Strategic Analysis of Shan Food Industries

Strategic Analysis of Shan Foods

Table of Contents Chapter No: 1 – Introduction .......................................................................................................... 5

1 Introduction of Project ................................................................................................................. 5

1.1 Introduction to Food Industry of Pakistan ................................................................................ 5

1.1.1 Phases of Food Industry of Pakistan .................................................................................. 6

1.1.2 Key Players of Pakistan Food Industry .............................................................................. 8

1.2 Introduction of Food Spices Industry ..................................................................................... 13

1.2.1 Production Process of Spices Industries .......................................................................... 19

1.3 Introduction of Shan Food Industries ..................................................................................... 21

1.3.1 History of Shan Foods ..................................................................................................... 23

1.3.2 Vision Statement of Shan Food Industries....................................................................... 24

1.3.3 Mission Statement of Shan Food Industries .................................................................... 24

1.3.4 Organizational Hierarchy of Shan Food Industries ......................................................... 25

1.3.5 Business Objectives of Shan Food Industries .................................................................. 25

1.3.6 Product Portfolio of Shan Food Industries....................................................................... 26

Chapter No: 2 – Strategic Analysis ............................................................................................... 29

2. Strategic Analysis ..................................................................................................................... 29

2.1 Tools of Strategic Analysis ................................................................................................. 29

2.2 SWOT Analysis of Shan Food Industries ............................................................................... 52

2.2.1 Strengths .......................................................................................................................... 52

2.2.2 Weaknesses ...................................................................................................................... 53

2.2.3 Opportunities.................................................................................................................... 54

2.2.4 Threats.............................................................................................................................. 56

2.3 Michael Porter’s 5 Forces Model ............................................................................................ 57

2.4 PEST Analysis of Shan Food Industries ................................................................................. 58


(Muhammad Abubakr)

2.5 Internal Factor Evaluation of Shan Food Industries ............................................................... 60

2.5.1 Interpretation of Internal Factors Evaluation ................................................................... 61

2.5.2 Interpretation of Total Weighted Score ........................................................................... 64

2.6 External Factor Evaluation of Shan Food Industries .............................................................. 64

2.6.1 Interpretation of External Factors Evaluation .................................................................. 65


2.7 Competitive Profile Matrix of Shan Food Industries .............................................................. 68

2.7.1 Interpretation of Competitive Profile Matrix Factors ...................................................... 69


2.8 Grand Strategy Matrix of Shan Food Industries ..................................................................... 78

2.8.1 Interpretation of Grand Strategy Matrix of Shan Food Industries ................................... 79

2.9 Boston Consulting Group (BCG)Matrix of Shan Food Industries ......................................... 80

2.9.1 Interpretation of Boston Consulting Group Matrix of Shan Food Industries .................. 81

2.10 Internal External Matrix of Shan Food Industries ................................................................ 81

2.10.1 Interpretation of Internal External Matrix of Shan Food Industries .............................. 83

2.11 Strategic Position and Action Evaluation (SPACE) Matrix ................................................. 83

2.11.1 Interpretation of Strategic Planning and Action Evaluation Matrix of Shan Food

Industries ................................................................................................................................... 86

2.12 SWOT Matrix of Shan Food Industries ................................................................................ 86

2.13 Quantitative Strategic Planning Matrix (QSPM) of Shan Foods .......................................... 88

2.13.1 Interpretation of QSPM Matrix of Shan Food Industries .............................................. 91

Chapter No: 3 – Conclusion .......................................................................................................... 92

3.1 Conclusion .............................................................................................................................. 92

3.2 Recommendation .................................................................................................................... 94


(Muhammad Abubakr)

Table of Figures

Figure 1 - Food Trends in Pakistan ................................................................................................. 6

Figure 2 - Market Share of Engro Foods Limited........................................................................... 9

Figure 3 - Market Share of Mitchells Fruits Farm Limited .......................................................... 10

Figure 4 - Market Share of Nestle Pakistan Limited .................................................................... 11

Figure 5 - Market Share of National Foods .................................................................................. 11

Figure 6 - Market Share of Murree Brewery Company Limited .................................................. 12

Figure 7 - Market Share of Unilever Pakistan Foods Limited ...................................................... 13

Figure 8 - Preference of Food Taste ............................................................................................. 14

Figure 9 - Spices Imports and Exports .......................................................................................... 15

Figure 10 - Estimated Market Share of Spices ............................................................................. 16

Figure 11 - Estimated Market Share of Branded Spices Companies ............................................ 17

Figure 12 - Non-Branded Spice Industry Share ............................................................................ 18

Figure 13 - Production Process of Spices Industry ....................................................................... 19

Figure 14 - Estimated Market Share of Shan Food Industries ...................................................... 23

Figure 15 - Quality and Taste Rating ............................................................................................ 70

Figure 16 - State of Art Technology Ratings ................................................................................ 71

Figure 17 - Brand Loyalty Ratings ............................................................................................... 71

Figure 18 - Online Marketing Ratings .......................................................................................... 72

Figure 19 - Strict Credit Policy Ratings ........................................................................................ 73

Figure 20 - Advertising Campaigns Ratings ................................................................................. 73

Figure 21 - Global Expansion Ratings .......................................................................................... 74

Figure 22 - Increasing Trend of Women's employment in Pakistan ............................................. 75

Figure 23 - Unexploited Segments outside the Country ............................................................... 76

Figure 24 - New Competitors Ratings .......................................................................................... 76

Figure 25 - Change in Government Regulations Ratings ............................................................. 77

Figure 26 - High Rate of Inflation within Pakistan....................................................................... 78


(Muhammad Abubakr)

Tables

Table 1 - Spices Imports and Exports ........................................................................................... 15

Table 2 - Classification of Spices Industry of Pakistan ................................................................ 16

Table 3 - Market Share of Branded Spices ................................................................................... 17


(Muhammad Abubakr)

Chapter No: 1 – Introduction

1 Introduction of Project

This Project is based on the key player of Spices Industry of Pakistan which is Shan Food

Industries. In this project we have applied different tools of Strategic Analysis through which we

have analyzed Shan Food Industries current internal and external position. Based on Shan Food

Industries current internal and external position we have suggested them different strategies

which will help them in prospering in Food Industry of Pakistan. The recommended strategies

will also help Shan Food Industries in capturing more market share, through this gain they can

even achieve the status of a market leader in Spices Food Industry of Pakistan.

1.1 Introduction to Food Industry of Pakistan

Pakistan the country which is renowned as an agricultural country, contributing its 70%

population to agricultural sector. The remaining 30% population contributes to different sectors,

but within this 30%, 20% belongs to the Food Industry. Pakistan’s current population is

approximately around 216.5 million, out of which 20% are contributing towards food industry in

the form of employment. The other 70% as it is already stated belong to agriculture sector

working as a farmer, fishermen, cattle men, etc.

Pakistan’s culture is made up many cultures mainly due to the invaders that came to Pakistan.

The question arises here, that what does culture has to do with Food. Talking about Pakistan, in

our culture food plays a vital role, in the world we are famous for our traditions and from these

traditions one key role is played by food. People around world are familiar with our food, they

love eating our food due to different taste and spices that we add.

Moving towards the Food Industry of Pakistan, it plays a vital role as it contributes towards the

economy of Pakistan. Pakistan Food Industry is very huge in size and the interesting thing is that

comprises of International Food and Local Food. Going back towards the point that how did

International Food influence Pakistan Food Industry. The answer to this refers towards the

invaders, who came to Pakistan after independence and later on. People of Pakistan as they

prefer eating food and consider it as their basic tradition, they prefer international food or so

called as fast food, but if we go through statistics the results are different. Talking about Local


(Muhammad Abubakr)

food it is highly influenced by the Indo-Pak Culture, our taste and the taste of India is almost

same even after 68 years.

Pakistan Food Industry compromises of many International Food Chains and Local restaurants

which are continuously providing quality taste and food to Pakistani people. Pakistan Food

Industry is classified under a major head on Karachi Stock Exchange which is named as “Food &

Personal Care Products”. There are total 20 companies which are listed under this head. People

of Pakistan still prefer Local Food more as compared to Fast Food, According to Google Trend

the comparison between Fast food and Local food for the past 10 years shows the following

result in figure 1 below;

Figure 1 - Food Trends in Pakistan

1.1.1 Phases of Food Industry of Pakistan

The Food Industry of Pakistan revolves around four phases and each phase has its own

importance. The four phases are;

Production

Process

Transportation

Distribution


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Production

The first phase of Food Industry is the production phase. In production phase things are

very basic, 70% of Pakistan’s population is involved in the food production. People of

Pakistan living in villages plant seeds to grow plants, fruits, vegetables, etc. The farmers

also grow things that are related to food. People living in villages also grow animals that

are necessarily required for the food industry, as it is the Islamic country only Halal

animals are fed and grown by the farmers.

In the production phase raw material is made, most of the raw material required for the

food industry comes from the villages of Pakistan. People living in the villages consider

this as the only source of income for them. The production of raw material in the villages

is mostly done on farms and ranches.

In Pakistan, production of raw material is done in every village, whether the village is

located in the province of Punjab, Sindh, NWFP, Balochistan and Kyhber Pakhtun

Khawa. Every province has its own specialization depending upon the environment they

are dealing in.

Process

The second phase of Pakistan Food Industry has a lot of importance, this phase is called

as processing phase. In processing phase the raw material like the plants, vegetables or

fruit that have been grown or the animals that have been grown are transformed into

finished form. The finished form that would directly meet the need of consumers or

indirectly through restaurants.

The processing process is not as simple as it looks, it is very complex. For every raw

material produced it has different processing way. If we talk about the plants, fruits and

vegetables it has a different way of processing and if we talk about animals it has

different way of processing.

In Pakistan, the processing of food is either done by the people belonging to villages or it

is one by International Food Chains through their local suppliers. Local suppliers buy

from these villagers and sell them to the International Food Chains for processing.


(Muhammad Abubakr)

Transportation

The third phase of Pakistan Food Industry is transportation. Transportation in any

industry has so much importance because it is said that producing the raw material may

not satisfy the consumer until and unless it is not delivered to him, but before delivering

the product it must be transferred near to consumer.

International Food Chains and other local suppliers contact the people who have

produced raw material and ask them to transport it, this is one way of doing it. The other

way is that companies themselves transport raw material or processed raw material to

their warehouses.

Seeing the current trend in Pakistan people they do not transport anything, local suppliers

and International Food Chains have done contracts with them, that they will do the

process of transportation themselves.

Distribution

The fourth phase of Pakistan Food Industry is called as distribution this phase is

interlinked with the third phase names as transportation. The processed raw material is of

no use if not being transported properly or distributed. Once the transportation is done,

which means processed raw material has reached the warehouses, the next thing is to

supply it within market to meet the need of consumers.

Distribution can be done in many ways either it can be provided to the market directly or

it can be provided indirectly.

Going through the overview of Food Industry phases, one thing is clear that it includes everyone

from farmers to the distributors. The important thing is that if one of the phase is not working

properly or is having an issue it may disturb the whole cycle.

1.1.2 Key Players of Pakistan Food Industry

Pakistan Food Industry consists of a lot of contributors, from local companies to International

Companies. All of the contributors are striving hard to provide quality food products to the end

consumers.


(Muhammad Abubakr)

We will focus mainly on those contributors which are listed on Karachi Stock Exchange. Some

of the major contributors which are taken from the list are;

Engro Foods Limited

Mitchells Fruits Farm Limited

Nestle Pakistan Limited

National Foods

Murree Brewery Company Limited

Unilever Pakistan Foods Limited

For having a better knowledge about the contributors towards the food industry we must have a

bit of knowledge about each of them.

Engro Foods Limited

Engro Foods is considered as the major contributor due to its diverse offering of

products to the consumers. Engro foods is an owned subsidiary which is involved in

the process of manufacturing, processing and distribution of products, like dairy

products, desserts and drinks. Engro Foods has currently established so many brands

in the market like, Olper, Omore, Tarang and Dairy Omung. Engro Foods Limited

currently holds 71% share of the Food Industry as shown in the figure 2 below;

Figure 2 - Market Share of Engro Foods Limited1

1 Market Share of Engro Foods Limited according to SMEDA Pakistan Study 2014


(Muhammad Abubakr)

Mitchells Fruits Farm Limited

Mitchells Fruits Farm Limited is another company that is considered as a major

contributor towards the Food Industry of Pakistan. Mitchells was established in 1933

and since then its providing numerous number of products to the Pakistani market in

the form of grocery products and confectionary products. Mitchells Fruits Farm

Limited currently offers 140 products subbed under 9 different categories. Mitchells

major products includes, Mitchells Tomato Ketchup, Mitchells Fruit Jams, Mitchells

Pickle (Achar). Mitchells Fruits Farm Limited currently holds 1% share of the Food

Industry as shown in the figure 3 below;

Figure 3 - Market Share of Mitchells Fruits Farm Limited2

Nestle Pakistan Limited

The third contributor towards Food Industry of Pakistan is Nestle Pakistan Limited, a

renowned name which everyone is familiar with. Nestle Pakistan is operating in

Pakistan since 1988 and from then it has offered so many products which have almost

become a need for everyone. Nestle Pakistan main products include Mineral Water,

Dairy Products, Maggie Noodles, Nescafe, etc. All of these products possess high

quality. Currently Nestle Pakistan Limited holds 4% share of the Food Industry as

shown in the figure 4 below;

2 Market Share of Mitchells Fruits Farms Limited according to SMEDA Pakistan Study 2014


(Muhammad Abubakr)

Figure 4 - Market Share of Nestle Pakistan Limited3

National Foods

The fourth contributor towards Food Industry of Pakistan is National Foods. National

Foods began its journey in 1970 and from then on it is progressing. National Foods

offers numerous products but it is mostly recognized due to its spices, jams and

pickles (Achar). Along with these products National foods also offers variety of

products to the Pakistani market like, Ketchup, Rice, Snacks, Salt, Desserts, etc.

