control the day to day operation at Shezan international and selecting the system among many systems that will provide efficiency and effectiveness to the system. The department is also responsible for the hiring and firing of staff and recruiting the best possible candidate for the company who will in response bring value to the company and doesnt hurt or damage the brand name Shezan. Shezans HR department also provide guidelines, norms, rules and regulations which have to be bound by all the employees irrespective of their seniority or position in the firm. Equal opportunity is also providing by them and it also ensures its due help in complex decision making like legal activities and formulation of plans etc.

Recruitment Policies

Shezan International believes in both internal and external postings thus we are going to discuss them in detail.

Shezan International believes in internal job posting which allows the current staff or employees of Shezan International for a possible promotion, shifting or rotation and keeping the morale high.

Self-Nomination:

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HR department at Shezan publishes newsletter that has detailed job listings in it along with description and specification. This incorporates nomination of job by self as well as nomination by the employee or supervisor.

Nomination by Employees Supervisor:

This is rather an informal technique used by Shezan International. It incorporates the nomination by the external or independent supervisor which nominates some employee on the basis of his better work.

Shezan International also believes in external job posting. For this purpose the use of media both print and electronic are used. Ads are published in dailies for job openings along with its detail and specification.

Organizational Structure
The structure of a company refers to the communication system that has been used in the firm and the authority that links employees and staff together to serve the organizational goals and objectives and to achieve the tasks that are provided by the company.

Structure can be described in the form of an organization chart. Shezan's organizational chart shows that it has functional structure.

Functional: In functional structure people with similar skills and performing closely related activities are placed together in formal group. They are expected to work together to perform a critical function for the total organization. Common functional departments of Shezan are:

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1. Marketing 2. Finance 3. Production The current structure of Shezan is doing well so there is no need to change it, For such diverse product company, functional structure is appropriate. People from different areas and with different skills are put together to work which increases the productivity and bring effectiveness and efficiency to the firm.

Organizational Culture
Shezan International has excellent organizational culture. The culture is very professional but yet very enjoyable, the environment is very easy and casual. Shezan international gives lot of importance to its junior employees and seniors are always ready to listen to their juniors and are also willing to act upon their advices and suggestions if considered feasible. Employees are free to pursue and select their goals and objectives and HR department is always there for employees to provide them with the best guidance. The employees of Shezan believe that it is the company of reality and understanding, where the employees are never for granted. Shezan is into the business of diverse products, from juices to jams to ketchups to pickles and thus they recruit people from different areas which give them opportunity to excel and advance. The company also offers employment benefits program but the workload is extreme there. The priority is always given to the job by the staff. The employee working there declares Shezan international a best place to work in and to make a reputable name in the corporate market, with a very open career ahead.

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Chapter III:

Financial Performance

34

Financial Analysis
The part will focus on the operations Shezan International Limited for the fiscal years starting July, 1st, 2007 to the fiscal year ending June, 30th, 2011. This chapter includes the analysis of the company through different measures and tools of analysis used by analysts in order to analyze the situation of a company; these measures include the analysis financial statements, short-term liquidity analysis, capital structure and solvency ratios, return on invested capital ratios, asset utilization ratios and analysis of profit margin ratios etc. The study covers all the aspects usually considered by the stakeholders of the company. The profits and losses, liquidity position, changes in owners equity, movements in assets and liabilities, and all such factors will discussed later in the report of the project. Shezan international Limited has gone through ups and down over the period of analysis (five years ending 11), but there was an overall trend of growth in the company. The company holds a good reputation in the market which can be considered as a factor of its rising movement in share price; its shares are currently been traded at an average price of Rs. 219. This analysis is based upon the facts collected through the annual financial reports of Shezan international limited, online information available on the official web site of Shezan international, and other news sources.

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Analysis of Income statement

Shezan Income Statement Sales Cost of sales Gross profit Distribution cost administrative costs other operating expenses other operating income 2007 2008 2009 2010 2011 2,174,894 2,468,572 2,728,709 3,528,134 4,221,827 1,489,845 1,691,443 1,974,446 2,591,790 3,130,544 685,049 289,336 68,213 70,145 -13,240 414,454 270,595 12,940 257,655 116,981 140,674 777,129 368,240 78,951 72,555 -19,880 499,866 277,263 8,104 760 268,399 107,195 161,204 754,263 443,862 91,449 71,979 -20,155 587,135 167,128 6,542 16 160,570 58,099 102,471 936,344 1,091,283 580,492 101,413 90,702 -19,448 753,159 183,185 17,950 16 165,219 58,474 106,745 629,912 116,605 122,601 -28,798 840,320 250,963 40,343 18 210,602 70,000 140,602

operating profit finance cost share of loss from associate profit before taxation taxation net profit for the year

Financial performance of a company can be fairly assessed by an income statement as it gives a summary of how the business incurs its revenues and expenses through both operating and nonoperating activities. Notes to the statements helps to look things into details. The five year income statements show that the company is in a good position. The Sales, the Gross Profit and the Net Profit for the year have shown a continuous rising trend over the last five years. The Net Profit has increased till 2010 but in 2011 it was decreased. The profits of the company have massively increased solely and even in comparison with the increase in sales. Therefore, rising sales is not the only factor of increasing profits; the company has controlled its

36

cost of sales and operating expenses quite impressively even after drastic rise in energy costs and energy crises in the country. The rise in finance costs is way too much in the last year which has caused the profit to decrease. A moreover high cost of sale is another cause of decrease in profits.

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Analysis of Balance sheet

Shezan Balance sheet

2007 ASSETS Non- Current Assets Property, plant and equipment Long term investments long term deposits Current assets Stores and spares stock in trade trade debts Advances, deposits ,prepayments income tax recoverable cash and bank balances 2008 2009 2010 2011 256,787 25,591 1,938 284,316 1,348 610,903 59,749 13,729 42,116 108,186 836,031 Total assets EQUITY AND LIABILITIES Share capital and reserves share capital reserves unappropriated profits Total Equity Long term liabilities Current liabilities Total liabilities 1,120,34 7 292,922 9,915 2,603 305,440 1,091 689,438 74,892 38,897 114,255 84,042 1,002,61 5 1,308,05 5 299,770 7,724 2,661 310,979 18,796 755,711 86,291 37,113 74,651 70,844 1,043,40 6 1,354,38 5 416,802 7,708 2,588 427,495 15,081 842,482 135,317 18,183 59,886 99,509 1,191,95 8 1,619,45 3 423,097 7,690 2,314 433,769 6,997 1,159,55 1 165,627 14,683 57,656 82,608 1,511,80 0 1,945,56 9

50,000 425,000 150,696 625,412 57,281 437,654 494,935

60,000 500,000 176,900 736,700 51,858 519,497 571,355

60,000 583,449 134,371 777,820 45,962 530,603 576,565

60,000 653,022 135,116 848,138 91,121 680,194 771,315

60,000 723,293 169,718 953,011 71,747 920,811 992,558

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Balance sheet is one of the three major financial statements of a company, the other two being income statement and statement of cash flows. It shows the position of the company at a certain point in time. The Assets of the company have shown an increasing trend and so have the liabilities and equity. To further look into the picture we can see that the companys Assets have increased by 73 %, liabilities by 100 % and Equity by 52.4%. The rise in assets was obviously partly financed by liabilities and partly by equity but the major portion was the liability one. Liabilities from the very beginning are the major proportion of the assets. There is an overall a rising trend in almost every component of the balance sheet. Long term finance has increased greatly. Trade debts, stock in trade and other stores are the major proportion of current assets. The company needs to focus on rising trade debts. Moreover the balance depicts a satisfactory picture of the company.

