MITCHELL’S FRUIT FARM LIMITED
Strategic Management Report
Group Members:
Aanish Ashfaq
Huzaifa- Bin- Saeed
Saad Mumtaz Mian
Muhammad Umer Ramzan
Submitted To: Prof. Freed Ahmad Freedy
Contents
Acknowledgement: 4
Executive SUMMARY: 5
Importance of Location: 6
BACKGROUND: 7
Product Lines: 7
FARM FRESH FOOD PRODUCTS 8
SQUASHES 8
PRESERVES 8
PICKLES 8
TOMATO KETCHUP 8
SUGAR CONFECTIONERY 9
MILK TOFFEE 9
BUTTER SCOTCH 9
FRUIT BON BONS 9
MILK CHOCOLATE ÉCLAIR 9
CHOCOLATe items 9
JUBILEE 9
HAT–TRIK 9
SIXER 10
Michelle’s Offices: 10
Corporate Office 10
Farms and Factory: 10
Organizational Structure: 11
Hierarchy Detail: 11
Departments: 12
Finance Department: 12
Marketing Department 12
Supply Chain Management: 12
Chain of Command: 12
Employees: 12
Problems of food industry: 13
Financial Performance: 15
Ratio Analysis 15
Liquidity Ratio 15
Current Ratio 15
Quick Ratio: 15
Inventory Turnover/ Days Sales in Inventory 16
Account Receivable Turnover/Days Sales Receivables 17
Profitability Ratio: 17
Solvency Ratio: 18
Assets Utilization and Efficiency Ratio 18
Fixed Asset Turnover, 18
Market Value Ratio: 19
Investor Perspective: 19
Competitors: 20
SWOT: 21
EXTERNAL FACTOR EVALUATION MATRIX 21
RESULTS: 22
INTERNAL FACTOR EVALUATION MATRIX 22
Industry of food in Pakistan 24
PEST ANALYSIS 25
Political Factor 26
Economic factors 26
Social Factors 27
Legal Factors 27
Life Style Changes 27
Technological Factors 28
BCG Matrix 29
Question Mark 30
Stars 30
Cash cows 30
Dogs 30
Porter’s Five Forces 31
Threat of new entrants 31
Suppliers’ Power 31
Buyers’ Power 33
Competitive Rivalry 34
Threat of substitutes 34
7 S Framework: 36
Strategy 36
Structure 36
System 37
Style 37
Staff 37
Skills 38
Shared Values 38
Formulation of new Business strategies: 38
SPACE Matrix: 39
Grand Strategy: 42
Recommendation: 44
ACKNOWLEDGEMENT:
.
First of all, we thank Allah Almighty who blessed us with health and made us able to complete project for the particular subject.
We are especially thankful to Prof. Fareed A. Fareedy with the help of which we were able to gather information about the company. And helped us groom for future responsibilities.
We also thank Sir Hamid Mukhtar (brand manager Mitchells), Sir Idress (operations Manager) and Miss Amna (Marketing Head Mitchelles) who provided us with the information that we needed. And for being always there when we needed help.
EXECUTIVE SUMMARY:
Mitchells fruit farms limited is the oldest company operating in Pakistan which is also listed on the Pakistan stock exchange. The company provides a wide range of products in nine different categories and products ranging to more than 140 in total. The three major categories include confectionary, farm fruits products and chocolate items. It has a competitive advantage over the competitors in that they have their own farms where fruits and vegetables are grown and used.
The corporate office is present in Lahore whereas the farms are present in Renala Khurd. Company is facing certain problems that are discussed along with solutins and recommendations.
INTRODUCTION:
Mitchell’s Fruit Farms is public listed company that is incorporated on the Pakistan stock exchange. It is engaged in the manufacturing of various products that include confectionary, fresh farm products and chocolate items. The company started its operations in 1933 and produces high standard products that enrich the lives of millions of people with all the goodness of nature for a healthy lifestyle.
Today the Mitchell’s family continues to grow reaching more and more households worldwide with an ever increasing array of products from thirst quenching squashes and syrups to jams, jellies, marmalades, pickles, canned fruits and vegetables. The company has its farms in Okara district, in Renala Khurd, Pakistan.
