Project Presentation

Business policy and strategy

Group members
AHSAN ROUF OSMAN QADIR KANWAL EJAZ SHEHAR BANO HASAN NASIR L1F08MBAM0089 L1F08MBAM0081 L1F07MBAM2083 L1F07MBAM2041 L1F05BBAM2050

History of Qarshi
Conceptualized by Allama Iqbal Hakim M. Hassan Qarshi established a herbal clinic in the heart of Lahore Beadon rd M. Iqbal Qarshi carried the torch in form of Qarshi Dawakhana 1968. Later it evolved into Qarshi industries.

chronological

EVOLUTION OF QARSHI

WHATS QARSHI ALL ABOUT?

Product portfolio

Introduction

ORGANIZATIONAL STRUCTURE

Locations in Lahore
Head Office Jam-e-Shirin Boulevard, 15-G, Gulberg-III, Lahore, Pakistan Ph: +92-42-111 200 300 +92-42-5831924 - 5 Fax: +92-42-5834057 Email: headoffice@qarshi.com Research & Development P.O. Qarshi New Shalimar, Multan Road, Lahore, Pakistan Ph: +92-42-7463134 - 7463135 Fax: +92-42-7463137 Email: rnd@qarshi.com

Number of Total Employees

There are more than 1600 Workers who are currently working in Qarshi industries all over Pakistan.

Nature of business
Natural Medicines Health Supplements

Refreshing Syrups
Natural Mineral Water Food and Farm products

Type of ownership
A 100% privately owned organization Capital structure

Equity financing financing 100%

debt 0%

VISION STATEMENT

To be the leader in Natural Medicines, Health Supplements, Refreshing Syrups, Natural Mineral Water, Food and Farm Products in our region by the year 2010.

MISSION STATEMENT
To become a brand of choice by: Conducting goods manufacturing practices to the entire satisfaction of our National and International customers, and providing them with quality products. Bringing about continuous improvement in all areas through a dedicated, sincere and competent workforce, supervised by a team of highly qualified and committed professionals.

GOALS & OBJECTIVES

Establish qarshi products as an all-round-the-year products Increase qarshi product acceptability in the new generation Remind and reassure our existing customers Counter growing competition from allopathic Target newer potential TM segments and increase consumer base Modify attitudes of non-users of Qarshi products and encourage trial Maintain strategic business partnership with Metro

Core competencies
Production capabilities of producing at high volumes. Ability to highly diversify the product portfolio. Background from tib. Good will and good brand image in market. Springley is the only natural mineral water available in market. Ability to produce herbal medicine. Favorable capital structure (zero liabilities). Research and development capabilities. Ability to maintain high quality in their products. State of the art machinery and equipment.

Key success factors

Expertise and proficiency in herbal medicine Plants and equipments for appropriate production levels Reputation in fair dealing b to b Financial resources Strong continuous research and development Favorable capital structure

Culture as defined by management

Ownership Cleanliness Competition Productive Hard Work

Culture reflected by practices

High centralization Entrepreneurial Seth culture Human resources head cannot use his authority Lack of authority/empowerment at all levels Everything is being controlled and interfered in by C.E.O Extensive job bindings (pay less work more)

Strategic head

MAIN STRATEGIES UNDER TAKEN:

At corporate level
The main objective of the business is to earn high revenues and high financial growth. The firm applies an aggressive strategy based upon push strategy mainly focusing on the distribution efficiency. Being the market leaders for their main products Qarshi industries use build and grow strategy on corporate levels.

At business unit level:

On the business unit level Qarshi is applying diversification strategy ensures many products to be order qualifiers and most of them are sliding towards order winners.

At Functional level
Two way relationship with distributors Based upon SCMC which stands for sales channel and marketing control. coordinate all the marketing activities and sales channel Ensure maximum efficiency in the operation of the distribution channel. Extensive job rotation and duty assignment, in order to ensure the involvement

External And Internal Assessment

STEPLE analysis
Social analysis: Huge number of people living under the poverty line single mothers or fathers are in insignificant number Cultural values and norms are highly celebrated and it creates a high demand for goods and services during any nearing event.

Cont..
Technological analysis: For Qarshi technology plays a vital part since it is in manufacturing sector. The world is technology driven nowadays Another perspective is in medicine sector which is something that always needs to be improved

Cont..
Economical analysis: Recession stage of economical cycle High inflation rates 80/20 rule is valid for such economy Economy is witnessing a shift from agro based to industry based

Cont..
Political analysis:
Pakistan is politically an unstable territory Government still swings between military dictatorships and democratically chosen parliamentarians. Foreigners are reluctant to invest in Pakistan

Cont..
Legal issues: Alcoholic element in any beverage, or soft drink. Proper tax laws Property, intellectual property and patents. Environmental analysis: Green house gases. disrupting noise pollution. Environmental safety and sensitivity.

