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HOTEL INDUSTRY – AN OVERVIEW

In any country, the hospitality industry is inextricably linked with its overall economic

prosperity and resourcefulness. In other words the developmental level of the hospitality

industry could well be considered the index of its all round growth. Trade and commerce

too would be unable to thrive were there not adequate facilities and provisions for the

overseas traders and business people. Hospitality industry is also directly proportionate to

the inbound tourism to any particular country. The various countries of the world like

Egypt, China, Mexico, Pakistan and Nepal etc., that were the seats of ancient

civilizations, are till date the most favorite destinations of the tourists from all corners of

the globe. Hence each of them has vast potentials for developing both tourism and

hospitality industries. In this era of increasing globalization, hospitality industry or hotel

management is assuming greater significance and fast evolving as a lucrative career

option. The history of hotel industry is as rich as the history of civilization itself. From

the moment that cities and towns began to spring up, the need for lodging for travelers

was obvious.

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COMPANY & PRODUCT PROFILE

COMPANY PROFILE:

AVARI HOTEL LAHORE - HISTORY TIMELINE

In 1905 Two Italian gentlemen, Falettis and Nedous, start building a hotel in Lahore.

Completed in 1908, named the Nedous, this hotel is not only in the heart of History itself,

as it belongs to the daughter of Mr.Nedous, who marries Sheikh Abdullah, the late

president of post partition Kashmir. In 1947, after the independence of Pakistan, Nedous

was not run as hotel, but was turned into numerous small offices. In 1961, after Nedous

was auctioned to the late Mr.Dinshaw Avari and after extensive renovations, Park Luxury

Hotel came into existence in 1962 with 80 rooms,50 of which were suites, Park luxury

boasted of 5 dining halls, a lobby, card-room, billiard rooms, garages and 150 rooms for

servants. Each of the 50 suites, besides a huge bath offered attached dressing and sitting

rooms and a parking garage! ”Vedera” (rich landlord) and businessmen were the usual

clients. Year 1970 saw the end of this grandeur as this building was demolished

according to a contract with the government. The foundation stone for the present hotel

was laid on September 23rd 1973 and was inaugurated on January 3rd 1978, in

association with Hilton international for 10 year. Hilton International Lahore operated as

on of the only two five-star Hotels in Lahore. On October 1st 1988, this contract came to

an end the management of Hilton International Lahore reverted back to the owners, Avari

Hotels limited. The Avari hotels in Lahore and Karachi now portray a new corporate logo

with the name Avari Lahore and Avari Tower Karachi. (Annex 1)

AVARI GROUP OF COMPANIES

Avari Family own and manage following hotels Pakistan as well as in Dubai & Canada:

Avari Lahore.

Beach Luxury Karachi.

Avari tower (Karachi).

Islamabad (Under construction).

Avari Dubai (UAE)

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Ramada Toronto ( Canada)

Moreover Avari Family also owns following companies operating in various sectors in

Pakistan:

Spencer & company (Pakistan) limited

Beach Brewery (Pvt.) Limited

Avari Travel Agencies (Pvt.) Limited

PRODUCT PROFILE

The complete Product/Service range of Avari is described bellow:

1. Rooms

There are 186 Deluxe guest rooms, including 12 Executive suites, 3 Large Deluxe

suites, 6 Jacuzzi rooms, and a no-smoking wing. The services provided in rooms are:

- Individually controlled air conditioning.

- 24 hour room service.

- Two phones and a large business writing desk.

- 20 satellite channels on remote control TV sets.

- Fully equipped business center

- Modern amenities.

- Complimentary morning tea/coffee service.

2. The Avari Club

Exclusive rooms at the club floor with express check-in, check-out with an added

measure of privacy and attentive guest service.

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3. Restaurants

Avari is providing different kind of restaurants which are specialized in providing

high quality of food and variety according to the different tastes of the customers.

