Asia Ghee Mill (MP)

++++ INTRODUCTION

Introduction of Ghee/Oil Industry

hee industry was introduced in the sub continent in mid thirties, and since then it has grown tremendously in face of all environmental hazards. It has been subjected to serious edible Oil shortages, government inconsistent policies and severe variations between demand and supply in the domestic market.

The country which was self sufficient in edible Oil production !."#$ million %T&, till "'(!, and paying not a single dollar against the import bill, is today importing well over "."(! million %T against an import bill of no less that )s.**!!! million per year, being the third largest edible Oil importing country of the world, after +hina and the ,uropean -nion. .ll these imports originated from %alaysia. /uring the past 0" years of interrupted and partially half hearted efforts of successive governments since "'1', the country has been able to procure only !.# million %T of edible Oil from indigenous resources while the rest of the "." million %T is procured from imports. The structure of 2hee3Oil industry is just like all the other developing industries of 4akistan.There are certain well5established companies working with good brand names, serving the nation as a whole. .long with them there are certain units, which are working in limited areas, meeting the re6uirements of these niche markets. 7ome of the vegetable 2hee mills are working under the control of government and other are held privately. The raw material re6uired for the production of 2hee3Oil is imported from different countries and this is the biggest imported item in food category. The prices of 2hee3Oil are very much influenced by the duties on these imports and the international price fluctuations of these items. In early "''!8s there had been a serious crisis in the 2hee industry, and the main reason for this was that production of 2hee was greater than the demand. In this period due to the heavy looses on account of these units government privatize so many 2hee producing units. 9egetable 2hee is the commercial term for vegetable Oil hardened by the process of hydrogenation. +ottonseed, soybean Oil, 7un :lower Oil, corn Oil, is being mainly used in4akistan for the manufacturing of Oil32hee. 4akistan is importing 4alm Oil and 7oyabean Oil from .merica, Indonesia and %alaysia. /uring "'''50!!! 4akistan imports of soyabean Oil and palm Oil has drastically decreased both in 6uantity and value. 4akistan imported soyabean Oil worth ;1#.< million and 4alm Oil ;0(1.< million in year "'''50!!!.

Ghee Industry in Pakistan

In 4akistan ghee industry is flourished over the years. Today there are many =ocals and >ational companies as well as international companies engage in the production of ghee and oil working in 4akistan. .mong multinational companies includes =ever ?rothers 4vt.& =td. They manufacture /.=/. and 4=.>T. cooking oil and ghee. 7ome other companies are as follows. "& .l @ilal 9egetable 2hee %ills engages in the production of 7ultan ?anaspati 2hee. It is situated in %ultan. 0& 7hehbaz 2hee %ills is engage in the production of 7hebaz ?anaspati. It is situated in )ahim Aar Bhan. *& Cazeer .li Industries =td. engages in the production of Tallo ?anaspati ghee and cooking oil. It is situated in @yderabad. $& :atima ,nterprises =td. #& )efahan %aize 4roduct +ompany involved in the production of )afhan +orn Oil and it is situated in :aislabad. (& .hmad :ood Industries manufactures .hmad 7oyabean Oil. 1& 2hee +orporation of 4akistan 2.+.4& under which 0( units engaged in the production of ghee are working all over the country. .part from these combines there are many other firms manufacturing ghee.

Introduction of Asia Ghee Mills

.sia 2hee %ill is situated "#km away from ?ahawalpur at Barachi )oad. This 2hee and Oil manufacturing unit was established in "''$ and start production in 'th Dune "''1. .sia 2hee %ill occupied a land area of approEimately * acres. The area of .sia 2hee %ill is divided in two headsF

a. Production Area b. Non Production Area

>on5production area consists of offices, parking facility, and a big lawn. In non5production area they have their own nursery. .sia 2hee %ill has a very attractive outlook because they have wide variety of plants and flowers in the lawn and nursery. The office interior of .sia 2hee %ill

is very good because the offices are fully air5conditioned and heaters are also available in cold weather. In production area there are different sections related to productions, stores, printing, and packaging of 2hee and Oil in different sizes. .sia 2hee %ill is not incorporated in 7tock ,Echange. .sia 2hee %ill has a capacity of "#! tons per day but currently they are using #!G of their total capacity. MAJEED GROUP OF INDUSTRIES %r. +huadry .bdul %ajeed is the chairman of .sia group of industries, who is one of the best businessmen in ?ahawalpur region. %ajeed 2roup of Industries involved in the following businessesF MAJOR BUSINESSES
.sia 2hee %ills .sia :lour %ills ?ismillah +otton Industries )ohi +otton %ills )asool %odel Industry 4vt. =td Oil H +otton& %ajeed ?rothers 4vt. =td.