Currently National Foods holds 9% share of the Food Industry as shown in the figure

5 below;

Figure 5 - Market Share of National Foods4

3 Market Share of Nestle Pakistan Limited according to SMEDA Pakistan Study 2014


(Muhammad Abubakr)

Murree Brewery Company Limited

The fifth contributor towards the Pakistan Food Industry is Murree Brewery

Company Limited, it was established in 1860 and it is recognized as the oldest

serving company to Food Industry of Pakistan. Murree Brewery offers beverages to

the Pakistani market, it provides wide variety of beers, liquor and non-alcoholic

beers. Murree Brewery is recognized mostly due to Malt drink of different flavors and

juices. Currently Murree Brewery holds 2% share of the Food Industry as shown in

the figure 6 below;

Figure 6 - Market Share of Murree Brewery Company Limited5

Unilever Pakistan Foods Limited

The Fifth and the last contributor discussed of Pakistan Foods Industry is Unilever

Pakistan Foods Limited. Unilever is ranked as the world largest supplier of Fast

Moving Consumer Goods (FMCG’s). Unilever Pakistan Foods Limited was

established in 2007 when it acquired Rafhan Best Foods Limited. Unilever in the

section of Food provides a numerous number of products to the Pakistani market, but

its main offerings are Energile, Knor, Rafhan Custards, etc. Currently Unilever

Pakistan Foods Limited holds 1% share of the Food Industry as shown in the figure 7

below;

4 Market Share of National Foods Limited according to SMEDA Pakistan Study 2014

5 Market Share of Murree Brewery Company Limited according to SMEDA Pakistan Study 2014


(Muhammad Abubakr)

Figure 7 - Market Share of Unilever Pakistan Foods Limited6

1.2 Introduction of Food Spices Industry

Pakistani Food is famous for its taste around the world, due to the addition of special spices,

which enhance the taste of food mostly making it spicy. The Food Industry all over the world

represents a small niche, named as spices. Spices now-a-days have a lot of importance due to

changes in the trends. People around the world and especially in Pakistan prefer more spicy

Foods.

The Spices not just only make the food spicy but it also takes the food cuisine to a new level.

According to Gilani Research Foundation as shown in Figure 8 below, 27% people living in

Pakistan prefer eating spicy foods, 23% people prefer eating non-spicy foods and remaining 50%

people of Pakistan were neutral on this matter.

6 Market Share of Unilever Pakistan Foods Limited according to SMEDA Pakistan Study 2014


(Muhammad Abubakr)

Figure 8 - Preference of Food Taste7

Spices all over the world are made through a wide range of plants, these plants include herbs,

spices seeds, dehydrated vegetables and spice blends. According to an American Research

Institute related to Spices, it quoted that “Spices are considered as dry plants which are now-a-

days used mostly for the seasoning purpose”.

In Pakistan spices are used for enlightening the taste of traditional cuisine. The Food spices

industry of Pakistan is categorized in two dimensions, branded and non-branded industry.

Branded Spice Industry means that industry in which the spices sold are branded and they do

come under a company or a brand, whereas unbranded spice industry means the industry in

which the spices are openly sold in packets, there is no name means no affiliation or no

recognition.

In Pakistan, According to Small and Medium Enterprise Development Authority (SMEDA)

currently there are 8,500 spices and salt grinding units that are working. The figure of 8,500 have

grown over years, in 2010 the unit’s operating in Pakistan were almost 7,000.

Out of 8,500 units, 55% spices and salt grinding units are operating in rural areas of Pakistan

whereas the rest 45% of belong to the urban areas. Interestingly, as the technology is being

7 Preference of Food Taste according to Gilani Research Foundation


(Muhammad Abubakr)

modernized around the world and in Pakistan, like newly equipped operating units are being

imported from the world. It is helping the Spices Industry towards growth and even the trend

which was first towards the rural areas is shifting towards urban areas.

The Spices Industry of Pakistan not only contributes towards the local market but it also

contributes towards Pakistan Economy in the form of Imports and Exports. Even though spices

are considered as a small portion of imports and exports but the numbers are increasing as years

are passing. According to State Bank of Pakistan, following are the figures of Import and Export

of Spices shown in table 1;

Table 1 - Spices Imports and Exports8

Year

Spices

Exports (in

Thousand

US$Dollar)

Spices

Imports (in

Thousand

US$Dollar)

2010 26,582 78,414

2011 36,203 69,208

2012 36,718 74,403

2013 44,537 65,550

2014 63,771 79,489

Figure 9 - Spices Imports and Exports

8 Spices Imports and Exports Data according to State Bank Of Pakistan Publication


(Muhammad Abubakr)

According to Small and Medium Enterprises Development Authority (SMEDA), statistics

related to Branded Spices Industry and Non-Branded Spices Industry are shown in table 2;

Table 2 - Classification of Spices Industry of Pakistan

Spices Business

Volume

Estimated

Market Share

Branded and Packed Rs. 14 Billion 45%

Non-Branded (Loose Spices) Rs 16-18 Billion 55%

Figure 10 - Estimated Market Share of Spices9

Pakistan’s Branded and Packed Industry currently holds 45% of Spice Industry, of this 45% the

major portion is achieved through the urban areas. Urban areas where people prefer more

towards the buying of packed spices rather than loose spices.

In the Branded industry there are some major players which are recognized by the market, they

are;

National Foods

Shan Foods

Mehran Foods

Along with them there are even other players which are considered as second priority by the

people of Pakistan, the players are;

9 Estimated Market Share of Spices according to SMEDA Pakistan


(Muhammad Abubakr)

Chef’s Pride

Habib Foods

Zaiqa Foods

Ahmed Foods

The above mentioned names are those names which may be found in the market most often.

Moving towards their prices the branded spices are expensive than the loose spices, they are 30%

more expensive.

The Market share of these major players in Pakistan Branded Industry of Spices are shown

below in Table 3;

Table 3 - Market Share of Branded Spices10

Brands National

Foods

Shaan

Foods

Mehran

Foods

Other

Market

Share

45% 40% 10% 5%

Figure 11 - Estimated Market Share of Branded Spices Companies

National Foods is currently leading the market with a share of 45% as shown above in Figure 11,

this is related to the branded and packed spice industry. National Foods is operating in Pakistan

since 1970. It has created a lot of brand loyalty in spices industry by providing its customers with

10

Market Share of Branded Spices according to SMEDA Pakistan


(Muhammad Abubakr)

high class and hygienic taste. National Foods was mainly responsible for changing the trend,

they changed the mind of consumers that packed spices are much better as compared to Loose

Spices.

Mehran Foods is another name in the branded spices industry which is operating since 1975.

Mehran Foods currently has a market share of 15% and it is growing. The reason behind their

growth is the taste which they have been providing to their customers, Mehran Foods has also

created their brand loyalty which considered as very important in the field of spices.

The Major players of the branded industry are even operating at International level, they have

created repute of Pakistan Spice Industry all over the world by providing quality taste

Pakistan’s Unbranded Spice Industry or in other words industry of Loose Spices currently holds

55% share, which is greater than the Branded Spice Industry. According to Small and Medium

Enterprises Development Authority (SMEDA) in 2011 the market share of Loose Spices was

60% whereas in 2014 it has decreased to 55% as shown in figure 12 below. This change shows

that Loose Spices industry in Pakistan is decreasing.

Figure 12 - Non-Branded Spice Industry Share

Loose Spices Industry is the industry which does not have any kind of affiliation with major

brands. Spices in this industry are independently sold by businessmen. To work in this industry

you do not need to have any kind of documentation and this was the main reason behind the


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progress of loose spices, but later on due to changes by Government in their regulations the trend

started decreasing. Along with this reason another major reason is the taste and brand loyalty

which is being created by major players of branded industry.

These Non-branded or Loose spices companies or individuals setup were and are involved in

unethical practices. These setups prefer earning profits instead of providing quality taste, even

though their prices are low as compared to the Branded Industry. For Non-Branded Spices

Industry low prices is an edge but in the recent time period they have to fail to capitalize on this

edge.

1.2.1 Production Process of Spices Industries

Spices are not produced as easy as it looks, the complete process goes through very complex

phases. One thing important to be considered before going towards the process is that spices

which have been planted must not be harvested before their maturity time, maturity time is

known as the time when plant of spice is ready to be harvested. The Production Process of Spices

industry revolves around 7 Phases, which are shown in Figure 13 below;

Figure 13 - Production Process of Spices Industry

Cleaning

Drying

Grading

Grinding

Packaging

Distribution


(Muhammad Abubakr)

Cleaning

The Planted Spices when harvested at their maturity, the first step is to clean the

harvested plants and this process is known as cleaning. In cleaning process, farmers

carefully clean the plants from particles like dust, insects and stones. Farmers either clean

them manually or through machinery. In manual cleaning the other method is to clean

planted spices by dipping them into water for 2 to 3 hours. In this method one thing must

be considered that water must be changed every time to prevent recontamination. Using

machinery is not even a bad idea but sometimes the plants harvested are not cleaned

properly due to which mostly manual cleaning is preferred.

Drying

Once the harvested spices are cleaned properly the next phase which has the same

amount of importance like cleaning is called as drying. The Harvested plants or spices

when cleaned they are left to be dried either in the open air or machineries are used to dry

them. Drying the crops has so much importance that if they are not dried properly it may

result in loss, the harvest plant may be sold at 50% less than its original value. Harvested

Spices if dried properly may lead towards much better taste. Drying the spices gets

different when the season is dry and once the season is wet. In dry season as the amount

of moisture is less the crops are dried under sun, whereas when the season is wet the

plants are dried using artificial dryers.

Grading

The third process of spices production is related to grading, grading is mostly done where

machineries are equipped for the process of cleaning and drying. Grading is done

automatically by the machineries. Grading basically means to grade spice on the basis of

their taste, size, color and shape.

Grading is even done where there are no machineries but doing it manually it takes a lot

of time.

Grinding


(Muhammad Abubakr)

Grinding is the fourth process which comes after cleaning, drying and grading. Once

grading is done and spices are categorized they move towards grinding. Grinding means

to crush spices or plants into small particles.

Grinding is either done manually or by machineries which are being used. The interesting

fact is that grinding depends on market requirements, if the market wants spices in dried

form then no grinding is done. The setup where machineries are used for grinding require

a huge place where there is proper room for ventilation to avoid spices from getting wet.

Packaging

Once everything is done, next process is to pack spices either in the raw form or in

powder for. Packaging of spices is not easy it looks, it requires proper attention. Mainly

three aspects are considered while packing spices, they are;

Type of Spice

Humidity of Storage

Raw Form or Powder

Every spice has its own kind of nature and taste, so for maintaining their taste it must be

determined that which will be packed in which kind of box or packet. Not only the type

but humidity of storage is also considered, more the humidity more it will affect the taste

of spices. So during the phase of packing much more importance is required.

Distribution

The spices whether in raw form or powder form once packed they need to be distributed

to fulfil the needs of market. Spices are either directly made available in market by local

suppliers or either indirectly through renowned suppliers.

1.3 Introduction of Shan Food Industries

Shan Food Industries a pioneer in the food industry of Pakistan. It is a well renowned company

not only in Pakistan but outside Pakistan, across the boundaries Shan Food Industries is known

for the quality and taste it has been providing since its establishment.


(Muhammad Abubakr)

Shan Food Industries is a Private Limited Company that was established in 1981 by Sikander

Sultan. Since 1981, it has been providing products of exceptional quality and even after so many

years it is mainly recognized due to its spice, it has created so much brand loyalty within the

market of Pakistan that whenever the word spices are used people start referring towards Shan

Food Industries. The story of Shan Food Industries not only ends in Pakistan but you may even

hear their name across the boundaries. People living outside Pakistan know Shan Foods

Industries due to their spices but in Pakistan the story is bit different. It is recognized not only

due to spices but also due to other offerings which it is has been offering.

Shan Food Industries main operation center in Pakistan is located over the area of 100,000 sq. ft.

The Machineries which are equipped in Shan Foods are imported from countries like United

States and United Kingdom, due to which they are fully equipped giving Shan Food Industries an

advantage of State of Art Technology. As Shan Food Industries main aim is to provide Food of

highest quality they have set up different laboratories which are used for testing and analyzing

each product.

Shan Food Industries is currently operating in 60 countries outside Pakistan, major countries

where Shan Foods is recognized as a brand are, United Kingdom, United States, Middle East and

Far East Regions. Shan Food Industries is a brand that is exporting its products outside the

country and it is helping Pakistan’s Economy. Shan Food Industries offers a numerous number

of products to the market around the world it offers 70 different types of spices and 70 types of

mixed and ready recipes, its main offerings include pickles, spices, easy to cook mixes, etc. Shan

Food Industries as it comes under the Branded Spices Industry it currently hold 40% share right

after the Market leader National Foods as shown in Figure 14 below;


(Muhammad Abubakr)

Figure 14 - Estimated Market Share of Shan Food Industries

Shan Food Industries during these 34 years have achieved many awards which have increased

their brand reputation, this was all due to the quality taste which they have provided and are still

providing within Pakistan and outside Pakistan. Some of the major achievements of Shan Food

Industries are;

2003-2004: Exports Performance Award, KCCI

2003-2004: Best Export Performance Award, FPCCI

2004-2005: Best Merit Performance Award, FPCCI


2005-2006: Best Export Performance Award. FPCCI


2010-2011: The Superior Taste Award, iTQi

1.3.1 History of Shan Foods

A company 34 years ago which was hardly known started its operations in a single room is

called as Shan Food Industries. Shan Food Industries was established in 1981 by an individual

named as Sikandar Sultan, he is currently the CEO and owner of the company.

The Journey of Shan Food Industries started in a room which belonged to Sikandar Sultan

himself. He carried the operations himself at the beginning and his main focus remained on the


(Muhammad Abubakr)

masalas. Sikandar Sultan wanted to provide masalas in the Pakistani Market but as it was a

unknown brand he was only able to provide it to his close relatives, family friends and other

known people. Later as some months passed unknown people started contacting him for masalas

and this was the point which pushed Sikandar Sultan and Shan Food Industries towards proper

operations. The servant quarter which was available at his residence was used for the first time to

produce masalas to fulfil needs of other customers, this time period is considered as the time

when proper production started.

The Journey from single room to servant quarter almost took 1 year and from servant quarter to a

multinational company it almost took 25 years. Sikandar Sultan during this period faced many

difficulties but the taste which he was providing led him towards growth.

Shan Food Industries took around 2 years to establish itself as a brand in Pakistani Market. In

1983, Shan Food Industries was officially marketed in Pakistan. As Shan Food Industries grew in

these 2 years, Sikander Sultan in 1984 decided to export its products outside Pakistan and the

result was more than he expected, Shan Foods Industries got immense success outside Pakistan

due to quality taste which it provided.

