COMMECS INSTITUTE OF BUSINESS AND EMERGING SCIENCES

SHAKARGANJ FOODS

November 29

2015 Report based on export of Shakarganj foods (Juices) to foreign Malaysia. It includes rules and regulations of trade from Pakistan to Malaysia. MALAYSIA

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T A B L E O F C O N T E N T

Executive Summary Mission and Vision About Company Juice divisions Why Anytime? Markets to be served Target Market Southeastern Asia nations (ASEAN) Culture of Malaysia Pakistan Trade and Payments Hofstede Comparison Malaysia Trade and Payments Rules of Origin Applied MFN Tariffs Import licensing, restrictions, and prohibitions Halal certification Economic Comparison of Pakistan and Malaysia Opportunities in Malaysian Trade Economic Relations (Pak-Mys) Opportunities in Malaysian Trade Economic Comparison of Pakistan and Malaysia Selangor Accessibility Port klang Entry Modes Stages of Going Global Organizational Structure Distribution Channel Marketing Program Product Classification Pest Analysis Budget Allocation

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EXECUTIVE SUMMARY

It is the mission of Shakarganj Foods to provide complete export services including purchase

contracts, shipping, warehousing, and delivery scheduling. The company will concentrate on special

and cultural exports from Karachi, Pakistan to the unique Malaysian town of Selangor. Shakarganj

Foods also plans to provide trade consultation services to newly started farms created under the

Consumers Farmland of oranges and mangoes.

The Company Shakarganj Foods will be a limited liability partnership registered in the state of

Malaysia for tax purposes. The company has a limited number of private investors and decided to go

public. The company has its main offices in Karachi, Pakistan. The juices include mango, orange and

Peaches. The company expects to begin offering its services in December.

MISSION AND VISION

“Shakarganj foods product limited strives to be among the leading companies in the

food industry and is committed to manufacturing and selling consistent high quality world

class product”

ABOUT COMPANY

Shakarganj Group comprises of several diversified business entities including, Shakarganj Mills

Limited (SML), Crescent Steel and Allied Products Limited (CSAPL) and Shakarganj Food Products

Limited (SFPL). SML was incorporated in 1967 and is listed on all three stock exchanges of Pakistan.

The company is a leading manufacturer of sugar, textiles, industrial ethanol and particle board.

Pakistan Dairy Association (PDA)

Lahore Chamber of Commerce & Industry (LCCI)

JUICE DIVISIONS

Beverages

Anytime Refresh

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WHY ANYTIME? Anytime is a tetra pack fruit juice by Shakarganj food limited. Flavors we are offering:

Apple

Mango

Orange There is a big market of juices in Malaysia the reason is that the people of their love fresh fruits and they have a tradition of drinking juices in breakfast. Fruits they like the most are Rose apple, mango, orange Guava, Pineapple and lychee.

MARKETS TO BE SERVED: Kualalampur, Selangor district near port Klang.

DEMOGRAPHICS Division

State Selangor in Kualalampur

35 towns in Selangor

Royal capital Klang

Area

Total 8,104 km2 (3,129 sq m

Population (2010) Total 5,411,324

Density 670/km2 (1,700/sq mi)

Best markets in Selangor Royal Selangor

Chow kit

Psychographic segmentation

Health conscious

Sports oriented

Target market

Our target market is family and young people of Malaysia because they enjoy juices with family. There are already many juice makers in Malaysia because trend of juices is increasing.

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SOUTHEASTERN ASIA NATIONS (ASEAN)

Southeast Asia or Southeastern Asia is a sub region of Asia, consisting of the countries that are

geographically south of China, east of India, west of New Guinea and north of Australia. The region

lies near the intersection of geological plates, with heavy seismic and volcanic activity. Southeast Asia

consists of two geographic regions: Maritime Southeast Asia, comprising Indonesia, East Malaysia,

Singapore, Philippines, East Timor, Brunei, and Christmas Island. Mainland Southeast Asia, also

known as Indochina, comprising Cambodia, Laos, Myanmar (Burma), Thailand, Vietnam, and West

Malaysia;

The major religions are Islam, Buddhism and Christianity. However, a wide variety of religions are

found throughout the region, including Hinduism and many animist-influenced practices. Political:

Definitions of "Southeast Asia" vary, but most definitions include the area represented by the

countries (sovereign states and dependent territories) listed below. All of the states excluding East

Timor are members of the Association of Southeast Asian Nations (ASEAN).

