TABLE OF CONTENTS PARTICULARS |PAGE No | |INTRODUCTION | 2-4 | |Pakistan Edible Oil Industry Overview |5-6 | |Introduction & History Of Dalda |5-6 | |Mission Statement |7-8 | |Organization Structure |9-10 | |Manufacturing Facility & Process |11 | |Market Share |12-13 | |Competitors Overview: Sufi Oil |14-16 | | Habib Oil Mills | | | ENVIRONMENTAL ANALYSIS | | |Porter five forces model |17-23 | |Political, Economic, Social and Technological |24 | |EFE Matrix |25-26 | |COMPANY AND COMPETITOR ANALYSIS | | |CPM Matrix |27 | | INTERNAL ANALYSIS | |Value Chain Management |28 | |Core Competencies |29 | |Strategic Cost Management |30 | |IFE Matrix |31-32 | |STRATEGIC ANALYSIS AND RECOMMENDATIONS | | |Generic Strategy |33 | |SWOT Analysis |34-37 | |TOWS Matrix |38-39 | |SPACE Matrix |40-42 | |BCG Matrix |43-44 | |IE Matrix |45 | |Grand Strategy Matrix |46 | |QSPM Matrix |47-49 | |STRATEGIC IMPLEMENTATION | | |The components of Strategic implementation |50-51 | |Balanced Business Scorecard |52-54 | |Diagnostic Survey |54-58 | PAKISTAN EDIBLE OIL INDUSTRY- OVERVIEW Edible oils and fats are an essential part of the daily needs of a Pakistani family.
It is also a significant part of household expenditure of an average family – almost 6% of the household budget is spent on it. Branded as well as non-branded products compete in the market.
Branded products are mostly at the high end of the market and non-branded towards the lower end of the market and mostly selling in loose form.
Edible oils and fats are marketed in variety of packaging formats – tin cans, plastic bottles, plastic pouches, plastic buckets and in loose form. Ghee and cooking oil industry in Pakistan relies heavily on the imported edible oil and spends a hefty foreign exchange on the payment of edible oil imports. Currently, Pakistan spends about $1. 0 billion per annum on the import of edible oil. At present the capacity utilization of ghee or edible oil is about 55 percent. A probable reason for this under utilization is the existence of unregistered ghee and cooking oil-processing units in the country. Edible oils market is a highly fragmented market with many brands and non branded players.
Total Consumer Cooking Fats & Oils Market [pic] The Cooking Fats and Oils market in Pakistan is about 1. 2 million tones of which Vanaspati market accounts for 0. 875 million tones and edible oils for about 0. 325 million tones. Of the total market of 1. 2 million tones, the branded market is about 51. 65% and the remaining 48. 35% is un-branded. An analysis of the major players in the branded market reveals that most of this market is non-premium segment taken by a large number of very small regional brands. Companies with national presence dominate the premium segment. On the basis of its market, it is divided into three categories; national, regional and local.
National brands are those popular in the whole country and marketable in the whole cities of Pakistan. Some examples are Dalda, Habib and Sufi. Local brands are those, which are present in a particular province like Punjab. Some examples are Kisan, Meezan, Kashmir or Shan. Regional brands are those which are present in a particular city like Rawalpindi. Some examples are Latif, Shahbaz etc. INDUSTRY SEGMENTS The oil and ghee industry has 3 clear segments. ? Ghee (75. 33%) with a total consumption of 1. 75 Mil tons. ? Cooking Oil (23. 33%) with a total consumption of 1. 0 Mil tons ? Industrial Fat (1. 34%) with a total consumption of 50,000 tons. LIST OF ALL PLAYERS: INDUSTRY PALYERS
The names of various players in the industry with their respective sales volume per annum in the ghee and oil categories are as follows: | |GHEE |OIL | |Dalda |65,000 |100,000 | |Habib |85,000 |105,000 | |Ghee Corpo. Of Pakistan |144,000 | | Associated |66,000 |1,200 | |Hamza |30,000 |1,500 | |United |30,000 | | |Punjab Oil |20,000 |800 | |Gulf |6,000 |700 | |Continental |2,500 |600 | |Mehboob |20,000 | | |Faisalabad (Kissan) Oil |20,000 |3,000 | |Shahbaz |30,000 | | |Khayaban |30,000 | | |Chniot Ent. 20,000 | | |Waheed Hafeez |40,000 | | |Piracha Ghee |10,000 | | |Hunza |20,000 |2,500 | |Madni |10,000 |2,500 | |P T C | |3,000 | |Agro (Soya Supreme) |15,000 |65,500 | |TULLO |25,000 |85,000 | |SUFI |20,000 |81,000 | |Evolin | |5,000 | Market Share DALDA FOODS INTRODUCTION The Dalda brand has a strong heritage in Pakistan.