IMPORTANCE OF LOCATION:
Renala Khurd has orchards that run along the canal. The area is also known for its production of rice and sugarcane. The crops are easily cultivated because of the abundance of water.
Okara district has orchards and lush green fields. Following is the list of fruits that Mitchell’s cultivate 100% in their own farms:
• Lemon
• Grape Fruit
• Sevlik Orange
• Tomato
• Garlic
BACKGROUND:
Francis J. Mitchell reached Bombay from Scotland in 1933, after World War 1. He was able to get 720 acres of land on lease. At that time his brother was working for the construction of railway tracks and had links on the north side. Fredrick started growing grapes on that land and started its export to Mildura in Australia. Soon the company originated with the name INIDAN MILDURA FRUIT FARMS LIMITED. The company was able to grab a market share of 75%.
After Independence, the land became under the territory of Pakistan. The company lost its entire market share and reemerged with the name MITCHELL”S FRUIT FARMS LIMITED which is now present in Okara and Sahiwal part of Pakistan. The company is one of the oldest to operate in Pakistan and has grew over the period of time.
PRODUCT LINES:
The Company is known for its grocery products. The company markets its product under one brand name that is Mitchells. The brand strategy helps the company to successfully disseminate its recognition to the customers and produce new products at less expense than that of competitors, on the basis of brand recognition. From the very start, the company has increased the length and breadth of its products by producing a variety of food products that can be served at breakfast, dinner and other servings. Recently, the company launched 3 new variants in fruit juices and 4 new variants in confectionary category. The company offers 140+ products in nine different categories which are further divided into 3 major categories. The major categories include fresh food products, confectionary items and chocolates.
FARM FRESH FOOD PRODUCTS
SQUASHES
Pure fruit juices go into the production of Mitchell’s squashes. The pulp is extracted from the fruits that are collected from the company’s own farms. These squashes come in a wide range of flavors such as orange, mango, lemon Etc. that are rich in content.
PRESERVES
Preserves are used in Mitchell’s jams, jellies and marmalades.
PICKLES
The pickles are made in the traditional manner. Fruits and vegetables are carefully selected and mixed up with spices that give it a real homemade taste. Mixed and ango pickle are most widely used.
TOMATO KETCHUP
It is made from the tomatoes that are grown in Mitchell’s own fruit farm. The rich red color shows the quality of the product, but recently people started believing that the company was using some sort of artificial color or dye because they had dark red color relative to other competitors.
SUGAR CONFECTIONERY
MILK TOFFEE
Milk toffee is made from milk and butter and is favorite among children.
BUTTER SCOTCH
Butter scotch made from milk and butter has a flavor that one cannot resist.
FRUIT BON BONS
The unique shape and delicious flavor make fruit bon bons famous among children.
MILK CHOCOLATE ÉCLAIR
The caramel nuggets with chocolate milk filled in the center is no less than a treat.
CHOCOLATE ITEMS
JUBILEE
The thick chocolate bar filled with caramel in the center was the best selling product for Mitchell’s after its launch in 1983. As of now, the product has lost its market share because of poor advertising and generational gap. As of now, Candy-land dairy milk is market leader.
HAT–TRIK
Having a rich chocolate coating, with the taste of crunch, hat-trick was introduced in 1986 and had a remarkable sale in early 1990.
SIXER
Introduced in 1988, was for those who liked to taste victory.
MICHELLE’S OFFICES:
Corporate Office
39-A, D-1, Gulberg III, Lahore, Pakistan
Phone: 042-35872392-96
Fax: 043-35872398
E-mail: ho@mitchells.com.pk
Farms and Factory:
Renala Khurd,
District Okara, Pakistan
Phone: 044-2622908, 2635907-8
Fax: 044-2621416
ORGANIZATIONAL STRUCTURE:
All operational activities are governed by the CEO. CEO is responsible for the performance of the company. Advisor plays the role of disseminator between chairman and the board of governors. The BOD takes decisions which are in the best interests of the company’s stakeholders. HOD’s of the departments have to report to the CEO for the performance of the organization.