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Profitability ratios analysis

Gross profit margin 2007 2008 2009 2010 31.50 31.48 27.64 26.54 28 26 29 27 26.98 29.57 28.34 32.22

Shezan Nestle Tops

2011 25.85 26 33.82

Gross profit margin is an indication of the total margin which is available to cover operating expenses and yield a profit. The gross profit of Shezan in 2007 was 31.50% which has decreased over the years and in 2011 it was 25.85. Since sales have increased in this period, the reason for a decreasing trend in gross profit margin is increase in cost of goods sold. Nestls gross profit margin has also showed an overall decreasing trend whereas the gross profit margin of Tops has shown an increasing trend. Operating profit margin 2007 2008 2009 2010 12.44 11.23 6.12 5.19 12 12 14 13 9.55 16.50 15.85 19.41

Shezan Nestle Tops

2011 5.94 13 22.39

The operating profit margin is an indication of the firms profitability from current operations without regard to the interest charges accruing from the capital structure. The operating margin of Shezan shows a decreasing trend. In 2007 the operating profit margin was 12.44% whereas it decreased to 5.94% in 2011.this means that the operating expenses of Shezan has increased

over these years which include distribution cost, administrative costs. On the other hand operating profit margin of Nestle and Tops has increased over this time period. This means that they have reduced their operating expenses which resulted in greater profit margins.

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Shezan Nestle Tops

Net profit margin 2007 2008 2009 6.47 6.53 3.76 9 7 10 -1.05 12.60 8.81

2010 3.03 11 12.23

2011 3.33 10 15.52

The net profit margin shows after tax profit per rupee of sales. Sub-par profit margin indicates that the sales prices are relatively low or that its costs are relatively high.Net profit margin of Shezan has decreased over this time period from 6.47% in 2007 to 3.33% in 2011. The reason for this is the increase in the interest charger and other expenses which have resulted into deteriorating profit margin. On the other hand the net profit margin for Nestle has increased from 9% to 10% and for Tops it increased from -1.05% to 15.52%.The reason for this is the decrease in Interest charges and other expenses. Return on Assets 2007 2008 2009 12.56 12.32 7.57 11.46 9.34 16.18 -0.84 5.32 4.82

Shezan Nestle Tops

2010 6.59 17.94 7.06

2011 7.23 13.28 10.49

Return on assets measure the return on total investment in the organization. It is sometimes desirable to add interest or after tax profit to the numerator of the ratio since total assets are financed by creditors as well as stock holders; hence it is accurate to measure the productivity of the assets by the returns provided to both classes of investors. The return on assets for Shezan has decreased over the period from 12.56% in 2007 to 7.23% in 2011. This is solely due to the decrease in net profit for the company. On the other hand the return on assets of Nestle and Tops shows and overall increasing trend due to the increasing trend of their profits.

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Shezan Nestle Tops

Return on Equity 2007 2008 2009 22.49 21.88 13.17 2.41 2.07 4.01 -1.14 6.10 5.54

2010 12.59 5.48 8.33

2011 14.75 6.22 12.28

Return on equity measure the rate of return on the stockholders investment in the business. Return on equity of Shezan has decreased over this time period of five years from 22.49% in 2007 to 14.75% in 2011. The reason for this decrease is the decrease in the net income of the company over these years. Whereas Nestle and Tops return on equity showed an increasing trend over the years. Return on equity of Tops has increased tremendously from -1.14% in 2007 to 12.28% in 2011.This was due to a tremendous increase in the profitability of the company. Return on Common Equity 2007 2008 2009 2010 22.49 21.88 13.17 12.59 2.41 2.07 4.01 5.48 -1.14 6.10 5.54 8.33

Shezan Nestle Tops

2011 14.75 6.22 12.28

Return on common equity measure the rate of return on the common stockholders investment in the business. Return on common equity of Shezan has decreased over this time period of five years from 22.49% in 2007 to 14.75% in 2011. The reason for this decrease is the decrease in the net income of the company over these years. Whereas Nestle and Tops return on equity showed an increasing trend over the years. Return on equity of Tops has increased tremendously from 1.14% in 2007 to 12.28% in 2011.This was due to a tremendous increase in the profitability of the company.

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Shezan Nestle Tops

Earning per share 2007 2008 2009 2010 2.81 2.69 1.71 1.78 39.81 34.24 66.27 90.69 12.20 14.93 16.45 18.21

2011 2.34 102.94 30.02

Earnings per share show the earnings available to the owners of the common stock. The earnings per share of Shezan Shows that it decreased from 2.81 in 2007 to 1.78 in 2010 but again increased to2.34 in 2011 which is a positive sign for common stock holders. On the other hand earnings per share of Nestle have increased tremendously from 39.81 in 2007 to 102.94 in 2011.this was due to the increase in the profitability and efficiency of operations in Nestle. Earnings per share of Tops have also increased from 12.20 in 2007 to 30.02 in 2011 because of high profits.

Overall Profitability analysis

The profitability of Shezan compared to industry is under threat implying that Shezan is not managing its operations efficiently as the income statements shows that finance cost, administrative cost, distribution charges, and cost of goods sold and taxes all have increased. The major reason behind this trend is the rising inflation in Pakistan which has compelled Shezan costs to rise

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Liquidity Ratio Analysis

Current ratio 2007 2008 2009 1.91 1.93 1.97 0.94 1.07 0.85 2.54 2.79 2.79

Shezan Nestle Tops

2010 1.75 0.85 2.72

2011 1.64 0.80 3.16

Current ratio indicates the extent to which the claims of short term creditors are covered by assets that are expected to be converted into cash in a period roughly corresponding to the maturity of the liabilities. The ideal current ratio should be 2:1 which means that the company can give 2 assets to pay a liability. Shezans current ratio has decreased over the years from 1.91 in 2007 to 1.64 in 2011 but still it is not considered as a threat. On the other hand Nestls current ratio is very low which has further decreased over this time period. It was 0.94 in 2007 and decreased to 0.8 in 2011. Tops have a very good current ratio which has an increasing trend. It was 2.54 in 2007 and increased to 3.16 in 2011. Quick ratio 2008 2009 0.60 0.54 0.60 0.37 1.43 1.43

Shezan Nestle Tops

2007 0.51 0.54 1.51

2010 0.51 0.38 1.53

2011 0.38 0.38 1.72

Quick ratio is a measure of a firms ability to pay off short term obligations without relying upon sale of inventories. The quick ratio of Shezan has a decreasing trend from 0.51 in 2007 to 0.38 in 2011. The reason is that more inventories are being stocked. Moreover Nestls quick ratio has also decreased from 0.54 in 2007 to 0.38 in 2011. It is also because of increase in inventories of

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finished goods at year. However Tops has increased its quick ratio in 2011 from 1.53 to 1.72. This is because more of the inventories were converted into sales. Inventory to net working capital ratio 2007 2008 2009 2010 Shezan 1.53 1.43 1.47 1.65 Nestle -6.75 6.59 -3.15 -3.17 Tops 0.67 0.76 0.76 0.69

2011 1.96 -2.08 0.67

Inventory to net working capital ratio measures the extent to which the firms working capital is tied up in inventory. The inventory to working capital ratio for Shezan has an increasing trend over this time period because more inventories is being tied with the working capital. In 2007 the ratio was 1.53 whereas in 2011 the ratio was 1.96.This increase is due to the increase in the inventory of finished goods which is held. Nestle is also not doing well , it has a negative working capital ratio therefore the inventory to net working capital ratio is also negative. Tops is doing good because it has a low ratio which is maintained over the period.