Overall, the journey from a single room has reached to 400+distributors within Pakistan and 80+

distributors across 60 countries.

1.3.2 Vision Statement of Shan Food Industries

Shan Food Industries vision11

is;

“To be a market leader in Food Industry of the world by providing quality standards and

to be a socially responsible company that stands for traditions”

1.3.3 Mission Statement of Shan Food Industries

Shan Food Industries mission12

is;

“To strive hard to meet the customer and market needs by providing those superior

products enriched with taste. To be a company which gives consumers a lot of importance

11

According to Shan Food Industries website “www.shanfoods.com” 12

According to Shan Food Industries website “www.shanfoods.com”


(Muhammad Abubakr)

by giving those superior products which are produced using state of art technology and this

technology will help them in achieving desired results. To be a company which motivates its

human resources by allowing them to participate to achieve the goals”

1.3.4 Organizational Hierarchy of Shan Food Industries

1.3.5 Business Objectives of Shan Food Industries

Shan Food Industries as it is a major Food company in Pakistan it has certain business objectives

which it have been fulfilling.

Shan Food Industries give utmost importance towards the client and customer interaction they

have made certain practices which revolve around this. Along with this Shan Food Industries has

also influenced on the practices in which suppliers are treated equally from best of raw material

is purchased.

Shan Food Industries also aims to provide the best quality of food products to the market

whether it is local or international market by using the latest technology which it has been using

in every phase. Shan Foods believe that enriched taste will help them in capturing market by

Managing Director

CEO

General Manager

Director GM (Production)

Director GM (Procurement)

Sales

Director GM Sales Office

Manager

Regional Sales Manager

Territory Sales Manager







Marketing and Exports

Director GM

BM (Plain Spices, Instant

Food)

Category Owners

Category Owners

Category Owners


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building brand loyalty. Shan Food Industries will also try to build the trust of customers on their

products by guaranteeing them hygienic products that are secure from harmful ingredients.

Shan Food Industries will also consider the overall food market of Pakistan and will keep on

competing with its competitors like National Foods, Mehran Foods, Shezan Foods, etc.

1.3.6 Product Portfolio of Shan Food Industries

34 years ago, a business which was started in a single room and was just providing basic masalas

to the market of Pakistan. Over the time main reason behind its growth is the products offering

which kept on increasing as time passed. Shan Food Industries within 34 years have created a

huge portfolio of products. All of the products which are offered by Shan Food Industries are of

extreme quality and taste.

The increase in the portfolio of Shan Food Industries over years was mainly due to its research

and development. Shan Food Industries owner Sikander Sultan had a belief that having a unique

and complete brand portfolio will lead towards success and he was right, Shan Food Industries

has achieved everything due to its portfolio.

Back in 1990’s when Shan Food Industries was just recognized as a spices brand, the research

and development team led by Sikander Sultan started going through different markets and they

realized that Shan Food Industries must come with more products so that it could be recognized

as a Food brand instead of Spices brand. New products which were introduced at that time made

their mission of becoming food brand successful. Shan Food Industries success was mainly due

to the research and development team but there was another reason, Shan Food Industries

whenever introduced a new product in market before that they use to take the product to

laboratories for testing and if the results were approved by laboratory then only it would be

launched.

After a journey of 34 years it is currently offering a numerous number of food products in the

market whether it is Pakistan or outside Pakistan. Shan Food Industries portfolio consists mainly

of spices, pickles, easy to cook mixes (recipe mix), dessert mixes, basmati rice and salt. Shan

Food Industries product portfolio consists of;

Recipe Mix

Biryani Mixes


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Stir Fried Foods

Curry Spice Mixes

Deep Fried Foods

Barbeque

Vegetarian Foods

Instant Foods

Breakfast

Plain Spices

Khushbudaar Lehsan

Zaiqedaar Adrak

Khatta Khatai

Qasuri Methi

Karara Zeera

Taiz Laal Mirch

Taaza Dhaniya

Zaafrani Garam Masala

Teekhi Kaali Mirch

Khaalis Haldee

Dessert Mixes

Basmati Rice

Pickles

Salts

Seeing at the product portfolio of Shan Food Industries, one thing is clear that Shan Food

Industries is offering a numerous numbers of products in any section of Food. Shan Food

Industries currently has 70 different types of spices and 70 different types of recipe mix in the

market. Products offered by Shan Food Industries also reflects that it is for every occasion and

for every type of Taste. Within the portfolio of Shan Food Industries the oldest offering is the

spices whereas these recipe mix, basmati rice, pickles and others were introduced later and that is

why Shan Food Industries is still known by the name of Spices. Due to this reason Shan Food

Industries have put their complete efforts towards the spices products.


(Muhammad Abubakr)


(Muhammad Abubakr)

Chapter No: 2 – Strategic Analysis

2. Strategic Analysis

Strategic analysis is a very broad term that is being done by companies or we can it is research, a

research which is conducted by the company to analyze its internal environment and external

environment. The overview companies get from strategic analysis help them in selecting a

strategy for their business. Strategic Analysis is mostly used by companies when they prefer

bringing a change in their organization, change in organization will lead towards change in goals

and if goals change the strategy to achieve goals will also change. So, Strategic analysis play a

vital role in determining strategies for new goals which have been set.

2.1 Tools of Strategic Analysis

For Conducting Strategic Analysis there are many tools which can be opted by a company to

analyze its internal and external environment and to select a strategy which may best fit in. The

tools which are used are;

PEST Analysis

SWOT Analysis

Michael Porter’s Five Forces Model

Internal Factor Evaluation

External Factor Evaluation

Competitive Profile Matrix

Strategic Planning and Action Evaluation Matrix

Quantitative Strategic Planning Matrix

Boston Consulting Group (BCG) Matrix

SWOT Analysis

Strengths, Weaknesses, Opportunities, Threats Analysis is also referred as SWOT Matrix it is a

tool that is used by companies for strategic analysis. SWOT Matrix is used by companies when

they want to conduct strategic audit, a company conducting their strategic audit must necessarily

prepare or conduct SWOT Matrix. SWOT Matrix is used by companies to create different

strategies which they can adopt. Strategies in SWOT matrix are made on the basis of;


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Strengths

Weaknesses

Opportunities

Threats

Every company has certain strengths, weakness, opportunities and threats and these are used to

make strategies which may help the company in achieving what it wants. Making strategies by

combining internal and external factors is considered as the most difficult part and all the

strategies are based on judgments, so to make strategies judgements must be realistic.

In SWOT matrix as it is already mentioned that strategies are made by combining internal and

external factors, so possibly there are 4 strategies which can be made they are;

S-O Strategies

W-O Strategies

S-T Strategies

W-T Strategies

The first strategy which could be made is called as S-O strategies, S stands for strengths and O

stands for opportunities. In this the company uses its internal strengths to capitalize on external

opportunities. The second strategy which could be made is called as W-O strategies, W stands

for weaknesses and O stands for opportunities. In this the company tries to improve its internal

weaknesses by capitalizing on the external opportunities which are present. The third strategy

which could be made is called as S-T strategies, S stands for strengths and T stands for threats. In

this the company uses its internal strengths to lower down the external threats which are being

faced. The fourth strategy which could be made is called as W-T strategies, W stands for

weaknesses and T stands for threats. In this the company tries to reduce down its internal

weaknesses and along with that it also tries to reduce down external threats.

Internal Factor Evaluation (IFE)

Internal Factor Evaluation even referred as IFE is a tool that is used by companies for strategic

analysis. Internal Factor Evaluation is used by companies when they want to conduct strategic


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audit, a company conducting their strategic audit must necessarily prepare or conduct internal

factor evaluation. Internal Factor Evaluation also plays a vital role in determining or deciding

strategies that the company will adopt for its success.

In Internal Factor Evaluation the company by using their strengths and weaknesses evaluate their

current internal position. The company preparing or conducting its internal factor evaluation uses

realistic judgments for assigning weights and rating. In Internal Factor Evaluation as it is already

discussed that there are two necessary factors which must be considered, they are;

Strengths

Weakness

Strengths and weaknesses are the internal factors of company which are determined through

SWOT. Strengths and Weaknesses which are found through SWOT are carried towards IFE

matrix for evaluation. Once strengths and weaknesses are brought to IFE matrix, the nest step is

to assign weights and ratings which may help in getting the final score. In IFE matrix, weights

which are assigned are on basis of the industry. In actual it means that strengths and weaknesses

which company has determined that how much importance it has in industry. For Example,

ABC company determines Financial backup as their strength, whereas in the industry the

company currently working does not give importance to financial backup, So, it won’t be

assigned a high weight. Weight which are assigned within the strengths and weaknesses must

have a total of “1” it must neither be lower nor higher.

After weights are assigned on the basis of industry, next step is to rate the factors which

company has listed in its IFE matrix. Rating of factor is done in judgements, but these

judgements must be realistic. The rating of factors is done on the basis of company’s own

perception, it means that how well company is dealing with the listed strengths and weaknesses.

Rating of listed factors is done between 1 to 4. Rating is interpreted as;

Rating Interpretation

1 Low (Major Weakness)

2 Average (Minor Weakness)


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3 Above Average (Minor Strength)

4 Excellent (Major Strength)

Weights and ratings once assigned by company, next step is to calculate the weighted average

score. For calculating weighted average score multiply each factor’s weight with their assigned

ratings. Hence, it clearly sums up that weight and ratings are necessary for internal factor

evaluation. The calculations once done, then you have to add up the column of weighted average

score to get the final score. Final score may vary company to company or within the company

because it is prepared on judgmental basis. The Final score of IFE matrix is interpreted as;

Final Score Interpretation

4 Strong

2.51 – 3.5 Above Average

2.5 Average

1.5 – 2.49 Below Average

1 Weak

External Factor Evaluation (EFE)

External Factor Evaluation even referred as EFE is a tool that is used by companies for strategic

analysis. External Factor Evaluation is used by companies when they want to conduct strategic

audit, a company conducting their strategic audit must necessarily prepare or conduct external

factor evaluation. External Factor Evaluation also plays a vital role in determining or deciding

strategies that the company will adopt for its success.

In External Factor Evaluation the company by using their opportunities and threats evaluate their

current external position. The company preparing or conducting its external factor evaluation

uses realistic judgments for assigning weights and rating. In External Factor Evaluation as it is

already discussed that there are two necessary factors which must be considered, they are;

Opportunities

Threats


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Opportunities and Threats are the external factors of company which are determined through

SWOT. Opportunities and Threats which are found through SWOT are carried towards EFE

matrix for evaluation. Once Opportunities and threats are brought to EFE matrix, the next step is

to assign weights and ratings which may help in getting the final score. In EFE matrix, weights

which are assigned are on basis of the industry. In actual it means that opportunities and threats

which company has determined that how much importance it has in industry. Weight which are

assigned within the opportunities and threats must have a total of “1” it must neither be lower

nor higher.

After weights are assigned on the basis of industry, next step is to rate the factors which

company has listed in its EFE matrix. Rating of factor is done in judgements, but these

judgements must be realistic. The rating of factors is done on the basis of company’s own

perception, it means that how well company is dealing with the listed opportunities and threats.

Rating of listed factors is done between 1 to 4. Rating is interpreted as;








ratings. Hence, it clearly sums up that weight and ratings are necessary for external factor

evaluation. The calculations once done, then you have to add up the column of weighted average


because it is prepared on judgmental basis. The Final score of EFE matrix is interpreted as;


4 Strong


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2.5 Average


1 Weak

Competitive Profile Matrix (CPM)

Competitive Profile Matrix even referred as CPM is a tool that is used by companies for strategic

analysis. Competitive Profile Matrix is used by companies when they want to conduct strategic

audit, a company conducting their strategic audit must necessarily prepare or conduct

Competitive Profile Matrix. In Competitive Profile matrix basically a comparison is done with

the competitors, that currently where the company stands and where the competitors are

standing, whether it is internal position or external position. Competitive Profile Matrix also

plays a vital role in determining or deciding strategies that the company will adopt for its

success.

In Competitive Profile Matrix the company by using their strengths, weaknesses, opportunities

and threats compare themselves with their competitors or with the industry they are currently

working. Competitive Profile Matrix majorly helps the companies in determining that what are

the strengths and weakness of the industry they are currently working in. The company

preparing or conducting its competitive profile matrix uses realistic judgments for assigning

weights and rating. In Competitive Profile Matrix as it is already discussed that there are four

necessary factors which must be considered, they are;

Strengths

Weaknesses

Opportunities

Threats

The First step to make CPM is to identify the companies with which comparison is going to be

done, once the companies are selected next step is to extract their strengths, weakness,

opportunities and threats.


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Strengths, weaknesses, opportunities and threats of every company are identified through their

SWOT analysis. The Strengths, weaknesses, opportunities and threats which are found through

SWOT are carried towards Competitive Profile Matrix for evaluation. Once the identified and

selected factors are brought to Competitive Profile Matrix, the next step is to assign weights and

ratings which may help in getting each company’s final score. In CPM matrix, weights which are

assigned are on basis of the industry. In actual it means that factors which have been determined

how much importance they do have in the industry. Weight which are assigned within the factors

must have a total of “1” it must neither be lower nor higher. Remember, for every company the

weights will be same, it means that every company included in CPM will show the same

weights.

After weights are assigned on the basis of industry, next step is to rate the factors which are

listed in CPM. Rating of factor is done on judgements, but these judgements must be realistic.

The rating of factors is done on the basis of company’s own perception, it means that how well

company is dealing with the listed factors. Rating of listed factors is done between 1 to 4 and it is

interpreted as;








ratings. Hence, it clearly sums up that weight and ratings are necessary for competitive profile

matrix. The calculations once done, then you have to add up the column of weighted average


because it is prepared on judgmental basis. The Final score of CPM matrix is interpreted as;


(Muhammad Abubakr)


4 Strong


2.5 Average


1 Weak

Boston Consulting Group (BCG) Matrix

Boston Consulting Group even referred as BCG Matrix is a tool that is used by companies for

strategic analysis. Boston Consulting Group Matrix is used by companies when they want to

conduct strategic audit, a company conducting their strategic audit must necessarily prepare or

conduct Boston Consulting Group. Boston Consulting Group matrix is used by companies to

identify the standing of their products currently in market, through this matrix we try to see the

actual position of products. Boston Consulting Group Matrix actually manages portfolio of

products which company has.