CULTURE OF MALAYSIA

Malaysia is a multi–ethnic, multicultural, and multilingual society, and the many ethnic groups in

Malaysia maintain separate cultural identities. The society of Malaysia has been described as "ASIA IN

MINIATURE"

Malaysia comprises of Malays in majority who are in dominance and are known as "Bumiputra",

while there are Indians (10% of the country's population) who mainly speak Tamil & Malaya lees.

These Indians brought about the Hindu & Sikh culture, which included temples, cuisines & clothing.

Malaysia also accounts for Chinese (second largest ethnic group) too, due to increased immigration.

When these Chinese intermarried Malaysians, they were referred to as

Since years, Malaysia has been enjoying a festive culture which comprises of mainly Arts & music.

Traditional art focused on carving & weaving. Jeweler was designed using Gold & Silver. Whereas, at

the same time in the mid 19th century, there were Islamic taboos that restricted artwork that

portrayed humans. Ever since islamaization took place, arts & tourism in Malaysia started focusing

on newer dances of Middle Eastern, Portuguese and Mughal origins. "Dhikir Barat" has gained great

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popularity over the years, which is a form of combined singing in groups. Within Malaysia, the largest

performing arts venue is the PETRONAS Philharmonic Hall.

Similarly, different tribes from West & East Malaysia have different dances.

Malaysia entertains its people through puppet shows which are very much lively and depict Indian

influence at the same time. Various influences can be seen in its architecture ranging from individual

cultures embedded in Malaysia to the very many varieties from other countries.

At the other end, Malaysian music has a variety of origins, based around a percussion of instruments.

When it comes to cuisines, it is divided among a great variety of ethnic groups. Rice, use of spices and

noodles are fondly eaten. Malaysia follows food ethics of many different cultures.

In Malaysia, each major religious group has its privilege to enjoy an official holiday on their holy days.

These official holidays differ by state, the most common of all being 'Hari Merdeka', which celebrates

the independences if Malaya. However, regardless of the ethnicities, festivals are celebrated and

enjoyed by everyone there all time as it’s the part of their culture.

Sports another event that keeps the Malays overwhelmed. Badminton, Golf and many other such

traditional sports events are held in Malaysia. Malaysian athletes have won a total of four Olympic

medals, all of which are in badminton, something in which Malaysians dominate.

Highlight media in Malaysia explains that besides Malay newspapers, there is large circulation of

English, Chinese, and Tamil dailies. Internet access is rare outside the main urban centers, and those

of the lower classes have less access to non-government news sources.

As far as language is considered, Malay texts are considered official.

PAKISTAN TRADE AND PAYMENTS

Pakistan’s overall external account balance posted a surplus of US $ 2.12 billion during Jul-Apr 2014-

15 against US $ 1.95 billion in the corresponding period last year due to marked improvement in the

current account and substantial foreign exchange inflows.

The current account deficit stood at US$1.4 billion during Jul-Apr 2014-15, which was 53.5 percent

less than the deficit of US $ 2.9 billion in Jul-Apr 2013-14.

Foreign exchange reserves improved substantially and reached US $ 17.8 billion by end of April 2015,

from US $ 14.2 billion at end June 2014.

Source

Highlights of the Pakistan Economic Survey 2014-15

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HOFSTEDE COMPARISON

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MALAYSIA TRADE AND PAYMENTS

Import prohibitions are maintained mostly for national security, religious, and environmental

reasons. A considerable portion of Malaysia's tariff lines remain subject to import licensing, most of

which is non-automatic and continues being used as a tool of trade and industrial policy for, inter

alia, regulating the flow of imports and promoting selected strategic industries. Malaysia's economy

recovered rapidly from contraction in 2009 as the drivers of economic growth shifted from export-

oriented manufacturing to domestic services between 2009 and 2012 the economy grew at an

annual average rate of 4.1%.7 In 2012 and early 2013, robust domestic demand offset weak external

demand and fuelled growth.

RULES OF ORIGIN

Malaysia has no national law governing rules of origin (ROO) for imports; it does not maintain any

non-preferential rules of origin. Preferential rules apply to imports under preferential trading

arrangements and FTAs Malaysia recognizes that ROOs need to be simple, easy to comply with, and

consistent across its FTAs so as to ensure that preferential tariffs are widely used and benefit the

small and medium enterprises (SMEs).

IMPORT LICENSING, RESTRICTIONS, AND PROHIBITIONS

LICENSING

No major changes have been made to Malaysia's import licensing regime, which affects about a

quarter of Malaysia's tariff lines. Since 2010, 55 tariff lines (e.g. sugar and automatic

cassette/cartridge loaders) have been removed.

