engro (s.m) presentation

Board of Directors' Meeting

TODAY December 2004

Engro Foods

Introduction

Engro Foods Vision Engro Foods will continue to make investments

aimed at impacting lives and delighting consumers each day, every day, in a multitude ways.

Mission To build food business to improve quality of life

by offering tasty, affordable and high nutritional products to our consumers while maximizing stakeholder’s value

Stage 1

Strategy formulation

EXTERNAL FACTOR ANALYSISKey Strategic Factors Weight Rating Weighted Score

OPPORTUNITIESTrend of cattle farming increase by 20% 0.3 3 0.9Competitor across town slow down their operations 0.1 4 0.4Diversification opportunities increased by 5% 0.05 1 0.05Reduction in Exports Restrictions 0.07 3 0.22Demand for UHT milk Growing by 9% 0.08 4 0.32Milk Consumptions Increased 0.1 3 0.3

THREATSNew Entrants 0.08 2 0.16Increment of Sales Tax 0.07 3 0.21Economic & Energy Conditions 0.05 3 0.15Fresh Milk market 0.05 2 0.1Small Target Market 0.05 2 0.1Total 1 2.91

Engro Foods

4= Superior 3=Responses above average 2= average response 1=poor response

INTERNAL FACTOR ANALYSISKey Strategic Factors Weight Rating Weighted Score

STRENGTHSBrand Image 0.08 4 0.32Growing Trend of Sales 0.03 2 0.06Market Share 0.05 3 0.15Distribution Channel 0.08 2 0.16Product Quality 0.07 3 0.21Innovation 0.04 3 0.12Customer Oriented 0.06 3 0.18Qualified Work force / Excellent Employee Moral 0.02 3 0.03

WEAKNESSESCentralized Decisions 0.17 2 0.34No Sales on Credit 0.21 2 0.42High Price 0.07 2 0.14Related Diversification 0.12 1 0.12Total 1 2.25

Engro Foods

4= Major Strength 3= Minor Strength 2= Minor Weakness 1=Major Weakness

COMPETITIVE PROFILE MATRIX (CPM)OLPERS NESTLE HALEEB

Critical Success Factors Weight Rating Score Rating Score Rating Score

1 Research& Development 0.12 3 0.36 4 0.48 2 0.24

2 Financial Position 0.13 3 0.39 4 0.52 2 0.26

3 Market Share 0.09 4 0.36 3 0.27 1 0.09

4 Product Quality 0.08 3 0.24 3 0.24 2 0.16

5 Price Competitiveness 0.11 3 0.33 2 0.22 3 0.33

6 Management 0.12 3 0.36 4 0.48 2 0.20

7 Customer service 0.06 3 0.18 3 0.18 2 0.12

8 Sales And DistributionNetwork 0.09 2 0.18 4 0.36 2 0.18

9 Production Capacity 0.07 2 0.14 3 0.21 4 0.28

10 Customer Loyalty 0.13 3 0.39 4 0.32 1 0.13Total 1.0 2.93 3.28 1.99

SPACE MATRIX STRATEGIC MANAGEMENTFinancial Position

+7+6+5

Conservative +4 Aggressive+3+2+1

Competitive Position

Industry Position-6 -5 -4 -3 -2 -1 +1 +2 +3 +4 +5 +6

-1-2

Defensive -3 Competitive-4-5-6-7

Stability Position

Y-Axis

INTERNAL STRENGTH POSITION EXTERNAL STRENGTH POSITIONCompetitive Position(CP) Industry Position(IP)

(Worst -7,Best -1)-1 Product Quality-1 Product Life Cycle-3 Market Share-2 Brand and image

Average Score =-1.75

(Worst +1,Best 7)+5 Barriers to entry+4 Growth Potential+4 Access to Financing+6 ConsolidationAverage Score =4.75

Financial Position (FP) Stability Position(SP)(Worst +1,Best +7)+5 ROA+5 Leverage+4 Leverage+6 Cash FlowAverage Score = 5

(Worst -6,Best -1)-2 Inflation -1 Technology-2 Demand Elasticity-4 TaxationAverage Score =-2.5