In Boston Consulting Group Matrix there are two dimension on which the complete matrix is

based, they are;

Industrial Growth

Relative Market Share Pattern

Industrial Growth is also called as I.G, industrial growth is used in BCG to determine that the

industry to which company belongs how it is working, and industrial growth can be either in

positive or negative, positive means high growth and negative means low growth. The formula

used to calculate Industrial Growth is;


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The second dimension of Boston Consulting Matrix is relative market share pattern even referred

as RMSP. In BCG relative market share pattern is used to identify the market share company

has, along with that RMSP also gives information about the current market leader who has high

percentage of market share. Market Share can either be high or low depending on the product

and its progress. The formula used to calculate Relative Market Share Pattern is;

Boston Consulting Group Matrix is basically used by companies to determine strategies for their

product according the quadrant to which it belongs. In Boston Consulting Group Matrix there are

four quadrants, which are;

Stars

Cash Cows

Question Marks

Dogs

The first quadrant is known as Stars in which the market share of company or its product is high

and the industry to which it belongs is growing positively, it means the industrial growth is high.

Company products belonging to this quadrant generate more revenues and later on when they

become mature they shift to Cash Cows. There are some strategies which are suggested in this

quadrant which a company can adopt, the strategies are;

Market Penetration

Market Development

Product Development

Backward Integration

Forward Integration

The second quadrant is known as Cash Cows in which the market share of company or its

product is high and the industry to which it belongs is growing negatively, it means the industrial

growth is low. Company or its products falling in this quadrant are at maturity level. Most

companies generating revenues from their products falling in cash cows use it to invest in other


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products. There are some strategies which are suggested in this quadrant which a company can

adopt, the strategies are;

Product Development

Diversification

Retrenchment

Divestiture

The third quadrant is known as Question Marks in which the market share of a company or its

product is low and the industry to which it belongs is growing positively, it means the industrial

growth is high. Company when introduces their products in the market it mostly falls in this

quadrant, because there is no idea that what will be the progress of product in market. There are

some strategies which are suggested in this quadrant which a company can adopt, the strategies

are;

Market Penetration

Market Development

Product Development

Divestiture

The fourth quadrant is known as Dogs in which the market share of a company or its products is

low and the industry to which it belongs is growing negatively, it means the industrial growth is

low. Company or its products falling in this quadrant are at declining phase, this quadrant is rated

as the worst position and that is why it is suggested to companies to dispose of their business

unit. There are some strategies which are suggested in this quadrant which a company can adopt,

the strategies are;

Retrenchment

Divestiture

Liquidation


(Muhammad Abubakr)

Strategic Planning and Action Evaluation (SPACE) Matrix

Strategic Position and Action Evaluation Matrix even referred as SPACE Matrix is a tool that is

used by companies for strategic analysis. Strategic Position and Action Evaluation Matrix is used

by companies when they want to conduct strategic audit, a company conducting their strategic

audit must necessarily prepare or conduct Strategic Position and Action Evaluation Matrix.

SPACE matrix helps the company in determining and adopting strategies based on which

dimension it falls. In Strategic Position and Action Evaluation Matrix a company basically tries

to examine its position through four dimensions, which are;

Financial Position

Competitive Position

Industrial Position

Stability Position/ Economic Stability

The above mentioned for dimensions play a very vital role in determining the company that

which strategy it should select. Financial Position and Competitive Position are company’s

internal dimension, all data relating to financial position and competitive position is gathered

internally. Financial Position determines the current financial standing of company, that how

financially it is strong. Data relating to financial position is gathered directly from the accounts

of company. Competitive Position determines company’s overall competitive advantages, any

company having any competitive advantage will use it to see its current standing in the market

competition wise. Competitive advantage provides an edge to company over its competitors, data

regarding competitive advantage is mostly gathered from strengths of company. The two

remaining dimensions, Industrial Position or Stability Position are company’s external

dimensions. In Industrial position factors regarding industry are considered, industry in which

the company is currently operating. Whereas Stability Position even referred as Economic

Stability determines the overall environment in which the company is working, mostly in this

dimension stability is checked of the environment.

In Strategic Position and Action Evaluation Matrix on Y-axis two dimensions are mentioned and

on X-axis also two dimension are mentioned. On Y-axis at top Financial Position is mentioned

and at bottom Stability Position is mentioned, whereas on X-axis at right Industrial Position is

mentioned and on left Competitive position is mentioned. For preparing Strategic Position and


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Action Evaluation Matrix different factors are taken into consideration for every dimension,

factors should be related to the dimension. Once factors are determined we give them rating

according to their importance. Rating in Strategic Position and Action Evaluation Matrix is bit

different, we rate Financial Position, Industrial Position, Competitive Position and Stability

Position in the following way;

Dimension Rating Interpretation

Financial Position Maximum +6

Minimum +1

+6 means excellent

+1 means bad

Stability Position Maximum -1

Minimum -6

-1 means excellent

-6 means bad

Competitive Position Maximum -1

Minimum -6

-1 means excellent

-6 means bad

Industrial Position Maximum +6

Minimum +1

+6 means excellent

+1 means bad

Once factors have been rated we add these ratings and then we divide it with the number of

factors that are taken, remember calculation is done for every dimension to get a final score for

the dimension. After getting the final score of each dimension we put them into the following

given formula;

X axis = I.P + C.P

Y axis = F.P + S.P

The score which is calculated through this formula is carried forward to be plotted in Strategic

Position and Action Evaluation Matrix.

In Strategic Position and Action Evaluation Matrix along with 4 dimensions there are 4

quadrants. Every quadrant in Strategic Position and Action Evaluation Matrix has its own value

and every quadrant also suggests different strategies which a company may adopt after

calculations. The four quadrants are;

Aggressive


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Conservative

Defensive

Competitive

Quadrant I is called as Aggressive quadrant, in this quadrant the company falls in Financial

Position and Industrial Position. There are some strategies which are suggested in this quadrant

which a company can adopt, the strategies are;

Market Penetration

Market Development

Product Development

Related Diversification or Unrelated Diversification


Forward Integration

Quadrant II is called as Conservative quadrant, in this quadrant the company falls in Financial

Position and Competitive Position. There are some strategies which are suggested in this

quadrant which a company can adopt, the strategies are;

Market Penetration

Market Development

Product Development

Related Diversification

Quadrant III is called as Defensive quadrant, in this quadrant the company falls in Competitive

Position and Stability Position. There are some strategies which are suggested in this quadrant


Retrenchment

Divestiture

Liquidation

Quadrant IV is called as Competitive quadrant, in this quadrant the company falls in Stability

Position and Industrial Position. There are some strategies which are suggested in this quadrant



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Market Penetration

Market Development

Product Development


Forward Integration

Quantitative Strategic Planning Matrix (QSPM)

Qualitative Strategic Planning Matrix is also referred as QSPM it is a tool that is used by

companies for strategic analysis. QSPM is used by companies when they want to reach on a final

conclusion of strategic audit, a company conducting their strategic audit must necessarily prepare

or conduct QSPM at end. QSPM Matrix is used by companies to select the best strategy which

they could adopt for future progress. QSPM is the last and final stage of strategic audit which is

prepared by the help of following;

Internal Factor Evaluation

External Factor Evaluation

Grand Strategy Matrix

SPACE Matrix

Internal External Matrix

BCG Matrix

SWOT Matrix

From the start to end strategic audit goes through different processes which helps in gaining

information about competitors, industry especially about the company itself. The above

mentioned play a vital role in developing QSPM because a company has already made different

strategies which it can adopt to prosper, but to reach on a conclusion only one strategy must be

determined and QSPM helps in doing that by evaluating. In evaluation process of strategies

different factors from following are taken into consideration;

Strengths

Weaknesses

Opportunities


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Threats

Once the identified and selected factors are brought to QSPM, the next step is to assign weights

and ratings which may help in getting each strategy’s final score. In QSPM matrix, weights

which are assigned are on basis of the industry it can be either taken from IFE or EFE. In actual

it means that factors which have been determined how much importance they do have in the

industry. Weights which are assigned within the factors of strengths and weakness must have a

total of “1” and weights which are assigned within the factors of opportunities and threats must

have a total of “1” it must neither be lower nor higher, hence the total weight of all factors

should be “2”. Remember, for every strategy the weights will be same.

After weights are assigned on the basis of industry, next step is to assign attractiveness score to

the factors which are listed in strategies. Assigning of Attractiveness score of factor is done on

judgements, but these judgements must be realistic. The assigning of attractiveness score to

factors is done on the basis that what effect they will have on the strategy. Rating of listed factors

is done between 1 to 4 and it is interpreted as;


1 Not Attractive

2 Somewhat Attractive

3 Reasonably Attractive

4 Highly Attractive

Weights and attractiveness score once assigned by company, next step is to calculate the total

attractiveness score. For calculating total attractiveness score multiply each factor’s weight with

their assigned attractiveness score. The calculations once done, then you have to add up the

column of total attractiveness score to get the final score. Final score may vary strategy to

strategy because it is prepared on judgmental basis. Strategy with higher score will be opted as

the best strategy for company.


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Grand Strategy Matrix

Grand Strategy Matrix is a tool that is used by companies for strategic analysis. Grand Strategy

Matrix is used by companies when they want to conduct strategic audit, a company conducting

their strategic audit must necessarily prepare or conduct Grand Strategy Matrix. In Grand

Strategy Matrix a company basically tries to examine its position through two dimensions, they

are;


Market Growth

Along with that Grand Strategy matrix also plays a vital role in determining or deciding

strategies that the company will adopt for its success. In Grand Strategy first dimension which is

mentioned above as is Competitive Position. Competitive Positions is related to company’s

industry in which it is currently working, or we can say what competitive edge other companies

have who are working in same industry. Every company has one or more than one factor which

gives it a competitive edge on other companies. Well, this was just the competitive edge which

may provide a company a stronger position in the market. Competitive position is also referred

as how much amount of competition is there in the industry. Competitive position may be either

stronger or it may be weak depending on industry it’s currently working in. In Grand Strategy

matrix competitive position is mentioned on the X-axis. The second dimension which is

considered in Grand strategy matrix is market growth it is shown on Y-Axis. Market growth by

name reflects that how well market is working, how much the market is growing it could be

either rapid growth or slow growth. Rapid growth means that the market is currently growing

and it has much more opportunities for entrance, whereas in slow market growth the industry is

at declining phase, there are no opportunities for new entrants which may help them in earning

their targeted goals. Plotting of this matrix is done with the help of Competitive Profile Matrix

and Market growth, if market growth is above 5% it means that there is a rapid growth in market.

In Space matrix there are 4 quadrants and every quadrant has its own importance. The four

quadrants are shown below;


(Muhammad Abubakr)

In the above figure Quadrants of Grand Strategy Matrix are shown. Quadrant I is also known as

an aggressive quadrant, any company based on its calculations if falling in this quadrant they

should adopt aggressive strategies for future. In this quadrant the market growth is rapid and the

competitve position of company is strong. Company falling in Quadrant I due to rapid market

growth and strong competitive position should keep on capitalizing on its competitive edge. In

this quadrant there are four aggressive strategies which a company can adopt, these strategies

are;

Market Penetration

Market Development

Product Development


Market penetration is a strategy that is mostly used to capture market share in the market or

which others have, penetration is done by a company when it cuts down its profit. Remember if a

company is leading in the market it won’t prefer penetration, it will go for market development.

Market Development means that the company starts moving towards those markets in which it


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has no existence. Sometimes a company rather than adopting market development it selects

product development. Product development means that company looks after its products and

tries to bring a change in them which may attract customers towards it. The fourth and final

aggressive strategy which a firm can adopt is related diversification, it means that a company

starts making products of similar nature but bit different.

Quadrant II is also known as conservative quadrant, any company based on its calculations if

falling in this quadrant they should adopt conservative strategies for future. In this quadrant the

market growth is rapid and the competitve position of company is weak. Company falling in

Quadrant II due to rapid market growth and weak competitive position should try figure out a

way which would lead them to a competitive edge, they should make such strategies which help

them to gain competitive edge because the market in which they are working is growing rapidly.

Hence, the problem is with their own product. Most often companies are not able to gain a

competitve edge so it is better for them sell of a business unit instead of a whole business. In this

quadrant there are five strategies which a company can adopt, these strategies are;

Market Penetration

Market Development

Product Development

Diversification

Liquidation







tries to bring a change in them which may attract customers towards it. The fourth strategy which

can be opted in this quadrant is diversification, diversification has two types;

Related diversification

Unrelated diversification


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Related diversification means that a company starts making products of similar nature but bit

different, whereas in unrelated diversification the company shifts towards different nature of

product. The last strategy which a company can adopt in this quadrant is Liquidation. A

company when continuously facing losses from their business and they feel that they will not be

able to generate anything from the business they completely dispose of the business owned, this

strategy is called as Liquidation.

Quadrant III is also known as defensive quadrant, any company based on its calculations if

falling in this quadrant they should adopt defensive strategies for future. In this quadrant the

market growth is weak and the competitve position of company is weak. Company falling in

Quadrant III due to weak market growth and weak competitive position should try figure out a

way which would help them in sustaining themselves in the market, it could either be done by

reducing cost or by adopting the strategy of diversification. Companies if they are not able to

sustain themselves in the market they should either dispose of their business unit or they should

completely sell their business. In this quadrant there are five strategies which a company can

adopt, these strategies are;

Retrenchment

Divestiture

Liquidation


Unrelated Diversification

Retrenchment is a strategy which is mostly adopted by companies who belong to this quadrant,

mainly preferred by those which have the potential to prosper in the market. In this strategy

company chooses to cuts its cost be reducing down its operations. Sometimes if a company feels

that there business unit is not generating them any return or profit then prefer to sell that unit,

this strategy is called as Divestiture. Whereas if a company is continuously facing losses from

their business and they feel that they will not be able to generate anything from the business they

completely dispose of the business owned, this strategy is called as Liquidation. The fourth

strategy which can be opted in this quadrant is related diversification, related diversification

means that a company starts making products of similar nature but bit different. The fifth and


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final strategy which a company can adopt in this quadrant is unrelated diversification, in

unrelated diversification the company shifts towards different nature of product.

