2.

THE CHALLENGE:
Pakola has an organizational structure which has ‘evolved’ as a result of a ‘need to be and do’
basis. If the business were to be described in one word, that word would be ‘chaos. Department
since its very inception, this business has ‘no eyes’ no ears’. It continues to trudge blind. No
marketing intelligence, no market researches and virtually zero market feedback and almost
absolute consumer ignorance are at the very core of this business which has amazingly
continued to survive for such a surprising span of time, most likely because of the intense brand
loyalty that it’s consumers have even without any strategic marketing efforts being executed by
the company itself, is poof of the potential that this brand has and the magnitude of success it
is capable of.

3. SITUATION ANALYSIS
COMPANY ANALYSIS

 GOALS:
To be SECOND TO NONE in exceeding customer expectations for Taste and Flavor,
Product Safety, Quality and Price Competitiveness.

 FOCUS:
Pakola can instead focus its short-term resources towards the structuring of its organizational
setup. The issues with Pakola's management setup are the root cause of its lackluster strategic
business performance; and must be addressed before the company can expect extended
success and profits.

 CULTURE:
The distinctive competence of Pakola is its ability to create unique tasting flavors which
none of its competitors are able to do. This core competence leads to its competitive
advantage of being, a beverage manufacturer of unique flavored drinks. Presently
Pakola has three unique tastes which is currently absent. In the other beverage
companies. Such unique flavored soft drinks such as Ice-cream Soda, Apple Sidra,
Lychee, and Raspberry are all examples of Pakola's internal ability to create different
and previously unheard-of drinks successfully. It is through this that they have managed
to build brand loyalty with consumers, because it is a unique taste that consumers
demand for when they choose a drink, and oftentimes when Pakola's ice-cream soda is
not available, brand loyal consumers will settle for anything n the beverage industry,
distribution is of vital importance.
  STRENGHTS:
Pakola caters to whichever markets it finds ‘convenient’ to cater to. Operating without a
Marketing Department since its very inception, this business has ‘no eyes’ no ears’. It
continues to trudge blind. No marketing intelligence, no market researches and virtually
zero market feedback and almost absolute consumer ignorance are at the very core of
this business which has amazingly continued to survive for such a surprising span of
time, most likely because of the intense brand loyalty that it’s consumers have even
without any strategic marketing efforts being executed by the company itself, is poof of
the potential that this brand has and the magnitude of success it is capable of.

 WEAKNESS:
Pakola received a total score of 1.86 in the internal evaluation. This signifies that the
company has a weak internal system and is not able to effectively manage any of their
strengths in a meaningful manner. Also of their weaknesses, it is worthy to note that
their weak distribution setup had the most weightage.

 MARKET SHARE:
Pakola has 4% market share of the cola- market.

COMPANY ANALYSIS
PAKOLA PEPSI
Critical Weight Rating Weighted Rating Weighting
factor score score
Market 0.30 1 0.30 4 1.20
share
Distribution 0.25 1 0.25 4 1.00

Customer 0.20 4 0.80 2 0.40

loyalty
Financial 0.15 2 0.30 4 0.60
position
Product 0.10 3 0.30 3 0.30
quality
Total 1.OO 1.95 3.50
 CUSTOMER ANALYSIS:

 NUMBER:
Pakola is distributed nationwide through our network of vehicles and distributors. The
company maintains a fleet of 56 trucks for operations in the Karachi base market

 TYPE
The distinctive competence of Pakola is its ability to create unique tasting flavors which
none of its competitors are able to do. Such unique flavored soft drinks such as Ice-
cream Soda, Apple Sidra, Lychee, and Raspberry are all examples of Pakola's internal
ability to create different and previously unheard-of drinks successfully.

 VALUE DRIVERS:
They have managed to build brand loyalty with consumers, because it is a unique taste
that consumers demand for when they choose a drink, and often times when Pakola's
ice-cream soda is not available, brand loyal consumers will settle for anything n the
beverage industry, distribution is of vital importance.

 DECISION PROCESS:
As per our analysis Pakola, being a Seth-owned company, Is not effectively managing Its
costs. As stated in their current mission statements, one of their focuses is to reduce
costs so as to be a low cost operator. This is a misinterpretation of what is required for a
differentiator. Rather than reducing costs seeking to be a loss leader, a company
following a differentiation strategy should instead aim to manage cost strategically In
order to optimize resources and internal efficiencies.

