Term Report SM

4/12/2010
TAPAL
STRATEGIC MANAGEMENT
Submitted To: Sir Javaid Ahmed Submitted By : Umair Aslam Satish Balani Khan Muhammad Samreeen Uzair Aysha
Strategic Management
Final Project: Tea Industry
LETTER OF TRANSMITTAL
April 12, 2010 Mr. Javaid Ahmed Head of Management and HRD Department Institute of Business Management, Karachi. Respected Sir, This is the term report on Strategic Management, Tapal. This report consists of the literature research, macro-environmental analysis and industry attractiveness, the company and competitor analysis, micro-environmental analysis and internal company resources, strategic analysis and recommendations, strategic implementation and diagnostic kit. The report has been completed after the perpetual hard work, determination and devotion of past 4 months. If you have any additional questions, we would be pleased to answer them. Thanking you. Sincerely, Group Members
LETTER OF AUTHORIZATION
April 12, 2010
Dear Reader, We are students of Strategic Management at IoBM and have been authorized by Mr. Javaid Ahmed to prepare a term report on Strategic Management, Tapal, which is to be submitted on April 12, 2010. The preparation of this term report required us to perform a thorough analysis of the tea industry of Pakistan and formulate the strategy for tapal by carry out internal and exteranal environment analysis and put these strategy through implementation. We would like to thank our course instructor Mr. Javaid Ahmed for such practical knowledge that he gave through out the semester and all such practical excerses that help us to enable the skills of professionals. We would also like to thank MR. Fahim (Manager Tea Department), Mr. Muffadil Mukhi (Brand Manager, Tez dum), Agha Ali Jan (Brand Manager, Danedar) and Mr.Arsalan (lipton).
Sincerely, Group Members
Index
Chapter #1 Literature Research----------------------------------------------------------6 Chapter#2 Macro Environment analysis
Threat OF NEW Entrants ------------------------------------------------------------------------- 8 Interpretation ------------------------------------------------------------------------------------ 9 Affect of PEST forces on threat of new entrants ----------------------------------------- 10 BARGAINING POWER OF BUYERS --------------------------------------------------------------- 10 Interpretation ---------------------------------------------------------------------------------- 11 PEST factors affecting bargaining power of buyers ------------------------------------- 12 Threat of Substitutes----------------------------------------------------------------------------- 13 Interpretation ---------------------------------------------------------------------------------- 13 PEST factors affecting threat of substitutes ----------------------------------------------- 14 Bargaining power of suppliers ----------------------------------------------------------------- 15 interpretation ---------------------------------------------------------------------------------- 15 PEST factors affecting bargaining power of suppliers ---------------------------------- 16 Rivalry --------------------------------------------------------------------------------------------- 17 interpretation ---------------------------------------------------------------------------------- 18 Industry direction and recommendations ----------------------------------------------------- 21 External Factor Evaluation Matrix ------------------------------------------------------------ 22 Analysis/Intrepretaion and recommendation --------------------------------------------- 23
Chapter# 3, Internal Analysis

competitve profile matrix --------------------------------------------------------------------- 26 Analysis/interpretation and recommendation --------------------------------------------- 27 Value chain ------------------------------------------------------------------------------------ 28 core competencies ---------------------------------------------------------------------------- 30
financial position ------------------------------------------------------------------------------ 31 strategic cost management------------------------------------------------------------------- 31 Internal Factor Evaluation Matrix ------------------------------------------------------------- 32 analysis/interpretation and recommendation ---------------------------------------------- 33
Chapter# 4 Matching, output Stage

Generic Strategy Matrix --------------------------------------------------------------------------- 36 Analysis And Recommendations ----------------------------------------------------------- 36 Tows Matrix ----------------------------------------------------------------------------------------- 37 Recommendations ---------------------------------------------------------------------------- 39 Strategic Position and Action Evaluation (SPACE) Matrix ---------------------------------- 40 Analysis and Recommendations ------------------------------------------------------------ 42 The Internal-External (IE) Matrix ---------------------------------------------------------------- 43 Analysis and recommendation -------------------------------------------------------------- 43 The Grand Strategy Matrix ------------------------------------------------------------------------ 44 Analysis and Recommendation ------------------------------------------------------------- 45 Matrix analysis and swot summary -------------------------------------------------------------- 45 Recommendation ----------------------------------------- Error! Bookmark not defined. QSPM------------------------------------------------------------------------------------------------- 46 Interpretation and recommendation -------------------------------------------------------- 47
Chapter#5 Implementation Stage