Quadrant IV is also known as competitive quadrant, any company based on its calculations if

falling in this quadrant they should adopt competitve strategies for future. In this quadrant the

market growth is weak and the competitve position of company is strong. Company falling in

Quadrant IV due to weak market growth and strong competitive position should try diversify

themselves in other markets because of the resources they do have, it just due to market which

restricts them. Companies belonging to this quadrant do have a competitive edge but they are not

able to capitalize on it. In this quadrant there are five strategies which a company can adopt,

these strategies are;


Unrelated Diversification

Joint Venture

Related diversification is a strategy in which a company starts making other products of similar

nature but bit different. Whereas unrelated diversification is a strategy in which a company shifts

towards different nature of product.

Internal-External (IE) Matrix

Internal External Matrix even referred as IE matrix is a tool that is used by companies for

strategic analysis. Internal External Matrix is used by companies while they are conducting their

strategic audit, a company that conducts its strategic audit must necessarily conduct Internal

External matrix.

Internal External matrix consists of 9 cells which are described in roman numbers, each cell has

its own importance. Internal External matrix is made up with the help of two tools they are;

Internal Factor Evaluation Matrix

External Factor Evaluation Matrix

Internal factor evaluation is the internal analysis of the company that how well it is dealing with

its strengths and weaknesses. Whereas External factor evaluation is the external analysis of the


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environment in which company is working. In external factor evaluation opportunities and

threats are taken into consideration. These two matrixes IFE and EFE have their own final score,

also called as total weighted score. This total weighted score helps the company in making IE

matrix and through plotting it helps the company to know to which quadrant it currently belongs.

Before going towards the quadrants, one thing is important to know that there is a little bit of

similarity between IE matrix and Balance Scorecard.

In Internal External matrix as already told that there are 9 divisions or cells which are;

Division I

Division II

Division III

Division IV

Division V

Division VI

Division VII

Division VIII

These 9 divisions which are mentioned above are further grouped into 3 quadrants. The three

quadrants are;

Quadrant (I, II, IV)

Quadrant (III, V, VII)

Quadrant (VI, VIII, IX)

The first quadrant (I, II, IV) is named as grow and build. This quadrant is considered as the

strongest quadrant, any company falling in this quadrant is at its peak because internally and

externally it is performing well. Grow and build mean that the company should select those

strategies which help in growing in market, which moves the company towards more success. In

this quadrant there are many strategies which a company can choose to grow and build, the

strategies belonging to this division are;

Market Penetration

Market Development

Product Development


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Integration

Diversification







tries to bring a change in them which may attract customers towards it.

In this quadrant the other strategy which a company can adopt is integration, Integration is of

two types;

Forward Integration


Forward integration means that the company buys its distributors, whereas in backward

integration the company buys their suppliers or we can say company buys their supply chain.

The last strategy which can be opted in this quadrant is diversification, diversification has two

types;

Related diversification

Unrelated diversification

Related diversification means that a company starts making products of similar nature but bit

different, whereas in unrelated diversification the company shifts towards different nature of

product.

The second quadrant (III, V, VII) is named as Hold and Maintain. This quadrant is rated

averagely, any company falling in this quadrant is considered that it is performing on average

whether it is externally or internally. Hold and maintain means that company should keep on

selling its products in the market and along with that it should find out a way which may help in

maintain its market share. The main thing about this quadrant is that mostly when a product

becomes mature it starts falling in this quadrant, so it should just be maintained by the company


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properly. In this quadrant there are two strategies which a company can choose to hold and

maintain, the two strategies are;

Product Development

Market Penetration




Market Penetration is mostly preferred in this quadrant because it helps the company in maintain

itself in the market. Sometimes if a company is falling in this quadrant but their product is not

achieving them what they want then they go for product development. Product development

means that company looks after its products and tries to bring a change in them which may

attract customers towards it.

The third quadrant (VI, VIII, IX ) is named as Harvest and Divest. This quadrant is rated as the

worst quadrant, any company falling in this quadrant is considered that it is not able to perform

well internally or externally. Harvest and Divest means either to completely shut down a

business or it means to sell of the business or a business part. Harvest basically means to increase

company profitability whereas divest means to sell the market share which a company has. In

this quadrant there are three strategies which a company can choose to harvest and divest, the

three strategies are;

Retrenchment

Divestiture

Liquidation

Retrenchment is a strategy which is mostly adopted by companies who belong to this quadrant,

mainly preferred by those which have the potential to prosper in the market. In this strategy

company chooses to cuts its cost be reducing down its operations. Sometimes if a company feels

that there business unit is not generating them any return or profit then prefer to sell that unit,

this strategy is called as Divestiture. Whereas if a company is continuously facing losses from

their business and they feel that they will not be able to generate anything from the business they

completely dispose of the business owned, this strategy is called as Liquidation.


(Muhammad Abubakr)

2.2 SWOT Analysis of Shan Food Industries




The SWOT Analysis of Shan Food Industries is as shown below;

2.2.1 Strengths

According to our analysis on Shan Food Industries we have found out the internal strengths,

which are;

Quality and Taste

The main strength is quality and taste, which they have been providing from 25 years

within Pakistan and outside Pakistan. Shan Food Industries as it belongs to Food sector, it

is necessary for them to provide taste and quality to the consumers they dealing with and

this is not just till Shan Foods, throughout the industry Quality and Taste is a basic

necessity to survive.

Financial Backup

Shan Food Industries a Private Limited Company and has enough finance to survive in

the market. In Pakistan Food industry financial backup is necessarily required for future

progress and expansion.

State of Art Technology

Every industry for it progress requires latest technology mostly in the form of machinery.

Shan Food Industries as it is operating within and outside Pakistan, it has to meet up the

standards of technology for future progress and it is currently equipped with latest

machinery which help them in going through different phases of production.

Brand Loyalty

Every company dealing in any industry pays a lot of importance in creating Brand

Loyalty. It is not so easy to create Brand Loyalty, it requires several years of dedication.


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Shan Food Industries as its operating from the past 25 years it has created a lot of brand

loyalty within and outside Pakistan.

Strong Relationship with Farmers and Suppliers

Shan Foods as it belongs to food industry it has to buy raw material from local suppliers

or from farmers directly, so it is necessary for them to maintain strong relationships with

their suppliers and farmers. Through their 25 years Shan Foods has established strong

relations with their suppliers and farmers and that is why they are progressing in the

market.

Customer Relationship Management

Customer Relationship Management, in Food Industry it is necessary for every company

to deal with customers in a proper way by providing them what they need at exact time

and at reasonable price. Shan Food Industries has established proper management which

deals with their customers in a proper way and hence allows them in building relations

with their customers.

Research and Development Team

Research and Development now a days play a very important in the company whether for

it progress or anything, they look after every aspect. Shan Foods industries has

established a proper department that take cares of research and development and it is

considered as their main strength because through this department they identify the

changes in market.

2.2.2 Weaknesses

According to our analysis on Shan Food Industries we have found out the internal weaknesses,

which are;

Weak Distribution in Markets of Punjab

Shan Food Industry started its operation in the Sindh region and even after 25 years it has

a strong hold in Sindh region, despite this Shan Foods established good relations


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throughout Pakistan and other world, but currently their main weakness is distribution in

markets of Punjab. Shan Food Industries distribution channel in Punjab is weak as

compared to Sindh and that is why they are currently ranked second in Spices Industry of

Pakistan.

Online Marketing

Now a days in every business e-marketing plays a very vital role towards progress,

whereas if we look towards Shan Foods it currently does not has proper existence on

internet world.

Strict Credit Policy

Business belonging to any industry now a days deal with more credit as compared to

cash, but sometimes the credit policy may affect the company in both ways. Shan Foods

credit policy is strict throughout their existence and this is considered as their weakness

because sometimes companies have to deal in credit if there is no cash and it may even

lead towards the disturbance in relationship of Farmers and suppliers.

Weak Marketing Communication in Punjab

Shan Food Industries as such it has not established itself properly in the areas of Punjab

and along with most of the promotional activities are carried in Sindh, so that is why it

considered as a weaknesses for them.

2.2.3 Opportunities

According to our analysis on Shan Food Industries we have found out the external opportunities,

which are;

Increasing Trend of Women’s Employment in Pakistan

In Pakistan, years ago women was not preferred to leave her house premises for working

but as time has passed the trend has also changed. Women in Pakistan are allowed to

work now a days and due to this they don’t have enough time to cook food in a traditional


(Muhammad Abubakr)

way, so they prefer ready to cook spices which will help them in saving their time and

also help them in preparing traditional food.

Availability of Finest Quality of Raw Material

In Spice industry as it is detailed that raw material must be of highest quality for better

taste. From recent years Pakistan itself has started producing raw material of finest

quality for the spices industry, whereas this is considered as an opportunity for Shan

Foods because Shan Foods as it believes in providing finest taste and quality it prefers

high quality of raw material so instead of importing it from other countries it can buy it

locally from those suppliers and farmers which provide finest quality.

Global Expansion

Businesses now a days instead of working in their own boundaries they try to target

markets that exist across the boundaries, it even refers towards globalization or global

expansion. Shan Foods is currently operating in many countries across Pakistan but still

there are some countries which are not targeted by them, hence giving them the

opportunity to expand globally.

Increasing Trend of Branded Spices in Pakistan

Few years back people living in the urban areas and rural areas used to prefer unbranded

or open spices which were easily available at every small store at every corner, other

reason was that these spices used to cost less as compared to branded spices, but in 2 to 3

years which have passed the trend completely shifted towards the branded spices. The

main reason behind an increase in this trend was due to Government strict policies which

were taken, along with that open or unbranded spices were causing health problems to

people to rural and urban areas. Shan Foods as it belongs to branded industry of spices it

has a huge opportunity in Pakistan, it can capture this opportunity which may lead them

towards growth

Unexploited Segments outside the Country


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Shan Foods has already established it brand name outside the country but there are

certain Asian segments which they haven’t reached yet, for example; Asian community

living in Germany are not able to access Shan Foods Spices and Ready to Cook recipes.

This is the story of one Asian community belonging to a country but in reality there are

many other unexploited Asian segments where there is immense need.

2.2.4 Threats

According to our analysis on Shan Food Industries we have found out the external threats, which

are;

New Competitors

In Pakistan, there are two sectors of food industry one is branded industry and the other

one non branded industry. So, Shan Foods has a direct threat from both the sectors

whether it is dealing in spices or in ready to cook recipes or others. Other important

aspect is that as spice industry of Pakistan is growing it attracts more competition.

Government Regulations

Government in any country plays a vital role in the development or downfall of any

industry. In Pakistan, from some years the Government has revised its policies but the

reality is that it has not created a big impact on branded industry only non-branded is

being affected.

Un-Branded Spices

Despite the changes in government regulations and the increasing trend towards branded

spices, un-branded spices still remain as a major threat to Shan Foods because these Un-

branded spices are cheaper in rates as compared to branded spices to which Shan Food

belongs.

High Rate of Inflation in Pakistan

Pakistan as it is not economically stable the inflation rate keeps on fluctuating, mostly the

inflation rate in Pakistan high and if inflation rate is high the buying power of consumer


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decreases hence they will start switching towards un-branded spices which are cheaper in

rates as compared to branded spice.

2.3 Michael Porter’s 5 Forces Model




For evaluating Porter’s Five Forces Model on Shan Food Industries, we will discuss about the

following;

Bargaining Power of Suppliers

Bargaining Power of Customers

Threat of New Entrants

Threat of Substitute Product

Rivalry among Existing Competitors

Bargaining Power of Suppliers

Bargaining Power of suppliers within this industry is low, because as there are so many

suppliers who are providing food related products especially spices and ready to cook

products in Pakistani Market.

Bargaining Power of Customers

Bargaining Power of Customers within this is industry is high, because there so many option

which are available to customers in this market. In other words it means there are huge

number of suppliers in the same line of industry. Customers as they have high bargaining

power they will easily switch over to another product if prices are increased.

Threat of New Entrants

In spices industry of Pakistan to which Shan Food Industries belongs the threat of new

entrants has two dimensions. The first dimension is the branded spices industry, in branded

spices industry to which Shan Food Industries belongs there is as such no threat of new


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entrants but considering the second dimension which is unbranded industry. Players which

are coming as new entrants in unbranded industry can become a threat to Shan Food

Industries.

Threat of Substitute Product

Shan Food Industries got recognition due the spices which it is providing in the market and

as such spices do not have substitute in Pakistan, so Shan Food Industries does not have a

threat of substitute product. Whereas if see company wise then there are substitutes to Shan

Food Industries.

Rivalry among Existing Competitors

The Rivalry among existing competitors in this industry which is spices industry is very high

especially between the market leader which is National Foods and catching firm which is

Shan Food Industries. The other players in the industry also force Shan Food Industries

towards more competition.

2.4 PEST Analysis of Shan Food Industries




For evaluating Shan Food Industries in PEST analysis we will be going through the following

factors;

Political

Economic

Social

Technology

Political

Political analysis of the industry to which Shan Food Industries belong reveals that as such

there is no pressure on the companies which are working in Industry. Existing branded


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companies or any new entrants in the industry have to just follow the Companies Ordinance

1984. Government of Pakistan has not put any kind of legal restriction on Branded industry,

but if we see the dimension of Un-branded industry government has certainly imposed some

legal restrictions on them, so that their market share would decrease. The Government has

not imposed any restrictions on exports and imports of spices especially, but it is preferred to

export more than import. Overall if we see the political analysis of Shan Food Industries we

will find that there is no threat to Shan Foods because it comes under the head of Branded

industry, but the Government is forcing them to provide superior taste and quality.

Economic

Considering the economic condition of Pakistan, currently its trend is shifting towards

growth after the economic meltdown which was hit in Pakistan. The Economic Growth of

Pakistan is slow but if we see the growth of Food Industry it is rapidly growing, especially

the spices sector. Branded sector of spices industry over the past has rapidly grown and it has

laid its bases not only in Pakistan but also outside Pakistan. Economic growth has been great

but currently there is a major economic issue which food industry is facing and that is Food

Inflation. Food Inflation in general term means increase in prices over a period of time. In

Pakistan as such there are no bodies which look after the issue of food inflation. Hence, the

prices keep on fluctuating but due to buying power the prices do not go at an extreme level.