HIERARCHY DETAIL:
Board of Directors
Advisor
Chairman
CEO/MD
DEPARTMENTS:
Finance Department:
CFO (chief financial officer) runs the department and makes sure that the money is supplied or released in time. All the cash related activities occur within the finance department. The CFO decides whether it is better for the company to be equity financed or debt financed.
MARKETING DEPARTMENT
Marketing department is run by the Marketing Manager. Marketing requires extrovert people who can interact with the customers and suppliers and provide constructive feedback to the company. This department is the backbone for any company. The marketing manager is involved in decisions related to sales, advertising and promotions etc.
Supply Chain Management:
Supply chain manager leads the department. It occurs within the factory. The supply chain manager has to make decisions about what items to produce and what to buy, keeping in view the current scenario.
Chain of Command:
CEO is the final authority. The heads of different departments have to report to the CEO about every single process occurring in the particular department.
Employees:
Total number of permanent employees of Mitchell’s about 350.
PROBLEMS OF FOOD INDUSTRY:
• Traditional approach prevailing. No advances in technology.
• The Industry is highly labor intensive and so the sector is a major employer.
• Employment pays low wages and uses the skills of the most ill-educated
• Lack of integration from the farmer to the consumer along the supply chain is the principal reason why Pakistan food processors are uncompetitive compared with overseas companies.
• About 75% of the rural-based food manufacturers are in the so-called informal sector. This informal economy is unregulated and finds difficulty in accessing essential raw materials and other resources especially finance skills, knowledge and management.
• Marketing and quality (especially hygiene) standards are especially lacking.
• Inability to manage raw material supply
• Erratic inputs and poor labor skills in particular supplies of potable water often present problems
• Poor literacy levels and basic artisan skills
• Poor financial support Companies report that commercial banks often fail to understand that their businesses depend on the natural environment, so that credit is extended or only short periods of time.
• Poor technical choices and a lack of innovation leads to bad quality products.
• Poor or non-existent standards of safety in the workplace and for the consumer.
• Significant non-tariff barriers to trade related to poor performance.
• A number of bans, for example most recently fish and seafood exports have been banned to the EU following a 2007 inspection of Karachi Fish Harbor that found unhygienic conditions.
• Pakistan’s food industry is generally deficient in food quality and standards for reasons that have been mentioned repeatedly.
• Product standards are usually deficient because consumers are often unwilling to pay for high quality products and don’t insist on adequate packaging and labeling.
• Poor understanding of technical processes.
• No supervision or credible support by the government.
FINANCIAL PERFORMANCE:
Ratio Analysis
Liquidity Ratio
Current Ratio
Current ratio state that the company has enough cash to pay off its current liabilities or not. The current ratio of the Mitchel fruit farm is greater than 1 over the past 5 years which means they have sufficient weight of current assets to pay off their current liabilities. This is also showing the strong quality of current assets that they can easily convert into cash. If we look at the ratio we can say that for every 1$ of liability, the company has 1.32$ of assets which means company has enough current assets to pay the current liabilities. Current ratio is decreasing but it is not decreasing below the 1 which means company has enough current assets to pay off their current liabilities.
Current Assets/Current Liabilities
1.329 1.520 1.815 1.362 1.240
2012 2013 2014 2015 2016
Quick Ratio:
Quick ratio shows that addition of cash and other current assets that are easily convertible into cash as compared to the short term liabilities of the firm or how much of your short term obligation can you meet through your most liquid assets, deducting inventory from assets. The firm’s quick ratio increasing from 2011 to 2012 which means their inventory is decreasing which lead to increase in quick ratio. Only year when the quick ratio is decreasing is 2013 but it further increase in 2014 and 2015 which is a good sign for the company because they can easily meet their short term obligation.
0.3695 0.3329 0.6739 0.5761 0.6508
2012 2013 2014 2015 2016
Quick Ratio
Inventory Turnover/ Days Sales in Inventory
Inventory turnover is measure of how many times a company’s inventory is being sold in a specific time period. Day’s sales inventory tells you exactly how many times your inventory turned over in a year. The company’s inventory turnover ratio is decreasing from 2011 to 2014 but in 2015 it increase to -7.54 %.It means from the previous year 2011 to 2014 the inventory turnover or (time inventory sold) was low but in 2015 it is increasing which means company is doing good regarding the inventory. Days sales in inventory were increasing from 2011 to 2014 but in 2015 they decrease which is good because previously if the company was taking 98 days to finish its inventory now it is taking only 48 days to replenish its inventory.