As discussed earlier, Mehran Bottlers has 56 vans with which it supplies its products,
whereas FMCQ companies like Unilever have a significantly lesser number of vans even
though they have much better market reach. Pakola needs to reduce this unnecessary
expense; along with costs that arises.

 CONCENTRATION OF CUSTOMER BASE FOR PARTICULAR PRODUCT:

Pakola should concentrate on driving its core competencies to create differentiation in
product research and development, distribution, and marketing. For companies of a low
cost strategy it is necessary to focus instead on purchasing, production R&D, and
manufacturing activities. Thus because Pakola is a differentiator, it should communicate
 this differentiation. One of the main drawbacks of Pakola's current strategy is that it
hardly conveys its message to its consumers

 COMPETITORS ANALYSIS:

 MARKET POSITION:

Pakola received a score of 1.95 in the competitive profile matrix. This low figure is
representative of Pakola's inability to leverage it’s competitive advantage of unique tasting
flavors successfully

 STRENGHTS:
Pakola is privately owned concern with a highly centralized authority base that
results in a tall organization structure. They do not publish any kind of financial
information and instead guard as a closely held secret, This mindset Is highly
limiting in Its nature, and will only serve competitiveness of the company itself

 WEAKNESS:
The low figure is representative of Pakola's inability to leverage it’s competitive
advantage of unique tasting flavors successfully. This, inability stems from the
company's lack of effective communication of their offering and its uniqueness.
This is one of the major mistakes companies make when following a
differentiation strategy, they assume that consumers will recognize the
difference that they offer. This Is exactly the mistake that Pakola has made. The
areas where Pakola has taken a heating are in market share and distribution.

 MARKET SHARE:
Pakola received a score of 1.95 in the competitive profile matrix
 COMPETITOR ANALYSIS
PAKOLA PEPSI
Critical Weight Rating Weighted Rating Weighting
factor score score
Market 0.30 1 0.30 4 1.20
share
Distribution 0.25 1 0.25 4 1.00

Customer 0.20 4 0.80 2 0.40

loyalty
 Financial 0.15 2 0.30 4 0.60
position
Product 0.10 3 0.30 3 0.30
quality
Total 1.OO 1.95 3.50

 COLLABORATORS:
Pakola is a line of fruit flavored soft drinks, originally introduced in Pakistan in 1950 by Hajji Ali
Muhammad. It is produced by Mehran Bottlers (Pvt) Ltd. It is the first nationally branded soft
drink of Pakistan. Hence its name Pakola meaning 'Cola of Pakistan. Mehran bottlers are the 1st
bottling plant is South Asia. Which has been certified to integrated management system based
on (ISO 9001: 2000), (ISO 14001: 1996) and (RVA HACCP) standard. Pakola quality and food
safety system follows the FDA GMP requirements and codex. Pakola products are
manufactured under strict CGMP and Hygiene controls.

 CLIMATE:
PEST ANALYSIS:

Political: There is significant political pressure on the beverage industry in Pakistan. This
pressure mostly arises from a high levy of taxes, 15% central excise duty, as well as 18% sales
tax, which totals up to about 36K. of retail prices. This extremely high double taxation rate
greatly deters the players in the industry from charging premium prices for perceived value
addition. Another political factor that impacts the beverage industry, however this time
positively, is the government's policy of banning the serving of food at wedding receptions. This
has prompted an increase in the consumption rates of soft drinks and carbonated beverages.

Economic: There are several implications of the economic situation of Pakistan upon the
beverage industry. For one, there have been complaints from several quarters regarding the
excess wastage of water in the production of aerated beverages, which for a population
compounded with astounding poverty levels raises points for concern. Recently, there has been
a crisis in the production of sugar in Pakistan, with prices skyrocketing. Such economic factors
have a resounding Impact on related Industries; and although most companies In this Industry
have switched from sugar to high-fructose corn syrup, some were affected by the agri-based
crisis.
Social: A major social trend in the rural areas of Pakistan has been a shift from presenting
guests with drinks such as lassie red sherbet, and fruit juices, towards cold drinks. This trend
has spume more from impressive distribution networks and less from increased advertising, yet
the result is positively in favor of beverage companies

Technological: Technology plays a secondary role In this Industry, as It is not heavily

dependent on technological advancements like the consumer electronics industry, or the
software industry. Because beverage products are non-tech based in nature, technology in this
industry is therefore limited to function as a catalyst to improve production capacities, speed of
product manufacturing cycles, Inventory management, and e-commerce applications