PROHIBITIONS

During the period under review, Malaysia prohibited imports of a number of products from certain

countries on religious, security, health, and environmental health and safety grounds. In March 2013,

imports of 13 major product categories were prohibited, including certain animal feed, tires (new,

retreaded), poisonous chemicals and minerals, substances under the Montreal Protocol, and logs and

wood in the rough from Indonesia.

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HALAL CERTIFICATION

Malaysia has been successful in developing halal certification, reflecting the Government's aim to

make the country a hub for halal food products. In 2011 the authorities introduced the world's first

halal pharmaceuticals standards.43 All meat, processed meat products, poultry, and egg products,

domestically produced or imported, must receive halal certification from the Department of Islamic

Development Malaysia (JAKIM) or any foreign halal certification body recognized by JAKIM prior to

importation and distribution in Malaysia.

ECONOMIC RELATIONS (PAK-MYS)

In 1986, Malaysia export $515.5 million worth of goods to Pakistan mainly on palm oil while Pakistan

export to Malaysia was only $31.1 million. Thus, Pakistan has stated that it wants to explore more

joint venture with Malaysian companies. There is a trade and cultural pact between the two

countries, under which the import and export of various goods is done on fairly large scale. The

President and the Prime Minister of Pakistan along with other high officials visited Malaysia many

times and Malaysian officials also paid a good will visit to Pakistan. Malaysia and Pakistan signed

a free trade agreement called the Malaysia-Pakistan Closer Economic Partnership Agreement

(MPCEPA) in January 2008.

Pakistan and Malaysia are linked by Air Transport. Pakistan International Airlines operates many

flights from Karachi, Lahore, and Peshawar to Kuala Lumpur.

OPPORTUNITIES IN MALAYSIAN TRADE

“Sindh needs to reenergize their branding effort on agriculture products to make them more

marketable and palatable for international market….it will propel your [Pakistani] agriculture

products because these are of high grades and top quality”, he told Dawn.Com at the residence of Dr

Irfan Gul Magsi, a former Sindh minister the other day. Pakistan’s High Commissioner to Malaysia

Masood Khalid recently claimed that bilateral trade between Pakistan and Malaysia has reached $2.8

billion It has registered an impressive 14 per cent increase over last year. But Pakistan’s share in

bilateral trade is only $257 million indicating the balance of trade heavily in favor of Malaysia. The

gap could be covered by increasing export of rice, mangoes and beef to Malaysia

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Economic Comparison of Pakistan and Malaysia

FACOTRS MALAYSIA PAKISTAN

Continent Asia Asia

Primary Language Bahasa Malaysia Urdu

Currency Malaysian Ringgit Pakistani Rupee

Capital City Kuala Lumpur Islamabad

Largest City Kuala Lumpur Karachi

Government Type Constitutional Monarchy Federal Republic

GDP Per Capita $10,538 $1,278

GDP Growth Rate 4.73% 4.41%

Unemployment Rate 3.20% 5.10%

Inflation Rate 3.10% 7.20%

Trade Percentage Of GDP 154% 33%

Merchandise Imports $187 B $40.1 B

Merchandise Exports $228 B $24.7 B

Imports Of Goods And Services $227 B $46.3 B

Export Of Goods And Services $256 B $30.7 B

Industry Annual Percentage Growth 3% 1%

Industry Value Added % Of GDP 40% 21%

Manufacturing Value Added % Of GDP 23% 14%

Foreign Exchange Reserves $134 B $18.1 B

Total Population 29.7 M 182 M

Population Density 90.15 sq.km 250.70 sq.km

Median Age 27.4 yrs old 22.2 yrs old

Rural Population 7.94 M 113 M

Urban Population 21.8 M 69 M

Birth Rate 17.65(per 1000 people) 25.25 (1000)

Death Rate 4.7 6.94

Population Before Poverty Line 3.80% 22.30%

Literacy Rate 93.12% 54.74%

Life Expectancy 75.02 years 66.59 years

Internet Users 66.97% 10.90%

KUALA LUMPUR

Kuala Lumpur, the capital of Malaysia, is called KL by locals. Its modern skyline is dominated by the

451m-tall PETRONAS Twin Towers, a pair of glass-and-steel-clad skyscrapers with Islamic motifs. The

towers also offer a public sky bridge and observation deck. The city is also home to British colonial-

era landmarks such as the Kuala Lumpur Railway Station and the Sultan Abdul Samad Building.

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SELANGOR

Rank Districts Population

1 Petaling 1,782,375

2 Hulu Langat 1,141,880

3 Klang 848,149

4 Gombak 682,996

5 Kuala Langat 222,261

6 Sepang 212,050

7 Kuala Selangor 210,406

8 Hulu Selangor 205,049

9 Sabak Bernam 106,158

PORT KLANG

Port Klang is a town and the main gateway by sea into Malaysia.