PRODUCTS OF ASIA GHEE MILLS .sia 2hee %ill is manufacturing both 2hee and Oil. The brand names of the product are given in the table along with their respective weights and prices.

MAJOR BRANDS

WEIGHT
"( B2 "! B2 # B2 0.# B2 "0 B2 "0 B2 "0 B2 " B2

PACKS
Tin 4ack Tin 4ack Tin 4ack Tin 4ack " +arton "0 pack of "B2& " +arton 0$ pack of !.#B2& " +arton $< pack of !.0#B2& 4lastic 4ack

PRICES RS.
1*( $(! 0#! "01 #$' #$' #$' $#.1#

ASIABANASPATI

"( B2 "! B2 # B2 ASIA PURE COOKING OIL 0.# B2 "0 B2 "0 B2 "0 B2 " B2 BY PRODUCTS OF ASIA GHEE MILLS

Tin 4ack Tin 4ack Tin 4ack Tin 4ack " +arton "0 pack of "B2& " +arton 0$ pack of !.#B2& " +arton $< pack of !.0#B2& 4lastic 4ack

1*( $(! 0#! "01 #$' #$' #$' $#.1#

.sia 2hee %ill has two types of by products, which areF

Laundry Soap CO2

.sia 2hee %ill has sold the laundry soap under the brand name of Asia Laundry Soapwhere as they dispose off the carbon dioEide into the air.

STRAT GIC INT NTION

!ision
Mr. Majeed is very social person and has an industrial mind, who always thin about the development o! people o! the country specially livin" in #ahawalpur throu"h the creation o! employment and meetin" their basic necessities o! clothes and !oods $%lour, &hee ' (il).

Pro"osed #ission
.sia 2hee %ill don8t have any written mission statement but through our discussion we came at, and the mission of the .sia 2hee %ill should beF

*e care the health o! our customers by providin" them, wherever they live, the superlative purity and best +uality oil ' "hee at comparable prices and continually improve our products to meet their needs which help us to ma,imi-e the wealth o!

owners who in turn, create more employment opportunities and provide ma,imum bene!its to employees.

Goals of Asia Ghee Mill

a& To eliminate the burden of debt. b& To utilize maEimum production capacity. c& To ensure 6uality at each step of production for both ghee and oil to care the health of our consumers. d& To improve the morale and efficiency of employees. e& To increase market share in %ultan division. f& To develop long lasting good relationships with distribution dealers. g& To dispose and utilize the wastage in a better way.

O$%ecti&es of Asia Ghee Mill

a& They have financed the whole capital through e6uity and no debt. They have "! crore authorized capital and 1 crore paid up capital. b& To increase production of ghee and oil from 01!!! tons last year to *#!!! tons this year. c& Installation of =evi bond Tento %eter %odel to check the color of oil and 7pector 4hoto %eter to assure zero percentage of >ickel in ghee. d& To provide two bonuses to every employee in a year and 0#G of basic pay as performance reward. .nd to provide minimum "!G increment on their basic pay per year to each employee. e& To sell <!!! tons of ghee and oil in coming year in %ultan division, specially in %alsey, Cehari, Bhanewal, and mia channoo. f& To give bonuses to dealers )s. #3 "(kg beyond the sales target of 0!! tons per month. g& To manufacture the laundry soap from the wastage of ghee H oil and recycle the water for reuses purposes in the production.

Pro$le# state#ent

In start the organization has faced a plenty of problems but due to proper planning and well implementation problems are decreasing day by day. ?ut still the organization is not totally out of trouble, and facing a problem. PROBLEM The major problem is related with the distribution network and utilization of production capacity of the organization. The organization is utilizing limited production capacity because it has a limited market and not supplying its products all over the country but only in?ahawalpur and %ultan. :urthermore firm is relying on private dealers for distribution of its final products. 7o because of limited market some times these dealers refuse to take the supply because of having old stock unsold, so that8s why inventory remains in the stores which cause the increase in holding cost and cash shortage problems for the organization. SITUATION ANA'(SIS

ANA'(SIS O) ASIA G*

MI''S

First to analyze the environment as a whole, two techniques are used. Which are

PEST Analysis and Structural Analysis. nd !or the speci!ic analysis o! companyValue chain analysis, SWOT and Financial Analysis is used.