Porters 5 Forces Model

Threat of New Entrant Threats of Substitutes Bargaining Power of Consumers Bargaining Power of Supplier Rivalry among Competing Firms Low High Moderate Low
High to moderate

overall industry= mature and competitive

External and internal assessment

S.W.O.T MATRIX FOR QARSHI INDUSTRIES

Strengths:
1. 2. 3. 4. 5. Backward integration Research and development Brand recognition Largely diversified High Environmental concerns

Weaknesses:
1. 2. 3. 4. Lack employee motivation High centralization Pursuing with failures Lack customer driven approach

Opportunities:
1. 2. 3. 4. 5. 6. Trend for consuming natural products Increasing demand for herbal medicine Health consciousness New SBUs (juices) Market potential Ecological organizations

S.O strategies
1. 2. Enhance the operations in foreign markets.(s1,o1,o2) Carry out a marketing awareness campaign for addressing to health conscious market segment.(s5,o3)

W.O strategies
1. Abandon failed products and deploy resources in new attractive SBUs. (w3,o4)

Threats:
1. 2. 3. 4. 5. Competition Price war Economic downturn Low entry barriers of industry Continuous increase in prices, taxes and labor cost

S.T strategies
1. 2.

W.T strategies
Improve internal organization structure and accompany it with suitable culture. (w1,w2,t1)

Use differentiation strategy for 1. products. (s2,t1,t2) Use push strategy for SBUs which are less profitable by producing in bulk. (s1,t5)

External and internal assessment

BCG MATRIX FOR QARSHI

External and internal assessment

C.P.M- COMPETITOR PROFILE MATRIX

No.

Core Industry competencie weight age s

Qarshi industries

Hamdard industries

Marhaba industries

rating Research 0.17 and development Backward vertical integration 0.05 4

total 0.51

rating 4

Total 0.68

rating 2

total 0.34

0.2

0.15

0.15

Brand image 0.18 Promotional 0.07 activities

2 3

0.36 0.21

3 3

0.54 0.21

2 1

0.36 0.07

Human 0.13 resource management

0.13

0.39

0.26

External and internal assessment

THE SPACE MATRIX

Axis X

Internal Strength Position Competitive Advantage

(Worst -6, Best -1) Product Quality Market Share Brand Image Research and development -2 -1 -3 -1

External Strength Position Industry strength

Growth potential Entry of new firms Access to Financing Competition pressure (Worst +6, Best +1) +3 +4 +3

+3
Average Score = -1.75 Total X-Axis Score = +1.5 Average Score = +3.25

Financial Strength Axis y

ROI Leverage Liquidity Cash Flow (Worst +6, Best +1) +1 +2 +3 +2

Environment Strength
(Worst -6, Best -1) -6 -4 -3

Inflation Technology Demand Elasticity Taxation

-4
Average Score = +2 Total Y-Axis Score = -2.25 Average Score = -4.25

+6.00

Conservative

Aggressive

1.5

-6.00

+6.00

-2.25

Competitive Defensive

-6.00

External and internal assessment

EFE - EXTERNAL FACTOR EVALUATION MATRIX

Factors

Weight

Rating

Weighted Score

Opportunities:
Trend for consuming natural products Demand for herbal medicines increasing 0.10 0.10 4 4 0.1 0.4

health consciousness
new SBUs, as to juices market potential Ecological organization

0.05
0.10 0.10 0.05

2
3 2 4

0.1
0.3 0.2 0.2

Threats:
competition Price war Over diversification Economic downturn Low entry barriers of the industry Continuous increase in prices, taxes and labor cost 0.15 0.10 0.05 0.10 0.05 0.05 1 2 3 2 3 4 0.45 0.4 0.05 0.2 0.15 0.1

2.65

External and internal assessment

THE GRAND STRATEGY MATRIX

Rapid market growth

Quadrant 2

Quadrant 1

Weak competitive position Quadrant 3 Quadrant 4

Strong competitive position

Slow market growth

Marketing head

MARKET ANALYSIS

Methods of Segmentation
Demographic Segmentation:
Religion: On the basis of cure: For profession and life styles:

Psychographic Segmentation:
Like customer needed a quality refreshing beverages

Cont..
Behavioral Segmentation Behavioral Occasions Behavioral Segmentation Benefits User Rate Loyalty Status Readiness Stage Attitude toward product