Known during colonial times as Port Swettenham but renamed

Port Klang in July 1972, it is the largest port in the country. It is

located about 6 kilometers (3.7 mi) southwest of the town

of Klang, and 38 kilometers (24 mi) southwest of Kuala

Lumpur. Pulau Indah, Pulau Ketam and the other surrounding

island are under Port Klang Authority. Located in the District of

Klang, it was the 12th busiest container port (2012)in the world. It was also the 17th busiest port in

by total cargo tonnage handled in 2012. Port Klang is a sub-division of Klang district.

Accessibility

Port Klang is served by KTM komuter service and trains stop and port klang Komuter station. The

electric train connects service links to Klang, Kuala lampur and other parts of klang valley.

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E N T R Y M O D E S

Entry mode Description Advantages Disadvantages

Indirect Exporting

CONFIRMING HOUSES THERE ARE DEALERSIN SELANGOR WHICH ARE INTERMEDIATE SELLERS THAT WORK FOR ANYTIME. WE WILL RECEIVE THE PRODUCT REQUIREMENTS FROM THEIR CLIENTS, NEGOTIATE PURCHASES, MAKE DELIVERY, AND PAY THEM.

FAST MARKET ACCESS CONCENTRATION OF RESOURCES TOWARDS PRODUCTION

little or no control over distribution, sales, marketing, etc. as opposed to direct exporting

Joint Venture

ANYTIME WILL DO JOINT

VENTURE WITH TROPICANA

BECAUSE IT ALREADY HAVE

ESTABLISHED MARKET SHARE IN

MALAYSIA AND OFFERS MORE

FLAVORS IN THE COUNTRY

OTHER BENEFITS INCLUDE

POLITICAL CONNECTIONS AND

DISTRIBUTION CHANNEL

ACCESS THAT MAY DEPEND ON

RELATIONSHIPS

Conflict over asymmetric new investments Mistrust over proprietary knowledge

DYNAMIC FACTORS

EQUITY & NON EQUITY MODE

NON EQUITY MODE

EQUITY MODE

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STAGES OF GOING GLOBAL

1. Market entry

Anytime is exporting its three flavors of juices to Selangor, Malaysia. It will contact to their local dealers

who have best knowledge about market and taste of people. Through this anytime is entering into the

market. This entry requires one marketing activity which is event marketing where anytime is offering free

samples in upcoming cycle race.

2. Product specialization

When market is established in Malaysia then anytime can transfer its production of any single juice flavor

to other location. Here in case production of pineapple juice will be shifted in Malaysia because Malaysia

produces good pineapples. Then production of apple juice can be transferred to china because it produces

the largest amount of apple and have low cost labor over there.

3. Value chain disaggregation

Anytime at this stage will look for most beneficial location for its product. As china where there is more

population and there is low cost labor.

4. Value chain reengineering

At this stage anytime can increase its product line. That means more flavors of anytime can be introduced

for example its cocktail flavor, coconut flavor in Malaysia.

5. Creation of new market

At this final stage anytime will expand its market and target different customers at different location.

Market entryProduct

specializationValue chain

disaggregatiion

Value chain reengineering

New market

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ORGANIZATIONAL STRUCTURE

Specialized jobs are grouped according to traditional business functions.

Ideal for Shakarganj foods having a narrow product line, sharing similar technology.

ADVANTAGES

Helps maximize economies of scale

Highly efficient.

DISTRIBUTION CHANNEL

LETTER OF CREDIT

A letter of credit is a document from a bank guaranteeing that a seller will receive payment in full as

long as certain delivery conditions have been met. In the event that the buyer is unable to make

payment on the purchase, the bank will cover the outstanding amount.

Shakarganj juice will apply for L/C.

CEO

Production

Pakistan

Karachi

Marketing

Malaysia

Selangor

Shakarganj Juice Consumer Retailer Dealer/ Wholesaler

Apple Juice Orange Juice Mango Juice

Direction of the flow of products, services and

communications

Direction of the flow of information, Payment

and ordering

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PRODUCT CLASSIFICATION

Certification: HACCP, ISO, HALAL Type: With Sacs Shelf Life: 11 Months

Packaging: Tetra Pack Box Place of Origin: Karachi Product Type: Juice, Fruit Juice

MARKETING PLAN

Marketing Objectives First to create awareness of anytime in Malaysia

Develop potential sales to reduce marketing cost

Target Market Families living in Selangor who are health conscious and like fruit juice

Positioning Anytime will position itself as healthy fruit juice especially for breakfast

to give complete nutrition.