P ST Analysis
4,7T analysis is used to assess what environmental factors are affecting the organization, which of them are most important and how they will effect in neEt years. It is an indicator of political, economical, social and technological influences on organization. The analysis of .sia 2hee %ills is as underF POLITICAL AND LEGAL FACTORS

Industrial 'a+s
Industrial laws regarding unions has no impact upon the .sia 2hee %ills because no union eEit in the organization, but if in future it become so, then the company has to consider these laws in their decision making concerning wage rates, bonuses, and benefits of the employees.

)orei,n Trade
This matter will be of a key concern for .sia 2hee %ills. ?ecause the .sia 2hee %ills is importing four different types of oil from 7ingapore and %alaysia, which are not available locally, but the 2overnment don8t provide any support to import these raw materials and don8t

provide any relaEation in import duty upon the imported raw materials. 7o if 2overnment bring any change in its foreign policy, then it will be very much important to cope with that.

n&iron#ental Protection 'a+s

.lthough the laws regarding environment are not very sophisticated in 4akistan but even if they become so, they will not be hampering for .sia 2hee %ills, because in .sia 2hee %ills all the wastes are considered as by products and used or sold. The water is also recycled for reuses purposes. The only emission is of the carbon dioEide, which is within the prescribed range of pollution.

Ta-ation Policy
The .sia 2hee %ills is paying taE each year. In last year the .sia 2hee %ills paid income taE $*G of net profit to the 2overnment. ?ut in this year .sia 2hee %ills has to pay income taE of $#G of net profit, which is e6ual for all the private companies.

#"loy#ent and Go&ern#ent Sta$ility

,mployment is not a matter of high concern for the organization because it is already following all the labor laws. ?ut recently the 2overnment increases the wages of the employees but .sia 2hee %ills has not affected by that, because this is a private company. ?ut they are paying more than the 2overnment announced. ECONOMIC FACTORS .mong the many of economic factors some are more important for .sia 2hee %ills, the detail of these factors is in followingF

Interest Rates
Interest rates increase and decrease has no impact upon the financial performance of the .sia 2hee %ills, because the company has no loan of any bank. ?ut it in future the company need to take the loan then it must has to consider this issue.

Inflation
.t the moment inflation rate does not seem to be very much related matter, because any increase in oil prices will be off set by the increase in price of 2hee and cooking oil. ?ecause there is no close substitute of 2hee and cooking oil, so the sales will not be affected. ?ut if we take it in longer perspective the inflation in the country will increase the cost of production, which will increase the sale price. .nd at high sale price the product will become in5competitive in the international market if the company will involve in the eEport. 7o the pan of eEport will be adversely affected by the inflation.

Dis"osa$le Inco#e

Cithin the country the demand will be affected if the disposable income will be reduced. 2hee and +ooking oil is a basic food ingredient and its primary demand cannot be eliminated. ?ut other than its direct use, it is also used in bakery and confectionery items and so many other foods whose demand is dependent on disposable. 7o any decrease in disposable income of the consumers will also be affecting .sia 2hee %ills negatively. TECHNOLOGICAL FACTORS Technology in ghee industry can be divided into two sectors. :irst is cotton seed and second is ghee mills. The technological factors, which are more concerned with .sia 2hee %ills, are as underF

Go&ern#ent S"endin, on Research

-sually in order to support some industry and improve economy, government allocates some fund to ) H /. -nfortunately our government doesn8t have any money for ) H /. /ue to this non5serious behavior of government this sector along with others, is suffering very much. >o single mill owner can support ) H / especially in the field of +ottonseed varieties. The varieties which now a days are being cultivated are of sub5standard 6ualities. It gives less recovery and more wastage. There is a need to find out the seeds, which can give better recovery.