It is synonymous with assured quality, which is why the business has been able to charge a premium over its competitors year after year. The Dalda brand is one of the 3 leading top brands in the Country. Current trademark and license rights in Pakistan only for: o Dalda Vanaspati o Dalda Melange o Dalda Cooking Oil o Dalda Planta HISTORY OF VANASPATI Dalda brand was first launched in British India in 1938. However, the Company launched the brand in Pakistan in 1952. The brand was successfully re-launched in 1997 when the Trans level in formulation was reduced to below 1% making it the healthiest Vanaspati available in Pakistan. The brand was again re-launched in 2001 with a new flavor “Irresistible taste with nutrition.
HISTORY OF COOKING OIL Dalda cooking oil was first launched in 1981 and re-launched in 1997 with the addition of Vitamin-E to create functional differentiation. The brand was again re-launched in 2001 on the platform of “Good Health, Great Taste…” Dalda is an all-purpose Vanaspati used in the preparation of all types of meals and is branded as a high quality grade in the retail market. Dalda is the most established branded vanaspati and holds a significant market share of the premium branded vanaspati market (Excluding Industrial Vanaspati Market). Dalda Melange is a recently developed cooking medium that is typically used in the preparation of all types of meals.
It has been developed as a middle product between Vanaspati and edible oil primarily to appeal to the health conscious customers Dalda Cooking Oil is a well-established name in the Edible Oils Market having significant share of premium branded cooking oil. Launched in 1981, the brand is on top of the recalled foods brands of Pakistan. It has seen a continuous volume growth over the years and is one of the most trusted household names. Planta was launched in 1989 specifically to attract the customers who wanted the health benefits of oil and taste of Vanaspati. The brand was transferred to the house of Dalda in June 2000 and the name was reformatted as Dalda Planta.
It enjoys very loyal customers’ base taking 4% of the branded edible oil market. Dalda products are manufactured in a Company-owned plant located at Sindh Industrial & Trading Estate (S. I. T. E. ) Karachi. The Company’s principal products compete in the categories of • Vanaspati and • Edible Refined Oils and are distributed primarily through an integrated channel of company distributors. MISSION STATEMENT OF DALDA Dalda …. Our Purpose ”At the heart of the corporate purpose, which guides us in our approach to doing business, is the drive to serve consumers in a unique and effective way. This purpose has been communicated to all employees worldwide”.
Our purpose in Dalda is to meet the everyday needs of people everywhere – to anticipate the aspirations of our consumers and customers and to respond creatively and competitively with branded products and services which raise the quality of life. Our deep roots in local cultures and markets around the world are our unparalleled inheritance and the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers – a truly multi-local, multinational. Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively and to a willingness to embrace new ideas and learn continuously.
We believe that to succeed requires the highest standards of corporate behavior towards our employees, consumers and the societies and world in which we live. This is Dalda’s road to sustainable, profitable growth for our business and long-term value creation for our shareholders and employees. ” MAIN COMPONENTS OF MISSION STATEMENT 1. CUSTOMERS: The purpose of Dalda is to serve consumers in a unique and effective way. 2. PRODUCTS OR SERVICES: It caters the requirement of everyday namely soap and detergents for washing and cleaning, tea for drinking and margarine for daily breakfast. 3. CONCERN FOR SURVIVAL: The Economic objectives of Dalda are deep rooted in local cultures and markets around the world. 4.
PHILOSOPHY: The philosophy of the company is to provide highest standard of corporate behavior towards the employees, consumers and the societies. 5. SELF CONCEPT: Total commitment to exceptional standards of performance and productivity. 6. CONCERN FOR PUBLIC IMAGE: Profitable growth for the business and long term value creation for shareholders and employees. 7. CONCERN FOR EMPLOYEES: The Company also focus to look after the employees and to motivate them to look after the interest of consumers. DALDA FOODS (PVT) LIMITED ORGANIZATION STRUCTURE Organizational Chart Of a Department MANUFACTURING FACILITY Production facilities are situated at a strategic location at Sindh Industrial & Trading Estate (S. I. T. E. , Karachi near to the Karachi Sea Port to enable easy access to imported raw material. The factory has an area of about 9. 27 acres. The oil refinery is highly automated and utilizes advanced technological processes. The Refinery includes all buildings, land, electrical and mechanical installations, furniture, fittings, machinery and equipment utilized by the business, including the margarine plant but excluding the third party packing facilities, which are located within the same vicinity. MANUFACTURING PROCESS MARKET SHARE In a highly fragmented MARKET Dalda is the largest selling single brand. Dalda‘s market can be broadly divided in two parts. 1.