Account Receivable Turnover/Days Sales Receivables
Account receivable turnover is a ratio that tells you the number of times a company collects its receivables in a year. Day’s sales receivable tells you how many days it takes for a company to collect its receivable. A/R turnover increasing from 2011 to 2012 but decrease in 2013 and 2014 and in 2015 it highly increased which means a company is receiving its receivable about 30 times in a year and if we talk about the days sales in receivable which is decreasing from 2014 to 2015 which means that company takes less time to collect its receivable from the previous year which is good because where the company is receiving receivable in 20 days now it is receiving in 11 days.
Profitability Ratio:
Profitability ratio shows the financial position regarding the loss or the profit of the organization or firm. The Return on sales of Mitchel’s fruit farm is increasing from the year 2011 to 2013 but it decrease in 2015 which means the profit on sales was good enough during the past years now it is decreasing which means company is reducing its profit of 1$ on every 1$ of sales. Gross profit margin is increasing which is because of decrease in cost of goods sold during previous years as the sales are increasing and the cost of goods sold over the period is decreasing that’s why gross profit margin is increasing from 2011 to 2014. Operating profit is also increasing from 2011 to 2013 because operating expenses are decreasing but its increase in 2014 and 2015. Return on assets is decreasing from 2013 to 2015 which means our assets are not operating well as they are not generating high return. Same trend for equity from 2013 to 2015 but in 2011 to 2012 they were good return on equity but now they are decreasing. RNOA is decreasing from 2011 to 2013.
Solvency Ratio:
Solvency Ratios generally measures risk of solvency of a company. The first ratio is the Debt to Equity ratio, it tells us how much a company relies on debt or equity. It kept changing so the firm dependence in term of this ratio kept changing, but overall it stayed above 1 which meant the firm was more dependent on debt rather than equity. The company debt to equity ratio is fluctuating over the time period as in 2012 and 2013 it was below the 1 which means company was doing equity financing but in 2014 and 2015 it increase from 1 which means they are taking debt and doing debt financing as it is earlier mentioned that they enhancing their short term borrowing which means increasing their debt.
Assets Utilization and Efficiency Ratio
TA turnover ratio tells you how much of sales are you generating from 1$ of your total assets, in other words, it tells you how efficiently your total assets are being utilized, ideally it should be greater than 1. The company ratio of total assets turnover is above one during the past five years which shows the good quality and strength of the company assets.
Fixed Asset Turnover, however only takes into account the fixed assets and eliminates the current assets from the TA turnover ratio. This should ideally also be greater than 1. This ratio is also showing a positive trend for the Mitchell Fruit Farm because its ratio is more than 1.
Market Value Ratio:
In this, the first ratio that we discuss is P/E Ratio, stock price was calculated based on the book value per share which was calculated by dividing the total equity with no. of shares issued each year. Price to earnings ratio is decreasing from 2011 to 2013 but afterwards it is increasing so looking at the 2015 ratio it is profitable to invest in this company because for investing the same amount from the previous years you are expected to earn more that’s why you will invest in this company. Dividend yield is also decreasing from the 2013 to 2015 that why company is giving low dividend in 2015 as compared to 2014.
Investor Perspective:
Company is showing better trend in assets utilization, return on assets and on other profitability ratio. Company EPS is decreasing that is not in the favor of company as their net income is also decreasing in 2015but in the past years there was permanent increase and the company able to control its manufacturing cost and other expenses. They have strong assets and heavy volume of current assets to pay their current liabilities so only one year of financial performance do not change the investment decision of the investor if I am an investor I will invest in this company because companies balance sheet look strong in the next few years. They are increasing their plants and machinery which will increase its net income and reduce its operating expenses and they can win the market share in the next few years. This will lead to the profitability.