Ne+ Disco&eries and De&elo"#ents

>ew discoveries in the field of raw material will be very much beneficial for the company, as it will reduce the cost of production. ?ut, if there will be any change in the technology of ghee mills, or process development than it will be very difficult for the company to cope with that change. In fact the company has made much investment in latest plant and machinery in "''$, and almost <!G of its total fiEed cost is stuck up in this area. 7o adopting any change means a loss of all these assets. This is almost unbearable for the company. SOCIO-CULTURAL FACTORS 7ocio cultural factors like demographicsI income distribution, life style etc. can also affect the company in different ways. =et8s see which of them are more concerned to .sia 2hee %ills.

'ife Style Chan,es

The consumption of ghee is very much related with the life styles of people. >ow people, all around the world, are becoming more and more health conscious. They are well aware that a high consumption of ghee will increase the cholesterol, which leads to heart disease. That is why, a significant change in the consumption of ghee is being observed in last many months..lthough the use of ghee cannot be fully eliminated but if this life style grows at same speed it will surely decrease the demand of ghee but on the other hand the demand of the cooking oil is gradually increase in last many months due to the same reason.

'e&el of ducation

=evel of education is directly related with awareness and health consciousness. In countries where education rate is high the ghee consumption rate is low. In 4akistan, as well as in foreign markets the rate of literary is increasing which will effect the organization negatively.@igh level of literacy will lead to low level of ghee consumption and people started switch towards cooking oil.

Structural analysis
The 4,7T analysis concerned with broad aspects of the environment while there is always a set of eEternal influences, which are more immediate, and directly affecting the organization. The structural analysis draws on :ive :orces approach prepared by 4orter. It is a structured mean of assessing the competitive environment. THREAT OF NEW ENTRANCE Threat of entry depends upon the eEtent to which there are barriers to entry. 2hee mills re6uire a big manufacturing unit which re6uires a huge capital investmentI like .sia 2hee %ills has "! crore authorized capital and 1 crore paid up capital. 7o we can say that ghee5manufacturing unit is highly capital intensive and because of high capital investment it has high risk for new to enter into production. SUPPLIERS POWER .ll organizations have to obtain resources and provide goods or services. The suppliers can affects on strategic freedom of an organization and can influence the margins of that organization. In .sia 2hee %ills, there are two types of suppliers. One is a local supplier, and others are foreign suppliers. ?ecause of many reasons the suppliers of oil have no powers. The reasons areF a& .s well as the foreign suppliers are concerned they have power of bargain because the material is not available locally and the buyer don8t have any option other than import, so the supplier charge the high prices and transaction is done through banks by opening letter of credit and buyer also has to bear high transportation cost and import duties. b& .s well as the local suppliers are concerned they have small oil mills, which separate oil from seed. 2hee mills are highly capital intensive so they don8t have any power because they can8t do forward integration. c& There are large numbers of oil suppliers in ?ahawalpur and in other cities so the buyer checks the 6uality of suppliers8 oil and make contract with any one which meet their re6uirements regarding 6uality or price. BUYERS POWER

The buyers don8t have any power, because the prices of the products are fiE, but high competition among ghee3oil mills leads the company to minimize the prices. COMPETITI!E RI!ALRY Organizations will also be concerned with the eEtent of rivalry between themselves and competitors. The eEtent of competitive rivalry depends upon the nature of four forces described earlier. It could be concluded from previous discussion that the ghee market is highly competitive.

!alue chain analysis

9alue chain analysis is widely used to determine where cost improvements could be made or value creation improved. This process involves the analysis of all the activities starting from the raw material provisions to the distribution of final product. That is why it is necessary to understand the complete procedure of production and distribution please see chapter J "& before doing such analysis.

Or,ani.ation !alue Chain

.ll these activities are broadly categorized into two main heads, which are 4rimary activities and 7upport activities. PRIMARY ACTI!ITIES The primary activities of the organization are grouped into five main areasF inbound logistics, operations, outbound logistics, marketing and sales H services. +ottonseed oil mills perform the inbound activity in .sia 2hee %ills, which provide basic raw oil to firm. This activity should be efficient in order to increase recovery rate by obtaining good 6uality oil. 7o in order to receive good 6uality of oil, .sia 2hee %ills has its own cotton factories which provide re6uired 6uality of cottonseeds. The operations are the production process of ghee3oil where the major value addition is made production process of .sia 2hee %ills is given on neEt page&. The management subcontracts the outbound activity, and the distribution is through dealers. The company owner believes that marketing has no benefit until unless they don8t utilize the enough production capacity. The only thing they do for their marketing is to have good relationship with the dealers and somewhat advertisement in print media in )amzan. The company doesn8t perform sales and services rather through dealers.