Financial Leverage
Debt to Equity ratio 2007 2008 2009 0.79 0.78 0.74 0.98 1.17 0.95 0.29 0.03 0.03

Shezan Nestle Tops

2010 0.91 1.00 0.04

2011 1.04 1.03 0.08

Financial leverage refers to the use of the debt capital in a company to finance its assets. The Share holders of the company are interested to know the leverage position of a company. Even though debt is cheaper, it is considered riskier compared to equity and a huge threat to the company. This portion discusses the risk arising from leverage position on Shezan International Limited. Comparing the

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leverage position of Shezan with Nestle and Tops we can see that Tops is in a very better position as it is financing almost 90% of its assets and operations from equity financing. It is not a highly leveraged firm. Its long term debt to equity is 0.22 so most of its long term investments and projects are financed by it equity. Shezan on the other hand is financing 100% of its assets through debt which is very risky Debts to Assets ratio 2007 2008 2009 2010 0.44 0.44 0.43 0.48 0.26 0.31 0.23 0.24 0.21 0.03 0.03 0.04

Shezan Nestle Tops

2011 0.51 0.22 0.07

The debt to assets ratio shows you how much of your asset base is financed with debt. If this ratio is 100% it means your company is bankrupt. It is very important to keep your debt to asset ratio in line with the industry. Debt to Asset ratio for Shezan has increased over the years from 0.44 in 2007 to 0.51 in 2007.This means that Shezan has financed its 51% of the assets with debt. Nestle has maintained the ratio to around 23-24% in this time period. Whereas Tops has a very low ratio of 0.07 which means that only 7% of the assets are financed by debts.

Shezan Nestle Tops

Long term Debt to Equity 2007 2008 2009 2010 0.09 0.07 0.06 0.11 0.02 0.02 0.03 0.02 0.29 0.03 0.03 0.04

2011 0.08 0.02 0.08

Long term debt to equity measures the balance between debt and equity in the firms long term capital structure. Long term debt to equity ratio for Shezan had a decreasing trend till 2009 where it dropped to 0.06 from 0.09 but increased in 2010 to 0.11 but again decreased to 0.08 in 2011.This means that a major chunk of long term debt was repaid. Nestle has maintained this

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ratio to 0.02 over this time period where as fluctuations can be seen in the long term debt to equity ratio for Tops. Times Interest Earned 2007 2008 2009 2010 20.91 34.21 25.55 10.21 6.01 7.37 12.61 13.37 157.81 482.11 66.42 209.25

Shezan Nestle Tops

2011 6.22 8.05 180.39

Times interest earned measures the extent to which firms earnings can decline without the firm becoming unable to pay it financial obligations. The ratio for Shezan has declined from 20.91 in 2007 to 6.22 in 2011 which is not a good sign for the company. This is solely due to the decrease in profits in recent years. Nestls ratio has also declined from 13.37 to 8.05 which is again not a good sign. Tops Ratio has fluctuated over this time period but since its so high, paying its financial obligations is not a issue for Tops. In 2011 times interest earned ratio was Tops was 180.39 which means that Tops has excess cash to pay its interest cost. Fixed Charge coverage 2007 2008 2009 2010 6.25 4.70 4.02 3.08 5.16 5.83 10.16 12.16 43.74 121.24 45.35 147.77

Shezan Nestle Tops

2011 2.87 7.96 123.97

Another method to see whether a firm can pay its fixed charges is to calculate the fixed charge coverage ratio. This ratio for Shezan has an overall decreasing trend during this time period. It was 6.25 in 2007 and decreased to 2.87 in 2011. The reason is the decrease in the profits of the company. Nestles fixed charge coverage has also decreased from 12.16 in 2010 to 7.96 in 2011.

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Whereas Tops fixed charge coverage ratio has increased tremendously from 43.74 in 2007 to 123.97 in 2011. It has excess money to pay off its fixed charges.

Activity Ratio Analysis

Inventory turnover 2007 2008 2009 3.56 3.58 3.61 9.4 10.3 9.2 3.70 3.40 4.41

Shezan Nestle Tops

2010 4.19 8.9 4.33

2011 3.64 8.2 4.19

Inventory turnover provides an indication of whether the company has excess or inadequate amount of inventory of finished goods. When the ratio is compared to the competitors, it is seen that Shezan ha low levels of inventory as compared to Nestle or Tops. Shezan had inventory turnover ratio of 3.56 in 2007 and 3.64 in 2011. Nestle has a ratio of 9.4 in 2007 and 8.2 in 2011.Tops inventory turnover ratio has increased over the period from 3.70 in 2007 to 4.19 in 2011. Fixed asset turnover 2007 2008 2009 2010 7.65 8.08 8.77 8.25 2.81 3.15 3.54 3.56 1.71 0.57 0.73 0.83

Shezan Nestle Tops

2011 9.73 3.00 1.05

Fixed asset turnover is a measure of sales productivity and utilization of the plant and equipment. The ratio for Shezan has increased over the years from 7.65 in 2007 to 9.73 in 2011. This is solely due to the increase in sales of Shezan. The ratio for nestle fluctuated over this time period and is low as compared to Shezan. However Tops ratio of fixed asset turnover has increased to 1.05 in 2011 but still it is low as compared to Shezan.

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Shezan Nestle Tops

Total asset turnover 2007 2008 2009 1.94 1.89 2.01 1.79 2.06 2.22 0.80 0.42 0.55

2010 2.18 2.25 0.58

2011 2.17 1.84 0.68

Total asset turnover is a measure of the utilization of the firms assets. The ratio for Shezan has increased over the years from 1.94 in 2007 to 2.17 in 2011. This is solely due to the increase in sales of Shezan. The ratio for nestle fluctuated over this time period and is low as compared to Shezan. It increased till 2010 to 2.25 but decreased to 1.84 in 2011. However Tops ratio of total asset turnover has decreased to 0.68 in 2011 and is low as compared to Shezan. Average collection period 2007 2008 2009 2010 10.03 11.07 11.54 14.00 14.25 15.22 16.87 18.64 12.41 18.47 14.25 5.50

Shezan Nestle Tops

2011 14.32 19.01 6.02

Average collection period indicates the average length of time the firm must wait after making a sale before it receives payment. The average collection period for Shezan has an increasing trend. It increased from 10.03 in 2007 to 14.32 in 2011 which means that now Shezan has to wait more to receive payments. This ratio for Nestle also had an increasing trend; it increased from 14.25 in 2007 to 19.01 in 2011. As compared to Shezan Nestle wait more days to receive payment. The ratio for Tops fluctuated but as compare to others it has the lowest ratio of 6.02 which means that Tops has to wait less than other to receive payment for credit sales.