Strategy Implementation --------------------------------------------------------------------------- 50 The Eight Components of Implementing Strategy --------------------------------------- 52 Implementation Mode At Tapal ------------------------------------------------------------ 58 Recommendations ---------------------------------------------------------------------------- 59
Chapter#6 Diagnostic Survey
Diagnostic Survey of Primary and Secondary Management Practices ---------------------- 61
CHAPTER # 1
LITERATURE RESEARCH
CHAPTER # 2
MACROENVIRONMENTAL ANALYSIS AND INDUSTRY ATTRACTIVENESS
THREAT OF NEW ENTRANTS
THREAT OF NEW ENTRANTS
YES ~ (+)
NO ()
Do large firms have a cost or performance advantage in your segment of the industry? Are there any proprietary product differences in your industry? Are there any established brand identities in your industry? Do your customers incur any significant costs in switching suppliers? Is a lot of capital needed to enter your industry? Is serviceable used equipment expensive? Does the newcomer to your industry face difficulty in accessing distribution channels? Does experience help you to continuously lower costs? Does the newcomer have any problems in obtaining the necessary skilled people, materials or supplies? Does your product or service have any proprietary features that give you lower costs?
Are there any licenses, insurance or qualifications that are difficulty to obtain? Can the newcomer expect strong retaliation on entering the market?
INTERPRETATION
Bulk buying through auctions and private buying both from Kenya gives added advantage in the industry which makes the threat of entrants low as its hard for new entrant t get familiar by this process . Market share of unbranded tea is 45% out of total industry. Small tea sellers are encouraged as there are no such barriers for the unbranded tea sellers so whenever theres a little increase in price by banded tea sellers, we see the switch of some customers from branded to unbranded tea which further increase the threat of new entrants to enter into the market and make further industry unattractive . In order to create differentiation and consistency in the tea industry and to create brand identity, the branded tea makers have successfully created their own brand taste by mixing techniques e.g. Lipton is prepared with the help of 54 mix technique while danedar is only prepared from the mix of particular Kenya farm only. Hence this helps to create brand identity and raise the barriers to entry and threat of new entrant low. They have large access to distributors and resellers. E.g. Lipton have their own distribution networks whereas Tapal has access to 400 plus distributors which are outsourced and help to access their products all over Pakistan which makes threat of entrants low and barriers to entry high. More than experience and skill, there is specialized skill required for the competitiveness. At Tapal, they have specialized and experienced tea tasters which help them to create better taste oriented blended tea and according to the consumer taste demands. (Departmental Manager, Mr. Fahim- responsible for tea industry and training new taster). So this all help to increase the barriers to entry and threat of new entrants low. There is no strong regulation by the government in terms of licensing which makes barriers to entry low.
Barriers to entry affect Low 1 4 10 high
AFFECT OF PEST FORCES ON THREAT OF NEW ENTRANTS
P- Licensing, taxes. The unbranded market is able to get 45% of market share because of no regulation which restricts branded or legal businesses which pay taxes to compete effectively. So no regulation forecasted in near future at least for 3 years so we can forecast that political affect will make the threat of new entrants high and barriers as low
6 E- Rupee devaluation against Dollar , which restricts the profits and ultimately increase
the barriers to entry and threat of new entrant low because it restricts the new entrant to earn ROI due to devaluation of currency and make them to compete at full pace which is very hard for the new entrants.
5 S- Trend of restaurants/ social networking . With the growing population there is a rise in consumption of tea which results is attracting new investors to the industry. The trend of not only dining out, most of the bachelors and even professionals chose their meeting point of their group and friends in dhabas which provide them highly casual and friendly environment with a unique tea taste. These factors attract new investments in tea cafes or desi dhabas and even encourage new entrants and existing tea makers to open such social points as a result of this; it makes the barriers to entry low and threat of new entrants high.
T- Equipments and new ways of blending and mixing. New blending techniques of automated tea tasting can influence the barriers to entry. As we have discussed that each branded tea company use different tea mixing machines to create the desire taste of their brands and hence these machines are fully automated and state of the art machines which are very expensive and raise the barriers to entry and threat of new entrant low.
BARGAINING POWER OF BUYERS
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BARGAINING POWER OF BUYERS
YES ~ (+)
NO ()
Are there a large number of buyers relative to the number of firms in the business? Do you have a large number of customers, each with relatively small purchases? Does the customer face any significant costs in switching suppliers?
Does the buyer need a lot of important information? Is the buyer aware of the need for additional information? Is there anything that prevents your customer from taking your function in-house? Your customers are not highly sensitive to price. Your product is unique to some degree or has accepted branding. Your customers businesses are profitable. You provide incentives to the decision makers.
INTERPRETATION
Tea as a commodity has a large number of buyers with small purchases which reduces the buying power of buyers. According to Mr.Fahim, Each consumer of 4 tea in Pakistan consumers 1kg of tea per year and the consumption is increasing
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due to different variants of tea like ice tea etc which further reduce the bargaining power of buyer. It is a commodity with regular consumption throughout the year, therefore price sensitivity has significant influence in buying of tea which increases the buying power of buyers and makes it unattractive. It does not include any switching cost and due to numerous factors such as economic factors in Pakistan, the consumer of tea some what conscious about the price and this some times favors the tea company as well although it increase the bargaining power. Example: We talked about that unbranded tea has huge amount of share as a result of which recently what happened that since tapal involve in weekly purchase of tea and we have huge inventory at both Kenya and Pakistani warehouse, now in open market, the price of tea has been increased and unbranded tea sellers have low amount of investment so they are not capable of maintaining large inventory. So tapal didnt increase their price but unbranded tea sellers increased their price, as a result of which many of the unbranded consumers shifted to tapal because of high value they were getting at cheap price and there was no switching cost and tapal reached the record sales. Though the unbranded products have high market share but still Tapal and Lipton have been creating own unique taste and acceptance of the brand is also increasing over the years which will result in decreasing the buyer power.
Bargaining Power of Buyer Low1 6 10 high
PEST FACTORS AFFECTING BARGAINING POWER OF BUYERS
P No effect E- Per capita income in Pakistan is on decreasing trend with rise in inflation and 10 economic recession in Pakistan which discourages the consumption of the tea and resulting increase in buyer power to demand the product at low price and makes industry unattractive.
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T Due to quality production by branded tea companies in Pakistan with the established Unique taste due to modern blending and mixing techniques, and applying modern technology like organo Lapto tasting techniques and utilizing the recipe of branded items of global tea industry from their reference library, these companies helps to increase their exports globally and gaining great acceptance of their brands in other countries which 2 will reduce the bargaining power of buyers
THREAT OF SUBSTITUTES
THREAT OF SUBSTITUTES
YES ~ (+)
NO ()
Substitutes have performance limitations that do not completely offset their lowest price. Or, their performance is not justified by their higher price. The customer will incur costs in switching to a substitute. Your customer has no real substitute. Your customer is not likely to substitute.
INTERPRETATION
There are no real substitutes to the product. If coffee or other beverages are considered as substitutes they are still weak ones as people are not ready to shift to these products at the cost of tea. Mr Atif from Lipton refused to accept that there is any substitute of tea and he said its something that cannot be substituted as our great great grand parents were drinking the same tea that we are drinking. The only difference is that the mixing techniques have been changed with the period of time but the tea remains the same. While MR.Fahim of tapal says that in long term we can expect that there would be possible substitute of tea. On asking the question that Tapal ice tea is a substitute and either tapal is working on the future substitute, he said its a blue ocean strategy that the tapal has adopted and our all group members got amazed by listening this word as when
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this concept was taught to us, we never imagined that it would be adopted in Pakistan especially at least not by SETHI organization Threat of Substitutes
Low 1
PEST FACTORS AFFECTING THREAT OF SUBSTITUTES
10 High
P-No effect E- Import duties have been increasing which if raised to a greater extent may encourage substitute consumption and increase threat of substitutes.
8 S- Elite class consumption of coffee is increasing and health conscious consumers are preferring juices more than tea. But due to lack of awareness, the health conscious trend is considered to be affecting negligible but still it can increase the threat of substitutes as it also didnt include any switching cost. 9 With that the rising hot climate in Pakistan forcing the consumer to switch consumers
towards cold drinks & juices which again give rise to threat of substitutes
T- Availability of juices and cold drinks through vending machines at convenient and more frequent places will reduce distribution costs of beverages that in turn will reduce their prices which will eventually promote threat of substitutes.
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BARGAINING POWER OF SUPPLIERS
BARGAINING POWER OF SUPPLIERS
YES (+)
NO ()
My inputs (materials, labour, supplies, services, etc.) are standard rather than unique or differentiated I can switch between suppliers quickly and cheaply. My suppliers would find it difficult to enter my business or my customers would find it difficult to perform my function inhouse. I can substitute inputs readily. I have many potential suppliers. My business is important to my suppliers. My cost of purchases has no significant influence on my overall costs.
INTERPRETATION
Inputs are standard rather than unique because the tea is the basic input which is taken from the tea plants which are grown in Kenya and other countries but the differentiation is only created through blending and mixing techniques so it makes the bargaining power of supplier low. Since there are masses of suppliers in Kenya and other countries from where imports are carried out with variety of import samples and purchases are done through auctions and private buying, this makes the supplier power low.
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Supplier will find it difficult to enter into tea making business because tea recipe is based on specialized techniques of blending and every brand of tea in Pakistan adopting different types of blending techniques which further decrease the treat of supplier to enter into the business and hence decrease the bargaining power of suppliers. The inputs are tea and there are no real substitutes of tea and for creating a consistent taste of tea brand, the company prefers to purchase from a particular tea farm and hence it makes the supplier power high.
Bargaining Power of Supplier Low1 4 10 High
PEST FACTORS AFFECTING BARGAINING POWER OF SUPPLIERS
P- Good relations with India and Kenya would result in further reducing bargaining power of suppliers by increasing the number of suppliers in the market. India is a potential very good supplier of tea and company with in the industry can get the import at low cost in terms of transport and carriage and maintain fewer inventories as well.
E- Kenyan economic conditions and agricultural supports would influence the supplier buyer in both ways. Adverse economic conditions and lack of support by Kenyan government to tea industry will increase the supplier power and vice versa.
ST- Research oriented farming may help some of the farms to produce good quality tea with unique taste globally which may eventually increase the bargaining power of supplier but improved research methods and availability of modern technology has help Pakistan to start growing the tea with in our country at the places like shinkiari and
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Parachinar which according to Pakistan tea association are the favorable areas to grow tea 3 in Pakistan and to get the almost same quality as grown in Kenya and other countries. Frequent experiments have been finished and the Govt of Pakistan is in the process to go for the auctions for these tea farms and provide the company with full support and long lease of land. So this will result into decreasing the bargaining power of supplier.
RIVALRY
Rivalry
YES (+)
NO ()
The industry is growing rapidly. The industry is not cyclical with intermittent overcapacity. The fixed costs of the business are a relatively low portion of total costs. There are significant product differences and brand identities between the competitors. The competitors are diversified rather than specialized. 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. My customers would incur significant costs in switching to a competitor.
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My product is complex and requires a detailed understanding on the part of my customer. My competitors are all of approximately the same size as I am.
INTERPRETATION
The industry is growing rapidly because of the growing population of Pakistan and increase in commodity consumption as a result of which rivalry is mediocre. Product differences and brand identities are created by utilizing different blending techniques such as 54 variants are used to make one tea quality product which differentiates from the competitors, which help to reduce rivalry. In order to reduce the overall rivalry and forecasting the poor condition in Pakistan, the branded local companies of tea industry in Pakistan extending their target market and focusing on global demand of tea in countries such as America, Spain, Australia, Great Britain, Germany, Korea, Saudi Arabia and Afghanistan. These potential markets will help them to meet the global demand of tea and help in ROI and reducing rivalry will result into making the industry structure more 1 attractive. Customer will not incur any switching costs because of similar range of products in similar pricing range due to strong options available such as unbranded tea. People are even encouraged to taste and try new brands available which depicts that there is immense competition. Rivalry Low1 8 10 High
PEST P- Afghan trade which is a great support to unbranded tea sellers, the transit allows free trade via Pakistan but unbranded sellers carry out the trade in the name of Afghan transit
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for Afghanistan which results in zero duties and they hold and sell illegally tea in
Pakistan which may further increase the rivalry. E-The high double digit inflation in Pakistan resulting into decreasing the consumption of tea and more frequent switch to the brands as a result of which it will give rise to the rivalry S- Tetley gaining popularity among the rural areas by creating such values which is possibly increase the rivalry because the consumption of tea would be forecasted in decreasing trend because of the above economic factor . T-
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OVERALL INDUSTRY RATING Threat of new entrants
Favorable Moderate
Unfavorable 5
Implications
Threat of new entrants is high Unfavorable Bargaining power of buyers 3 3 4 Bargaining power of buyers is high Unfavorable Threat of substitutes 3 1 0 Threat of substitutes is low Favorable Bargaining power of suppliers 3 2 2 Bargaining power of suppliers is low Favorable Intensity of rivalry among competitors 2 2 5 Intensity or rivalry is Moderately High Unfavorable Total 15 11 16 Unattractive
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INDUSTRY DIRECTION AND RECOMMENDATIONS
Hence the overall industry is unattractive though the difference is minor but due to unbranded tea sellers, its affecting the while industry structure. The pest forces are trying to make the overall industry structure some what attractive such as branded companies differentiating their product and making consumers unique taste by mixing into 54 different mixes. But until the govt take serious steps to improve the structure such as licensing and immediate control over afghan transit route, the drastic change over the structure cannot be carried out. The branded companies need to carry out combined campaign against these unbranded tea sellers which are disturbing the structure of the industry by exploring the value and discouraging their sales by emphasizing on the hygiene factor and may be without mixing, it could be dangerous and manual mixing includes different germs. These recommendations would help to make the structure attractive and make it more organized.
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EXTERNAL FACTOR EVALUATION MATRIX
Weight Rating
Weighted Score
Key Factors
Opportunities 1. Increase in global consumption of tea
1
0.15
0.45
2 2. Drastic increase in exports of tea from Pakistan
0.10
0.3
3. Shinkiari and Parachinar are potential cultivating lands 3 in Pakistan 4. Domestic demand is 1 kg/yr per person and is forecasted to be in increasing trend due to other variants of 4 tea
5 5. Social networking (cafes) is increasing
0.15
0.3
0.10
0.2
0.05
0.1
Threats 1. 2.
6 Devaluation of currency
0.05 0.15
1 3
0.05 0.45
Afghan transit which result into selling unbranded tea 7 at much cheap price 3. Awareness among health conscious consumers
8
0.10
0.3
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Rising hot climate in Pakistan affecting the tea 9 consumption