MARKETING MIX

Product

Anytime provides Fresh fruit juice of 3 flavors liked by

the Malaysians. Mango, orange and apple

Price

Available in 200ml tetra pack packaging at

price of 1 ringgit.

Place

Anytime is available at famous marts of kualalampur

Tesco and TMG mart

Promotion

Free sampling in upcoming event race” Run

my Buddies”

CHANNEL PLAN Manufacturer Retailer customer

CHANNEL OBJECTIVE ACTIVITY

Manufacturer Create awareness and make profit Production of quality juice

Retailer Maximize its selling space Sell products of anytime to final

customers and influence purchase.

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PROMOTIONAL PLAN

Following tools will be used for promotion.

Event marketing

Shelf merchandizing in stores Event marketing is generally a sponsorship or sampling of juice in events held in Selangor as

mentioned above about race run my Buddies which is going to be held on 20th December, 2015. Shelf

merchandizing is related with how well shelf in stores is presentable to customers.

PEST ANALYSIS

PEST analysis (Political, Economic, Social and Technological analysis) describes a framework of

macro-environmental factors used in the environmental scanning components of strategic

management in Malaysia.

FACTORS DESCRIPTION

P O L I T I C A L

Corruption does exist in the country. (This fact may become a barrier to foreign businesses as it adds to firm’s costs and can cause problems).

Transparency International ranks Malaysia 47th of 180 countries in its Corruption Perceptions Index.

E C O N O M I C

Malaysia’s main attraction as a location for business is its vibrant economy.

Over the last 10 years, economic growth has averaged 7% per year.

S O C I A L

This mix of populations gives Malaysia a rich and vibrant culture, and the country is seen as an example of racial harmony as the different populations have existed peacefully together for years.

T E C H N O L O G I C A L

This corridor hosts more than 360 multinationals, including foreign-owned and home-growth Malaysian companies, all focused on multimedia and communications products.

COPY RIGHTS PROTECTION

Sufficient effort has been expected to make the work original in character;

The work has been written down, recorded or reduced to a material form;

The author is qualified person or the work is made in Malaysia or the works first published in

Malaysia.

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Cash Flow Projected Actual Variance

Total Income 4,160,000 600,000 -3,560,000

Total Expense 100,000 150,000 -50,000

TOTAL CASH FLOW 4,060,000 450,000 -3,610,000

Monthly Income Projected Actual Variance

Income 1 4,000,000 430,000 -3,570,000

Income 2 130,000 140,000 10,000

Extra income 30,000 30,000 0

Other 0

TOTAL INCOME 4,160,000 600,000 -3,560,000

Housing Expense Projected Actual Variance

Mortgage or rent 50,000 51,000 -1,000

online Phone charges 800 500 300

Electricity 44,000 56,000 -12,000

Gas 22,000 28,000 -6,000

Water and sewer 8,000 8,000 0

Cable 12,000 18,000 -6,000

Waste removal 1,000 1,000 0

Maintenance or repairs 2,300 5,000 -2,700

Supplies 0 0 0

Other 12,000 15,000 -3,000

SUBTOTAL 152,100 182,500 -30,400

Transportation Projected Actual Variance

Vehicle payment 50,000 75,000 -25,000

Insurance 500,000 500,000 0

Licensing 50,000 60,000 -10,000

Other 5,000 5,000 0

SUBTOTAL 605,000 640,000 -35,000

Loans Projected Actual Variance

Personal 300,000 300,000 0

SUBTOTAL 300,000 300,000 0

Taxes Projected Actual Variance

Local 50,000 80,000 -30,000

SUBTOTAL 50,000 80,000 -30,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

TOTAL INCOME TOTAL EXPENSE TOTAL CASH FLOW

PROJECTED

ACTUAL

CashFlow

MonthlyIncome

MonthlyExpenses

FAMILY MONTHLY

BudgetPlannerMarch 2011

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FINANCIAL CONSIDERATIONS

Start-up assets required include expenses and cash needed to support operations until revenues

reach an acceptable level. Most of the company's liabilities will come from outside private investors

and management investment; however, we have obtained current borrowing from Habib Bank

Investments, the principal to be paid off in two years. A long-term loan will be paid off in ten years.

The company expects to reach profitability in year 2 and does not anticipate any serious cash flow

problems. We expect that about 35,000 units per month will guarantee a break-even point.

Reference

Sbp.org.pk

Economicsurvey.com

Imf.org

Wikipedia.com

Journals

Articles

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Report Prepared By

Syed Jabbar Ali Shah (Syed.jabbar_shah@ymail.com) CIBES I BBA-8

Submitted To, MR Baber Saad Khairi International Business I Course Supervisor CIBES I BBA-8