Vanaspati market 2. Edible oil market. VANASPATI MARKET Total Vanaspati Market [pic] Branded Vanaspati Market [pic] An analysis of the total market reveals that about 47% of the market are un-branded. Of the remaining 53% market, premium segment constitutes only about 12% of the total market. In the branded market however, the premium segment accounts for 23%. Edible Refined Oil Market An analysis of the total market reveals that about 52% of the market is un-branded. Of the remaining 48% market, premium segment constitutes about 30% of the total market. In the branded market, however, the premium segment has a major share and accounts for about 62%. OIL COSTING SHEET | | | | A: COSTING |PER KG % | EXAMPLE (RS) | | Oil |80% | 80 | | Ingredients |1% | 1 | | Packaging Material |8% | 8 | | Total Cost of Material / TON |89% | 89 | | 2. Product Cost (per ton) | | | | Variable Costs | | | | Material Cost |89% | 89 | | Variable FOE 2% | 2 | | Distribution Cost |2% | 2 | | Fixed Costs | | | | FOE |2% | 2 | | | | | | Total Product Cost per ton |94% | 94 | | 3.
Period Cost (per ton) | | | | Direct | | | | Team Cost | | | | Admin Costs |1% | 1 | | Finanical Charges |1% | 1 | | Ammortization |0% | 0 | | Advertising & Promotion |2% | 2 | | Others – Taxation |1% | 1 | | Total Period Cost Per Ton |3% | 3 | | 4. NPS COST | | | | Redistribution |0% | 0 | | TPR |2% | 2 | | Shortages/ Damages . 5 % of GSV |0% | 0 | | Total NPS Cost |2% | 2 | | Total Cost |100% | 100 | | CHANGE TOTAL COST ALL OTHER COSTS WILL CHANGE AS PER %. | | | COMPETITORS [pic] INTRODUCTION Sufi Group of Industries are one of the most dynamic and quality conscious companies with customer oriented approach towards their products. Sufi has a long-standing commitment to the community and to giving back to society.
The top management of Sufi has believed that the Company has a responsibility to use its money, its people, its energies and resources for the long-term benefit of society. Over the last decade, Sufi Group of Industries has emerged as one of the fastest growing, forward-looking and most innovative consumer goods company in Pakistan. Right from recruiting and training top talent to setting new standards of product quality and promotional excellence. Sufi provides products and services of superior quality and value their customers. Their customer oriented policy has given them a proper identity in the market. Their slogan is that customer is the lifeline of business and they need to be satisfied at any cost.
Serving the country since 1952, the company has diversified into the field of Soap chemical products, detergent and edible oil business. Products are Sufi Mini, Sufi Darja Awwal, Sufi Glycerine, Sufi Brown, Sufi Special Quality, Sufi Super, Sufi Nirol and Sufi Ploy Bag 1 kg; 1/2 kg. HISTORY OF SUFI Established in 1992 with state of the art facilities to produce quality guaranteed cooking oils. The company defined its goals as producing the best edible oil for quality conscious consumers with the local market in mind and proper influx of quality management. The Sufi oils have become a household name. The company is currently producing oil under the following brand names. o Sufi Canola Oil o Sufi Banaspati Ghee o Sufi Sunflower Oil o Sufi Soyabean Oil
The Strong market presence with its marketing team and customer support has built a solid reputation of being committed to their quality. This has led Hamza Vegetable oil to become a leading manufacture of quality oils. HABIB OIL MILLS Habib Oil Mills (Pvt. ) Ltd. “HOM” is the largest FMCG Company exclusively in the vegetable oil & fats sector in Pakistan. The company produces premium brand cooking oils and hydrogenated cooking mediums, and markets the products through its own distribution network, which covers almost all commercially viable markets nation wide. Habib Oil Mills (Pvt. ) Ltd. is one of the leading processors and marketer of vegetable oil and its products.