Target Market:
Families of urban population. Concerned about their health and preferring quality natural products. School/college/university students engaged in sports activities. Professional Athletes Club-level Athletes Field Workers

Marketing

MARKETING MIX

Marketing mix of Qarshi

Product
Quality Features Brand Name

Price
List Price Discount Allowance

Place
Channel Location Transportation

Promotion Advertising Personal Selling Sale Promotion

Marketing head

MARKET SHARE

Market share in red syrup market

60 50

40

30

20

10

Rooh Afza

All other red syrups

Jam-e-Shirin

Market share in johar joshanda market

120 100 80
60

40 20 0 Jul-07 Aug- Sep- Oct-07 Nov- Dec- Jan- Feb- Mar- Apr-08 May- Jun- Jul-08 Aug- Sep- Oct-08 Nov- Dec07 07 07 07 08 08 08 08 08 08 08 08 08
TOTAL JOSHANDA OTHERS (SACHET PAPER) Qarshi Johar Joshanda Hamdard Joshina Qarshi Johar Joshanda Ahmed Joshanda Total Werrick Pharma Qarshi Pura (POLYTHYLENE)

Marhaba Joshanda

Unique selling points

100 % pure and natural products Positioned as differentiated products as to quality and wholesomeness Trustworthy brand name

Competitive analysis

COMPETITORS

Competitive Analysis
In red syrup market:
Hamdard Lifestyle

In herbal and natural medicine market:

Hamdard Marhaba hashmi

Other competitors
Mineral water:
Nestle purelife Coca cola kinley Pepsi aquafina And many others.

Financial issues

FINANCIAL STRATEGIES

The core strategy

milk and invest According to this strategy is to get share of profit from one business unit and finance other SBUs.

Qarshi industries income statement

For the years 2009-10(1st qrtr) particulars sales cost of sales gross profit operating cost operating profit Rs $4,838,635,742 $967,727,148 $3,870,908,594 $486,404,004 $3,384,504,590 2008-09 Rs $3,701,435,578 $899,986,248 $2,801,449,331 $428,035,524 $2,373,413,807 2007-08 Rs $3,155,784,214 $676,789,658 $2,478,994,556 $385,231,971 $2,093,762,585

administrative cost net profit before interest and tax

interest Net profit before tax Income tax (@ 16 %) net profit

$1,211,885,542 $2,172,619,048
0 $2,172,619,048 $347,619,048 $1,825,000,000

$1,156,138,807 $1,217,275,000
$0 $1,217,275,000 $167,900,000 $1,049,375,000

$1,080,989,785 $1,012,772,800
$0 $1,012,772,800 $139,692,800 $873,080,000

Qarshi industries

balance sheet as on 31st,march 2010

Assets intangible fixed assets tangible fixed assets current assets quick assets total Rs Liabilities Rs $3,928,564,884

$255,356,718 owner's equity $2,298,210,458 $903,569,923 $471,427,786 $3,928,564,884 Total

$3,928,564,884

Financials

FINANCIAL EVALUATION

Ratios
turnover ratios
fixed asset turnover Total Asset Turnover

Rs
1.89 1.23

profitability ratios
Profit Margin 38% 46%

ROA
ROE

46%

solvency ratios
Equity Multiplier 1

interpretation
Liquidity ratios and solvency ratios: Since liquidity ratios are calculated relatively to current liabilities owed by the business and in Qarshis case there are no current liabilities, which makes liquidity ratios impossible rather unimportant. EPS Being a private limited company Qarshi has no shares in the market.

Asset utilization ratios

Fixed asset turnover=1.89: Qarshi in 2010 first quarter the fixed asset turnover ratio is 1.89 reflecting the high efficiency of revenues as to the investment in fixed assets. Total assets turnover =1.23: it shows that Qarshis investment in its assets is returning high sales and adding value to the organization.

Profitability ratios
Net Profit Margin = 37% the firm is having a ratio of 37 % from total sales as net income and remaining 63% of sales are accounting for costs and taxes. ROE=46% Qarshi a healthy ratio of 46 % shows an above par rating for return on equity proving Qarshi to be a growing organization.

Profitability ratios (cont..)

ROA=46% 46% is the return on assets for Qarshi industries which is more than good rate of growth NOTE: Its the same as return on equity because of the capital structure being composed of just equity.

Long term solvency

Equity Multiplier=1 Equity multiplier or financial leverage shows the ratio of assets which are being acquired from equity. The higher it is the lower will be the interest expense and consequently the costs for the firm. just equity and no debts as Qarshi has and thats why equity multiplier is 1.