X-Axis

SPACE MATRIX STRATEGIC MANAGEMENT

Financial Position

+7+6+5 Aggressive

+4

2.5 +3 +2 +1

Industry Position-2 -1 +1 +2 +3 +4 +5 +6 +7

-1 6.5-2-3-4

CP = 1.75FP = 5SP = 2.5IP = 4.75 

X- Axis1.75 + 4.75 =

6.5

Y- Axis-2.5 + 5 =

2.5

SPACE MATRIX STRATEGIC MANAGEMENT

BCG Matrix Model

1- Question mark ↑↓2- Star↑↑3- Cash Cows ↓↑4- Dogs ↓↓

Internal External (IE) Matrix

IGrow and Build

IIGrow and Build

IIIGrow and Build

IVGrow and Build

VGrow and Build

ENGRO

VIHarvest

VIIGrow and Build

VIIIHarvest

XIHarvest

Strong3 to 4

Average2 to 2.99

Weak1 to 1.99

Low1 to 1.99

Medium2 to 2.99

High3 to 4

IFE

EFE

Strategy Selection

Stage 2

Internal External Factor WeightDIVERSIFICATION (TARANG

POWDER) MARKET PENETRATION

Strengths   AS TAS AS TAS

Brand Image 0.08 3.00 0.24 2.00 0.16Growing Trend of Sales 0.03 1.00 0.03 1.00 0.03

Market Share 0.05 3.00 0.15 1.00 0.05Distribution Channel 0.08 4.00 0.32 4.00 0.32

Product Quality 0.07    Innovation 0.04 1.00 0.24  1.00 0.24

Customer Oriented 0.06    Qualified Work force / Excellent Employee Moral 0.02 2.00 0.04 3.00 0.06

Weaknesses          Centralized Decisions 0.17    

No Sales on Credit 0.21 3.00 0.63 2.00 0.42High Price 0.07  4.00 0.28  4.00 0.28

Related Diversification 0.12      1.00        

QSPM of Tarang

Opportunities          Trend of cattle farming increase by 20% 0.3 1.00 0.30  3.00 0.90Competitor across town slow down their operations 0.10 3.00 0.30 3.00 0.30Diversification opportunities increased by 5% 0.05 4.00 0.20 1.00 0.05Reduction in Exports Restrictions 0.07    Demand for UHT milk Growing by 9% 0.08 1.00 0.08 4.00 0.32Milk Consumptions Increased 0.10 4.00 0.40 4.00 0.40Threats          New Entrants 0.08  4.00 0.32   4.00 0.32 Increment of Sales Tax 0.07  2.00 0.14   3.00 0.21 Economic & Energy Conditions 0.05 4.00  0.2  3.00  0.15 Fresh Milk market 0.05  2.00 0.1   2.00 0.1 Small Target Market 0.05    Total 1.00   3.97   4.31

Internal External Factor WeightDIVERSIFICATION (TARANG

POWDER)MARKET

PENETRATION

  AS TAS AS TAS

QSPM of Olper’sInternal External Factor Weight

MARKET DEVELOPMENT

PRODUCT DEVELOPMENT

Strength   AS TAS AS TASBrand Image 0.08 2.00 0.16 1.00 0.08

Growing Trend of Sales 0.03    Market Share 0.05 2.00 0.10 1.00 0.05

Distribution Channel 0.08 4.00 0.32 2.00 0.16Product Quality 0.07    

Innovation 0.04 2.00 0.08  4.00 0.16Customer Oriented 0.06 1.00 0.06 3.00 0.18

Qualified Work force / Excellent Employee Moral

0.02   

Weakness          Centralized Decisions 0.17    

No Sales on Credit 0.21 2.00 0.42 1.00 0.21High Price 0.07    

Related Diversification 0.12  1.00 0.12 1.00 0.12  1.00        

QSPM of Olper’sInternal External Factor Weight

MARKET DEVELOPMENT

PRODUCT DEVELOPMENT

  AS TAS AS TASOpportunities          Trend of cattle farming increase by 20% 0.30 3.00 0.90  1.00 0.30

Competitor across town slow down their operations 0.10

4.00 0.40 1.00 0.10Diversification opportunities increased by 5% 0.05    Reduction in Exports Restrictions 0.07  4.00 0.28 2.00 0.24Demand for UHT milk Growing by 9% 0.08 3.00 0.24 2.00 0.16Milk Consumptions Increased 0.1 2.00 0.20 2.00 0.20Threats          New Entrants 0.08 1.00  0.08  2.00  0.16 Economic & Energy Conditions 0.05 3.00  0.15  2.00  0.1 Increment of Sales Tax 0.07    Fresh Milk market 0.05  3.00 0.15   2.00 0.1 Small Target Market 0.05    Total 1.00   3.66   2.32

Stage 3

Strategy Implementation

SBU’s StructureCEO

Chief Finance officer

Chief operating

officer

Brand head of olpers

Brand head tarang

Brand head of omang

Brand head of omore

VP of HR VP of Marketing

Chief management

officer

Subordnate

VP of HR

VP of HR

VP of HR

Conclusion