The company sells 52,000 tons of branded consumer packs of cooking oil and banaspati nationally through a well-established network of 350 distributors. The total turnover of Habib Oil Mills is Rs. 2 billion. It has grown at the rate of 9-10% per annum for the last 5 years. It has an 8. 8% share of the total branded consumer pack market. The company covers all major segments of the market. It enjoys an excellent marketing reputation and is viewed as a professionally managed, ethical company marketing quality product. There is a growing concern with environmental issues in the organization. PRODUCTS The products of Habib Oil Mills include Edible Oil and Banaspati. These products are being marketed in a variety of sizes and packaging options. Habib has the largest range of products.
Out of all the products offered by the company, Super Habib, Habib Cooking Oil, and Habib banaspati are all flagship brands. Super Habib and Habib Cooking Oil are the most profitable brands whereas Habib Banaspati has the highest volume tonnage sales. • Super Habib • Habib Cooking Oil • Habib Banaspati • Habib Corn Oil • Nayab, Handi and Mayar Banaspati • Nayab, Handi and Mayar Banaspati are regional brands of Habib Oil Mills. • Fryo ANALYSIS OF THE INDUSTRY USING MICHAEL PORTER’S FIVE COMPETITIVE FORCES Worksheet on Industry Structure | | | | | | | |1.
Threat of Entrants | | | |Yes |Moderate |No | | | |(+) | |(-) | | | | | | | | | | | | | |1) | Do large firms have a cost or performance advantage in your segment of the | | | | | |industry? | | | | | | |? | | | |2) | Are there any propriety product differences in your industry? | ? | | | |3) | Are there any established brand identities in your industry? |? | | | |4) | Do your customers incur any significant costs in switching suppliers? | | |? |5) | Is a lot of capital needed to enter your industry? | ? | | | |6) | Does the newcomer to your industry face difficulty in accessing distribution | | |? | | |channels? | | | | | | | | | | |7) |Does experience help you to continuously lower costs? | | |? | |8) |Does the newcomer have any problems in obtaining the necessary skilled people, | | |? | | |materials or supplies? | | | | | | | | | |9) |Does your product or service have any proprietary features that give you lower | | |? | | |costs? | | | | | | | | | | |10) |Are there any licenses or qualifications that are difficult to obtain? | | |? | |11) |Can the newcomer expect strong retaliation on entering the market? |? | | | | 12) |Is serviceable used equipment expensive? | ? | | | | |Total 6 | |6 | ANALYSIS Although this matrix suggests that the threat of entrants is moderate, however, we feel that factors such as capital requirements (and existing established brands would create problems for new entrants) have a higher weight age. It is therefore our opinion that the threat of entrants is low. This alone explains why in recent past we have seen hardly any new companies entering the edible oil industry. LowModerateHigh | |2. Bargaining Power of Buyers | | |(To what extent are your customers locked into you? | | | | | | |Yes |Moderate |No | | | |(+) | |(-) | | | | | | | | | | | | | |1) |Are there a large number of buyers relative to the number of firms in the business? |? | | | | | | | | | |2) |Do you have a large number of customers, each with relatively small purchases? |? | | | |3) |Does the customer face any significant costs in switching suppliers? | | |? | |4) |Does the buyer need a lot of important information? | | |? | |5) |Is the buyer aware of the need for additional information? | |? | |6) |Is there anything that prevents your customer from taking your function in-house? |? | | | | | | | | | |7) |Your customers are not highly sensitive to price | | |? | |8) |Your product is unique to some degree or has accepted branding |? | | | |9) |Your customers’ businesses are profitable |? | | |10) |You provide incentives to the decision makers | |? | | | | | | | | | |Total |5 |1 |4 | ANALYSIS The table above shows that buyers of the edible oil industry have low to moderate bargaining power. This is because, there are large numbers of buyers as compared to the producers in the edible oil industry, and the end consumer to some degree does purchases based on brands rather than prices, therefore, buyers have little bargaining power.
There is however a limit to which the company can exploit the buyers, for example if Dalda starts charging too higher price then the buyers would switch brands. LowModerateHigh | |3. Threat of Substitutes | | |(some other product or service that performs the same job as yours) | | | | | | |Yes |Moderate |No | | | |(+) |(-) | | | | | | | | | | | | | |1) |Substitutes have performance limitations that do not completely offset their |? | | | | |lowest price. Or, their performance is not justified by their higher price. | | | | | | | | | | |2) |The customer will incur costs in switching to a substitute. |? | | |3) |Your customer has no real substitute. |? | | | |4) |Your customer is not likely to substitute. |? | | | | | | | | | | |Total |4 | | | ANALYSIS As the table suggests, there is basically no real substitute of the edible oil. The closest substitute is butter however that poses as a little threat to the industry. And there is very little chance that consumers would use this substitute. LowModerateHigh | |4.