COMPETITORS:
Company’s Gross Profit Margin EPS Market capitalization
Nestle 35.40 % 249.88 (Rs) Rs. 492.04 bn
National 33.04 % Rs. 2.98 Rs. 32.12 bn
Engro foods 22.64 % Rs. 0.50 Rs. 63.87 bn
Mitchells 1.52% Rs. 0.62 Rs. 2.17 bn
Shezan 28.99 % Rs. 17.82 Rs. 3.60 bn
SWOT:
EXTERNAL FACTOR EVALUATION MATRIX
OPPORTUNITIES WEIGHT RATING WEIGHTED SCORE
Increase the size of target market 0.15 3 0.45
Innovation (upgrading equipment
0.08 1 0.08
Domestic market expansion
0.05 2 0.10
Health consciousness 0.20 2 0.40
Increase the depth of new products 0.10 2 0.20
Threats
Increasing competition 0.07 1 0.07
Generational gap 0.13 2 0.24
Additional general tax 0.04 3 0.12
Weather condition 0.12 2 0.24
Production expertise 0.06 2 0.12
Total 1.00 2.02
RESULTS:
The analysis shows that threats are dominating factors for Mitchells Fruit Farm. So to overcome threats, the company should work on seeking benefit from its opportunities.
INTERNAL FACTOR EVALUATION MATRIX
STRENGTHS WEIGHT RATING WEIGHTED SCORE
Quality 0.07 4 0.28
Product mix 0.05 4 0.2
Own farm 0.10 4 0.4
Oldest food processing company 0.05 4 0.2
ISO 9001 certification 0.10 4 0.4
Fully-integrated operation 0.10 4 0.4
Market leader of chocolate 0.10 3 0.3
Good industrial equipment 0.05 3 0.15
WEAKNESSES
Management style bureaucratic 0.07 2 0.14
Advertisement (poor) 0.09 2 0.18
Poor distributional channel 0.05 2 0.1
Lack of short term offering 0.09 1 0.09
Less discounts 0.08 1 0.08
TOTAL 1.00 2.92
The weighted score 2.92 indicates that Mitchell’s is not performing well. They need to improve their quality and revive the company name.
INDUSTRY OF FOOD IN PAKISTAN
The advancement rate in the sustenance business has been assessed at 7.46 for each penny for each annum. The most rapidly creating things are dairy things edge arranged, baked good shop things, sugar, rolls and sweet parlors, natural item squeezes and other fragile refreshments. Snappy charge improvement has depicted fish arranging, normal item stick, dry natural items, a couple of beverages and sugar, and nectar course of action. Sustenance things (beside rice) don't nevertheless, make up a basic degree of Pakistani tolls and there is a noteworthy potential for broadening such admissions, especially to Europe and the Gulf region. As product line of Mitchell is so long so we would be looking National, Shezan & Rafhan as major competitors. You can see outdoor promotions by these brands. Including Lahore, sign boards and banners on the public places are found. Upwards of 79 sustenance delivering associations are on the once-over of Karachi Stock Exchange out of total 707 associations. They consolidate, a part of the best social affairs in the market, for instance Habib, National Foods, Shangrila, Candyland, Fecto, Lakson, Burma Oil, Brooke Bond, Rafhan, Clover Foods, Mayfair, Mitchells fruit farms and Shezan. Joining hands with multinationals leads to strong footing, financial support and professional expertise. For instance Rafhan and Unilever. A couple of significant associations including comprehended multinationals have extensive wander duties and there are in like manner a considerable number of reasonable evaluated upward compact nearby firms. Shezan and Rafhan are offering Buckets and attractive packaging. The sustenance delivering firms have all things considered performed well on the stock exchange with capitalization selecting a superior than anticipated addition. Thusly, there is a basic degree for theory expansion in the sustenance manufacturing fragments. Squashes and syrups in 0.5l & 1.5 litres by Rooh Afza and Jame Shereen. There is similarly a prerequisite for development trade understandings which can support the passageway of Pakistani associations, to display day advancement and know-how in the areas of dealing with, shielding and packaging of sustenance makes. A couple of Pakistani firms have made longing modernization programs. In the present dynamic and rapidly advancing world, the examples and the benchmarks of the business have changed. Neighborhood associations are clasping hands with the Multi-Nationals for additional assistance, whole deal business change, sharing of market benefits, particular help, up-level of the sorts of rigging and the HR, acquiring the potential remote markets. Likewise, the customers have developed more trust in the Multi-Nationals. Shangrila offer discounts on product. They mostly offer 100 grams of Mayonese on purchase of 5 Kg of Tomato ketchup bucket.