- Kims Local and continental cuisine 130 seats

- Fort Grill Local and continental cuisine 110 seats

- Fujiyama Authentic Japanese specialties 126 seats

- Dynasty Chinese cuisines (“Sichuan”) 120 seats

- The Tolington Pakistani BBQ specialties 200 seats

- La patisserie Fast food and bakery 20 seats

- Samovar Snacks/Traditional afternoon tea 40 seats

4. Recreational Facilities

Avari Lahore is providing recreational facilities like temperature controlled

swimming pool, health club with gymnasium, massage and steam bath. Moreover;

jogging track, badminton court, Volley ball, Golf practice net, three championship

golf courses, Horse riding and Polo ground nearby are also provided to its valued

guests.

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5. Guest Services

Following are the services provided to the guest that stay in Avari Lahore.

- Non Smoking Rooms

- Hair & Beauty Saloon

- Suites

- Major Credit Cards

accepted

- 1 IDD Phones in each

room

- Car Rental

- In-Room Fax in

Penthouse Suites

- Baby Cot / Baby Sitting

- Voice Mail Facility

- Currency Exchange

- Satellite TV

- Internet & Email Services

- 24 Hours Room Service

- Gift Shops

- In-room complimentary

Tea/Coffee

- Laundry & Dry Cleaning

- Valet Parking

- Complimentary Airport

Shuttle

- Private Meeting Rooms

- Business Centre

- Sight Seeing

Arrangements

- Contemporary Amenities

- Outdoor Swimming Pool

- Airlines Sales Office

- Health Club /

Gymnasium / Massage

- Jacuzzi / Sauna / Steam

Bath

- Doctor on Call

- Tennis & Golf Courts /

Scuba Diving Nearby

- E-Rooms (Computer,

printer & DSL

connection)

- Car Parking

6. Conference, Banquet & Meeting facilities.

In order to meet the need of business, educational and ceremonial requirements , Avari

Lahore has provided state of the art Audio and Visual equipments in its halls. A

professional team is also available to handle details during official/non official meetings,

international conferences or corporate board meetings.

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THE STRUCTURE OF EXTERNAL ENVIRONMENT

Macro Environment

Economic environment

In any country, the hospitality industry is inextricably linked with its overall economic

prosperity and resourcefulness. In other words the developmental level of the hospitality

industry could well be considered the index of its all round growth. Pakistan’s economy

has changed a lot during few years and it has affected Avari’s business as well. Our

economy is growing but due to inflation rate, people’s purchasing power has decreased

and it has decreased the Avari’s sales as well. People are becoming uncertain about the

future and are spending less which in result has made the profits to decline.

Political Environment

As the changing political situations in Pakistan have affected the entire industry it also

has decreased the business for Avari. Because of this political instability people from

abroad are avoiding from coming Pakistan. Terrorism and suicide attacks are a major

cause of less business as well as destroying the image of our country. Investors don’t

consider Pakistan a safe place for their investment, no foreign delegations as well as

tourism have also decreased in nut shall Avari is faced with decreased business.

Legal environment

Avari is operating according to the rules and regulations of government. A tax rate of

24.2% is paid. Avari also have Permit room which controls the sale of liquor to the non

Muslim holding liquor permit .But it also operates in accordance to the legal rules.

Social environment:

Social and cultural factors are one of the significant factors affecting a business of Avari.

It changes its strategies in accordance to the change in social environment. Basant festival

was one of the famous occasions celebrated in Lahore but because of the legal restrictions

this time it was not celebrated which resulted in reduced profit. But taking it a social

responsibility Avari made its policies accordingly. Talking about culture Avari has a

Lobby that portrays the old Mughal’s paintings which gives a snapshot of the splendid

past.

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Micro Environment

Customer:

Avari Hotel has segmented its customer in three categories

Foreigners 50%

Corporate Sector 30%

Walking customers/Companies 20%

Avari hotel has a competitive advantage that it has contracts with British and US

conciliates and there representatives stay at Avari during there visit in Pakistan. They are

a major portion of Avari’s customers that is fifty percent. Avari facilitates them by

providing pick and drop facility from the airport. During there stay they are served with

the international standers of facilities and comfort. Corporate sector and business

personals is the second bigger share of Avari’s customers. It includes those personals that

come to Lahore for their business purposes, meetings, seminars etc. Twenty percent of

the customers are named as walking customers. This percentage of people come to Avari

for food or for attending functions like weddings, birthday parties etc.