10
4.
0.05
0.15
5.
Economic recession and double digit inflation
0.10
0.2
Total
2.5
ANALYSIS/INTREPRETAION AND RECOMMENDATION
The score of Tapal is 2.5 which depicts that the company is performing above average and responding to the external environment just on average. First and the foremost important opportunity on which that the tapal should work on is the global opportunity that exist in environment for the tea export from Pakistan to different countries as a result of which ,the tapal should work on Market development strategy which means that finding new market globally and offering he existing product to them. This can be achieved by catering the needs of consumer globally since its already exporting more than five countries but this making its global operation very costly as first the tea in form of processed raw material come in Pakistan and is stored in warehouse in huge inventories and then it is processed and mixed to get the required taste of the brand that it make and then it is packed and again transported to the desired countries. All together, its making all process very expensive and resulting into lesser ROI hence the tapal should take the global market as the greatest potential and should open a mixing plant in neighboring countries of Kenya if not Kenya it self. Market penetration strategy should be persuade locally in Pakistan by catering the demand locally which is towards increasing trend by lowering the cost if they started cultivating the tea farm in Pakistan near parachinar and shnkiari. This is the great opportunity for the company to save huge amount of cost ( Transport, inventory in Kenya and Pakistan ) and after which the company can either
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maintain the price or slightly reduce its price over the economy pack to penetrate more in the Pakistani market and become the leader of overall tea industry. On the threat side, the company should needs to deal with the transit afghan trade which is carried out locally. Producing tea in Pakistan and saving cost as mentioned above would outperform the unbranded market automatically and would make the tea industry structure attractive as well and help company to compete in rescission without sacrificing the profits.
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CHAPTER#3
COMPANY AND COMPETITOR ANALYSIS
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COMPETITVE PROFILE MATRIX
Critical Success Factors Advertising Product quality Coverage Price Competition Management Financial Position Customer Loyalty Market Share Customer Service(queries)
Weights
Rating
Weighted Score
Rating
Weighted Score
Rating
Weighted Score
0.1
0.2
0.4
0.2
0.15
0.6
0.45
0.3
0.05
0.15
0.15
0.1
0.15
0.45
0.45
0.6
0.05
0.15
0.2
0.1
0.1
0.3
0.4
0.2
0.05
0.1
0.15
0.1
0.2
0.4
0.6
0.2
0.15
0.3
0.45
0.3
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TOTAL
1.00
2.65
3.25
2.1
ANALYSIS/INTERPRETATION AND RECOMMENDATION
Tapal as a local private limited company performed above average in competitive profile matrix against Unilever and Tetley. The product quality in terms of taste, uniqueness and packaging has outperformed their competitors but other than this, its some what behind or equal to its immediate competitor which is uniliver. Tapal needs to work on its advertising and it should needs to be consistent and meaning full with its image. It should needs to portray the health conscious consumer image by providing health table on the packs and should increase value by educating customers in terms of identifying tea drinking healthy benefits The tapal has created a blue ocean strategy in terms of providing ice tea to the consumers which has created its own market with in tea industry. It has crossed its boundaries and its peach flavor is most preferable flavor has the highest sale in the year 2009 in ice tea. Through this strategy, tapal has earned high ROI and utilizing this ROI , it should invest it in tea farming in Pakistan to reduce its cost and provide at least the same quality as grown by Kenyan farm. This strategy will help to gain greater market share as it would help to reduce the cost and help tapal to penetrate in the market.
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MICRO-ENVIRONMENTAL ANALYSIS AND INTERNAL COMPANY RESOURCES