PEST ANALYSIS
PEST analysis is Political, Economical, Social and Technological analysis what's more, depicts a system of full scale level ecological variables utilized as a part of the natural filtering segments of vital administration. It is the piece of the outer examination when leading a key investigation or doing statistical surveying and gives a specific diagram of the diverse full scale ecological elements that the organization needs to mull over. It is helpful key apparatus for understanding business sector development or decrease, business position, potential and bearing of operations. It is utilized to survey what natural elements are influencing the association, which of them are most vital and how they will impact in one years from now. It is a marker of political, sparing, social and innovative effects on association.
POLITICAL FACTOR
Talking about Pakistan, there is no political stability. Military and civil government tend to be in a friendly relation however everyone knows the reality. A corrupt man is disqualified by court and that man blames the other institutions. Sit ins are becoming a part of our culture. Investors are running from country. This is also disturbs the operations of Mitchell’s fruit farms as government comes with new agenda of taxation policies and etc. Pakistan is a state which is on front line against war on terrorism. It is effected by political decisions made by opposition and ruling party. Importing and Export strategies are changing quickly in country, this additionally influences the chipping away at organization, since import of crude material and fare items in everywhere throughout the world. Items like cocoa powder, pineapple concentrate, cocoa butter, tin for packaging, aluminum foils for sealing, pectin, hydrogenated palm kernels are imported. Indonesia and China are importers. Problem is that Government doesn’t provides support for importing of these raw materials. No relaxation is given on imported raw materials.
ECONOMIC FACTORS
Financing costs increment and reduction has critical effect upon the budgetary execution of the Mitchell's, on the grounds that the organization has taken credits from the banks. For example loan fees, trade rates and expansion rates are influencing the working of organization. Company needs to acquire fund on higher rate of intrigue. Trade rates are changing on regular routine which likewise causes a main consideration for the benefits and costs of the organization. Expansion is likewise a noteworthy financial issue of Pakistan. Electricity and Resource costs are increasing day by day. Swelling likewise influencing the organization since it sends out item and import crude material, items costs are expanded step by step. It is likewise discernible that the organization takes the long haul advances from the banks on the general premise.
SOCIAL FACTORS
It includes legal and life style changes.
LEGAL FACTORS
Legal factors have got consumer laws, employment laws, discrimination laws, antitrust laws, health laws and safety laws. A company’s operations might be affected by these factors. Costs and demand structure for products are changed by presence of these.
LIFE STYLE CHANGES
The utilization of jams, jams, jellies, squashes, sauces, pickles and squashes is particularly related with the ways of life of individuals. Presently individuals, all around the globe, are winding up increasingly wellbeing cognizant. They are very much aware that a high utilization of overwhelming nourishments will build the cholesterol, which prompts coronary illness. That is the reason, a huge change in the utilization of nourishments is being seen in last numerous months. As the development rate of fast food industry is astounding in the nation. That is most ideal for the Mitchell's. It is on the grounds that more utilization of quick nourishments will expand the request of Mitchell's items.
TECHNOLOGICAL FACTORS
Technology in food sector plays an important role. For better operations and productivity technology is used. Standardization of natural food products is essential for companies. Unfortunately food industries are extremely bad in terms of updating technology. Mitchells is using the advanced technologies to compete with its rivals. Their workplace is equipped with latest softwares and hardwares. By this they can connect worldwidely to its consumers and suppliers easily. Additionally they have hired IT professionals to keep the companies operations for updated technology. Mitchells is spending a huge amount for this purpose. 15% of revenues are used in research & development department
BCG MATRIX
BCG is called as Boston Consulting Group. Businesses are being classified from high to low scales. X Axis has got market share and Y-Axis has got Market Growth. Market Share is the level of the aggregate market that is being adjusted by your organization measured either in the income terms or unit volume terms. Market Growth is a measure of a market's engaging quality. Singular Sales this year – Individual deals a year ago. There are four quadrants and 4 quadrants are named as Question marks, star, Cash Cow, Dog.