Social

Food plays a very vital role in the Culture of Pakistan, it is considered as a very important

tradition. People living in Pakistan prefer food products which provide superior quality and

taste and this is the reason due to which trends have shifted from unbranded spices industry

to branded spices industry. Socially Pakistani people due to education have got so much

awareness that companies belonging to food industry have to come with innovative and

creative ideas instead of old marketing traditions to attract more customers towards them.

Technology

Technology in any industry plays a very vital role. In modern era technology that too latest is

considered as a basic. Pakistan Food Industry from the past few years have started using


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proper technology which has become a major cause in time saving and cost reducing.

Considering the Food Industry of Pakistan technology not only has helped the industry but it

also has created problems for the new entrants, because industry requires technology and

technology requires huge capital investment which sometimes becomes a problem for the

new entrants. Currently companies having State of Art of technology do have a competitive

edge on others.

2.5 Internal Factor Evaluation of Shan Food Industries




For evaluating Shan Food Industries internally we have found out strengths and weaknesses

which belong to the company. Factors which are considered during internal evaluation of Shan

Food Industries are;

Strengths

Quality and Taste

Financial Backup


Brand Loyalty

Strong Relationship with suppliers and farmers

Customer Relationship Management


Weaknesses

Weak Distribution in markets of Punjab

Online Marketing


Weak Marketing Communications within the markets of Punjab


(Muhammad Abubakr)

Weak Advertising campaigns

Factors Weight Rating Weighted Average

(Weight x Rating)

Strengths

Quality and Taste 0.1 4 0.4

Financial Backup 0.1 3 0.3

State of Art Technology 0.1 4 0.4

Brand Loyalty 0.1 4 0.4

Strong Relationship with Suppliers and

Farmers

0.05 2 0.1

Customer Relationship Management 0.05 2 0.1

Research and Development Team 0.15 4 0.6

Weakness

Weak Distribution in markets of

Punjab

0.1 3 0.3

Online Marketing 0.05 2 0.1

Strict Credit Policy 0.05 2 0.1

Weak Marketing Communication

within the markets of Punjab

0.1 4 0.4

Weak Advertising campaigns 0.05 3 0.15

1 3.35

2.5.1 Interpretation of Internal Factors Evaluation

In the above internal factor evaluation matrix we have taken 7 strengths and 5 weaknesses of

Shan Food Industries. These strengths and weaknesses have been extracted from their current

situation. Talking firstly about strengths, each strength has been assigned weight according to its

importance in the industry and then it has been assigned rating according to the way company is

dealing with it.

On our Analysis of Shan food industries we found out that their main strength is quality and

taste, which they have been providing from 25 years within Pakistan and outside Pakistan. Shan


(Muhammad Abubakr)

Food Industries as it belongs to Food sector, it is necessary for them to provide taste and quality

to the consumers they dealing with and this is not just till Shan Foods, throughout the industry

Quality and Taste is a basic necessity to survive. For quality and taste we have assigned 4 to

Shan foods considering their taste and quality. The second strength mentioned is financial

backup, Shan Food Industries is a Private Limited Company and has enough finance to survive

in the market. In Pakistan Food industry financial backup is necessarily required for future

progress and expansion. We have assigned 3 as a rating to Shan Foods for financial backup

because of the reason that they are Private Limited Company. The third strength mentioned is

State of Art Technology, every industry for it progress requires latest technology mostly in the

form of machinery. Shan Food Industries as it is operating within and outside Pakistan, it has to

meet up the standards of technology for future progress. We have assigned 4 to Shan Food

Industries for State of Art Technology by keeping in mind their latest technology equipment’s.

The fourth strength mentioned above is Brand Loyalty, every company dealing in any industry

pays a lot of importance in creating Brand Loyalty. It is not so easy to create Brand Loyalty, it

requires several years of dedication. Shan Food Industries as its operating from the past 25 years

it has created a lot of brand loyalty within and outside Pakistan. We have assigned 4 as a rating

to Shan Foods for their brand loyalty by considering their current situation in the market. The

fifth strength mentioned above is Strong Relationship with Farmers and Suppliers. Shan Foods as

it belongs to food industry it has to buy raw material from local suppliers or from farmers

directly, so it is necessary for them to maintain strong relationships with their suppliers and

farmers. Through their 25 years Shan Foods has established strong relations with their suppliers

and farmers and that is why we have rated them with 2. The sixth strength mentioned above is

Customer Relationship Management, in Food Industry it is necessary for every company to deal

with customers in a proper way by providing them what they need at exact time and at

reasonable price. Shan Food Industries has established proper management which deals with

their customers in a proper way and hence allows them in building relations with their customers.

We have assigned 2 to Shan Foods for their customer relationship management by keeping their

current situation in mind. The Seventh strength that has been mentioned is Research and

Development team, Research and Development now a days play a very important in the

company whether for it progress or anything, they look after every aspect. Shan Foods industries

has established a proper department that take cares of research and development and it is


(Muhammad Abubakr)

considered as their main strength because through this department they identify the changes in

market. We have assigned 4 as a rating to Shan Foods for Research and Development team.

The second part of the IFE matrix given above details about the weaknesses that are being

related with Shan Food Industries. The first weakness mentioned is Weak distribution in markets

of Punjab, Shan Food Industry started its operation in the Sindh region and even after 25 years it

has a strong hold in Sindh region, despite this Shan Foods established good relations throughout

Pakistan and other world, but currently their main weakness is distribution in markets of Punjab.

Shan Food Industries distribution channel in Punjab is weak as compared to Sindh and that is

why they are currently ranked second in Spices Industry of Pakistan. We have assigned 3 as the

rating to Shan Foods for Weak distribution in Punjab because they have established certain

strategies which are looking after their distribution process. The Second weakness mentioned is

online marketing. Now a days in every business e-marketing plays a very vital role towards

progress, whereas if we look towards Shan Foods it currently does not has proper existence on

internet world. We have assigned 2 as a rating to Shan Foods for Online marketing by keeping

their current situation in mind. The third weakness which has been mentioned is strict credit

policy. Business belonging to any industry now a days deal with more credit as compared to

cash, but sometimes the credit policy may affect the company in both ways. Shan Foods credit

policy is strict throughout their existence and this is considered as their weakness because

sometimes companies have to deal in credit if there is no cash. We have assigned 2 as a rating to

Shan foods for their strict credit policy. Fourth weakness which has been mentioned is weak

marketing communication within Punjab. This weakness is some of related with the 2nd

weakness which has been mentioned above. We have assigned 4 as rating to Shan Foods on this

weakness because they have established certain strategies which are helping them in covering up

their deficiency. Fifth and the last weakness that has been mentioned is weak advertising

campaigns. Advertising campaigns play a very vital role in the success of a company because it

helps to attract the customers, Shan Foods till the last year had no proper marketing strategies

regarding advertising campaigns but in the current year they have worked a lot on this weakness,

but it still stays as a weakness for them. We have assigned 4 as rating to Shan Foods for this

factor because of their current advertising campaigns which are attracting customers towards

them.


(Muhammad Abubakr)

2.5.2 Interpretation of Total Weighted Score

The Total weighted score which we got by assigning weights and ratings to each factor is 3.35, it

means Shan Foods falls in above average category. This score shows that Shan Foods is

efficiently capitalizing on their strengths by trying to minimize their weaknesses to an acceptable

level.

2.6 External Factor Evaluation of Shan Food Industries




For evaluating Shan Food Industries externally we have found out opportunities and threats

which belong to the company. Factors which are considered during external evaluation of Shan

Food Industries are;

Opportunities

Increasing trend of women’s employment in Pakistan

Availability of Finest quality of Raw Material in Pakistan

Global Expansion

Increasing trend of branded spices in Pakistani market

Unexploited Segments outside the country

Threats

Exchange Rates

New Competitors

Changes in Government Regulations

Unbranded spices

High rate of inflation within Pakistan


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Factors Weight Rating Weighted Average

(Weight x Rating)

Opportunities

Increasing trend of women’s

employment in Pakistan

0.15 4 0.6

Availability of Finest quality of Raw

Material in Pakistan

0.1 3 0.3

Global Expansion 0.15 3 0.45

Increasing trend of branded spices in

Pakistani market

0.1 4 0.4

Unexploited Asian Segments outside

the country

0.1 2 0.2

Threats

Exchange Rates 0.05 2 0.1

New Competitors 0.1 3 0.3

Change in Government Regulations 0.05 2 0.1

Unbranded Spices 0.15 3 0.45

High Rate of Inflation within Pakistan 0.05 2 0.1

1 3

2.6.1 Interpretation of External Factors Evaluation

In the above external factor evaluation matrix we have taken 5 opportunities and 5 threats of

Shan Food Industries. These opportunities and threats have been extracted from their current

situation. Talking firstly about opportunities, each strength has been assigned weight according

to its importance in the industry and then it has been assigned rating according to the way

company is dealing with it.

On our Analysis of Shan food industries we found out that their main opportunity is the

increasing trend of women’s employment in Pakistan. In Pakistan, years ago women was not

preferred to leave her house premises for working but as time has passed the trend has also

changed. Women in Pakistan are allowed to work now a days and due to this they don’t have


(Muhammad Abubakr)

enough time to cook food in a traditional way, so they prefer ready to cook spices which will

help them in saving their time and also help them in preparing traditional food. Shan Foods along

with providing spices it also provides Pakistani market with ready to cook recipes which helps

them in capturing these working women’s. So, we have assigned 4 as a rating to Shan Food on

this opportunity. The second opportunity mentioned is availability of finest quality of raw

material. In Spice industry as it is detailed that raw material must be of highest quality for better

taste. From recent years Pakistan itself has started producing raw material of finest quality for the

spices industry, whereas this is considered as an opportunity for Shan Foods because Shan Foods

as it believes in providing finest taste and quality it prefers high quality of raw material so

instead of importing it from other countries it can buy it locally from those suppliers and farmers

which provide finest quality. We have assigned 3 as a rating to Shan Foods on this opportunity

because they have made strategies which are efficiently capitalizing on this opportunity. Third

opportunity which has been mentioned is Global expansion. Businesses now a days instead of

working in their own boundaries they try to target markets that exist across the boundaries, it

even refers towards globalization or global expansion. Shan Foods is currently operating in many

countries across Pakistan but still there are some countries which are not targeted by them, hence

giving them the opportunity to expand globally. We have assigned 3 as a rating to Shan Foods on

this opportunity because they are continuously trying to expand themselves in other countries.

The Fourth opportunity that is mentioned is increasing trend of branded spices in Pakistan. Few

years back people living in the urban areas and rural areas used to prefer unbranded or open

spices which were easily available at every small store at every corner, other reason was that

these spices used to cost less as compared to branded spices, but in 2 to 3 years which have

passed the trend completely shifted towards the branded spices. The main reason behind an

increase in this trend was due to Government strict policies which were taken, along with that

open or unbranded spices were causing health problems to people to rural and urban areas. Shan

Foods as it belongs to branded industry of spices it has a huge opportunity in Pakistan, it can

capture this opportunity which may lead them towards growth. We have assigned 4 to Shan

Foods on this opportunity because they are working continuously on this opportunity. The Fifth

opportunity which has been mentioned is unexploited Asian segments outside the country. Shan

Foods has already established it brand name outside the country but there are certain Asian

segments which they haven’t reached yet, for example; Asian community living in Germany are


(Muhammad Abubakr)

not able to access Shan Foods Spices and Ready to Cook recipes. This is the story of one Asian

community belonging to a country but in reality there are many other unexploited Asian

segments where there is immense need. We have assigned 2 as a rating to Shan Foods for this

opportunity because currently they are not focusing on these Asian segments around the world.

The second part of the EFE matrix given above details about the threats that are related to Shan

Food Industries. The first threat that has been mentioned is new competitors. In Pakistan, there

are two sectors of food industry one is branded industry and the other one non branded industry.

So, Shan Foods has a direct threat from both the sectors whether it is dealing in spices or in ready

to cook recipes or others. Other important aspect is that as spice industry of Pakistan is growing

it attracts more competition. We have assigned 2 as rating for Shan Foods on this threat because

Shan Foods is directly not paying any attention towards it. The second threats that has been

mentioned is change in government regulations. Government in any country plays a vital role in

the development or downfall of any industry. In Pakistan, from some years the Government has

revised its policies but the reality is that it has not created a big impact on branded industry only

non-branded is being affected. We have assigned 2 as rating to Shan Foods on this threat

depending on their current strategies. The third threat which has been mentioned is Un-branded

spices. Despite the changes in government regulations and the increasing trend towards branded

spices, un-branded spices still remain as a major threat to Shan Foods because these Un-branded

spices are cheaper in rates as compared to branded spices to which Shan Food belongs. We have

assigned 3 as rating to Shan Foods for this threat. The fourth threat which have been mentioned

is High rate of inflation in Pakistan. Pakistan as it is not economically stable the inflation rate

keeps on fluctuating, mostly the inflation rate in Pakistan high and if inflation rate is high the

buying power of consumer decreases hence they will start switching towards un-branded spices

which are cheaper in rates as compared to branded spice. We have assigned 2 as rating to Shan

Foods for this threat by keeping in the current situation of Pakistan and strategies which Shan

Foods has developed.


The Total weighted score which we got by assigning weights and ratings to each factor is 3, it

means Shan Foods falls in above average category. This score shows that Shan Foods is


(Muhammad Abubakr)

efficiently capitalizing on their opportunities and along with that they are responding well

towards threats.

2.7 Competitive Profile Matrix of Shan Food Industries




For evaluating Shan Food Industries with its competitors we have found out different factors.