Competitors

Avari has a direct competition with Perl Continental Lahore .Avari is market challenger

to PC. As a challenger Avari uses the Frontal attack strategy in which it targets to mach

the competitors marketing efforts. Avari and PC share a sales comparison sheet including

the revenue and sales on the daily basis, which helps them to improve there strategies and

functions. But in some fields Avari is using Bypass attacks strategy as well. The

competitive situation prevailing in the market for Avari is Oligopoly because a few hotels

control the market almost entirely and the market share left by these giants can’t be

attractive for the new entrants. Avari is expecting to have its direct competitors; Grand

Hayyat which is going to come in operation in the next 4 years till then there is no direct

threat to Avari.

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Technological environment

As technology is considered to be one of the sources for creating competitive advantage

Avari is paying more emphasis to it. WiFi is being used inside the building and a new up

to date Software Micro Fidelio is installed for data entry. Business center is providing the

facility of computer and internet to the consumers for the purpose of checking mails,

international dialing and tele-fax.

MARKETING MIX (7 P’S)

Avari develops a complete marketing program to reach its consumers by using a

combination of seven tools; known as seven P’s which are as follows

Product

Price

Place

Promotion

People

Process

Physical Evidence

1. PRODUCT/ SERVICES

Now a day’s hotel industry is very much different from the one which existed in the past.

Previously hotels were providing a limited range of services like stay and food, but now

the needs have changed as well as have the services. The same change has affected Avari

and its offering more then the basics. Its offering a wide range of services to its customers

like:

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There are 186 deluxe guest rooms, including 12 executive suites, 3 large

deluxe suites, 6 Jacuzzi rooms, and a no smoking wing.

Individually controlled air conditioning.

24 hour room service.

Two phones and a large business writing desk.

20 satellite channels on remote control TV sets.

Fully equipped business center

Modern amenities.

Exclusive rooms at the club floor with express check-in, check-out with an

added measure of privacy and attentive guest service

Temperature controlled swimming pool, health club with gymnasium,

massage and steam bath, also available, jogging track, badminton court,

Volley ball and Golf practice net, three championship golf courses, Horse

riding and Polo ground nearby.

Conference, Banquet & Meeting facilities.

Restaurants

2. PRICE

Avari uses different prices for its different target markets. Price is a major component in

customer judgment of both product and company as Avari’s target market is focusing on

upper class so prices are high according to its competitor’s prices.

Banquets

This section works closely with guest in making arrangement for wedding, social

events, private and meetings. The banquet rooms are also equipped to handle

individual trade groups, conventions, and seminars. The main banquet halls and

their seating capacities are: -

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Khorshed mahal

The Khorshed Mahal is the main banquet hall of the Avari hotel has a capacity of

900 persons.

From 9:00am – 11:00pm Rs.135, 000/+Tax

From 9:00am – 01:00pm Rs. 80,000/+Tax

From 9:00am – 05:00pm Rs. 90,000/+Tax

From 7:00am – 11:00pm Rs. 90,000/+Tax

Dinshaw mahal

Dinshaw Mahal is the second larger hall of Avari hotel and has capacity of 750

persons.

From 9:00am – 11:00pm Rs. 100,000/+Tax

From 9:00am – 01:00pm Rs. 60,000/+Tax

From 9:00am – 05:00pm Rs. 85,000/+Tax

From 7:00am – 11:00pm Rs. 85,000/+Tax

Sutlej hall

Sutlej hall has the capacity to accommodate 750 persons.