Question Mark
It has got high market growth and lower market share. From our research we found that squash can be considered as question mark. Roh Afza and Tang makes more market share than of Mitchells.
Stars
They have got high market share and higher market growth. It is best product for any company. From our research we found out that sauces and ketchups are the star of company. Reason is that it has got a very good quality and taste is better than of competitors. It is placed above competitor’s product on shelves
Cash cows
These have got low market growth and high market share. Jams and Marmalades are cash cows of the company. They were the stars of company at some time but due to entrance of new companies forced it to become a cash cow.
Dogs
They have got the low market growth and lower market share. They are almost the failed products for a company. A company must finish this product from their offerings or can improve it. Chocolates are the dog for company. There are already so many competitors. Market share of Jubilee is low and their production have also reduced as we saw that in our visit. CandyLand is dominating the chocolate industry as after NOW, Paradise and Sonnet chocolate, Novella is launched and after its success of simple chocolate flavor, strawberry and caramel flavor are introduced and have got better taste than jubilee.
PORTER’S FIVE FORCES
The basic investigation draws on Five Forces approach provided by Porter. It is an organized mean of surveying the focused condition.
Threat of new entrants
As Mitchells is dealing in different products. So different sectors are considered here. There are already so many competitors in industry so new entrants have some problem. It depends upon degree to which barriers are present for entrance. A major assembling unit is required for production of materials for instance in food manufacturing, large area is required. Acquiring Land is a major source of investing. Mitchells have more than eight hundred paid up capital. So we can state that basic supplies fabricating unit is exceptionally capital concentrated and in view of high capital speculation it has high hazard for new to go into generation. Companies like Nestle, Shezan and National foods are already there and have got a large market share and new entrants have to be cost effective.
Suppliers’ Power
Talking about Pakistan, it has not got so much raw materials in it. But in food industry we can say that Pakistan is a agricultural land and fruits, vegetables are grown. The quality can’t be said well enough so China and other countries are the suppliers. Outside providers have energy of deal on the grounds that the material isn't accessible locally and the purchaser don't have any alternative other than import, so the provider charge the high costs and exchange is done through banks by opening letter of credit and purchaser additionally needs to hold up under high transportation cost and import obligations. The bartering energy of provider is Low, since they are the crude material maker, its cost is much steady for the client and ideal for an organization. Neighborhood providers have little organic product ranches, nourishment organizations are very capital escalated so they don't have any power since they can't do forward coordination. There are substantial quantities of natural product, vegetables, sugar and other crude material providers so the purchaser checks the nature of providers' items and influence contract with any one which to meet their necessities viewing quality and also cost. Another reason of no impact of the providers over the Mitchell's is that the organization itself delivering substantial measure of natural product, vegetables, drain and spread. Thusly, in reverse incorporation lessens the power and impact of providers of the crude material. Mitchell's has great notoriety in the market since from the 1933. Another reality is that Mitchell's is the market goliath in its industry, so every provider need to work with the Mitchell's. All associations need to acquire assets and give products or administrations. The providers can influences on key opportunity of an association and can impact the edges of that association. In Mitchell's natural product ranches; there are two sorts of providers. One is a nearby provider, and others are outside providers. We can assess the energy of providers with the assistance of following imperative focuses that can't be overlooked:
a) As well as the outside providers are concerned they have energy of deal in light of the fact that the material isn't accessible locally and the purchaser don't have any choice other than import, so the provider charge the high costs and exchange is done through banks by opening letter of credit and purchaser likewise needs to shoulder high transportation cost and import obligations.
b) As well as the nearby providers are concerned they have little natural product ranches. Sustenance organizations are profoundly capital serious so they don't have any power since they can't do forward combination.
c) There are vast quantities of natural product, vegetables, sugar and other crude material providers so the purchaser checks the nature of providers' items and influence contract with any one which to meet their prerequisites viewing quality and cost.
d) Another reason of no impact of the providers over the Mitchell's is that the organization itself creating extensive measure of natural product, vegetables, drain and margarine. The along these lines, in reverse reconciliation lessens the power and impact of providers of the crude material.