PRODUCTION PROCESS Chen decanting tanks of oil entered in the factory first of all they have stored in main storage tanks with the help of pumps. Then they transfer oil from main storage to refinery section where first of all the oil pass through pre5neutralizer then through post5neutralizer then after filtration

they pass ghee and oil from pre5bleacher and then post bleacher. Then they pass ghee and oil from deodorization then after deodorization they got the oil in the final stage where as for ghee they pass for hydrogenation at particular temperature in the presence of nickel then after filtration they got ghee in the final stage which is free from nickel. The production process of .sia 2hee %ills is shown below

SUPPORT ACTI!ITIES The support activities can be divided into four groups, which are procurement, technology development, human resource management and infrastructure. .s the prime input of ghee is available locally and some material has to import from out side countries. 7o procurement for long time is not possible in case of raw material, which is locally available. Chere as the material that has to be import the company has a lead5time of 05* months. 7o the department of inbound logistics is sufficiently performing the activity of procurement. ) H / and 4rocess development researches are very important in ghee3oil industry in 4akistan.7o in the company value chain this thing should be emphasized much, rather it has a big contribution in total value addition. @uman resource management involves the training and development of workers and employees in order to increase their productivity and efficiency.:or this purpose company make their employees to work with the senior worker to get the eEperience, but they don8t have any separate training program for new employees. The company has good planning, 6uality control systems and future orientation, which although does contribute directly in value addition and increase the effectiveness of whole process. The organization has the policy that the dealer who distributes their product will not distribute the products of any other competitors or substitute. ANALYSIS .ll the value creation does not happen in the organization itself rather much of it can be occur in the supply and distribution chains. 7o the whole process needs to be analyzed. :or this purpose we can divide it into three areasF suppliers, organization and channel members.

Su""liers
7uppliers play a very vital role in total value creation. The whole of the profitability depends upon the 6uality of raw materialI if supplier does not provide the good 6uality of oil then the desired level of 6uality of ghee3oil cannot be achieved. The price structure of the country de5 motivates the grower to produce better 6uality of cottonseed. ?ut good relationship with the suppliers and fair and prompt payment can enforce the grower to cultivate better variety.

Or,ani.ation
Cithin the organization the value addition activity is focused only on ghee3oil production, which is their core competence. In order to provide the superior 6uality of ghee3oil to customers, .sia 2hee %ills pass the raw material from two different machines for oil and ghee i.e. 4ost5

>eutralizer and 4ost5?leacher, Chich are not performed by other mills. ?ut they do nothing for by5products of ghee3oil. The carbon dioEide has directly released in the air and the laundry soap has been packed and sold under the brand name of Asia Laundry S a!". >ow the further addition in ghee3oil is not possible due to the market conditions but there is a lot of space to improve in by5products. Cith a little effort and investment.

Channel Me#$ers
There is a difference of "50 rupees per Bilogram in the ,E5mill price and market price and the middlemen create this difference. .s shown in the distribution network diagram, the ghee3oil is not directly sold to the ultimate consumer rather it goes through a long process. .nd everyone involves in this process take its share in terms of commission. @ere the value addition takes place in terms of price increase. +urrently the company is using traditional distribution network for ghee3oil sale but with a forward integration the company can increase the profit margin.

S/OT Analysis
STRENGTHS OF ASIA GHEE MILLS

Professional 'eadershi"
-sually in such kind of traditional organizations leadership is deficient. 4eople are usually guided through specified rules and regulations. .lso the professionalism is lacking in most of the cases. ?ut .sia 2hee %ills is clearly different in this aspect from other organizations. .fter taking charge of many responsibilities %r. +h. .bdul %ajeed has worked very hard for the success of the mill. /ue to his professional abilities and leadership 6ualities he has also achieved many of his objectives. .nd now this is the result of his efforts that the company is showing very good performance and operating on professional basis.

Skilled 'a$or /ith *i,h Morale

In most of the factories skilled and semi skilled labor along with unskilled labor is hired from outside. There is always a risk associated with them that whether they work properly or not. :irst of all .sia 2hee %ills always hire the educated people, you can take the eEample that they re6uire at least %atric pass candidate for the post of helper. .sia 2hee %ills has placed its new employees with the senior employees and trained them before they actually placed on job. They have the career opportunity to move upward to become an operator because helper has known all the responsibilities of the operator. 7o this will create the most loyal employees with high morale, which are more productive.