VALUE CHAIN
The Tapal Company started creating the value for the customer by identifying their unique brands taste tea plant farms in Kenya from where the majority of the tea is imported. The tapal tea has their expert tea taster directly come under the tea deraptment of tapal company who find these farms in Kenya and perform number of test including Organo Lapto test. Once the tea selected by them, they send the sample to their Karachi
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FIRM INFRASTRUCTURE
Tapals widely strethced distributors networks based upon 450+ distributors,Participative Management Style,Excellent Employee Compensation
The most competent Brand managers with a vision to make the company as long term market leader with highest ROI
State of the art tea refernce library to create different blend for the new brand,AccessibilityOpen Door Policy
HUMAN RESOURSE MANAGEMENT
Highly trained Tea tasters with the comapny from 24+ years
TECHNOLOGICAL DEVELOPEMENT
introduction of state of the art mixing plant to create unique brand taste
Introduction of ice teabeing the first mover inPaksitan
PROCUREMENT
Standardized packgiing is done with proper seal to make sure the long sustainable taste of tea.The attractive red colour along with guidelines to make a perfect tea add value to customers
INBOUND LOGISTICS Tea is recived from kenyan farms and stored in karachi warehouse. These are stored in special packects to make sure its taste remain the same SIM PACKAGE HAND BOOK/PRINTING
OPERATIONS Tea testing is done with the sampled tea and the final supply recied Trail blend is created blending mixing is done Packaging is done
OUTBOUND LOGISTICS RAPID AND TIMELY DELIVERY OF the product by the help of 450+ distributors network all over the pakistan STOCK WATCH MOBILE BANKING CORPORATE SMS PIA RESERVATIONS
MARKETING & SALES Strong coordination betwenn marketing , sales and tea department regarding the tea taste of brands and forecasted sales of the year and weekly purch Promoting tea through tapal tea cafes such as in Makro stores Invovle in promoting tea at all levels and mxing it into cultures
SERVICES Corporate service is provided interms of providing tea cafes and tea making machines
office where the final sampling test is done by the professionals tapal tea tasters and then by mixing small blend, they identify that either its creating the similar unique taste or not. After which the tea department representative purchased the tea on weekly basis and involve them selves in smart buying to create value for the company as well. Tea is
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dispatched into smart state of the techno packets which make sure that the tea leaves remain fresh and should provide the same taste and value to the customer. Before final mixing and blending phase, it is again tasted by the tea taster and this process is known as trail blend in which small blend of each brand is made to make sure that it would provide the same taste. Then it is blended according to the recipe. In order to make the overall process quick and cost saving, the company use state of the art inter network which is connected to Kenya as well and it provides the status of inventory at Kenyan warehouse, and Karachi warehouse as well. As soon as the supplies are consumed, it quickly shows the status of inventory and matches the yearly forecasted sales demand and ordered on weekly basis. This has controlled the inventory to some what but still its creating a huge amount of cost for the company to maintain 2 warehouses in Karachi and one in Kenya. Once this blending process is complete, the packaging is done and quality control checks are done on random sampling basis. After than the online network provide the demand of the distributor and that much of quantity is supplied to the distributor warehouse. The company makes sure that the timely distribution is important and its absence would result into giving edge to the competitors. So in order to make it effective distribution network, the company has outsourced its function on a total of 450+ distributors supplying tapal tea all over the Pakistan and creating value for the customer as well as for the company
CORE COMPETENCIES
The core competencies that the tapal have which give them edge over their competitors is the outsource well managed and iner net connected distribution network based upon 450+ distributors and result into develop long term relationship with them which is also the source of key information about the competitors while the competitors mange their own network and involved their much energy into it instead of focusing other things Another core competency that tapal have is their tea tasters in tea department who are working for the company more than 24 years and perforimg the same function i.e tea tasting every day 700 cups daily and are highly paid even more then the market Blend of culture with the brand that the tapal created is another core competency of the company. The brand image and mixing of culture into it has result into
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strong equity customers culture like such brands chainak chai,tez dum chai, mezban chai etc This is the only company in Pakistan which come up with core competent concept which is not even copied by the unbranded tea maker is offering cold tea first in cans but in order to penetrate in this blue ocean strategy, it created small sachets to increase the customer value
FINANCIAL POSITION
The financial position is not very much disclosed by the mangers of the company since its a private limited company, but we still able to get the information form the secondary sources such as Tapals yearly magazine known as News blend in which the ceo message clearly tells us that the company does not have recession affect and growing at the same and increasing trend. MR Mazz(CBM internee at Tapal) told us that the company forecasted this a year a record profit which will result into giving two bonuses to the employees and preparation for celebrating the market leader tag in branded market tea industry has been started internally as tapal has outperformed the unilever from this year by a record margin 2.7% greater than uniliver. The magazine also told us that the company has vital interest in export of tea and because of successful exports in past three year, last year it has exported 238 tons of tea and this year, it has forecasted 476 tons of tea exported to different countries which is 100% increase in exports There is an increase in fixed asset as tapal has purchased some land in shinkiari and site area of Karachi which again shows a favorable trend for the company. Consolidated financial improvement is seen due to marginal increase of exports since 2003 from 86 tons to 476 tons in 2010. Increase in revenues- 20%/annum since 2003
STRATEGIC COST MANAGEMENT
Tapal enjoys cost or performance advantage over its competitors by doing SMART buying called by MR Fahim (Tea department). He explained us the whole process in the tapal state of the art laboratory where sample testing is carried out. The process is managed in such a way that creates lowest cost buying and maintains the quality tea as
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the same time. The key element in SMART buying is observation and tea departments tea tasters contacts in Kenyan farms. The process starts with exploring opportunities particular in tea seasons. The tea is purchased through a) auctions and b) private buying by tapal. These Kenyan farms after processing carryout different auctions and before auctions, they provide sample. This sample is then carried to Pakistan for the tea test. Each day, in Pakistani tapal lab, 700 different samples are checked and tasted every day (core competency).The tapal is involved in weekly purchase which is fixed i.e on every Monday. Once the sample tasted and selected, the tea department person in Kenya bid on company behalf and buy smartly but if the sample is not up to tapal mark, the person then involve in private buying for the company and here it includes the negotiable element where company try to save cost. Once its purchased and dispatched to Pakistan, it is again checked in the lab so that the previous sampled and the purchased are same. Tapal believe on spending money for quality training for its employees and that is why the company send specifically tea department people on training in Kenya and promote research and development. The one example of R&D is the ice tea that it launched The company also involve in promoting activities by proving tea machines to various corporate, operating tea cafes in malls, makro stores etc
INTERNAL FACTOR EVALUATION MATRIX
Key Factors
Weight
Rating
Weighted Score
Strengths 1. Access to distribution channels (400+) 2. Strong brand identity promoting cultures 3. Specialized skills (tea tasters)
0.1 0.1 0.05
3 3 4
0.3 0.3 0.2
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4. Exports doubled in 2010,20% increase in revenues 5. Increase in fixed assets
0.1 0.2 0.15
3 4 4
0.3 0.8 0.6
6. Quality management resulting into SMART buying
Weaknesses 1. High cost of inventory maintained in Kenya & karachi 2. Miscommunication about the products (Cold Tea) 3. Unsatisfactory Customer query process 4. Brand name associated with being expensive 0.1 0.05 0.1 0.05 1.00 2 1 2 3 0.2 0.05 0.2 0.15 3.1
Total
ANALYSIS/INTERPRETATION AND RECOMMENDATION
The weighted score is 3.1 that is above average and shows that the company is managing its internal strengths and weaknesses well. Increase in the fixed assets is the strength with the highest weighted score that shows the expansion of the business. Exports of Tapal have also doubled in the year 2010 resulting in 20% increase in the revenues.
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However, on the weakness side the one which needs the most attention is the high cost of inventory maintained in Kenya and Karachi. In the light of the strengths and weaknesses of Tapal the following strategies are recommended: With the expansion of business and increase in exports Tapal shall go more towards being global. Tapal can cultivate own lands here in Pakistan in Parachinar and Shinkari to increase the production and increase in the exports. However, to counter the weakness Tapal shall own its warehouses in Kenya to reduce its inventory costs. At this point of time Tapal has to hold large amount of inventory in Karachi to be exported to other countries. If Tapal maintains its inventory in Kenya warehouses it will help to export to the countries which are nearby and will reduce the cost of freight and holding large amount of inventories.
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CHAPTER#4
STRATEGIC ANALYSIS AND RECOMMENDATIONS
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GENERIC STRATEGY MATRIX
LOW COST Uniqueness
Product
Broad (Industry wide)
Cost leader ship