From 9:00am – 11:00pm Rs. 80,000/+Tax

From 9:00am – 01:00pm Rs. 45,000/+Tax

From 9:00am – 05:00pm Rs. 50,000/+Tax

From 7:00am – 11:00pm Rs. 50,000/+Tax

Function rooms

From 9:00am – 11:00pm Rs. 90,000/+Tax

From 9:00am – 01:00pm Rs. 50,000/+Tax

From 9:00am – 05:00pm Rs. 55,000/+Tax

From 7:00am – 11:00pm Rs. 55,000/+Tax

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Moghul / Hunza room

From 9:00am – 09:00pm Rs. 20,000/+Tax

From 9:00am – 01:00pm Rs. 10,000/+Tax

From 9:00am – 05:00pm Rs. 20,000/+Tax

Board room:

From 9:00am – 09:00pm Rs. 20,000/+Tax

From 9:00am – 01:00pm Rs. 8,000/+Tax

From 9:00am – 05:00pm Rs. 10,000/+Tax

Avari lawns

From 9:00am – 11:00pm Rs. 200,000/+Tax

Rooms

Executive Club Rooms:

Single Rs. 34,000/- Double Rs. 41,500/-

Business Club Rooms:

Single Rs. 25,000/- Double Rs. 39,500/-

Deluxe Rooms:

Single Rs. 25,000/- Double Rs. 37,500/-

Junior Suite

Rs. 35,000/-

Shalimar Suite

Rs. 40,000/-

Shahi Suite

Rs. 43,000/-

Residential Suite

Rs. 45,000/-

Presidential suite

Rs. 55,000/-

(Rates are subject to government taxes at the current rate of 24.2%)

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3. PLACE

Avari is located in the heart of Lahore. Major cultural, commercial and tourist

attractions, bazaars with wonderful shopping opportunities enhance the importance of

its location. Its just 20 minutes drive from Lahore international Airport along the

famous “Mall” a tree lined avenue surrounded by parks and gardens.

4. PROMOTION

Avari is performing many functions in order to achieve its promotional targets .It has

a separate marketing department that takes the responsibility of making the customers

aware of the new and existing services. Avari emphasizes more on personal selling

but other tools like billboard, brochure are also used.

5. PEOPLE

The people who work in an organization are central to its success, because business

can only be conducted between human beings. Avari considers its employees as

assets which are the basic reason for its outstanding performance and growing

business. In order to enhance their efficiency training programs are conducted and

employees are empowered, which makes them capable of performing their duties in

better way. Avari has a formal organization hierarchy which helps to understand the

entire organization.

6. PROCESS

Process includes all the functions perform by Avari Lahore and process is well

defined with the help of this blue print diagram.

7. PHYSICAL EVIDENCE

Physical evidence can be a perfect way of creating competitive advantage. It includes

all the things that can be touched. In case of Avari its physical evidence include its

building, decor, facilities on demand, Swimming-pool, towels, pens, notepads,

sleepers, shopping bags, laundry, car facility, brochures etc the quality of all these

things matter a lot and portray the brand of Avari Lahore.

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Avari hotel uses its physical evidences in order to enhance its brand image. Recently

it has renovated its lobby in the theme of Great Mughals, which has helped it to

differentiate itself from the other hotels.

STARSAVARI

DOGS CASH COW

QUESTIONMARK

High Market Share Low

High

Market Growth

Low

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BCG MATRIX

It is used in order to get a snapshot of the business.

As Avari is growing and has a dominant market share .It falls in the category of stars.

Hotel industry in Pakistan is growing as well as the trend of hanging out. People are more

attracted in trying international foods (chine’s) of different flavors. Avari is capturing this

market share by offering different range of international foods like Japanese restaurant in

Avari is one of its kind in Lahore offering unique Japanese dishes along with this Avari

has Chine’s food as well.

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Market coverage strategies

Avari pays very much attention in choosing the right market because if it’s not performed

well it will result in lost opportunities and waste of resources. The market coverage

strategies followed by Avari are:

Product market concentration Here Avari Lahore is concentrating in its major

segment that is foreigners, because most of Avari

Lahore revenue comes under this segment.

Market Specialization Avari Lahore is capable of providing all the

necessities that are required by its target market,

whether they are foreigners, corporate customers or

walk in customers. Each segment has been provided

all the facilities required by them.

Product specialization Avari Lahore is providing a wide range of products

and services to its target customers, and the detail of

the products and services offers by Avari Lahore has

been explained earlier.