Factors which are considered during competitive profile matrix are;

Quality and Taste


Brand Loyalty

Online Marketing


Marketing Campaigns

Global Expansion

Unexploited segments outside the country


New Competitors

Change in Government Regulations

Rate of Inflation

Shan Food Industries National Foods Unbranded Spice

Companies

Factors Weight Rating Weighted

Average

(Weight x

Rating)

Weight Rating Weighted

Average

(Weight x

Rating)

Weight Rating Weighted

Average

(Weight

x Rating)

Quality and

Taste

0.15 3 0.3 0.15 4 0.4 0.15 2 0.2


(Muhammad Abubakr)

State of Art

Technology

0.1 4 0.4 0.1 4 0.4 0.1 2 0.2

Brand Loyalty 0.15 4 0.6 0.15 4 0.6 0.15 2 0.3

Online

Marketing

0.05 2 0.1 0.05 3 0.15 0.05 1 0.05

Strict Credit

Policy

0.05 2 0.1 0.05 3 0.15 0.05 1 0.05

Marketing

Campaigns

0.1 3 0.3 0.1 4 0.4 0.1 1 0.1

Global

Expansion

0.1 3 0.3 0.1 4 0.4 0.1 1 0.1

Unexploited

Segments

outside the

country

0.1 2 0.2 0.1 3 0.3 0.1 1 0.1

Increasing trend

of women’s

employment in

Pakistan

0.1 4 0.4 0.1 4 0.4 0.1 2 0.2

New

Competitors

0.1 3 0.3 0.1 4 0.4 0.1 2 0.2

Change in

Government

Regulations

0.05 2 0.1 0.05 2 0.1 0.05 3 0.15

High rate of

Inflation within

Pakistan

0.05 2 0.1 0.05 3 0.15 0.05 2 0.1

1 3.2 1 3.85 1.75

2.7.1 Interpretation of Competitive Profile Matrix Factors

In Food sector, it is necessary for every company to provide taste and quality to the consumers

they dealing with and throughout the industry quality and taste is considered as a basic necessity

to survive. Shan Food Industries as it belongs to Food sector, it is necessary for them to provide


(Muhammad Abubakr)

taste and quality to the consumers they dealing with. For quality and taste we have assigned 4 to

Shan foods considering their taste and quality.

National Foods as it is currently market leader in the spice sector of food industry and their

quality and taste has been exceptional throughout years, we have given 4 to National foods on

Quality and taste. The Unbranded sector of food industry has been given a rating of 2 because of

their taste and quality that is below the standards.

Figure 15 - Quality and Taste Rating

State of Art Technology in every industry plays a vital role. Every company for it progress

requires latest technology mostly in the form of machinery. Shan Food Industries as it is

operating within and outside Pakistan, it has to meet up the standards of technology for future

progress. Shan Food Industries as it is operating within and outside Pakistan, it has to meet up

the standards of technology for future progress. We have assigned 4 to Shan Food Industries for

State of Art Technology by keeping in mind their latest technology equipment’s.

National Foods as it is currently market leader in the spice sector of food industry and they have

been serving all over the world so the machinery currently they have is latest equipped with

latest technology, we have given 4 to National foods on State of Art Technology. The Unbranded

sector of food industry has been given a rating of 2 because do not use modern technology they

prefer working manually.

Shan Food Industries National Food Industries Un-Branded Food Companies

Quality and Taste 3 4 2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Quality and Taste


(Muhammad Abubakr)

Figure 16 - State of Art Technology Ratings

Brand Loyalty plays a vital role in company’s progress, every company dealing in any industry

pay a lot of importance in creating Brand Loyalty. It is not so easy to create Brand Loyalty, it

requires several years of dedication. Shan Food Industries as its operating from the past 25 years

it has created a lot of brand loyalty within and outside Pakistan. We have assigned 4 as a rating

to Shan Foods for their brand loyalty by considering their current situation in the market.

National Foods as it is currently market leader in the spice sector of food industry and they have

been serving all over the world, along with that they are first mover in spice industry so they

have a lot of brand loyalty. Whereas the Unbranded sector of food industry has been given a

rating of 2 because people rarely preferring buying from them hence they do not have enough

brand loyalty.

Figure 17 - Brand Loyalty Ratings

Shan Food Industries National Food IndustriesUn-Branded Food

Companies

State of Art Technology 4 4 2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5



Brand Loyalty 4 4 2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Brand Loyalty


(Muhammad Abubakr)

Now a days in every business e-marketing plays a very vital role towards progress, companies

belonging to food industry of Pakistan have established themselves properly on internet, so that

they may be able to capture that niche. Shan Foods currently does not has proper existence on

internet world. We have assigned 2 as a rating to Shan Foods for Online marketing by keeping

their current situation in mind.

National Foods as it is currently market leader in the spice sector of food industry and the have

established there proper presence on Internet world and that is why we have given them a rating

of 3. Whereas the Unbranded sector of food industry has been given a rating of 1 because they

don’t prefer marketing themselves on internet.

Figure 18 - Online Marketing Ratings

Business belonging to any industry now a days deal with more credit as compared to cash, but

sometimes the credit policy may affect the company in both ways. Shan Foods credit policy is

strict throughout their existence and this is considered as their weakness because sometimes

companies have to deal in credit if there is no cash. We have assigned 2 as a rating to Shan foods

for their strict credit policy.

National Foods as it is currently market leader in the spice sector of food industry and they also

have a strict credit policy but during the last year they have certainly establish some strategies

which are helping them in covering up their weakness, so we have given a rating of 3 to National

Foods. Whereas the Unbranded sector of food industry has been given a rating of 1 because they

don’t’ deal in credit, they just work in cash.


Online Marketing 2 3 1

0

0.5

1

1.5

2

2.5

3

3.5

Online Marketing


(Muhammad Abubakr)

Figure 19 - Strict Credit Policy Ratings

Advertising campaigns play a very vital role in the success of a company because it helps to

attract the customers towards them. Shan Foods till the last year had no proper marketing

strategies regarding advertising campaigns but in the current year they have worked a lot on this

weakness, but it still stays as a weakness for them. We have assigned 3 as rating to Shan Foods

for this factor because of their current advertising campaigns which are attracting customers

towards them.

National Foods as it is currently market leader in the spice sector of food industry and the have

been coming with some revolutionary ideas of advertising campaigns which are attracting more

people towards them as compared to others, that is why we have assigned them a rating of 4.

Whereas the Unbranded sector of food industry has been given a rating of 1 because they are not

involved in marketing or advertising campaigns which may attract people towards them.

Figure 20 - Advertising Campaigns Ratings


Strict Credit Policy 2 3 1

0

0.5

1

1.5

2

2.5

3

3.5



Advertising Campaigns 3 4 1

0

1

2

3

4

5

Advertising Campaigns


(Muhammad Abubakr)

Businesses now a days instead of working in their own boundaries they try to target markets that

exist across the boundaries, it even refers towards globalization or global expansion. Shan Foods

is currently operating in many countries across Pakistan but still there are some countries which

are not targeted by them, hence giving them the opportunity to expand globally. We have

assigned 3 as a rating to Shan Foods on this opportunity because they are continuously trying to

expand themselves in other countries.

National Foods as it is currently market leader in the spice sector of food industry and along with

that they are also operating in numerous countries outside Pakistan, which means they have

globally expanded themselves, we have given a rating of 4 to National Foods. Whereas the

Unbranded sector of food industry has been given a rating of 1 because they have been only

working in Pakistan and they don’t have any linkage with global expansion.

Figure 21 - Global Expansion Ratings

In Pakistan, years ago women was not preferred to leave her house premises for working but as

time has passed the trend has also changed. Women in Pakistan are allowed to work now a days

and due to this they don’t have enough time to cook food in a traditional way, so they prefer

ready to cook spices which will help them in saving their time and also help them in preparing

traditional food. Shan Foods along with providing spices it also provides Pakistani market with

ready to cook recipes which helps them in capturing these working women’s. So, we have

assigned 4 as a rating to Shan Food on this opportunity.


that they are specially involved in those products which may help working women’s of Pakistan,

on these basis we have given them 4 as rating. Whereas the Unbranded sector of food industry


Global Expansion 3 4 1

0

1

2

3

4

5

Global Expansion


(Muhammad Abubakr)

has been given a rating of 2, this sector has been trying to focus women but as such there main

preference is to serve women’s that do not go for work.

Figure 22 - Increasing Trend of Women's employment in Pakistan

Shan Foods has already established it brand name outside the country but there are certain Asian

segments which they haven’t reached yet, for example; Asian community living in Germany are

not able to access Shan Foods Spices and Ready to Cook recipes. This is the story of one Asian

community belonging to a country but in reality there are many other unexploited Asian

segments where there is immense need. We have assigned 2 as a rating to Shan Foods for this

opportunity because currently they are not focusing on these Asian segments around the world.


that they are even concentrating on that Asian sector which is yet not reached by anyone and this

why we have assigned National Foods 3 as rating. Whereas the Unbranded sector of food

industry has been given a rating of 1 because they don’t have any link with those segments

which are yet to be exploited outside the country.


Companies

Increasing trend of women'semployment in Pakistan

4 4 2

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Increasing trend of women's employment in Pakistan


(Muhammad Abubakr)

Figure 23 - Unexploited Segments outside the Country

In Pakistan, there are two sectors of food industry one is branded industry and the other one non

branded industry. So, companies have a direct threat from both the sectors whether it is dealing

in spices or in ready to cook recipes or others. Other important aspect is that as spice industry of

Pakistan is growing it attracts more competition. We have assigned 2 as rating for Shan Foods on

this threat because Shan Foods is directly not paying any attention towards it.

National Foods as it is currently market leader in the spice sector of food industry and it does not

has any direct risk related to new competitors, but still they have made certain policies which

may help them in competing new competitors and that is why we have given them 4 as rating.

Whereas the Unbranded sector of food industry has been given a rating of 2 because they done

make such strategies which would help them in driving out their competitors from the market.

Figure 24 - New Competitors Ratings


Companies

Unexploited Segments outside thecountry

2 3 1

00.5

11.5

22.5

33.5



New Competitors 3 4 2

0

1

2

3

4

5

New Competitors


(Muhammad Abubakr)

Government in any country plays a vital role in the development or downfall of any industry. In

Pakistan, from some years the Government has revised its policies but the reality is that it has not

created a big impact on branded industry only non-branded is being affected. We have assigned 2

as rating to Shan Foods on this threat depending on their current strategies.

National Foods as it is currently market leader in the spice sector of food industry and as it is a

Public Limited Company that belongs to branded industry it does not has such risk that are

related with change in government regulations, so we have assigned them 2 as rating. The

Unbranded sector of food industry has been given a rating of 3 because they are the one who

suffer a lot if there are changes in government regulations and they do certainly make policies

which would help in avoiding this threat.

Figure 25 - Change in Government Regulations Ratings

Pakistan as it is not economically stable the inflation rate keeps on fluctuating, mostly the

inflation rate in Pakistan high and if inflation rate is high the buying power of consumer

decreases hence they will start switching towards un-branded spices which are cheaper in rates as

compared to branded spice. We have assigned 2 as rating to Shan Foods for this threat by

keeping in the current situation of Pakistan and strategies which Shan Foods has developed.

National Foods as it is currently market leader in the spice sector of food industry and as it is a

Public Limited Company that belongs to branded industry it has to take care of inflation factor,

because already National Foods and other branded companies are selling at a high price. We

have given National Foods a rating of 3 for this factor by keeping their strategies in mind. The

Unbranded sector of food industry has been given a rating of 2 because inflation is considered a


Companies

Change in Government Regulations 2 2 3

0

1

2

3

4



(Muhammad Abubakr)

plus point for them because as inflation increases consumers tend to buy those products which

are of less cost.

Figure 26 - High Rate of Inflation within Pakistan


The Total weighted score which we got by assigning weights and ratings to each factor is 3.25

for Shan Food Industries, 3.85 for National Food Industries and 1.75 for Un-Branded Food

Companies. It means Shan Food Industries falls in above average category, National Food

Industries fall in excellent category and Un-Branded Food Companies fall in below average

category.

2.8 Grand Strategy Matrix of Shan Food Industries




For Grand Matrix as it is compulsory to know that what is the competitive position and market

position overall. From our findings we have found out that market of this industry in Pakistan is

growing by 8 % yearly. Whereas the competitive position of Shan Food Industries is also strong

despite the fact that it not currently leading the spices industry of Pakistan. The Grand Strategy

Matrix of Shan Food Industries is shown below;


Companies

High Rate of Inflation within Pakistan 2 3 2

00.5

11.5

22.5

33.5

High Rate of Inflation within Pakistan


(Muhammad Abubakr)

2.8.1 Interpretation of Grand Strategy Matrix of Shan Food Industries

According to our calculation the growth in market is rapid, it grows by 8% yearly and the

competitive position of Shan Food Industries is also competitve. Based on our plotting Shan

Food Industries falls in the first quadrant where market growth is rapid and competititve position

is strong.

Shan Food Industries should adopt the strategy of market development, it means Shan Food

Industries should expand their markets within Pakistan and across the boundaries. This strategy

will help Shan Food Industries in developing its presence which may even lead them towards

market leader in future.


(Muhammad Abubakr)

2.9 Boston Consulting Group (BCG)Matrix of Shan Food Industries




In BCG matrix, we have mainly focused on the spice sector because of limited data that is

available with us. The Market Share of National Foods is 45%, Shan Food is 40%, Mehran

Foods is 10% and other companies is 5%.


(Muhammad Abubakr)

2.9.1 Interpretation of Boston Consulting Group Matrix of Shan Food Industries

Based on our calculations of Industrial growth and relative market share pattern we have plotted

the results as shown above. In BCG matrix we have concentrated on the spice sector of Pakistan

industry. In Spice sector as shown above National Foods is leading the market or it has high

market share, National Foods is currently falling in stars. Shan Food is right on second number

with market share of 0.85 as shown above and it is also falling in Stars. Whereas Mehran Foods

with a market share of 0.2 and other companies with a market share of 0.1 as shown above are

falling in question marks.

Shan Food Industries as it is not the market leader we will adopt the strategy of market

penetration. Through adopting this strategy Shan Food Industries can gain more market share

which would help Shan Food Industries in becoming the market leader. Through this strategy

Shan Food Industries will penetrate into Pakistani markets by reducing down their profits, they

will work on different promotional activities which will help them in gaining the market share.

2.10 Internal External Matrix of Shan Food Industries




For conducting Internal External Analysis on Shan Food industries we have also conducted

internal factor evaluation and external factor evaluation and by the help of their final score our

Internal External Matrix is as shown below;


(Muhammad Abubakr)


(Muhammad Abubakr)

2.10.1 Interpretation of Internal External Matrix of Shan Food Industries

According to our calculations which were brought from internal factor evaluation and external

factor evaluation we have plotted the Internal External (IE) matrix as shown above. The internal

factor evaluation score is 3.35 and external evaluation score is 3. After plotting these scores we

fall in quadrant (I,II,IV), this quadrant is called as grown and build and it is considered as the

strongest quadrant. Hence, Shan Food Industries as it falls in the strongest quadrant it must adopt

the strategy of market development it means Shan Food Industries should expand their markets

within Pakistan and across the boundaries. This strategy will help Shan Food Industries in

developing its presence which may even lead them towards market leader in future.