TAPAL
Differentiation Generic strategy

UNILEVE R
TETLEY
Narrow (Market Segment)
Focus strategy (low cost)
Focus strategy (diferentiation)
ANALYSIS AND RECOMMENDATIONS
Tapal has been working on the basis of cost leadership with some differentiated position in the market as compared to other competitors. They have been using their low cost operations to have distinct position in the generic forces. On the other hand Unilever is able to have premium position in the market with broad scope by huge blending techniques whereas Tetley is able to grab share in the cost leadership are by following a focused strategy and passing on cost advantage to the consumers. Tapal should stay in the same quadrant and keep on capitalizing on the cost advantage strengths that they have been using for maintaining their strategic position and they can use more effective advertising and promotional strategies to penetrate further in the broad industry wide segment. With that in order to charge premium price, it should focus on ice tea different variants and in this way the tapal can move to focus differentiation.
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TOWS MATRIX
Strengths
1. High return on investment
Weaknesses
1. High cost of inventory maintained in Kenya & karachi
2.
Strong brand identity
2.
Miscommunication about the products (cold tea)
3.
Specialized skills (tea tasters)
3.
Brand name associated with being expensive
4.
Exports doubled in 2010,20% increase in revenues
4.
Unsatisfactory customer queries
5.
Increase in fixed assets
6.
Quality management resulting into SMART buying
Opportunities
1. Increase in global consumption of tea 1
S-O Strategies
W-O Strategies
1.
Start blending plant in existing export markets of Tapal(S1,O2)
1.
Promotional campaigns through existing social networking channels to improve communication (W2,O5)
2.
Drastic increase in exports of tea from Pakistan2
2.
Start cultivation of tea locally in plain areas(S2,O3,O4)
Healthy cultural activities should be carry out to deliver brand value to increasing customers (W3,W4,O4)
3.
Shinkiari and Parachinar are potential cultivating lands in Pakistan3
3.
Can initiate entering in caf businesses.(S5,O5)
4.
Domestic demand is 1 kg/yr per person
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and is forecasted to be in increasing trend due to other variants of tea4
Social networking (cafes) is increasing5
Threats
1. Devaluation of currency6
S-T Strategies
W-T Strategies
1.
Save cost by Start blending plant in existing export markets of Tapal (S4,T1)
1.
Promote existing ice tea more effectively to create pull(W2,T4)
2.
Afghan transit which result into selling unbranded tea at much cheap price7
2.
To convince health conscious people you provide superior quality tea than unbranded.(S2,T2,T3)
2.
Arrange seminars specific on tea Health relationship and cater customer queries (W4,T3)
3.
Awareness among health conscious consumers8
4.
Rising hot climate in Pakistan affecting the tea consumption9
Economic recession and double digit inflation10
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RECOMMENDATIONS
As their export doubled in year 2010 .in order to cut their cost they should start blending plant in existing export market of tapal. Domestic consumption increases, so this suggests they should start cultivating in shinkiari and parachinar. Opportunity Increasing global consumption provide opportunity tea producers to cater new markets. Threat The major threat to branded tea producer is illegal use of afghan transit. International trade agreement allows tea import to Afghanistan via Pakistan, but it is exploited by retention of tea in local market and sold through illegal channels. Strength Smart buying is the tool in which tapals tea department is very strong. The department works on weekly basis which includes judgment of the quantity needed and further buying at low cost which gives them advantage. Weakness The major weakness of tapal is their communication strategies in terms of their advertising messages are not clear to project actual image desired. Now one strategy it can adopt it to start cultivate the land in Pakistan and with the help of this , it can enter into a long term lease agreement with the government and formed a mixing plant in near by which will help to cater the local demand and could save huge inventory cost. It can open its mixing plant in Kenya or outskirts of it to cater the increasing global demand which will help to save money in terms of inventory, warehouse, and duties and add great value for the company. It should run health conscious programs seminars to educate the consumers and deal with their quires and truly communicate their brand value. It should come up with the ice tea variants and create a truly blue ocean strategy by minimizing the cost with zero rivalry and playing a different game.
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STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
INTERNAL STRATEGIC POSITION
EXTERNAL STRATEGIC POSITION Environmental Stability Technological Changes Demand Variability Competitive Pressures Price Range of Competitive Products Economic Tension
Financial Strength Return On investment Leverage Liquidity Working Capital Cash Flow
4 3 4 5 4
-2 -1 -3 -3 -2
Average score Competitive Advantage Customer Loyalty Local Expansion Product Quality Employee Retention Cost Competitive
Average Score Industry Strength Growth potential Profit Potential Financial Stability Technological know how Resource utilization Capital intensity
-2.2
-1 -2 -2 -2 -3
4 5 5 4 3 2
Average Score
-2
Average Score
3.83
Y axis Financial strength 4 +1 worst to + 6 best Y axis: Environmental stability -2.2 -1 best to 6 worst 4+ (-2.2) = 1.8 X axis Industry strength 3.83 1 worst to 6 best X axis: Competitive advantage -2 -1 best to -6 worst 4.17 + (-2.57) = 1.6
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Space
Conservative
+6 +5 +4 +3 +2 +1 +0 -5 -4 -3 -2 -1 -1
FS
Aggressive
+0
+1
+2
+3
+4
+5
CA
-2 -3 -4 -5 -6
IS
Defensive
ES
Competitive
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ANALYSIS AND RECOMMENDATIONS
With strong financial and unique position in the industry TAPAL is placed in the AGGRESSIVE QUADRANT which suggest following strategies market penetration, market development, product development, backward integration, forward integration, horizontal integration, conglomerate diversification, concentric diversification, horizontal diversification, or a combination strategy can all be feasible. The strategies that we have proposed for Subway through this analysis are Market Development: there are markets which are yet to be explored. Start blending plant in existing export markets of TAPAL Market Penetration: Promotional campaigns through existing social networking channels to increase consumption. Backward integration: Start cultivation of tea locally in plain areas
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THE INTERNAL-EXTERNAL (IE) MATRIX
The IFE Total Weighted Score Strong 3.0 to 4.0 High 3.0 to 3.99 I Average 2.0 to 2.99 II Weak 1.0 to 1.99 III
IV Medium The EFE Total Weighted Score 2.0 to 2.99 V VI
Low 1.0 to 1.99
VII
VIII
IX
ANALYSIS AND RECOMMENDATION
The Internal External Matrix positions an organizations various divisions in a nine cell display. This matrix is based on the two key dimensions which are the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis. Therefore the scores of Tapals IFE and EFE matrix place the bank in the first cell. This cell can be described as GROW AND BUILD that requires the formulation of intensive strategies like market
43
penetration, and/or product development. Therefore Tapal should focus on these strategies and decide which one is most appropriate to adopt.
THE GRAND STRATEGY MATRIX