 SWOT ANALYSIS

Strengths
 55 years establishment shed presence
 Extremely brand loyal customers
 Automated bottling plant
 Online order booking system
 Public percepli on of being an innovator

Weaknesses:
 Weak distribution setup
 Ineffective marketing
 No formal organization structure
 Centralized decision making process
 Lack of professional employees

Opportunities

 Health conscious trend In lifestyles

 High growth rate of food industry
 Increased demand in rural markets
Threats

 Engro's entry into the food and beverage (milk) industry

 Increase in foreign imports of beverages
 Rising prices of sugar and sugar substitutes
 Main competitors are International giants of the Industry

 MARKET SEGMENTATION:

 DESCRIPTION:
The areas where Pakola has taken a heating are in market share and distribution. From
a strategic viewpoint however, distribution is the area which Pakola should target in the
short run if they hope to achieve any type of success. Advertising programs that are
basically demand-building exercises are useless if the product has little market reach
and is not meeting the created demand.

 PERCENT OF SALES:
Pakola makes about Rs.2.3 billion per annum in revenues, selling 8million cases of cola per
year. In an increasingly growing industry, this figure is not impressive in the least bit.
Pakola's revenues seem lackluster at best; this trend can be immensely improved by
focusing on weak areas like distribution and marketing.

 WHAT THEY WANT:

Pakola needs to strategically outsource their distribution setup to a distribution
company such as Muller and Phipps, with the expertise in now to effectively increase a
company's reach into the market.

 HOW THEY USE PRODUCT:

Pakola's weak branding choices regarding it’s milk products reflect this ineffectiveness in
communicating to end-users. The company stretched its Pakola brand name to its UHT
milk as well as to its flavored milks, when the name stood mainly for their ice-cream
soda cola drink in the minds of consumers. Therefore, by stretching the brand name to milk,
they create mental conflicting users, between fizzy carbonated colas, and pure clean milk.
This mistake coupled with ineffective marketing has put Pakola in this situation
 SUPPORT REQUIREMENT:
The generic strategy that Pakola needs to pursue is that of differentiation. In their
current vision and mission statements, the company says it aims to be a low cost leader,
yet through our thorough analysis of the strategic direction the company needs to adopt
a generic strategy of differentiation. This will allow Pakola to do three things;
 1. Charge a premium
 2. Increase unit sales
 3. Gain buyer loyalty

However, at the expense of sounding simplistic, it is necessary that the company

communicate its differentiation to its customers, otherwise these three advantages will
not avail themselves.

 Initially Pakola will need to adopt a focused differentiation approach, which means that
they should selectively choose which markets will profit them the most and then target
only those markets until such provisions are in place from where the company is able to
expand its target base. After which they should opt for a broad differentiation generic
strategy
  HOW TO REACH THEM:

FIRST STRATEGY is the formation of a structured and competent distribution network

through the enabling of sales force teams. An alternate path would be tout source the
function to an existing distribution company like Muller and Phipps in the short-run, and
over time develop the organization required for an internal distribution setup.

SECOND STRATEGY that they can enforce is the introduction of diet versions of their current
product portfolio. By tapping into this market they would be able to hit two birds with one
stone.

 BRAND POSITIONING:
The original green color Pakola ice cream soda is still popular in Pakistan.
However, other Pakola flavors, like Pakola Lychee, have gained popularity.
Another famous type of Pakola is Pakola Orange, which is an orange soda with an
ice cream taste. It is also available in most Asian shops in the U.K. The drink itself is a
very bright green color, much like the can, and tastes unlike most North American soft
drinks.It have a distinctive and strong taste. Pakola have also launched their milk. Pakola
brand name is owned by Teli Family and currently Zeeshan Habib is the owner of Pakola
carbonated drinks and Yasin Teli, is the owner of Pakola flavored milk. Yasin Teli is also
the bottler for PepsiCo for Sind and Baluchistan province

CARBONATED SOFT DRINK MINERAL WATER FLAVOURED MILK BASED

BEVERAGES
 Pakola Ice Cream-  VITAL  PAKOLA MILK
Soda  ICECREAM SODA
 Pakola Orange  PINACOLADA
 Pakola Lychee  MANGO
 Pakola Raspberry  ROSE
 Pakola Guava*
 Apple Sidra
 Bubble Up
 Double Cola
 Diet Bubble