Bargaining Power of Suppliers | | | | | | |Yes |Moderate |No | | | |(+) | |(-) | | | | | | | | | | | | | |1) |My inputs (materials, labor, supplies, services etc. ) are standard rather than |? | | | | |unique or differentiated. | | | | | | | | | |2) |I can switch between suppliers quickly and cheaply. |? | | | |3) |I can substitute inputs readily. | | |? | |4) |I have many potential suppliers. |? | | | |5) |My business is important to my suppliers. | | |? | |6) |My suppliers would find it difficult to enter my business or my customers would find it |? | | | | |difficult to perform my function in-house. | | | | | | | | | |7) |My cost of purchases has no significant influence on my overall costs. | | |? | | | | | | | | |Total |4 | |3 | ANALYSIS Bargaining power of suppliers is moderate. Companies cannot easily switch from one supplier to another as they have signed contracts. As producers, there is virtually no substitute to the inputs that the firm uses. LowModerateHigh |5. Determinants of Rivalry among Existing Competitors | | |Yes | Moderate |No | | | |(+) | |(-) | | | | | | | | | | | | | |1)|The industry is growing rapidly. | | |? | |2)|The industry is not cyclical with intermittent overcapacity. |? | | | |3)|Fixed costs of the business are a relatively low portion of total costs. |? | | | |4)|There are significant product differences and brand identities between the competitors. |? | | |5)|The competitors are diversified rather than specialized |? | | | |6)|It would not be hard to get out of this business because there are no specialized skills and | | |? | | |facilities or long term contract commitments, etc. | | | | | | | | | | |7)|My customers would incur significant costs in switching to a competitor. | |? | | |8)|My product is complex and requires a detailed understanding on the part of my customer | | |? | | | | | | |9)|My competitors are all of approximately the same size as I am. | | |? | | | | | | | | |Total |4 |1 |4 | ANALYSIS This table illustrates that the rivalry among the firms in the edible oil industry is moderate. Since no new firms are entering the market, existing firms have targeted specific end consumers, and unless there is significant price increase, end consumers would not switch brands easily.
LowModerateHigh | |Summarized Worksheet | | | |Favorable |Moderate |Unfavorable | | | | | | | |1) | Threat of new entrants |? | | | | | | | | | | 2) |Bargaining Power of Buyers | |? | | | | | | | | | | | | | |3) |Threat of Substitutes |? | | | | | | | | | |4) |Bargaining Power of Suppliers | |? | | | | | | | | | | | | | | |5) |Intensity of Rivalry among Competitors | | ? | | | | | | | | | | | | | | |Overall Rating |2 |3 |0 | FINAL ANALYSIS The porters 5 forces model shows that the edible oil industry is a two star industry; however we feel that the remaining factors do not show that the industry is un-favorable. We feel that the current profit margins would remain the same. And existing firms that are doing well would have no real threat of new entrants and there is no real threat of substitutes.
Rivalry to some degree is non existent, however rivalry would occur when competing firms target each other target market, there have been one or two occasions where this has happened but this doesn’t occur in the industry very often. Since there are very few producers in the edible oil industry as compared to the buyers, and the general end consumer does look at brand when making a purchase decision rather than the price, at the same time buyers of this industry have a tendency to switch to other brands if firms try to exploit them too much. Therefore we feel that buyers have low to moderate bargaining power. ENVIRONMENTAL ANALYSIS AND INDUSTRY ATTRACTIVENESS PEST (Overall Industry) Political Political factors play an insignificant role.
Even if the government changes the import duty or tax structure, the increase in cost can be transferred to the consumer; an increase in price would not result in decrease in sales due to the fact that edible oil has an in-elastic demand. Also, any changes in the government regulation would affect the entire industry; therefore the effect is on all firms. Recently, the government has introduced sales tax on items that are imported, directly on the port. This reduced the chances of small producers from tax evasion, however they start smuggling raw materials. Geo-political factors influence greatly (as it does all other industries), factors such as strike, riots are increasing in this country and they are greatly affecting the profitability of all industries. Economic
Economic factors greatly influence the edible oil industry, due to consistent increase in inflation; the purchasing power of the end consumer is decreasing. The PKR Rs is also devaluating, on top of that countries from which we import oil raw material (e. g. Malaysia) have improved economically, their currencies have appreciated, and causing problem for our local producers as the cost of imports has increased substantially. So companies have found it difficult to purchase raw materials at high costs and not to increase prices. This has greatly reduced the profit margin for the industry. Social Social factors play very insignificant role in this industry, existing oil producers have not been able to create that “premium brand” image (one in which snob value cannot be created).