RAPID MARKET GROWTH
Quadrant II
Quadrant I
WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION
Quadrant III
Quadrant IV
SLOW MARKET GROWTH
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ANALYSIS AND RECOMMENDATION
Grand strategy The grand matrix of tapal has come in the 1st quadrant which has been a consequence of the IFE and EFE matrix ratings and weights. This matrix is proposing to tapal to adopt strategies like market development, market penetration, and product development, any kind of integration or then diversification, Which are repeated in other matching tools.
MATRIX ANALYSIS AND SWOT SUMMARY
Alternative Strategies Forward Integration
IE X X X X X X
SPACE X X X X X X
GRAND X X X X X X
TOWS
COUNT 3
Backward Integration Horizontal Integration Market Penetration Market Development Product Development
4 3
X X
4 4 3
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Strategic Alternatives
QSPM
Critical Success Factors
Weight GLOBAL EXPANSION OF PLANTS 0.1 0.1 0.05 0.1 0.2 0.15 AS 3.00 3 4 3.00 1.00 TAS 0.3 0.15 0.4 0.6 0..15
LOCAL CULTIVATION IN PARACHINAR AS 4.00 2.00 2.00 1 3.00 --TAS 0.4 0.2 .1 .1 .6 ---
Strengths Access to distribution channels (400+) Strong brand identity Specialized skills (tea tasters) Exports doubled in 2010,20% increase in revenues Increase in fixed assets Quality management resulting into SMART buying Weaknesses High cost of inventory maintained in Kenya & karachi Miscommunication about the products (cold Tea) Unsatisfactory customer queries Brand name associated with being expensive SUBTOTAL
0.1 0.05 0.1 0.05 1.00
4 --------
.4 --------1.92
2 ---------
.2 ---------1.6
Critical Success Factors
Weight
Opportunities Increase in global consumption of tea and 1 acceptance of Pakistani tea brands Drastic increase in exports of tea from 2 Pakistan Shinkiari and Parachinar are potential 3 cultivating lands in Pakistan
0.15 0.10 0.15
GLOBAL EXPANSION OF PLANTS AS TAS 4 0.6 4.00 0.40 --
LOCAL CULTIVATION IN PARACHINAR AS TAS ------4.00 -0.6
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Domestic demand is 1 kg/yr per person and is forecasted to be in increasing trend due to 4 other variants of tea 5 Social networking (cafes) is increasing Threats 6 Devaluation of currency Afghan transit which result into selling 7 unbranded tea at much cheap price Awareness among health conscious 8 consumers Rising hot climate in Pakistan affecting the 9 tea consumption Economic recession and double digit 10 inflation SUM TOTAL ATTRACTIVENESS SCORE
0.10
---
---
4.00
0.4
0.05 0.05 0.15
--3 ----
---0.15 ---
1.00 4.00 ---
0.05 0.20 ----
0.10 0.05 0.10
-----3
------.3 1.45 3.37
-----2
--------0.2 1.45 3.05
INTERPRETATION AND RECOMMENDATION
Tapals strong brand identity would be favorable for market penetration as it would make it a
successful venture. People already know about it, so they wouldnt hesitate in trying it.
Implementing the globalization of the company by making plants in other countries (existing export markets) would help capitalize strengths as it will add cost advantages. It will help in reducing the inventory costs and duties on trade will be saved.
Now one strategy it can adopt it to start cultivate the land in Pakistan and with the help of this, it can enter into a long term lease agreement with the government and formed a mixing plant in near by which will help to cater the local demand and could save huge inventory cost.
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It can open its mixing plant in Kenya or outskirts of it to cater the increasing global demand which will help to save money in terms of inventory, warehouse, and duties and add great value for the company. These strategies would be beneficial for the long term and help company to play different and vital game and secure their future and optimize the strategic window.
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CHAPTER#5
STRATEGIC IMPLEMENTATION
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STRATEGY IMPLEMENTATION
A common misconception that we, students of business administration generally hold, is that the answer to any business problem is the development of strategic alternatives and then the discernment of one best strategy. In reality, we see that the development of strategy is only just one half of the story. The other half is the actual implementation of this strategy. The translation of the proposed strategy into solid tangible actions is in fact, the destination, the final objective. Knowing the path is only just one half of the story, The other more important half is walking the path. Businesses & mankind itself, has learnt over the past few centuries that the actual enactment of the devised strategy or strategies is the primary task that must be carried out, no matter the cost, and it is in this execution, where lies the determining factor, as to whether or not the strategy will succeed. Therefore, it stands to reason that defective enactments may very possibly make sound strategies ineffective and skilled implementation has the power to make a debatable choice successful, therefore, the business concern at hand, requires a diligent plan and vigilant execution of its implant plan. Strategy implementation is an internal, operations-driven activity involving organizing, budgeting, motivating, and culture-building, supervising, and leading to make the strategy work as intended. Management at Tapal will have to work on building a firm capable of carrying out strategy successful. It will have to allocate ample resources to improve its out-reach to cultivate lands locally and making warehouses in Kenya. Strategy supportive policies will have to be initiated. Tapals experience and strong financial position can help to grow its distribution channel in these areas. However, any change in strategy will have to be taken step by step with only the most important changes to be addressed first so that resentment, anxiety or any possible demonization can be avoided. According to palladium group, strategy execution is a competency that creates a competitive advantage. 85-90% of organizations fail to execute strategies because of lack of alignment of their budgets, priorities or incentives with business strategy. Most of the time a typical business does not understand what strategy is. The following diagram can offer a road map for Tapal to execute its newly formed strategy.
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Strategy management process
Annual cycle
Q1
Q2
Q3
Q4
Review and update strategy
Enterprise strategy planning
Clarify vision Define corporate strategy
Develop the corporate scorecard/strategy roadmap
Align the organization Corporate and business units aligned Business and support units aligned Board of directors aligned Develop business and support unit scorecards
Organization planning
Financial planning
Planning/ budgeting Budgets Plans finance IT
Workforce planning
Employee alignment Initiatives HR Personal goals Employee incentives Personal development
Strategy reviews
Management control & learning
Initiative management Best practice sharing Strategy communication
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Tapal will need to address the following problems Define the key implementation tasks Review the variety of approaches that management can apply to these tasks Identify the key skills that are needed to implement these tasks
THE EIGHT COMPONENTS OF IMPLEMENTING STRATEGY
Allocating resources Tapal has a good financial position so they have abundance in financial resources. Moreover, they have advanced technology in every department to facilitate their process of meeting internal and external process requirements. Financial resources should be focused towards setting up the technology and side by side advertising in such a way that it reaches the target audience in the most cost effective manner possible. Technology also needs to be updated, to make processes more efficient. Instituting Best Practices for Continuous Improvement The PDCA (Plan-Do-Check-Action) cycle should be incorporated in the whole organization at each level. Each and every employee should be told to constantly be on the lookout for new ways to do things in the most efficient way possible, in whatever their job is. This also includes improving quality of service by improving processes employees are involved in. Installing Support Systems The effort towards real-time communication is also targeted at reducing time taken for decisions as employees will be constantly connected with each other and will not be required to move from their designated seats to work with others.
Tying Rewards to Achievement of Key Strategic Targets Employees should be evaluated on a consistent basis. Those who actually do recommend good ideas and work efficiently should be rewarded. No effort should go unrewarded as that can become a de-motivating factor. Those who perform well should be given titles like employee of the month or quarter with bonuses. Building a Capable Organization
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Tapal should focus on its value chain and find out areas of improvement. Through continuous improvements, the company can provide greater value to all its stakeholders and also earn a competitive edge over its competitors. The company must train its employees regularly to keep them updated about various aspects of the tea industry and the changing demands of the customers. They need to be trained well to deal with the technological advancements so that they can provide the best services to their customers. Exercising Strategic Leadership The top-management themselves have to be completely involved in the strategy implementation, seek cost management measures, be well updated with the technological advancements, give value to employee contributions and create hype about the new strategy to gain employee commitment. The corporate culture should be flatter, with cross functional groups and a strong leadership of the CEO as it is the leader who creates power and force that constitutes strategy, so that it is implemented effectively. Shaping Corporate Culture to fit Strategy To effectively execute the recommended strategy, efforts towards employee empowerment need to be made and must be targeted towards increasing employee commitment to the strategy. Tapal needs to create a culture which can accept flexibility and move on with technological advances to keep up with the changing market demands. Also, special efforts will have to be made by the top management at Tapal to explain the new strategy to all employees and welcome any feedback or suggestions from that front. Tapals policy to employ young, creative graduates seems to be an effective policy for the company to remain innovative, creative and resourceful. Establishing Strategy-supportive Policies Tapal needs to provide training to the employees to deal with day-today operations, technical problems and customer care. Moreover, proper training also needs to be given for PDCA, explaining to employees how they will write short reports on new ways of doing things by conducting research both inside and outside the organization and also online.
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Resource High quality network to support latest technological advancements Good PR should be present to jump through loopholes and avoid extra taxes and licensing issues
Structure Well established technological structure should be present De-centralized structure should be kept
Culture High teamwork among employees
Very interactive culture exists with an open door policy
High class business culture
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The Balanced Business Scorecard:

Strategic Theme: Operations Excellence Financial Cost recovery Profitability Profitability Increased market Recovery of share in the post costs by June paid market esp. 2011 among the Corporate Clients Increase return on investment Sustain no.1 position as post-paid service (41.7% market share) Design products (service packages) according to data usage patterns in the past and the future demands of customers License Cater to customers according to needs: Commercial Corporate Offer services at Super-Premium rates Objectives Measures Targets Initiatives
Customer Retain existing customers and attract new ones Market research for the purpose of usage patterns Product Development Programs
Retain existing customers and attract new ones
Corporate packages
Internal
Commercial packages
Upgrade technology
Increase reach
Arrange for finances Investors
Upgrade
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Learning Technological leader Technological leader Employee training and development Emphasis on technicians and engineers x employees to be hired y employees to be trained Senior technicians to be trained Subordinates to be trained by the senior technicians
Learning Perspective A companys ability to learn and innovate is directly linked to its culture. The intense global competition requires from the companies to make constant advancements to bring in innovation in their products and processes. For Tapal to adopt the strategy for cultivating lands and warehouses, it will have to stress highly on becoming the technological leader in the industry in Pakistan. The primary measures that are to be conformed are to train and develop employees. Special emphasis is to be given to technicians and engineers who will manage the whole system. An effective step can be that of training senior personnel of the company so that later on the learning can be passed on to the subordinate technicians. Internal Perspective This is catered to align the processes, decisions and actions throughout the organization with the strategy to be implemented. The infrastructure of the Tapal has to be upgraded to meet the requirements. This requires a research that sees the usage patterns in the past and the demands in future. Customer Perspective To retain the relationship with customers and to make new ones, what is required is the alignment of their requirements according to their concerns of time, quality, performance & service and cost. Since the service caters premium customers, we will have to deal with the performance & service issues. Financial Perspective The primary motive from the financial perspective is that of recovering the huge cost that Tapal would incurred, while profitability and prospering comes later. For fast recovery of the costs, wise measures can be taken related to the return on investment and
56
market share. The corporations tend to purchase services in huge amounts and relatively do not hesitate in compromising over paying good price for the technological advancement for their firms. So the focus on Corporate clients can give speedy recoveries. Tapal has a deep rooted culture and core values that differentiate it from its competitors. It is built on sound practices and principles. It is not dominated by a group of individuals. Its greatest assets are its people and its consistency of principles and policy gives it directions. Never compromise on quality has been the motto of tapal since the very beginning. This commitment to quality has resulted in a high level of customer satisfaction and unflinching brand loyalty. Always in a move, Tapal tea is honored to have taken the lead in a number of areas in the tea industry; it was the first to produce soft packs, metal free tea bags, first to market Kenya teas, etc. Tapal is a research oriented company. It subscribes to and conducts various researches in the area of retail outlets, consumer behavior, product development, etc. Tapals philosophy has always been be as unique and innovative as possible in whatever we do it has a strong distribution network spread across Pakistan from Karachi to Khyber with 400 distributors. Pakistan is one of the leading tea importers in the world. It is infact the second largest tea importer. Pakistanis are avid tea drinkers with per capita consumption of 1 kg per annum. A cup of tea is part of the daily routine and culture. It is not simply a beverage but a cheapest form of dietary intake. The government of Pakistan treats tea as an essential commodity and although there are no price controls, still the prices are closely monitored by the government. Tapal has been a winner of Brand of the year award 2008. Consumer survey for the Brand of the year Award conforms the best acceptable brand status by voting Familiarity as the best rated attribute of Tapal Tea followed very closely by Quality. This voting pattern certifies that quality and familiarity are two integral part of the best edible brand. Familiarity at the top specifically entails that the brand is investing a great deal on advertising and marketing tools based on the family traditions and cultures when all family members spend some time together having a cup of tea. Affordability has been rated as the third most preferred attribute out of four and it explains that consumers are sensitive to prices of essential commodities. Availability has been rated as the least rated attribute and indicates further market potential to explore and to increase product availability in new areas. Tea is consumed regularly in every home both in urban and rural areas. Therefore, Tapal as a brand has a long way ahead and can definitely grow to new heights in future. There are multinational brands available in the
57
market with strong financial back up for advertising but Tapal has established its position as a market leader. Specific attention is required to the marketing of Tea Bags where competition is fierce and Tapal has to establish itself in this premium market segment.
While implementing the recommended strategy, the above factors have to be kept in mind to form a strategic fit with functions and administration of Tapal.
IMPLEMENTATION MODE AT TAPAL
Degree of attention to administrative constraints
Degree of general manager involvement and direction
High High Low Political Manager Administrative Manager
Low Entrepreneurial Manager People And Organization Shaker
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From our analysis of the company, we found that Tapal follows an administrative mode of implementation where the manager is concerned with the administrative consequences of implementing strategy and so limits involvement to processes, systems, and people who must achieve the strategy. The managers make sure that everyones voice is heard which helps in developing a high level of organizational commitment.
RECOMMENDATIONS
Since Tapal is a Sethi organization, the structure and culture somewhat reflects the fact. However, culture of the company is changing to more decentralized gradually, Tapal needs to adopt culture that is not autocratic. However, Tapal provides the employees with handsome salary packages and benefits that the employee turnover rate is too low that people are attached with the company for more than 20 years even. Tapal needs to stay on this trend to retain its talent. Tapal pays attention to its processes. It has specialized and experinced tea tasters, tasting 700 cups everyday, which help them to create better taste oriented blended tea. Tapal needs to convey its processes to customers to create awareness of the fine processes Tapal go through to provide its customers with the best taste and improve on the customers` perspective. Since the vision of the company is to global that is why they are now more export oriented, the company needs, as per the recommended strategy, train its employees and provide them with the exposure of international markets. For Tapal to adopt the strategy for cultivating lands and warehouses, it will have to stress highly on becoming the technological leader in the industry in Pakistan. The primary measures that are to be conformed are to train and develop employees. Special emphasis is to be given to technicians and engineers who will manage the whole system. An effective step can be that of training senior personnel of the company so that later on the learning can be passed on to the subordinate technicians.
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CHAPTER#6
DIAGNOSTIC TEST
60
DIAGNOSTIC SURVEY OF PRIMARY AND SECONDARY MANAGEMENT PRACTICES
Answer the following questions using a scale from 1-5, where 1=inferior to industry peers, 3=about the same as industry peers, and 5=superior to industry peers. Strategy Inferior Top of Form 2 1 Top of Form 2 1 Top of Form 2 1 Top of Form 2 1 3 4 5 Bottom of Form 3 4 5 Bottom of Form 3 4 5 Bottom of Form 3 4 Average Superior 5 Bottom of Form
The company has a clearly articulated and widely understood strategy.
The company has strong external antennae and quickly anticipates external shocks, emerging opportunities, and market downturns.
The company has a very good understanding of its competitors and can anticipate competitors moves.
The company is focused on extending/improving its core business or businesses and is committed to growing them aggressively. Subtotal of Strategy score: 12
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Execution
Inferior Top of Form 2 1 Top of Form 2 1 Top of Form 2 1 Top of Form 2 1
Average
Superior 5 Bottom of Form
The companys products and services consistently meet customer expectations.
The company consistently improves employee productivity.
5 Bottom of Form
The companys programs and initiatives consistently achieve desired outcomes.
5 Bottom of Form
The companys IT systems enhance its ability to execute its value proposition.
5 Bottom of Form
Subtotal of Execution score: 14 Culture Inferior Top of Form 2 1 The company consistently raises the performance bar. Top of 3 4 Average Superior 5 Bottom of Form
The company sets demanding performance standards for all of its employees.
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Form 1
Bottom of Form
The companys culture is exciting, engaging, and fun.
Top of Form 2 1 Top of Form 2 1 3 4 3 4
5 Bottom of Form
The company has clear values that people in the company abide by.
5 Bottom of Form
Subtotal of Culture score: 15
Organizational Structure
Inferior Top of Form 2 1 Top of Form 2 1 Top of Form 2
Average
The company makes decisions quickly.
The company minimizes bureaucracy.
5 Bottom of Form
The companys business processes are simple.
5 Bottom of Form
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1 Top of Form 2 1 Subtotal of Organizational Structure score: 15 3 4 5 Bottom of Form
The company effectively cooperates across the organization.
Talent
Inferior Top of Form 2 1 Top of Form 2 1 Top of Form 2 1
Average
The company has great talent and bench strength at each position.
The company successfully develops talent.
5 Bottom of Form
The company designs jobs that intrigue and challenge talented employees.
5 Bottom of Form
The companys senior management is personally involved in recruiting and developing talent.
Top of Form 2
5 Bottom of
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Form 1 Subtotal of Talent score: 13
Quality of CEO/Board Leadership
Average
The CEO is uncanny at spotting opportunities and problems before others.
People at all levels of the organization feel connected to the CEO.
5 Bottom of Form
The CEO matches words with actions (walks the talk).
5 Bottom of Form
The companys board members know the business and have a significant stake in the success of the company.
5 Bottom of Form
Subtotal of CEO/Board score: 12
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Innovation Capability
Average
The company is continually transforming or reshaping its industry.
The companys products, devices, or innovations are better than those of its competitors.
5 Bottom of Form
The company does not hesitate to cannibalize its existing business or businesses.
5 Bottom of Form
People who have new ideas are respected and enjoy high status in the company.
5 Bottom of Form
Subtotal of Innovation score: 12
M&A Growth
Inferior Top of Form 2 1
Average
The company consistently identifies good M&A possibilities.
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The company rarely overpays for mergers & acquisitions.
Top of Form 2 1 Top of Form 2 1 Top of Form 2 1 3 4 3 4 3 4
5 Bottom of Form
The company is consistently better than its competitors at integrating mergers and acquisitions.
5 Bottom of Form
The companys mergers and acquisitions achieve most of their projected cost and revenue benefits.
5 Bottom of Form
Subtotal of M&A score: 8 Total score: 101
If you scored above 120, your organization is doing well in these practices compared to your peers. Don't forget to maintain this success as you continue to juggle these practices in the future. If you scored between 72 and 119, your organization is performing well or adequately in some areas of these practices and at or below your peers in other areas. Look for practices with subtotal scores under 12. You need to concentrate on improving those weak areas. If you scored under 72, your organization is performing below your industry peers in these practices. You need to focus on overall improvement.
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4/12/2010