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Chapter IV:

Analysis of Strategic Viability

50

SWOT Analysis
The SWOT analysis refers to the companys overall strengths (S), weaknesses (W), opportunities (O) and threats (T). The first two terms are a measure of the companys internal environment while the latter two are a measure of the companys external environment. These combined factors are used as a decision making tool for better organization of business actions. Before Shezans analysis of strengths, weaknesses, opportunities and threats is conducted, it is important to define each of these terms so that the scope of our analysis is clear. Strengths: These are the key factors or set of practices / actions that a firm performs better than its competitors. Essentially these are the core competencies of the organization. Weaknesses: Weaknesses are either a set of resources that an organization lacks in or activities that the firm does not perform well, relative to the competition. Opportunities: These are a number of chances and circumstances in the external environment that if utilized would result in favorable performance. Threats: Threats are categorized as external factors that may harm performance of an organization. The following tables highlight some of the key strengths, weaknesses, opportunities and threats that have been identified based on company interviews and analysis of published stock exchange reports.

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Strengths
Strong financial backing, high capital available Variety of packing and products available in the market Vast, comprehensive distribution network throughout Pakistan High inventory turnover rate ISO certification Excellent R&D team Passionate owners, empathizing with employees and managers Global scale of operations Brand name value within the country High operational expertise

Weaknesses
Lack of innovation Lack of consumer awareness of product quality Vendor Relationship Management not prioritized Decreasing Employee Morale Ineffective positioning strategy Lack of defined long term corporate planning & strategy Limited funds for promotional budget Unable to match competitors in terms of juice flavors Lack of sustainable, mainstream advertisement campaign Product strategy and promotion strategy not synchronized

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Opportunities
Younger demographic, 67% of population, leading to increasing size of target market Further backward integration, leading to higher profits Overall size of Pakistani juice market increasing Increasing demand for low-priced juices in African countries Increased investment in the food & beverage sector on the stock exchange Falling value of Rupee, leading to greater quantities demanded abroad Demand for multitude of flavors Potential for diversification of business as Shezan has enough capital to expand Huge distribution network, allowing for piggybacking of products Modification of operations to keep abreast of new age practices

Threats
Intense competition within the juice manufacturing industry Increasing trend of having nutritional drinks rather than artificially flavored ones Political instability Increasing inflation rate Non-Islamic tag associated with Ahmedis in Pakistan Perceived lack of quality Decreasing power of the brand name Shezan Market moving towards fragmentation Social burden of managing huge quantities of waste that arise in juice manufacturing Rapidly changing technology within the juice manufacturing industry

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External Factor Analysis Summary

External Factors Opportunities
Increased demand for low priced juices in African countries Increasing size of Juice market in Pakistan Younger demographic largest segment of population Increased investment in food& beverage companies on stock exchange Falling value of Rupee, greater quantities demanded abroad Demand for multitude of flavors Possibility of further backward integration Potential for conglomerate diversification Distribution network allowing for piggybacking of products Modification of operations to keep abreast of new age practices

Weight
0.15 0.07 0.05 0.02 0.05 0.03 0.05 0.03 0.05 0.02

Rating
4 3 4 3 4 2 3 2 4 2

W. Score
0.6 0.21 0.2 0.06 0.2 0.06 0.15 0.09 0.2 0.04

Comments
Increased exports to Africa Expand network Targeting younger demographic Current shareholders satisfied Capitalizing on increased exports Limited set of flavors Incorporation of fruit farms in portfolio conduct feasibility Multiple products using same channels Technologically not up to date Distance Shezan from religious views Revitalize through increased brand image Improved IMC for counter-measures Good margins despite rising costs Build on brand image Need to position juice as a healthy alternative Need for multiple lines Good sense of CSR Need for new age practices Corporate stability despite political environment -

Threats
Non-Islamic stigma associated with Ahmedis in Pakistan Decreasing power of the brand name Shezan Intense competition Increasing inflation rate Perceived lack of quality Increasing nutritional awareness Market moving towards fragmentation Waste management Rapidly changing technology Political instability Total 0.1 0.09 0.04 0.02 0.05 0.07 0.03 0.03 0.02 0.03 1.00 3 2 3 4 2 2 3 3 2 3 0.3 0.18 0.12 0.08 0.1 0.14 0.09 0.09 0.04 0.09 3.04

*Analysis of the table is provided in conjunction with the internal-external matrix analysis

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Internal Factor Analysis Summary

Internal Factors Strengths
Financially strong Variety of products Comprehensive distribution network High inventory turnover rate ISO certification Excellent R&D team Passionate owners Global scale of operations Brand name value High operational expertise

Weight
0.15 0.03 0.09 0.02 0.03 0.05 0.03 0.1 0.05 0.02 0.05 0.1 0.05 0.02 0.03 0.05 0.02 0.03 0.02 0.03 1.00

Rating
5 3 4 4 3 4 4 4 3 3 2 2 3 2 2 2 3 2 2 2 -

W. Score
0.75 0.09 0.36 0.08 0.09 0.2 0.12 0.4 0.15 0.06 0.1 0.2 0.15 0.04 0.06 0.1 0.06 0.06 0.04 0.06 3.17

Comments
Excellent financial track record Good utilization of products Multiple products distributed High efficiency Sign of quality Ability to produce new designs Good commitment Ever expanding reach Shezan still recognized positively Efficient performance Unable to innovate Need to communicate high fruit concentrate Need greater communication with vendors Need motivational techniques Need to reposition Juice Hire outside consultants Promotional budget as a function of sales Introduce more flavors Increase budget Synchronize both -

Weaknesses
Lack of innovation Lack of awareness of product quality Vendor Relations not prioritized Decreasing Employee Morale Ineffective positioning strategy Lack of defined long term corporate planning & strategy Limited funds for promotional budget Lack of flavor variety Lack of mainstream advertisement Product strategy and promotion strategy not synchronized Total

*Analysis of the table is provided in conjunction with the internal-external matrix analysis

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Strategic Factor Analysis Summary

Key Strategic Factors External Factors (O) Demand increase in Africa (O) Increasing market size (O) Backward integration (O) Large younger demographic (T) Non-Islamic stigma (T) Decreasing brand value (T) Nutritional awareness (T) Increasing competition Internal Factors (S) Financially strong (S) Global operations (S) Huge distribution network (S) R&D (W) Positioning (W) Product quality awareness (W) Vendor relationship (W) Corporate strategy Total 0.1 0.1 0.05 0.03 0.05 0.03 0.05 0.07 1.00 4 4 4 3 2 2 2 2 0.4 0.4 0.2 0.09 0.1 0.06 0.1 0.14 3.13 Long term Long term Long term Long term Short term Intermediate Intermediate Long term 0.15 0.05 0.05 0.05 0.03 0.07 0.07 0.05 4 4 3 4 2 2 2 3 0.6 0.2 0.15 0.2 0.06 0.14 0.14 0.15 Long term Long term Intermediate Long term Short term Intermediate Long term Intermediate Weight Rating W. Score Duration

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Internal-External Matrix
Total IFE Score Strong Average (3.0-4.0) (2.0-2.99) I II Shezan IV VII V VIII

Weak (1.0-1.99) III VI IX

Total EFE Score

High (3.0-4.0) Medium (2.0-2.99) Low (1.0-1.99)

Scores of 3.17 & 3.04 show that Shezan is placed in the first quadrant, meaning that it is in a strong position to avail the external opportunities using its strengths and to minimize weaknesses and threats using a combination of strategies listed in the SFAS. I-E matrix shows that Shezan is in a position to grow and build; It is recommended that Shezan consider backward integration, which would result in maximum utilization of the current position of the company and allow it to grow through concentric (linked) diversification in a way as to capitalize upon the current opportunities in the market through its strengths. [Further strategy planning is provided in the TOWS matrix]

SPACE Matrix
*Internal: (-6 worst, -1 best) | External: (6 best, 1 worst)

Internal Strategic Position

Competitive (CA)

External Strategic Position

Industry (IS)

Product Quality Market Share Brand Image Life Cycle Average

Financial (FS)

-1 +5 -4 +6 -3 +2 -3 +3 -2.75 4 Total X Axis Score = 1.25 -2 +4 -1 +1 -1 +3 -4 +4 2.0 3 Total Y Axis Score = 1.0

Suppliers Growth potential Degree of rivalry Substitutes Average

Environmental (ES)

ROE Working Capital Inventory Turnover Leverage Average

Technology Inflation Variability Barriers to entry Average

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Plotted SPACE Matrix

Conservative

Aggressive

(1.25, 1)

Defensive

Competitive

The suggested strategy based on the SPACE matrix analysis is that of the aggressor and as such positive, proactive steps should be taken by Shezan to ensure further growth. It should also be noted that the suggested strategy based on the SPACE Matrix is in line with the analysis of the I-E Matrix, hence providing further strength to the overall strategic plan.