So"histicated Technolo,y
There are no hard and fast rules in ghee3oil industry regarding the technology or process implied. ,ven in some factories fifty years old machinery is also used. 7uch type of machinery affects the 6uality of oil3ghee. .sia 2hee %ills has the latest machinery and plant. .s it is one of

the latest ghee3oil mills build in 4akistan whose machinery is locally available from %ultanH =ahore, so it is using the most modern technology available in 4akistan. This machinery also gives an edge to the organization over its competitors, because all the ghee3oil industries working in 4akistan are using By Pass" operations means that the same machinery is used for the production of ghee and oil. Chere as the only .sia 2hee %ills have separate processes for both ghee and oil to assure the good 6uality products.

0ack+ard 'inka,es
2enerically the company has got an advantage of access to the sources of raw material. In fact the owner of the company is big business man of ?ahawalpur. The raw materials, which are available in 4akistan, are mostly available in ?ahawalpur. The other strength of the company is that they take the oil from their own cotton factories but their cotton factories meet only "!G of the total raw material re6uired for the current capacity utilization WEA"NESSES OF ASIA GHEE MILLS

'ack of A+areness
The major weakness of the .sia 2hee %ills is the lack of awareness among the consumers, because the .sia 2hee %ills don8t go for any type of advertising program. .sia 2hee %ills use print media one time in a month, where as they had used electronic media in start but now they don8t have any advertisement for their products, so that8s why majority of the people even don8t listen the name of company.

'i#ited Distri$ution Net+ork

The other weakness of the .sia 2hee %ills is of having limited distribution network. .s we have already told that .sia 2hee %ills is distributing their products only in ?ahawalpur, where they are distributing their products at mass level and having a market share of 1!5<!G, but in%ultan division the firm has started its distribution. ?ecause of this limited distribution network the company is unable to utilize its full capacity because currently %ill is utilizing #!G of its full capacity which is enough to meet the need of consumers in ?ahawalpur, and other than ?ahawalpur the company don8t have so much demand because of no advertisement, and absence of distribution network which forced the company to operate half capacity.

Dealershi" Marketin,
.sia 2hee %ills distribute its products through outside dealers which cause increase in price of the products which the consumers receive, because the dealers and retailers take their margin which cause a "50 rupees difference in the ,E5factory price and )etail price. OPPORTUNITIES

Generic O""ortunities

The ghee3oil has so many opportunities due to its product nature. It is a necessity and no one can avoid it. In 4akistan, the consumption rate of ghee3oil is high in the world, and as the population growth rate is also very high so the company has an opportunity to meet the demand of local market. .lso the product has no substitute, so people have to buy it in any case. These are the natural opportunities, which the company is enjoying. THREATS

'o+ Production of Cottonseed

The cotton is not produced sufficiently in the country. It is due to the low productivity of the varieties and due to the less area cultivation. /ue to this low production the mill faces a shortage of raw oil, which is always a problem for the company.

Decrease in Consu#"tion
/ue to the increase in awareness level of the people the consumption rate is decreased. The reduction in disposable income is also a cause of decrease consumption of ghee. The high rate of heart disease in the country is another cause, which restrict the people to use ghee. ?ecause of all these factors the consumption rate of ghee is decreasing in 4akistan. This is a source of continuous threat for the company.

)inancial Analysis
In order to see the viability of the company, :inancial .nalysis is necessary. In this analysis we calculate financial ratio and some financial indicators. PROFITABILITY RATIO . profitable company will have to be eEpanded further. 7o we can analyze its profitability through following indicators. The company has authorized capital of "! crore, and the paid up capital of 1 crore.

Gross Profit Mar,in

Gr ss Pr #i$ Mar%in & Gr ss Pr #i$ ' N($ Sa)(s Gr ss Pr #i$ Mar%in & **+,-.-/. ' -0*1./... & */2 .sia 2hee %ills is getting "#G profit margin after paying its cost of goods sold. :rom that "#G margin company can easily pays its operating eEpenses and taEes. .s firm is not raising any long5term debts, so, the profit for the company is enough to pay its operating eEpenses.