Final Project: Tea Industry

Final Project: Tea Industry

Sincerely, Group Members

Final Project: Tea Industry

Chapter# 3, Internal Analysis

Final Project: Tea Industry

Chapter# 4 Matching, output Stage

Chapter#5 Implementation Stage

Chapter#6 Diagnostic Survey

Final Project: Tea Industry

Diagnostic Survey of Primary and Secondary Management Practices ---------------------- 61

Final Project: Tea Industry

MACROENVIRONMENTAL ANALYSIS AND INDUSTRY ATTRACTIVENESS

Final Project: Tea Industry

THREAT OF NEW ENTRANTS

THREAT OF NEW ENTRANTS

Final Project: Tea Industry

Barriers to entry affect Low 1 4 10 high

Final Project: Tea Industry

AFFECT OF PEST FORCES ON THREAT OF NEW ENTRANTS

BARGAINING POWER OF BUYERS

Final Project: Tea Industry

BARGAINING POWER OF BUYERS

Final Project: Tea Industry

Bargaining Power of Buyer Low1 6 10 high

PEST FACTORS AFFECTING BARGAINING POWER OF BUYERS

Final Project: Tea Industry

Final Project: Tea Industry

Final Project: Tea Industry

BARGAINING POWER OF SUPPLIERS

BARGAINING POWER OF SUPPLIERS

Final Project: Tea Industry

Bargaining Power of Supplier Low1 4 10 High

PEST FACTORS AFFECTING BARGAINING POWER OF SUPPLIERS

Final Project: Tea Industry

Final Project: Tea Industry

Final Project: Tea Industry

Final Project: Tea Industry

OVERALL INDUSTRY RATING Threat of new entrants

Final Project: Tea Industry

INDUSTRY DIRECTION AND RECOMMENDATIONS

Final Project: Tea Industry

EXTERNAL FACTOR EVALUATION MATRIX

2 2. Drastic increase in exports of tea from Pakistan

Final Project: Tea Industry

Rising hot climate in Pakistan affecting the tea 9 consumption

Economic recession and double digit inflation

ANALYSIS/INTREPRETAION AND RECOMMENDATION

Final Project: Tea Industry

Final Project: Tea Industry

COMPANY AND COMPETITOR ANALYSIS

Final Project: Tea Industry

COMPETITVE PROFILE MATRIX

Final Project: Tea Industry

ANALYSIS/INTERPRETATION AND RECOMMENDATION

Final Project: Tea Industry

MICRO-ENVIRONMENTAL ANALYSIS AND INTERNAL COMPANY RESOURCES

Final Project: Tea Industry

HUMAN RESOURSE MANAGEMENT

Introduction of ice teabeing the first mover inPaksitan

Final Project: Tea Industry

Final Project: Tea Industry