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TOWS Matrix
Strengths (S) Weaknesses (W)

IFAS \ EFAS

1. Financially strong 2. Global operations 3. Huge distribution network 4. Brand name 5. R&D

1. Lack of innovation 2. Product quality awareness 3. Vendor relationship 4. Positioning 5. Corporate strategy WO Strategies 1. Look for newer markets (W1,O1) 2. Reestablish vendor-firm agreements (W3,O2) 3. Establish consistent strategy for supply chain (W5,O4) 4. Reposition juice to new target

Opportunities (O)

SO Strategies 1. Increase supply to Africa (S2,O1) 2. Buy farms to increase backward integration (S1,O4) 3. Create more availability in the market (S3,O3)

1. Demand increase in Africa

2. Increasing market size

3. Large younger demographic

4. Backward integration

4. Leverage brand name to cater segments (W4,O3) to market (S4,O2) 5. Increase operations overseas (S1,O5) ST Strategies 1. Establish a new corporate 5. Establish 5 year plan incorporating foreign exports (W5,O5) WT Strategies 1. Utilize foreign expertise in innovation (W1,T5) 2. Develop healthy juice alternatives (W4,T3) 3. Focus on brand building (W2,T1) 4. Benchmark with industry leaders (W5,T4) 5. Partner with local Islamic spokespersons (W5,T2)

5. Falling Rupee value Threats (T)

1. Decreasing brand value

image (S5,T1) 2. Incorporate patriotic themes

2. Non-Islamic stigma

(S1,T2) 3. Understand consumer nutrition

3. Nutritional awareness

preferences (S5,T3) 4. Cover a wide area of region

4. Increasing competition

(S3,T4) 5. Use brand equity as quality

5. Perceived quality

assurance (S4,T5)

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Value Chain Analysis

Support Activities

Firm Infrastructure Shezan applies hierarchical set-up within formalized management structure Human Resource Management New employee initiative, OJT, mentor programs and remuneration strategy Technology Development Continuous research initiative, flavor development and automation change Procurement Backward integration allows, purchase of fruit from self-owned farms
OUTBOUND LOGISTICS Establish Centers Distribute juices MARKETING & SALES Celebrity Endorsement Retail promotions Sales training

Profit Margin

INBOUND LOGISTICS Fruit Pulp Packaging

OPERATIONS Heat exchange Mixing Packing

SERVICES

Customer Feedback

Primary Activities

Activity Inbound Logistics Operations Outbound Logistics Marketing & Sales Services

Valuable? Yes No Yes Yes No

Rare? Yes No No No No

Substitutes? Few Many Few Many Many

Difficulty of Imitation High Medium High Low Low

Identified Sources of Competitive Advantage:

Inbound & Outbound Logistics

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Grand Strategy Matrix

Rapid Growth

Quadrant II Shezan

Quadrant I

WCP

SCP

Quadrant III

Quadrant IV

Slow Growth
*WCP=weak competitive position; SCP=strong competitive position

The Grand Strategy Matrix, which is made by overviewing all the other matrices, shows that although there is rapid market growth (local & abroad), Shezan is in a weak competitive position when comparing it to market leader Nestle as well as other strong competitors like Olfrute. It is suggested that Shezan utilize the previously mentioned strategies and reposition itself in such a manner as to improve its competitive position in the minds of the consumers. This, it is felt is necessary for survival and is the single biggest change that needs to be implemented.

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Portfolio Analysis
Business Unit Strength High High I.A Medium Low Shezan Medium Low

Portfolio analysis depicts that Shezan international is competing in the industry which is very fast growing, the market share of Shezan is medium to high. It is evident that economic and political factors are not stable but still the conditions are favouring Shezan International. It also incorporates the competitive strength and relative market share in which Shezan is excelling. After analysis it has become clear that Shezan should opt for funding according to matrix and can use Invest/Growth strategies. It would be also viable for Shezan to go for selective strategies because of the nature of the business in which it is competing.

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BCG Matrix

The BCG matrix method tells us that what priorities should be given in the product portfolio of a business unit. BCG matrix shows different products of Shezan placed in different quadrants with respect to the market share and the business growth rate they have. These products include ALLPURE, Twist, regular juice and Rose syrup. ALL-PURE lies in the first quadrant and is categorized as a star because it has a high market share and a high business growth. Star products are also knows as market leaders. Shezan Twist lies in the second quadrant and is categorized as a question mark. These products are called question marks or problem child because they have a

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low market share but a high business growth rate. The strategy to deal with these products is to divest these products. Shezan regular juice lies in the third quadrant and is categorized as cash cow because of high market share and low business growth rate. These products are milked and usually their profits and reinvested in other products. Rose syrup lies in the fourth quadrant and is categorized as a dog. These products have a low market share and a low business growth rate; the best strategy for these products is to liquidate them so that other brands dont suffer from those products.

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Chapter V:

Shezan Strategic Plan

65

Strategic Plan Overview

A strategic plan is formed upon the basis of the analysis conducted and as such the plan is only as good as the analysis which serves as the foundation for strategy. The analysis conducted using the matrices will serve to shape the proposed strategic plan for Shezan. The three major factors that have emerged from the matrix analyses are: Shezan needs to reposition its juices to become more competitive in the market Shezan needs to capitalize on its strong financial muscle to diversify in fruit farms Shezan needs to further expand its distribution network to sustain competitive advantage

It is understood that these factors relate primarily to marketing, supply chain and positioning (also a subset of the marketing function), hence the major focus of the plan would be changes within the marketing and supply function, along with a repositioned Shezan Juice line; however since in todays business world and within Shezans structure, most functional departments are interrelated and need to present a consistent front to attain strategic advantage and hence the proposed strategic plan brings about changes in other functional areas as well in accordance with the new strategy.

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Vision
To be known as the leading quality provider of nutritious food products in the region. Providing the products and services of the highest quality by adhering to international standards is the primary objective. Shezan international will maximizing shareholders value by being a good corporate citizen and recognized as a preferred employer serving the country through economic development. The company shall contribute to the environment with implementation of green technology. By following best business practices and ethical behaviour and adopting transparency in its working, Shezan shall become a role model for the industry.

Mission
Serving the customer needs through manufacturing of highest quality fruit and vegetable based juices and products. The company aims at being recognized as leader in the industry by maximizing customers, employees and shareholders value. To accomplish this, maintaining a tradition of pride in our products, growth through innovation, integrity in the management of our business, and commitment to team management and quality improvement process. Giving back to environment and becoming a preferred corporate citizen shall be our priority.