Strategic head

MANAGEMENT STRATEGIES UNDER TAKEN:

Human Resource Management

headed by Brig.(Rtd) Taimur, It administers various benefit programs (health insurance and medical allowances) as well
Equal Employment Laws and Occupational safety Laws

Recruitment Strategy Recruit as needed Job Orientation and Training Strategy An initial orientation Time to time training of communication skills. Performance Appraisal The employees work performance is measured against the set objectives and are graded and rewarded annually according to their performance

Administration
Coordination among different departments Make tactical plans for implementation of strategies at the final level Act as a support to workforce

Decision Making
centralized decision making process, where most of the decisions can be overridden by the Chief Executive Officer Majority of the decisions taken by the chief executive officer

Total Quality Management

Tradition of Research, Assurance of Quality To become No.1 Quality Brand, was an important vision set out in 2005, Taking care of quality at every stage of production Extensive checking and testing to assure quality

Motivation and Incentive Techniques

The company is limited in terms of employee motivation incentive plans small incentive plans are made for the sales team based on achieving annual objectives.
Ummrah tickets Facilities, allowances etc are also provided

Strategic head

OTHER STRATEGIES

R&D
Qarshi has always been emphasizing on quality which lead to research and development. R&D Department has developed a complete profile of 207 products based on indigenous knowledge of Tibb-e-Islami and ayurveda Main role is to provide lead to production dept to pursue business level strategy

procurement
headed by DGM Admin and Commercial. Packaging, bottling are outsourced Long term and consolidated relationship with supplier to avoid conflict and costly delays.

Production
three different plants for processing:
natural medicines Jam-e-Shirin farm products like jams and juices

All these production facilities are located in HATTAR Industrial Estate, NWFP.

Management control

CONTROL PROCEDURES

Marketing control
Marketing is not considered as the guiding philosophy for the organization as a whole rather its importance is limited to advertising. use sales as marketing appraisal procedures. outsource all the A.T.L (above the line) marketing activities to an advertising agency named as MANHATTON US BROTHERS.

Production control
The production department is using LEVEL STRATEGY for production. it carries batch production. The C.E.O himself gives a detailed visit once a month to ensure the operation to be working as planned.

Quality control
Qarshi industries has been awarded with 7 certificates in the past acknowledging a superior level of quality maintenance.
ISO-9001: 2000, Quality Management System ISO-14001: 2004, Environmental Management System. HACCP, Food Safety System.

As the product is in the development process continuous checks and laboratory testing is done on different sample units out of a test batch.

Human resource control

from recruiting to exit interviews all are conducted by the human resource department. selects appropriate employees out of the pooled talent, and alongside provide training to employees. C.P.A: CPA stands for cost preventive actions which is an allegation on those employees which take any action which is not favorable for the organization.

Finance control
Along with capital budgeting and structuring the department is also charged with the responsibility to set prices of the products
C.E.Os involvement Internal audit

Main issue

IF EVERY THINGS GOING WELL WHATS THE ISSUE?

Problems (management)
High employee turnover Weak lines of authority High job bindings High frequencies of meetings Barriers for implementation of new ideas Lacks employee empowerment Over interference of C.E.O Overtime without pay

Group analysis

WE SAW SOMETHING ELSE!!

Qarshi through my lens

Managers lack authority entrepreneurial (Saith) culture Lacks marketing as a guiding philosophy Lacks integration between departmental goals and objectives Management by tactics rather strategies (short term management) Using management by extrapolation Human resource policies lack any incentives or financial motivation for employees

The way out?

STRATEGIC ALTERNATIVES

Solutions to problems
Empower managers. Integrate the goals of all the departments. Marketing importance. Encourage creativity and performance. Remove operational bottle necks. Improve incentive and promotion policies. Change of culture. Rationalization + intuition

In a nut shell
Application gaps of performance from theory. Absence of strategic nature of management. culture or orientation of organization is mechanistic.

Recommendations
Apply strategic management process (from vision till implementation). Carry out differentiation along with image building branding. Deal with marketing dilemma of pricing. Balance the culture between mechanistic and organic.

Our words of advice

THE GAME PLAN FOR FUTURE

2010 to 2011
The organization must instantly take a feedback from its employees regarding human resource issues. Listen to their concerns as to package, job specifications and their commitment to organization. Promote consumer orientation by delegating authority to marketing department.

2011 to 2012
Revise the strategic management model change in culture. adequate promotional mix, resonate brand and position in the market. Enter foreign markets Reposition springley on its point of differentiation.

2012 to 2013
Plan special campaigns to promote corporate brand image. Promote new products in the market extensively such as juices, farm products and make to drink products. Apply market penetration strategy in local markets. Get into market development once local leadership is gained. Proliferate and maintain jam-e-shireen.