Net Profit Mar,in

N($ Pr #i$ Mar%in & N($ Pr #i$ ' N($ Sa)(s N($ Pr #i$ Mar%in & ,33000+. ' -0*1./... & 4.342 +ompany is earning very good profit margin, and it is improved from previous year by !.'*G. Chich shows good performance the main reason for that is the increase in sales from previous year. +ompany is utilized its e6uity very well. 7hareholder8s value is also increased. ACTI!ITY RATIO :rom available data we are only able to calculate inventory turnover ratio. .s firm is utilizing its capacity about #!G and from that, they have to keep some inventory as safety stock.

In&entory Turno&er
In5(n$ ry Turn 5(r & CGS ' In5(n$ ry In5(n$ ry Turn 5(r & 0+-/4+,/. ' *3.+/*,/. & 4.+ $i6(s It means the firm is able to sell its inventory * to $ times a year. /ue to uncertainty they have to keep about 0#G inventory as ending inventory.

Cor"orate 'e&el Strate,iees

-istin, STRAT GI S

orporate level strategy focuses on strategies for enterprises consisting of more than one business. .sia 2hee %ills, for instance, comprises several businesses, including consumer goods and industrial goods. .sia 2hee %ills involve more than one business is said to be diversified.

CONCENTRIC DI!ERSIFICATION K.dding new, but related products or servicesL. .sia 2hee %ills involved in concentric diversification because .sia 2hee %ills has two by products, laundry soap and +O0 gas. .sia 2hee %ills has developed a setup to sold laundry soap under brand name of Asia Laundry Soap so .sia 2hee %ills is adding new but related products in to the market. Instead of selling laundry soap as a raw soap to any other soap manufacturer, they themselves start cutting and packaging of the soap and sold in the market as their own new products under their own brand name. Then we said it concentric diversification because they manufacture the soap from the by products they receive.

BAC"WARD INTEGRATION K7eeking ownership or increased control of a firm8s suppliersL. .sia 2hee %ills involved in backward integration because they receive the cottonseed oil from their own cotton factories. .lthough these three cotton factories provide only "!G of its total re6uirement but this will increase the bargaining power of the .sia 2hee %ills if it has to negotiate upon the prices of oil purchasing from other factories.

0usiness 'e&el Strate,y

:irms compete directly with one another at what is called the business level of strategic management, so we will focus on crafting successful competitive strategies. ?ecause competition takes place at the business level, strategic management at this level is crucial to the overall success of the firm. COST LEADERSHIP In manufacturing and especially in industries where the product differentiation is not possible the only strategy the organization is left with is .Low /ost Production. or cost leadership. In fact cost reduction is the only way to stay in the industry. .sia 2hee %ills has cost leadership strategy. .sia 2hee %ills has the following two major competitorsF Ma7 r C 6!($i$ rs 7ultan ?anaspati S8(89a: Banas!a$i Ceights "kg "kg 4rices )s.& $< $1 Ceights "( kg "( kg 4rices )s.& 1$! 1*(

.sia 2hee %ills is following cost leadership because the competitors especially 7ultan ?anaspati has a very old name in the ghee industry so .sia 2hee %ills has to charge the low prices to compete with the competitors. @ere from the above table we can see that the price of the 7hehbaz ?anaspati is e6ual to the prices of the .sia ?anaspati. ?ut in ?ahawalpur the sale of .sia ?anaspati is more than 7hehbaz ?anaspati, but in %ultan division the sale of 7ultan ?anaspati and 7hehbaz ?anaspati has more sales than .sia ?anaspati. .ccording to the teEt, the low cost strategy is good when, product cannot be differentiated, industry is producing standardized product, product has same usage and switching cost is low. .ll the characteristics are fully applied in ghee industry. 7o company is using right strategy.

O"eration 'e&el Strate,y

Operation level strategy focuses at how to develop capabilities in process eEecution that will yield competitive advantages for a firm. This involves applying strategic management concepts

to what is known as the operations level, the level at which work inside the organization actually takes place. Ce focus on how organizations go about improving their process capabilities, including both total 6uality management and core process reengineering. PRODUCT DE!ELOPMENT K7eeking increased sales by improving or modifying present products or servicesL. +urrently .sia 2hee %ills is following the product development strategy, because the .sia 2hee %ills is continuously improving the 6uality of the ghee3oil for the consumers. .sia 2hee %ills has a good image in the ?ahawalpur, and they try to develop the same good image in all over the country, so that8s why they are improving their products through TM%.