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Objectives
To be the leading company in the industry. To have a transparent process through open disclosure policy. Have passionate people with intelligent and firm approach towards business. Provide challenging opportunities, training, and fun loving environment, necessary resources and facilities to our employees. Invest in technology to lead the competition. Stand committed to sustainable business growth and ensures 100% compliance of CSR by ensuring the safety of our people, assets and the community in which we operate. Serve the public through poverty alleviation programs and building farming expertise. Serve the consumer in every way possible. Maximize customer value. Demonstrate honest and ethical behaviour by implementing best business practices.

Corporate Development Stage

Among the 10 stages of corporate development which are courtship, infancy, go-go, adolescence, prime, stability, aristocracy, recrimination, bureaucracy, death; Shezan international is at Prime where the clearness in vision and mission is very clear, everything is aligned and coming together in positive manner for the firm. Shezan international is ready to start-up their new product lines and can afford to have innovation in their products and business. It is suggested that Shezan International move towards the stability stage in which things will become easier for the firm. The emphasis will be shifted to R&D from customers and marketing. Rapid growth will take place but with more maturity and strong brand name.

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Positioning
As the juice industry is heavily competed, it is difficult to choose the category in which you want to position your product. One of the major players in juice industry, nestle has launched a low priced juice increasing competition for Shezan. To compete with this new competition, Shezan has to reposition its juice to better sell itself. For the repositioning of Shezan, we will use the seven step positioning process. The first step in this process is to identify a relevant set of competitive products. The relative set of products contains competitors like nestle, country, fresher and Tropicana. These are considered in this set because they all have same perception and quality. The second step is to identify determinant attitudes. These attributes include price, packaging, taste and nutrition value. The third step involves collecting data about customers perceptions. The current perception of Shezan is that of low quality and cheap juice. In the fourth step we analyse the current positions of the products in the set. According to the current position nestle is considered as best tasting juice and affordable. Nestle is also considered to be the choice of the youth as its trendy and stylish, Whereas Shezan and country juice are positioned as low quality drinks. The fifth step is to determine the customers most favourable combination of attributes. The most favourable set of attributes according to the customer are price, taste and packaging. Shezan has to improve its taste and raise its price to change its perception. In the sixth step we consider fit of possible positions with customer segments. Here we reposition our product according to the ideal fit. In the repositioning of shezan, we recommend that shezan should increase their fruit concentrate and improve their taste while increasing their price to the competing brands. The packaging may also be improved and new updated packaging should be introduced which should change customer perception. the new packaging should be well designed and should reflect the youth. They need to follow the trend. Improving the taste is also important as people now demand more fruit concentrated juice rather than artificially sweetened juices. So in our repositioning we will be targeting consumers who are from SEC A and B between the ages of 12-30. The primary focus would be

69

to get the attention of school and college going students and position shezan as the best quality, trendy and tasty juice in the market. The last step involves writing a positioning statement. The new positioning statement will be Shezan, the taste of freshness.

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Functional Areas: In accordance with the new strategy in a holistic sense and the new juice positioning at the smaller scale, a number of changes have been proposed to the functional areas of business. Each are discussed individually

Research & Development

The R&D strategy should be made by considering the R&D mix. This will help in knowing what resources should be allocated to research, product development and process. This helps in making decisions like acquiring new technologies, making strategic alliances and putting in place new processes. The company can either become technological leader or follower keeping in mind its generic strategy. In the proposed R&D department, we will like to recommend shezan that they invest more in research department as the new development of products, new flavour enhancements and better nutritious juices are being increasingly demanded. The industry is becoming more competitive so there is need for innovation and to grow companies need to have competitive advantage. The company should continuously work on new flavours. The R&D department should focus on the changing needs of the consumer. Through proper research they should be well aware of what the new trends are and what the consumers want from their juice drink. Then accordingly shezan should develop new juices. Research can also help in finding new sustainable ways in which juices can last longer. Their shelf life plays integral part and through research it can be increased. Shezan also should invest in machinery and other product related technologies. These updated technologies can improve their operations and can save company quite a lot of money in terms of efficiency and increased productivity. R&D can help shezan in discovering new ingredients and enzymes which might speed up the process and can eventually save them costs of production. Storage of products like juices an important aspect. This can be improved on through R&D as well. For this technological advancement, shezan should see the industry leader try to follow them.

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Procurement
Shezan international has a very good procurement department which is well coordinated and integrated with other departments but there are few things in the system which needs to be revised. Shezan international is slow down in the process of logistics, the delivery of raw material that is fruits and vegetables require two to three days to reach the factory of shezan international which is quite ineffective in todays scenario. The delivery time period should be enhanced by adding more transport and logistics facilities to the system and the delivery period should be minimized to maximum of two days. The other thing which needs serious consideration is that of enhancing and increasing backward integration. Currently shezan international has few fruit farms and they are just bound to them but they should increase it by adding more fruit farms to the portfolio, that will enable Shezan international to work more than the current capacity. Shezan international has the highest production facilities among its competitors so it is mandatory to convert that opportunity into strength and milking upon this. By adding more fruit farms to their portfolio, Shezan can also go for cost minimization and can achieve economies of scale.

Operations
The current production process of Shezan international is quite effective and there is no need to change it. They have the highest production capabilities among their competitors. Their machines and plants are technologically up to date and have all the due abilities to cope up with this technologically driven era. They have all the international standard requirements which makes them best in the business. They have achieved their this position due to this strict check

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and balance on their production side because at Shezan they believe that the product which tastes good will lead the market.

Marketing and Sales

Product In the product, we are not going to do any major changes. The product would essentially be kept the same. A little enhancement of flavour would be done by increasing the pulp concentrate. The rest of the product ingredients will be the same. The packaging of the product however will be changed. New graphically designed more trendy and up to date packaging would be used. This will be designed keeping in mind the consumer and target markets lifestyles. Price The price of the product would be changed. As our new positioning suggests and modification to the product, we will increase the price of shezan to Rs. 15/ 250ml pack. This will now be competitive to nestle. We have changed are competitive set and now instead of competing with country and other low quality brands, we will be competing with better quality brands like nestle. Promotion In the promotion part we would be emphasising more on electronic media, magazines and internet. The juice will be promoted through TVCs, internet banner ads, print ads and billboards. In addition in store promotions activity, discounts, coupons and free sampling cars will roam around the city to promote the juice. Shezan juice will also conduct on campus drives to influence their target market.

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It would also sponsor the school cafes. Shezan will also start sponsoring sports and music events as they are one of the most watched programs. This new promotion strategy will be carefully devised after studying the media habits and lifestyles of its target market. The primary objective of this promotion drive would be to reposition the shezan juice as the good quality, nutritious and trendy drink.

Logistics
The logistics department of shezan is considered as an efficient and effective one. The inbound logistics seem to be doing a great job as shezan have their own farms where their major raw materials come from. The transportation of this fruit pulp is done through their own vans. This ensures timely supply of pulp and keeps the inventory down. So we recommend that shezan stick with their current way of inbound logistics. As far as outbound logistics is concerned, shezan has a mix of different strategies. As mentioned above, shezan supplies all its products through their own system in Lahore. this allows them to operate efficiently and effectively as it allows them to supply to vast area in Lahore and also helps in keeping the costs down. For other cities, the company sells the product to large wholesalers who further sell to small wholesalers who then distribute it. This process includes intermediaries. Due to them the cost of the final product increases as the product goes through several channels. The efficiency is also compromised as delays are caused. Shezan needs to rectify this distribution system for outside Lahore suppliers. It needs to appoint company owned agents in different cities who should be responsible of identifying selling pints and then supply to them as per need. Primarily they need to control the

74

wholesalers by giving them contracts and incentives to distribute efficiently. In the longer run Shezan needs to set up their own distribution channels in at least big cities where the demand is high.