2.11 Strategic Position and Action Evaluation (SPACE) Matrix




For constructing Shan Food Industries Strategic Position and Action Evaluation Matrix we have

taken the following factors for the dimensions;

Financial Position

Financial Backup

Return on Investment

Net Profit

Inventory Turnover

Industrial Position

Growth Potential

Resource Utilization

Productivity

Profit Potential


Technology

Market Share

Quality Share


(Muhammad Abubakr)

Customer Loyalty

Stability Position

Competitive Pressure

Technological Position

Political Situation

Barriers to Entry

Financial Position Industrial Position

Financial Backup +5 Growth Potential +3

Return on Investment +5 Resource Utilization +4

Net Profits +4 Productivity +4

Inventory Turnover +4 Profit Potential +3

+18/4

= +4.5

+14/4

= +3.5

Competitive Position Stability Position

Technology -1 Technological Position -2

Quality Service -2 Competitive Pressure -3

Market Share -2 Barriers to Entry -3

Customer Loyalty -3 Political Situation -3

-8/4

= -2

-11/4

= -2.7

X axis = I.P + C.P

= +3.5 + (-2)

= +1.5

Y axis = F.P + S.P

= +4.5 + (-2.7)

= +1.8


(Muhammad Abubakr)


(Muhammad Abubakr)

2.11.1 Interpretation of Strategic Planning and Action Evaluation Matrix of Shan

Food Industries

According to our calculations as shown above we have plotted the Space Matrix above. In our

calculations X-axis value is +1.5 and Y-axis value is +1.8, which means Shan Food Industries is

falling in Financial Position and Industrial Position dimension. This dimension is also considered

as aggressive dimension so the strategy which we have selected is also aggressive.

Shan Food Industries as it is financially strong as compared to the industry, it can adopt the

strategy of backward integration. In this strategy Shan Food Industries will do a strategic

collaboration with their suppliers or even they can buy their suppliers which will help them in

making their industry position much stronger.

2.12 SWOT Matrix of Shan Food Industries




For creating SWOT matrix of Shan Food Industries we have taken the following internal and

external factors;

Strengths

Quality and Taste

Financial Backup


Brand Loyalty

Strong Relationship with suppliers and farmers



(Muhammad Abubakr)

Weaknesses

Weak Distribution in markets of Punjab

Online Marketing


Weak Marketing Communications within the markets of Punjab

Weak Advertising campaigns

Opportunities


Availability of Finest quality of Raw Material in Pakistan

Global Expansion

Increasing trend of branded spices in Pakistani market


Threats

New Competitors

Changes in Government Regulations

Unbranded spices

High rate of inflation within Pakistan


(Muhammad Abubakr)

Strengths Weaknesses

1. Quality and Taste

2. Financial Backup

3. State of Art Technology

4. Brand Loyalty

5. Strong Relationships with

suppliers and farmers

6. Research and Development Team

1. Weak Distribution in

Markets of Punjab

2. Strict Credit Policy

3. Weak Marketing

Communications within the

markets of Punjab

4. Weak Advertising

Campaigns

Opportunities S-0 Strategies W-O Strategies

1. Increasing trend of

women’s employment in

Pakistan

2. Availability of Finest

Raw Material in Pakistan

3. Global Expansion

4. Increasing trend of

branded spices in

Pakistan

5. Unexploited segments

outside the country

i. Strategic Collaboration with

Farmers and Suppliers (S5,O2)

ii. Penetrating into women working

areas of Pakistan (S1,S6,O1)

iii. Setup of new operations outside

the country (S1,S2,O3,O5)

i. Penetrating into the areas of

Pakistan (W3,W4,O4)

ii. Market Development with

easy credit policy

(W2,W4,O4)

Threats S-T Strategies W-T Strategies

1. New Competitors

2. Changes in Government

Regulations

3. Unbranded Spices

4. High Rate of Inflation

i. Provide exceptional taste to local

markets (S1,S3,S6,T1)

ii. Backward Integration (S5, S2, T3)

i. Improve marketing efforts

all over Punjab

(W3,W4,T1)

ii. Unrelated diversification

(W1,T1)

2.13 Quantitative Strategic Planning Matrix (QSPM) of Shan Foods





(Muhammad Abubakr)

For creating QSPM matrix of Shan Food Industries we have taken the following strategies in

which comparison will be done;

Setup of New Operation Outside the Country

Strategic Collaboration with Farmers and Suppliers

Penetrating into the areas of Pakistan

Along with that we have taken the following factors through which comparison of strategies will

be done;

Strengths

Quality and Taste


Brand Loyalty


Strong Relationship with Farmers and Suppliers

Weaknesses

Online Marketing


Marketing Campaigns

Opportunities

Global Expansion

Unexploited segments outside the country


Threats

New Competitors


Rate of Inflation


(Muhammad Abubakr)

Setup of New Operations

Outside Country

Strategic Collaboration

with Farmers and

Suppliers

Penetrating in to the

Areas of Pakistan

Factors Weight Attractiv

eness

Score

Total

Attractive

ness Score

Attracti

veness

Score

Total

Attractiveness

Score

Attracti

veness

Score

Total

Attractiveness

Score

Strengths

Quality and Taste 0.2 4 0.8 3 0.6 4 0.8

State of Art Technology 0.15 4 0.6 2 0.3 3 0.45

Brand Loyalty 0.1 3 0.3 2 0.2 4 0.4

Research and

Development Team

0.15 2 0.3 4 0.6 4 0.6

Strong Relationship

with Farmers and

Suppliers

0.1 1 0.1 4 0.4 3 0.3

Weakness

Online Marketing 0.1 3 0.3 1 0.1 3 0.3

Strict Credit Policy 0.05 1 0.05 4 0.2 1 0.05

Advertising Campaigns 0.15 3 0.45 2 0.3 4 0.6

1

Opportunities

Global Expansion 0.15 3 0.45 1 0.15 1 0.15

Unexploited Segments

outside country

0.1 3 0.3 2 0.2 1 0.1

Increasing Trend of

women’s employment

in Pakistan

0.15 1 0.15 3 0.45 4 0.6

Increasing Trend of

Branded Spices in

Pakistan

0.2 1 0.2 4 0.8 4 0.8

Threats

New Competitors 0.15 2 0.3 3 0.45 3 0.45

Unbranded Spices 0.15 1 0.15 3 0.45 3 0.45


(Muhammad Abubakr)

Changes in Government

Regulations

0.1 3 0.3 2 0.2 2 0.2

1 4.75 5.4 6.25

2.13.1 Interpretation of QSPM Matrix of Shan Food Industries

According to our calculations in which we have assigned weightage and attractiveness score to

all strategies we have found out the following results;

Strategy Total Attractiveness Score

Setup of New Operation Outside the Country 4.75

Strategic Collaboration with Farmers and Suppliers 5.4

Penetrating into the areas of Pakistan 6.25

Based on the calculation, we have to select that strategy which has the highest attractiveness

score. Shan Food Industries should adopt the strategy of Penetrating into the areas of Pakistan.

This strategy will help Shan Food Industries in capturing market share because currently it is not

the market leader.


(Muhammad Abubakr)

Chapter No: 3 – Conclusion

3.1 Conclusion

Pakistan the country which is renowned as an agricultural country, contributing its 70%

population to agricultural sector. The remaining 30% population contributes to different sectors,

but within this 30%, 20% belongs to the Food Industry. Pakistan’s culture is made up many

cultures mainly due to the invaders that came to Pakistan. In our culture food plays a vital role, in

the world we are famous for our traditions and from these traditions one key role is played by

food. People around world are familiar with our food, they love eating our food due to different

taste and spices that we add.

Pakistan Food industry goes through 4 phases which are, Production, Process, Transportation

and Distribution. These phases includes everyone from farmers to the distributors and important

thing is that if one of the phase is not working properly or is having an issue it may disturb the

whole cycle. Currently the major players of Pakistan Food industry are, Engro Foods, Mitchells

Food, National Foods, Nestle Pakistan and Unilever Pakistan Food, etc.

Talking about Pakistani Food it is famous for its taste around the world, due to the addition of

special spices, which enhance the taste of food mostly making it spicy. The Food Industry all

over the world represents a small niche, named as spices. The Food spices industry of Pakistan is

categorized in two dimensions, branded and non-branded industry. Branded Spice Industry,

According to Small and Medium Enterprise Development Authority (SMEDA) currently there

are 8,500 spices and salt grinding units that are working. Out of 8,500 units, 55% spices and salt

grinding units are operating in rural areas of Pakistan whereas the rest 45% of belong to the

urban areas. In the Branded industry there are some major players which are recognized by the

market, they are, National Foods, Shan Foods and Mehran Foods. Currently in spices industry

National Foods is the market leader. The production of spices industry revolves around seven

phases, Cleaning, Drying, Grading, Grinding, Packaging and Distribution.

Moving towards Shan Food Industries, It is a well renowned company not only in Pakistan but

outside Pakistan, across the boundaries Shan Food Industries is known for the quality and taste it

has been providing since its establishment. Shan Food Industries is a Private Limited Company

that was established in 1981 by Sikander Sultan. Since 1981, it has been providing products of


(Muhammad Abubakr)

exceptional quality and even after so many years it is mainly recognized due to its spices. Shan

Food Industries is currently operating in 60 countries outside Pakistan, major countries where

Shan Foods is recognized as a brand are, United Kingdom, United States, Middle East and Far

East Regions. Shan Foods currently holds a share of 40% in spices industry of Pakistan. Shan

Food Industries after a journey of 34 years it is currently offering a numerous number of food

products in the market whether it is Pakistan or outside Pakistan, the portfolio consists mainly of

spices, pickles, easy to cook mixes (recipe mix), dessert mixes, basmati rice and salt.

We have conducted strategic analysis or strategic audit on Shan Food Industries based on

strategic analysis tools. According to our first Strategic Analysis tool which is Porter’s 5 forces

model, we have found out that the bargaining power of suppliers in the industry is low, whereas

the bargaining power of customers is high and as such there is no threat of a substitute product

and new entrance to the branded industry to which Shan Food belongs. The second Strategic

Analysis tool used which is PEST Analysis. Through PEST we have found out that politically as

such there is not threat to the industry especially branded industry, but economically it is

effecting the industry despite the rapid growth and that is due to food inflation. Technology wise

Industry is flourishing because of the state of art technology which it has as a competitive

advantage.

The third Strategic Analysis tool used is SWOT through which we did the SWOT Matrix,

through this tool we determined the strengths, weaknesses, opportunities and threats of Shan

Food industries and according we prepared some strategies which are helpful for Shan Food

industries. The fourth Strategic Analysis tool used is Internal Factor evaluation or IFE matrix, in

which we used the internal factors of Shan Food Industries to determine its current standing. The

results determined that currently Shan Food Industries is performing above average internally.

The fifth Strategic Analysis tool used is External Factor evaluation or EFE matrix, in which we

used the external factors of Shan Food Industries to determine its current standing. The results

determined that currently Shan Food Industries is performing above average externally. The

sixth Strategic Analysis tool used is competitive profile matrix, which is used to do a comparison

between Shan Food Industries and other companies. On our analysis through this tool we have

found out that Shan Food just comes below National Foods which is the market leader and it

currently it is performing excellently in the industry. The seventh Strategic Analysis tool used is


(Muhammad Abubakr)

Internal External Matrix which is prepared through internal factor evaluation and external factor

evaluation. On our calculations we have found that Shan Food industries currently falls in grow

and build quadrant. The eight Strategic Analysis tool used is Grand Strategy matrix, through

which we have identified that Shan Food Industries fall Quadrant I in which the market growth is

rapid and competitive position is strong. The ninth Strategic Analysis tool used is Strategic

planning and action evaluation matrix, in which we have identified factors for financial position,

competitive position, industrial position and stability position. Using these factors we have done

calculations and based on our calculations Shan Food Industries falls in Aggressive quadrant.

The tenth Strategic Analysis tool used is Boston consulting group (BCG) matrix, through this

matrix we have identified the current standing of spices of Shan Food Industries which is

currently falling in the stars zone.

In the above mentioned tools by using their calculations we have developed different strategies

which Shan Food Industries can adopt for its future progress, all of the strategies which were

suggested were carried into the eleventh Strategic Analysis tool known as QSPM matrix.

Through QSPM we had to select the best strategy and according to our Calculations the best

strategy is to Penetrate into the areas of Pakistan.

3.2 Recommendation




According to Strategic Analysis which is conducted on Shan Food Industries it should currently

adopt the strategy of “Penetrating into the areas of Pakistan”. This strategy is determined using

different tools of strategic analysis on Shan Food Industries.

We recommend Shan Food Industries to adopt this strategy so that they can fulfill the business

objectives which they have determined. Our recommendation suggests that through this strategy

Shan Food Industries will be able to attract customers and by attracting customers they gain

more market share. As currently Shan Food Industries is just ranked 2nd

below the market leader

which is National Foods it can pressurize them by using this strategy. In this strategy Shan Food

Industries should reduce down their prices by reducing their profit margin up to an acceptable


(Muhammad Abubakr)

level. The amount of profit which will be reduced should be invested by Shan Food Industries

into different promotional activities or advertising campaigns which may help them in capturing

more market share.

We also recommend Shan Food Industries to target mostly the rural areas of Pakistan because as

trends have been changing, people in Pakistan are shifting from unbranded spices to branded

spices. The reason behind targeting rural areas is that people living there used to prefer

unbranded spices but now they have also shifted towards branded spices. Currently in the rural

areas of Pakistan as such there is now Branded Spice Company which has proper existence, so it

can be a major opportunity for Shan Food Industries. As Shan Food Industries major revenue is

earned by Spices and ready to cook recipes we recommend them to keep on concentrating on

these products by providing superior taste and quality to the markets of Pakistan and across the

boundaries.

Strategic Analysis of Shan Food Industries

Food

Transcript of Strategic Analysis of Shan Food Industries