Also, as mentioned before although brands do influence purchasing decision making however it is not that significant as consumers are becoming more and more price sensitive. Technological Technology doesn’t impact highly on this industry, even if firms are able to reduce production cost, but the main expense comes from purchases of raw material and that cannot be reduced. Technology has helped (as in the case of Dalda, who has tried to differentiate themselves but introducing VTF technology) firms create core competencies but that doesn’t greatly influence the firms profitability as consumers are becoming more and more price sensitive. EXTERNAL FACTOR EVALUATION |WEIGHT |RATING |WTD. SCORE | |OPPORTUNITIES | | | | |Setting Refineries |0. 08 |4 |0. 32 | |Local production of Raw Material |0. 06 |3 |0. 18 | |Emerging modern trade departmental chains like Macro and Metro |0. 07 |4 |0. 8 | |Institutional Selling |0. 05 |3 |0. 15 | |People are becoming more health conscious |0. 04 |3 |0. 12 | |Untapped rural Market |0. 06 |3 |0. 18 | |Export potential |0. 06 |3 |0. 18 | |Population growth |0. 05 |3 |0. 5 | |Increase in per capita consumption of edible oil |0. 04 |3 |0. 12 | |THREATS | | | | |Unbranded edible oils |0. 05 |3 |0. 15 | |New entrants |0. 04 |2 |0. 08 | |Lower pricing by competitors |0. 05 |2 |0. 0 | |Intense competition in the industry |0. 07 |3 |0. 21 | |Deteriorated law and order situation |0. 06 |2 |0. 12 | |Declining real purchasing |0. 05 |2 |0. 10 | |Non-availability of basic utilities power |0. 05 |3 |0. 15 | |Political influence is used |0. 04 |2 |0. 8 | |Reduction in the purchasing power of people due to inflation |0. 04 |2 |0. 08 | |International brands are entering in the market |0. 04 |2 |0. 08 | | |1. 00 | |2. 83 | ANALYSIS The average total weighted score of EFE Matrix is 2. 83 which is above industry average. It appears that Dalda is responding in a good way to existing opportunities and threats in the industry.
The average weighted score shows that Company’s performance is good but not outstanding in the industry. When we analyze the EFE Matrix by separating the opportunities and threats, we found that Setting up Refineries and emerging modern trade departmental chains like Macro and Metro carry more weights and Dalda’s rating to these factors is also very good means Dalda is taking full advantage to these opportunities. After that, Local production of Raw Material, Untapped rural Market and Export potential carry . 06 weights each and company’s rating to each factor is 3. These are the areas where Dalda needs improvement to take advantage of the market opportunities.
When we analyzed the threats we found that the biggest threat in the industry is intense competition and company’s rating is 3. It shows that competition is the biggest threat for Dalda (competition from the local as well as from unbranded/ loose edible oil) after that Deteriorating law and order situation and Non-availability of basic utilities power are also severe threats face by the whole industry. STRATEGIES • Dalda has to focus on the local production of raw materials, because Dalda import the basic raw material for production- they can enter into joint venture with Malaysian companies for getting help in the local production and refining of raw material like; cotton seed, Soya bean etc. Untapped rural market is one of the biggest opportunities for Dalda where people still use unbranded or loose cooking oil- Dalda has to work on the easy availability and distribution of cooking oil in the rural area/markets. • The demand of Pakistani cooking oil is high in Asian countries like Afghanistan and Middle Eastern countries like Dubai, where people know Dalda and also having emotional attachment with Dalda- in these markets there is a high export potential. Dalda has to work on the local production of the raw material to have an easy accessibility of raw material to increase production at a lower cost to meet local demand and also taking advantage from export potential. COMPETITIVE PROFILE MATRIX |Dalda |Habib |Sufi | |Critical Success Factors |Weight |Rating |Wtd. Score | |STRENGTHS | | | | |A respectable position in the eyes of the consumers |0. 10 |3 |0. 30 | |Brand Name |0. 05 |4 |0. 0 | |Dalda’s slogan |0. 02 |3 |0. 06 | |Market leader – not a follower |0. 08 |4 |0. 32 | |Loyal customers |0. 07 |3 |0. 21 | |Production facilities |0. 08 |4 |0. 32 | |Efficient supply chain management system |0. 12 |4 |0. 8 | |Pricing |0. 06 |3 |0. 18 | |Strong sales and distribution network |0. 12 |4 |0. 48 | |WEAKNESSES | | | | |Centralized Decision Making |0. 12 |2 |0. 24 | |Huge amount of Import |0. 10 |2 |0. 0 | |Lack of company-owned R |0. 08 |1 |0. 08 | | |1. 00 | |3. 07 | ANALYSIS The total weighted score of IFE Matrix is 3. 05 which is above industry average. It means that company’s internal position is good. Factors like efficient supply chain management system and sales and distribution network are getting higher weights and company’s rating to these factors are also very strong. It appears from this analysis that Dalda is overcoming its weaknesses quite fairly with its strengths.