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7. CREATING COMPETITIVE ADVANTAGE: MISSION,

VISION, OBJECTIVES, SEGMENTATION, TARGETING,

POSITIONING & COMPETITIVE STRATEGIC DECISIONS

MISSION STATEMENT

“We Aim To Provide All Our Guests Outstanding Quality and Comfort with Genuine

Friendliness and Professional Warmth”

STANDARDS TO ACHIEVE MISSION BY

Unconditional Teamwork and communication.

Being fair with our Guests and with our colleagues.

Personal responsibility:

o For oneself.

o For Property.

Protecting assets

Identifying defects

For knowing the product

For making Guest complaints your own and recording.

OBJECTIVES OF AVARI

To provide high quality services at competitive market rates.

To achieve hospitality excellence.

To ensure the comfort of the wellbeing of the guests.

To provide a differentiated product

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SEGMENTATION

Avari Lahore has segmented its customers in to three categories that are

Foreigners

Corporate Sector

Walk in customers

Almost the entire revenue of Avari is coming through these sectors. Most of the profits

come from the first two segments and Avari is making it possible to provide all the

services of international level which their customer needs.

As far as foreigners are concern there are some services which are not provided to them

such as international level bar and casino as these two aspects are not legally allowed in

the surroundings of Pakistan but still Avari is trying to provide all the necessary services

to its foreign customers.

TARGETING

Avari Lahore is targeting on the first two categories of its customers that are foreigners

and corporate sectors and providing them the international level of facilities.

Targeting decisions

Segment size profit/unit sold Number of competitors

Large 50%

foreignersLarge Hotel

Large Pearl

continental & Holiday inn

Large 30% Corporate

Sector

Small events

Large Pearl

continental & Holiday inn

Small 20% walk in Large food

Large Pearl

continental & Holiday inn

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POSITIONING

Perceptual map of Avari hotel

Perceptual map shows that Avari hotel providing good quality and high prices as

compare with Pearl continental hotel. There are few other names in hotel industry in the

market which are doing well for customer care, while Avari hotel giving good quality

along with healthy environment. Avari Lahore is challenging to pearl continental hotel.

0.2 0.4 0.6 0.8 1.0 1.2 0.2 0.4 0.6 0.8 1.0 1.2 1.41.4 1.6 1.6

-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 --1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.20.4 -0.2

1.01.0

0.80.8

0.60.6

0.40.4

0.20.2

-0.2-0.2

-0.4-0.4

-0.6-0.6

-0.8-0.8

Good Quality

Poor Quality

High priceLow price

Avari

Holyday inn

Peal continental

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CORE COMPETENCIES

Avari’s core competencies include:

Lady Avari

It is aimed to facilitate single lady traveler providing with comfort privacy and security.

Rooms are looked after by lady staff.

Best Japanese food restaurants

Fujiyama the Japanese restaurant located on the second floor the only Japanese restaurant

in the city, now even more attractive and enjoyable with Chef Taka’s special menu

including imported seafood and authentic Japanese dishes. The chefs prepare dishes right

in front of the customer which indicates the best quality and hygienic food.

3 time winner of safest hotel

Avari has the credit of winning the safest hotel award since three years. it is a clear

indication of Avari’s excellent performance and service toward its customers.

Diplomat of US and UK embassy

Avari has been a diplomat with the US and UK embassies which consist of the biggest

segments of its customers.

Own garden (providing vegetables)

Avari owns a beautiful garden which not only provides a beautiful view but it as well

provides the seasonal vegetables to the kitchen.

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SWOT ANALYSIS OF AVARI

Strength

Quality of services.

Lady Avari, lounge only for business lady.

Quality of food.

Best japans food restaurants.

Security system.

Swimming pool.

Brand name.

Courteous and friendly staff.

Homely environment.

Way of handling customer complaints.

Big Lawns.

Avari hotels chains.

Weakness

Limited number of rooms.

Limited car parking.

Parking at your own risk write down which create a bad impression to customer.

No music function.

Old building.

Fail to establish a long term relation with external customers.