R COMM NDed strate,ies

reco##eded Strate,ies

t this time when industry is fully mature, and the competition in terms of access to final consumer is very high the companies usually face the problems of slow demand growth, emphasize on cost and services, topping out and loss of profitability. The .sia 2hee %ills is also facing the same problems. .lthough it has tackled the major problems very well but still there is some room of improvement in its eEisting strategy.

FORWARD INTEGRATION K2aining ownership or increased control over distributors or retailersL. The firm should use their own distribution network because the motive behind that when they have their own distribution system the additional cost will be avoided which had been kept by dealers as their own margin. In this dynamic and competitive environment the firm has to maintain its current position of cost leadership to be competitive. CONCENTRIC DI!ERSIFICATION .sia 2hee %ills is involving in the concentric diversification because of having two by products. One is laundry soap and the other is +O0 gas. The firm is using laundry soap as the new product and is selling under their own brand name. ?ut they are disposing off the +O0 gas in the air. They can generate good cash flows if they use +O0 gas as the new product of the factory and sold to soda water or you may receive the application from different contractors. MAR"ET DE!ELOPMENT KIntroducing present products or services into new geographic areasL.

.s it is already mentioned that the firm is only distributing in ?ahawalpur and %ultan division. The firm should go for market development, means that the firm should introduce their products in new markets or new geographical areas. This can increase the demand of the firm8s products. Then increase in demand will lead the company to utilize the full capacity of the production. Chen the company utilizes the full capacity its sales will increase along with the profitability of the owners. AD!ERTISEMENT .sia 2hee %ills is not using any mode of advertisement, because of low demand and unavailability of their products. They believe that advertisement without availability of the product is useless and creates a bad image. In order to create awareness .sia 2hee %ills must go for advertisement. ISO CERTIFICATE .lthough the firm is working better than re6uired I7O certificate but the firm should take the I7O certificate. ?ecause I7O certificate create a good image among the consumers. DISPENSARY .sia 2hee %ills has no dispensary in the factory for the employees8 injuries during the production. .sia 2hee %ills must take some action to establish a full fledge dispensary for dealing the employees8 injuries. This will provide the safety to the employees and they will be more satisfied, productive and having high morale. i#"le#entation .sia 2hee %ills can implement on our proposed strategies in following waysF

FORWARD INTEGRATION # MAR"ET DE!ELOPMENT

.sia 2hee %ills has following options available for distribution of its products. Through private dealers Through their own networks. .s we already suggested .sia 2hee %ills should distribute its products through its ownnetworks. 7o for this it should take following steps. 4urchase its own vehicles. .ppoint more sales officers.

 ,stablish its own distribution networks in major cities of 4akistan i.e. ?ahawalpur, %ultan, Bhanewal, %ianchannoo, 7ahiwal, =ahore, :aisalabad. The sales officers are re6uired to sell the product of the company directly to the retailers. Chen they got success in these cities then the company should approach to other cities of the country to eEplore new markets. CONCENTRIC DI!ERSIFICATION :or establishment of +O0 2as plant, .sia 2hee %ills should take following measuresF +onstruction of +O0 gas cracking plant andF 7old to 7oda Cater producers or any other contractor. 2as cracking plant re6uires approEimately (.# lac of investment. This plant has the capability to eject the +O0 gas from the disposable gases. The disposable gases have transferred to sulpher tower where these gases are re6uired to be refined at <!!c, which separate all the gases @0, O0, +O0, +O&. Then these gases has to transferred to first converter then second converter where the converter absorb the +O0 gas, then after absorbing this +O0 gas again has to reboil at "!!c which purify the +O0 gas and then +O0 gas has to transferred from low pressure tank to high pressure tank. Then the +O0 gas is ready to fill the cylinders. AD!ERTISEMENT .sia 2hee %ills has following options for advertisementF ,lectronic %edias o T9 o )adio o Internet

"rint #edias o $ewspapers o #a%azines sia &hee #ills should advertise on electronic media especially on '(, )ecause '( is more capa*le to create awareness a*out the company+s product amon% the people and can !acilitate its sales

o!!icers durin% sales to retailers. 'he timin% o! advertisement should *e durin% ,hawatin pro%rams.