Such as strong distribution network, production facilities and efficient supply chain management system. When we analyzed the weaknesses, centralized decision making and huge amount of import are the weaknesses that need to be overcome. STRATEGY • In order to decrease the amount of import of raw material, Dalda has to be self sufficient in it. Dalda should enter in joint ventures with raw material producing and refining companies like Malaysian oil refining companies to get help in cultivating basic raw material like: cotton seed, Soya bean etc. in Pakistan and also refining it STRATEGIC ANALYSIS AND RECOMMENDATIONS GENERIC STRATEGY [pic] ANALYSIS We feel that Dalda has a large target market.
In the edible oil industry, product information does not play a vital role in influencing end consumer purchasing decision, the two most important factors that do influence decision making are product price and brand image. We have observed that Dalda has been able to create a high quality brand image of it. Companies in the edible oil industry are consistently trying to reduce their cost, but we feel that reducing cost should not be the primary strategy. As we know that companies that fall in the product differentiation category consistently try to reduce costs, therefore it is our strong belief that even though Dalda is trying to develop methods to reduce their expense but their main strategy would be creating a product differentiation for their brand. RECOMMENDATION
Keeping in view the current standing of Dalda and the edible oil industry in general, we would advise Dalda to stay in the broad differentiation strategy and continue to differentiate itself. By following this strategy Dalda not only differentiate itself but also working on cost reduction. SWOT Analysis STRENGTHS • A respectable position in the eyes of the consumers: The Dalda brand is one of the 3 leading top brands in the Country. This is strength for the company in the market as it gives a respectable position to Dalda in the eyes of the consumers and ensures brand loyalty. • Brand Name: The name “ Dalda” is a great strength for the company as some people buy the product just because of the name.
Dalda has reserved the right for using the name Dalda for itself through trademark. This prohibits any other company or individual from using the name Dalda for their products. Current trademark and license rights in Pakistan only for: 1. Dalda Vanaspati 2. Dalda Melange 3. Dalda Cooking Oil 4. Dalda Planta • Dalda’s slogan: Dalda’s slogan “Jahan Maamta, wahan Dalda” (“Mother’s Love is Dalda”) became a synonym for purity and quality and has been the platform for the brand for many, many years. It means that Dalda is as pure as a mother’s love. This is a strong message, which has given Dalda an edge over the competitors. The company has hold true to the message by maintaining their quality and standards over the years. Market leader – not a follower: Dalda is the overall market leader in the vanaspati and edible refined oils market in Pakistan as it has a significant market share position both in the edible oil market and vanaspati market. This has enabled Dalda to be a leader in the market and not a follower. • Loyal customers: Dalda enjoys very loyal customers all over Pakistan. • Production facilities: Production facilities are situated at a strategic location at Sindh Industrial & Trading Estate (S. I. T. E. ), Karachi near to the Karachi Sea Port to enable easy access to imported raw material. This cuts down transportation costs for Dalda. • Efficient supply chain management system:
The Company has an efficient supply chain management system. There is a dedicated specialized oil-buying department within the Company catering to all the input needs of Dalda. • Pricing: The pricing of Dalda’s is almost equivalent to the pricing of Habib, which is a major player in the industry. This has given Dalda a similar platform to compete in the industry. • Strong sales and distribution network: The company has a very strong sales and distribution network in Pakistan. WEAKNESSES • More like a family owned business: Being a family owned business, although a very professional team of expert looks after the marketing department, the marketing plan and the final udgets comes from the owners of the business so some times the marketing department faces problems in implementing certain decisions which have to be taken immediately in the competitive environment. • Centralized Decision Making As discussed it’s a family owned business, so most of the decision making is centralized. • Hugh amount of Import: The Company imports most of its needs for palm oil from Malaysia whereas most of soya bean oil is imported from South America. This makes Dalda vulnerable to changes in the conditions of the countries in which its suppliers are situated. • Lack of company-owned R OPPORTUNITIES • Setting Refineries Industry players believe the setting up of refineries would encourage crude edible oil import, which is much cheaper in terms of cost than the refined product. • Local production of Raw Material