Lack of mass marketing.

Regular cocktail parties.

Unusable roof.

Lack of automation.

Too much paper work.

No setting arrangement for the candidates.

Poorly designed and furniture in all departments expect GM offices.

High turnover rate last four year.

Unhygienic food provided in employee cafeteria.

Low wages rates as compare to the other hotels.

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Limited bulge in entrance lounge customer feel difficulties when using their

laptop or charging their mobiles set.

Opportunity

Back lawns.

New property at Islamabad.

New food outlet.

Future renovations and extensions plan.

Implementation of new sales process.

Improved communication.

International Trade fair.

Loyalty Program.

Construct Avari hotel in GAWADER.

Threat

Pearl continental Hotel brand image and its coverage in Pakistan.

Pearl continental Hotel extensions.

Low rate Hotel and Guest houses.

New competition diver.

Political instability.

Poor country image due to terrorism.

Regular training of sale staff of competitor.

Large number of sale teams of competitors.

Low customer Loyalty.

City image as an expensive one.

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RECOMMENDATION FOR A SUTIABLE COURSE OF ACTION

Limited car parking

Avari has very limited amount of space available for the car parking. Customer face

problems when they have to park the cars especially when there are functions or other

occasions happening. There is a board saying “Parking at your own risk ” which creates a

bad impression on the customer as the security of the vehicles is the responsibility of the

hotel. They must have a basement for car parking purpose. Hertz (rent-a-Car) can shift

half of there cars to the air port and the hotel should do certain arrangements in order to

facilitate the increasing number of vehicles.

Old building

Hotel develops in 1978 but no improvement in physical structure till now. It is

management responsibility to change the physical location & bring some remarkable

changes like use a crystal elevator, build a shopping mall.

Department conditions

During my internship period I observe people feel very bad to see the condition of

Human resource department and they compare with the pearl continental hotel Human

resources department which creates a bad impression to general public.

Unusable roof

Avari Hotel Lahore has a big un-useful roof they can utilize and develop a new human

resources department with a proper setting arrangement and separate store room for the

data storage and have an orientation room and training room all these offices at one place.

Discriminations between contract and Avari employees

This is responsibility of the government to remove the concept of Contract employees it

create discrimination between employees and create a difference in benefits like Avari

employee get two bounce in a year as compare to CT employees get one bounce in a year

& twenty-eight annual leave for Avari employees and fourteen leave for Contractual

employees.

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Low wages

Low wages as compare to other hotels. That is the main reasons Avari turnover rates are

very high last four years. Government of Pakistan passes a law of minimum wages must

be four thousand per moth. It helps to reduce a turnover rates.

Vision statement

Vision determines the direction of change in an organization and in the individual.

“…there is no more powerful engine driving an organization toward excellence

and long range success than an attractive, worthwhile, and achievable vision of

the future, widely shared.”

Vision clearly distinguishes leadership from management.  As the citation from

Proverbs indicates, having a vision is essential to the welfare, even the life, of the

people.

Unhygienic food

Avari provide breakfast, lunch, and dinner facility to their employees with out any fee.

The quality of food provides in employees Cafeteria is very unhygienic because

employees are not happy with the menu and repetition is very often. Avari itself is

services provided and it is his responsibility to provide a quality of food to their

employees.

Lack of Automation

Half of their work are automated and rest of this are manually. They must have an

automat data entry but they mostly relay on papers work because they think they must

have a white and blacks written documents for the proof. Employees check-in and

employees check-out they use a card system some time it takes a time for check-in and

out. They must have a thump –scanning system for check-in and out purpose.

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CONCULSION

In nutshell it can be said that although Avari is operating on small scale but due to

its core competencies and brand image it is growing more rapidly as compared to

the rest of the industry. If Avari follows its expansion and growth it will be able to

gain higher revenues. Its departments are contributing to its profitability. If Avari

ads more facilities and services it can catch more market share.

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REFERENCES

Pictures [online], available, www.avari.com, 15.05,2008

Mr. Raheel Siddique Sales Manager Avari

Miss. Aysha Malik Brand Manager Avari