Human Resource
Shezan international Human Resource department has certain flaws and weakness which should be removed to ensure the effectiveness of Human Resource department. HR department of Shezan is more focused in daily operations which make it weak in term of employees and staff perspective. The employees want their HR department to guide them towards their career path whereas the current HR department thinks that their duty is to ensure better communication between and within department, effective daily operations at the company and recruiting/hiring the best suitable candidate for the firm but actually HR department is more than that, it is the link that strongly or weekly bonds the company and employee together. The HR should focus on the motivation and performance evaluation practices. Employees always need motivation from their company and that should be done by Shezans HR department. HR department should also consider incentives for their performing employees as that will bring more value to the firm. The HR department should also incorporate feedback system, 360 degree feedback motivation system will be very effective for Shezan as it will help to identify future leaders for the firm and also in evaluating the performance of oneself. HR department should also highlight the best performers and also ensure to adopt a systematic approach for sharing of knowledge among seniors and juniors. Last but not the least, HR department of Shezan international should apply training programs for their employees to keep them up to date and to cope up with the current technological trends.

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More formalised on the job training should be conducted to train the junior employees effectively.

Organizational Structure
The current structure of Shezan is doing well so there is no need to change it, For such diverse product company, functional structure is appropriate. People from different areas and with different skills are put together to work which increases the productivity and bring effectiveness and efficiency to the firm.

One reason for not changing the current structure is that the functional structure also provides the chain of command and clear chain of command is important because it increases accountability and make formal standard operating procedures.

Functional structure also offers qualified supervision and this provide the employees with more trust, credibility and deep insight to the business. Since everyone is operating in his area of expertise so the outcome of task or activity will be specialized and more accurate.

Organizational Culture
According to Shezans international employees, Shezan is the best place to work in but yet there are few things in the culture which need to be a part of it. The first and the most important thing is the company should opt participatory culture. In this culture the participation of employees will be more welcomed and will be given more value which in turn will improve the performance of employees. This type of culture will also help Shezan to keep their employees motivated and encouraged. Participatory culture will also offer a sense of trust between the employees and the company.

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Information Systems
There are many other information systems that can be incorporated to make operations throughout the company smooth. Shezan can use supplier integration systems which allow them to be linked with suppliers through the online system. This will help in having inventories filled when needed just like just in time concept. The suppliers will be aware of the inventory level and when the inventories are below certain level they will automatically supply it. Same kind of system can be used for distribution side. When distribution networks will be linked with the company, shezan will know which distributor has what level of inventory with it. It will also allow for checking which areas are most profitable. Shezan can also use softwares like SAP AG., and R3 which allow for credit checking, payment handling and book balancing etc. Shezan juices can make use of internet and networks to make the whole system online. This will ensure that every department in the value chain is linked to each other hence ensuring the alignment of strategic goals and objectives of the company which is key for having an efficient and effective organization system.

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Applied Models
The New BCG matrix, along with McKinseys 7-S framework have been chosen to illustrate the changes that will be brought about by the new strategy for Shezan International. Although a number of models would help explain the changes and benefits of the new strategy, these two models best visualize the changes that Shezan will undergo. New BCG Matrix Fragmented Specialized

ROI Many

ROI

Number Of Appear ances ROI

Market Share Stalemate

Market Share Volume Shezan ROI

Few Market Share Small Market Share Large Size of Advantage

The New BCG Matrix is used to show the size of competitive advantage and the approaches to achieve those advantages.

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Shezan International is a giant in the industry with having very strong market share and competitive advantage in terms of production capabilities. Shezan international comes under the heading of Volume business where the production of Shezan products is huge and massive. Shezan international cannot segment or differentiate its market because of its level of production. It is not possible for Shezan to use differentiation strategy rather they pursue cost leadership which is considered to be a success for them. McKinseys 7-S Framework
Structure

Strategy

System

Super ordinate goals

Skill

Style

Staff

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1. Structure: The organizational structure of shezan is functional structure and it is relatively unchanged. 2. Strategy: The strategic position has already been discussed in great detail, including vision mission & objectives and how they form the basis of change 3. System: Shezan had strict rules. We have proposed to less standardization of rules. 4. Skill: Shezan should focus more on financial and marketing competencies. 5. Staff: We have introduced new policies to boost employee motivation. 6. Style: The culture of the organization has been made more participative which allows for 360 degree feedback. 7. Super ordinate goals: We have suggested continuous improvement for super ordinate goals.

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References
1. Srinivasan, R., 2005, Strategic Management: The Indian Context, Prentice Hall, New Delhi, pp. 48-84 2. Ahmed Jibran, 2009, Shezan: Business Strategy Proposal. Journal of Scribd, pp. 4-42 3. Porter, M.E., 1985, Competitive Advantage, the Free Press, New York, pp. 482-512 4. Zohaib H. Shah, 2010, Impact of Celebrity Attributes on Purchase Behavior, Research Thesis, Lahore School of Economics, pp. 11-18 5. Menon, A. et al., 1999, Antecedents and Consequences of Marketing Strategy Making, Journal of Marketing, pp.18-41 6. Armstrong et al., 1996, Bringing Structural Change through Strategy, London CIPD, pp.218-267 7. Shezan International Limited, 2007-2011, Published Annual Reports for Stakeholders, Lahore Stock Exchange 8. Nestle Ltd., 2007-2011, Published Annual Reports for Stakeholders, Lahore Stock Exchange 9. Murree Brewery Ltd., 2007-2011, Published Annual Reports for Stakeholders, Lahore Stock Exchange 10. Keller et. al 2004, Strategic Brand Management, Prentice Hall, pp.249-401 11. www.Shezan.com 12. www.ibid.com

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Annexures

Nestle Income statement

Sales 2007 28,235,393 20,285,142 7,950,251 2008 2009 34,183,847 41,155,822 25,231,532 (29256902 8,952,315 11,898,920 2010 51,487,302 37,608,733 13,878,569 2011 64,824,364 48,099,046 16,725,318

Cost of goods Sold Gross Profit Distribution and selling expenses Administration expenses Operating profit Finance cost Other operating expenses Other operating income Profit before taxation taxation Profit after taxation Earnings per share

-3,538,284 -900,822 3,511,145 584,434 -442,914 65,959 2,549,756 -744,544 1,805,212 39.81

-3,890,352 -956,816 4,105,147 557,325 -1,382,138 61,800 2,227,484 -674,590 1,552,894 34.24

-5,238,488 -1,085,121 5,575,311 442,050 -1,091,149 144,145 4,186,257 -1,181,124 3,005,133 66.27

-5,709,078 -1,311,637 6,857,854 513,081 -819,084 170,491 5,696,180 -1,583,331 4,112,849 90.69

-6,862,113 -1,405,298 8,457,907 1,050,355 -1,064,233 159,545 65,202,864 -1,834,507 4,668,357 102.94