Now the government is taking steps to grow Soya beans and different type of seeds at the coastal line of thatta. • Emerging modern trade departmental chains like Macro and Metro • Institutional Selling • People are becoming more health conscious Now the people become more health conscious and they prefer branded products. • Untapped rural Market There is a lot of potential to cater untapped market where people still use unbranded/ loose cooking oil. • Export potential There is potential to export in Middle Eastern countries where people prefer strong established brands like Dalda. • Population growth • Increase in per capita consumption of edible oil THREATS
Unbranded edible oils: One of the threats for Dalda, are the low category brands which price their products at much low cost then Dalda but they feature their brand in such a way that the people think that the brand is very hygienic and nutritious. • New entrants: Edible oil industry is a growing market and hence many people are entering the market. This is increasing competition in the industry. • Lower pricing by competitors: Sufi is charging a low price for its product. Although Dalda is well established all over the country it still needs to be careful of Sufi’s action as it can steal some of Dalda’s customers. • Intense competition in the industry:
There is an intense competition in the industry, due to which Dalda has to keep a close eye on its competitors. • Deteriorated law and order situation • Non-availability of basic utilities power • Weak Infrastructure of the country • Political influence is used • Smuggling of unbranded edible oil from Afghanistan The edible oil businesses were now facing fierce battle with the combined pressure from smuggled, unbranded and competitive local ghee and cooking oil brands. • Reduction in the purchasing power of people due to inflation Consumers might shift to open packet oil due to rise in prices. • International brands are entering in the market TOWS | | | |Internal |STRENGTHS (S) |WEAKNESSES (W) | |Factors |A respectable position in the eyes of the consumers; | | | |Brand Name; |Centralized Decision Making; | | |Dalda’s slogan; |Hugh amount of Import; | |External |Market leader – not a follower; |Lack of company-owned R. |Factors |Loyal customers; | | | |Production facilities; | | | |Efficient supply chain management system; | | | |Pricing; | | | |Strong sales and distribution network. | | | | | |OPPORTUNITIES (O) |S-O STRATEGIES |W-O STRATEGIES | | | |-If Dalda improves the R it able to have local | |Setting Refineries; |-By using efficient distribution network, Dalda can |production of raw material (W3, O2). | |Local production of Raw Material; |increase the market share by targeting modern trade | | |Emerging modern trade departmental chains like Macro |departmental chains and institutions (S9, O3. O4). |-If Dalda decrease import and focus on local | |and Metro; | |production of raw material can increase the | |Institutional Selling; |-Strong sales and distribution and sales network can be use|export (W3, O7). |People are becoming more health conscious; |to tap rural market (S9, O6). | | |Untapped rural Market; | | | |Export potential; |-Dalda’s name and image is very reputable in the | | |Population growth; |international market help Dalda to get export potential | | |Increase in per capita consumption of edible oil. |(S7, O1, O2). | | | | | | |-Dalda’s production facility is very strong if it succeeds | | | |to establish local production of raw material Dalda can | | | |further increase the production of cooking oil (S6, O2). | | | | | | | |-If Dalda decreases the price by lowering its cost, able to| | | |get share in the rural market (S8, O6). | | | | | | | | | | THREATS(T) | | | | |S-T STRATEGIES |W-T STRATEGIES | |Unbranded edible oils; | | | |New entrants; |Dalda can use its strong sales and distribution to compete |If Dalda become self sufficient in raw material | |Lower pricing by competitors; |with unbranded oil in rural markets (S9, T1). production, it helps Dalda to decrease the cost | |Intense competition in the industry; |
Cite this Research on Dalda Cooking Oil
Research on Dalda Cooking Oil. (2019, May 02). Retrieved from https://graduateway.com/research-on-dalda-cooking-oil-174/