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Nestle Balance sheet

2007 Equity and liabilities Authorised capital Equity Non current liabilities Lease obligations Long term finances total Current liabilities Assets tangible Longterm loans and advances Current assets Inventory Total assets Working capital 2008 2009 2010 2011

75,000,000 75,000,000 75,000,000 75,000,000 75,000,000 4,111,705 4,388,847 4,426,955 5,581,873 7,612,416

119,602 4,028,700 5,758,347 5,978,522

177,582 5,139,875 6,988,758 5,306,571

118,275 4,210,750 6,076,895 8,083,130

55,415 13,690 5,573,750 7,848,050 7,563,787 10,778,988 9,806,572 16,788,455

10,045,611 10,846,774 11,615,830 14,447,083 21,601,089 80,670 98,544 113,490 125,674 161,982 5,623,823 5,684,078 6,845,528 8,352,923 13,395,017 2,393,306 2,488,573 3,895,038 4,602,019 7,064,170 15,750,104 16,629,396 18,574,848 22,925,680 35,158,088 -354,699 377,507 -1,237,602 -1,453,649 -3,393,438

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Tops Income statement

2007 Turnover Cost of sales Gross profit Distribution cost Administrative expenses Finance cost Operating profit Other expenses Other operating Income Net profit before Taxation Tax Net profit after tax 1285181 -3206849 346725 120966 102365 707 122687 26311 15197 2008 1713574 -1206849 506725 120966 102365 707 282687 26311 15197 2009 2220715 -15911385 629330 159907 112989 4466 351968 21379 35308 2010 2578533 -1747741 830792 177976 149906 2507 500403 37661 61839 2011 3349788 -2216880 1132908 247735 130892 4350 749931 56026 90781

111573 125022 -13449

340854 125022 215832

296616 100771 195745

524581 -209252 315329

784686 -264765 519921

84

Tops Balance Sheet

2007 Fixed Assets Property,Plant and equipment investment property Long term advances Long term deposits 2008 2009 2010 2011

743801 4092 2438 750331

2946626 78207 631 2704 3028168

2946626 78207 631 2704 3028168

2997183 96405 1546 3480 3098614

3074902 111149 4694 14773 3205518

Current assets stores and spares stock in trade trade debts advances short term prepayments interet accured Securities purchased Investment at fair value advance income tax Cash at bank Total assets Share capital and reserves Share capital Capital reserve Contingency reserve General reserve Reveneu reserve Surpless on revaluation Equity Non current liabilities Liabilities subject for lease Deffered liabilities Deffered taxes

62247 347640 43680 63473 3534 584 182050 4288 151262 858938 1609269

102474 503415 86697 17778 4295 50 69083 25744 222140 1031676 4059844

102474 503415 86697 17778 4295 50 69083 25744 222140 1031676 4059844

72384 595396 38885 18936 5545 2087 3787 74704 552986 1364710 4463324

82235 799342 55285 15343 10752 4506 3836 84132 696290 1751721 4957239

108440 30681 20000 695829 322227 1177177

131213 30681 20000 327042 668388 2358432 3535756

131213 30681 20000 327042 668388 2358432 3535756

144334 30681 20000 327042 916729 2346692 3785478

173201 30681 20000 327042 1347693 2334615 4233232

3440 16202 74865

1072 15769 137529

1072 15769 137529

1633 23713 150156

3258 29619 137616

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Current liabilities Liabilities subject to lease trade and other payables Short term running finance Total liabilities Working capital

1887 331544 4154 337585 1609269 521353

2122 367596 369718 4059844 661958

2122 367596 369718 4059844 661958

1050 465750 35544 502344 4463324 862366

1996 536097 15421 553514 4957239 1198207

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Shezan
2007 Profitability gross profit margin op profit margin net profit margin ROA ROE return on comon equity earning per share liquidity ratios current ratio quick ratio inventory to net working capital levrage ratios debt to assets debt to equity long teerm debt to equtiy times interest earned fixed charge coverage activity ratios inventory turnover 3.56 3.58 3.61 4.19 3.64 0.44 0.79 0.09 20.91 0.44 0.78 0.07 34.21 0.43 0.74 0.06 25.55 0.48 0.91 0.11 10.21 0.51 1.04 0.08 6.22 1.91 0.51 1.53 1.93 0.60 1.43 1.97 0.54 1.47 1.75 0.51 1.65 1.64 0.38 1.96 31.50 12.44 6.47 12.56 22.49 22.49 2.81 2008 31.48 11.23 6.53 12.32 21.88 21.88 2.69 2009 27.64 6.12 3.76 7.57 13.17 13.17 1.71 2010 26.54 5.19 3.03 6.59 12.59 12.59 1.78 2011 25.85 5.94 3.33 7.23 14.75 14.75 2.34

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fixed asset turnover total asset turnover

7.65 1.94

8.08 1.89

8.77 2.01

8.25 2.18

9.73 2.17

average collection period

10.03

11.07

11.54

14.00

14.32

Nestle
2007 Profitability gross profit margin op profit margin net profit margin ROA ROE return on comon equity earning per share liquidity ratios current ratio quick ratio inventory to net working capital levrage ratios debt to assets debt to equity 0.26 0.98 0.31 1.17 0.23 0.95 0.24 1.00 0.22 1.03 0.94 0.54 -6.75 1.07 0.60 6.59 0.85 0.37 -3.15 0.85 0.38 -3.17 0.80 0.38 -2.08 28 12 9 11.46 2.41 2.41 39.81 2008 26 12 7 9.34 2.07 2.07 34.24 2009 29 14 10 16.18 4.01 4.01 66.27 2010 27 13 11 17.94 5.48 5.48 90.69 2011 26 13 10 13.28 6.22 6.22 102.94

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long teerm debt to equtiy times interest earned fixed charge coverage activity ratios inventory turnover fixed asset turnover total asset turnover

0.02 6.01 5.16

0.02 7.37 5.83

0.03 12.61 10.16

0.02 13.37 12.16

0.02 8.05 7.96

9.4 2.81 1.79

10.3 3.15 2.06

9.2 3.54 2.22

8.9 3.56 2.25

8.2 3.00 1.84

average collection period

14.25

15.22

16.87

18.64

19.01

Tops
2007 Profitability gross profit margin op profit margin net profit margin ROA ROE return on comon equity earning per share 26.98 9.55 -1.05 -0.84 -1.14 -1.14 12.20 2008 29.57 16.50 12.60 5.32 6.10 6.10 14.93 2009 28.34 15.85 8.81 4.82 5.54 5.54 16.45 2010 32.22 19.41 12.23 7.06 8.33 8.33 18.21 2011 33.82 22.39 15.52 10.49 12.28 12.28 30.02

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liquidity ratios current ratio quick ratio inventory to net working capital levrage ratios debt to assets debt to equity long teerm debt to equtiy times interest earned fixed charge coverage activity ratios inventory turnover fixed asset turnover total asset turnover 3.70 1.71 0.80 3.40 0.57 0.42 4.41 0.73 0.55 4.33 0.83 0.58 4.19 1.05 0.68 0.21 0.29 0.29 157.81 43.74 0.03 0.03 0.03 482.11 121.24 0.03 0.03 0.03 66.42 45.35 0.04 0.04 0.04 209.25 147.77 0.07 0.08 0.08 180.39 123.97 2.54 1.51 0.67 2.79 1.43 0.76 2.79 1.43 0.76 2.72 1.53 0.69 3.16 1.72 0.67

average collection period

12.41

18.47

14.25

5.50

6.02

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