Buyers’ Power
Talking about buyers, in food industry the products are sold at fixed prices. Food products and cans have got prices printed on them. The haggling energy of purchaser is low which implies that the cost for any item offer by an organization needs to pay by the client, so it is ideal for organization. The purchasers don't have any power, in light of the fact that the costs of the items are settle, yet high rivalry among sustenance organizations drives the organization to confront issues in the value intensity.
Competitive Rivalry
Food industry has got many rivals. Some are said to be at local levels and some at international levels. It could be inferred that the sustenance advertise is exceptionally aggressive. Furthermore, the level of rivalry in the business is expanding step by step which may make Mitchell's change. Counterfeit companies are also present in the market. Associations will likewise be worried about the degree of contention amongst themselves and contenders. The degree of focused competition relies up on products which industry sells.
Threat of substitutes
Counterfeit products are available everywhere. Poverty also plays a role in Pakistan. Customers when go for purchasing, can get products from Nestle, Shangrila, Rafhan, National, Candyland, Rooh Afza, Qarshi.
When talking about pickles and sauces, substitutes are
• Knorr
• Shangrila
• Shezan
When talk about Chocolates and candies, substitutes could be
• Candyland
• Cadbury
• Mayfair
When talk about Jams, substitutes could be
• National
• Shezan
When talk about Juices, substitutes could be
• Jam e Shireen
• Nestle
• Tops
So there are so many substitutes for the products. This is not good for the company as market share falls.
.
7 S FRAMEWORK:
STRATEGY
The overall articulation of our business must be credited to the great esteem we offer to our buyers both as far as quality and value globalization and agreeing rivalry from imported items dependably remain challenge capable yet we have found a way to ensure our position as a main maker of prepared nourishment items by affirming to elevated requirement of value joined with a steady push to contain costs.
STRUCTURE
All operational activities are governed by the CEO. CEO is responsible for the performance of company. Advisor plays the role of disseminator between chairman and the board of directors. The BOD takes decisions which are in the best interests of the company’s stakeholders. HOD’s of the each department have to report to the CEO for the performance of the organization.
System
If we talk about Mitchells, different department are present. Each department in the organization is responsible for their own department’s operation. There are departments which include Finance Department, Production Department, Human Resource Department, Quality Control Department Planning and Stores Department Technical Services Department and finally marketing department. Proper documentation is required for each department.
Style
As told by brand manager, democratic leadership style is used. This leads for motivation of employees and is good for the company. BODs, CEO, managers, Advisors are mostly involved in decision making. Performance level of employees are increased as they are taking part in decisions.
Staff
The selection approach in Mitchell’s uses a set of specified regulations and rules. Recruitment process involves the board of directors and HR manager. Strict performance criteria is followed and references are avoided as company aims to perform well. They are not going for hiring more employees. They are preferring that a single employee does the double task than normal task. There are less females working in plant. They have unskilled and skilled labors. A training institute is also operational so that quality staff is prepared for betterment of company.
Skills
Mitchells is the oldest food manufacturing organization of Pakistan. It was established in 1933 so this makes them distinctive. They have got most experience in research and development of fruits and vegetables. Additionally they are located alongside a canal. So the quality and taste of natural food items is way better than of competitors. They were the first company to achieve ISO 9001 certificates. It was a prestige for them to gain this certificate in 1998. Engineers from NUST are supervising daily productions.
Shared Values
The most important value of Mitchells that is being promoted within organization is honesty. It is a necessity that the employees of company not only deal with their staff with honesty but to also deal with the customers and suppliers of the company honestly. Mitchells is also promoting the values like participation, punctuality, and hard work. Every one of these values have solid help from the upper administration of Mitchell's. So we can say that culture is good for both employees and directors of company.
FORMULATION OF NEW BUSINESS STRATEGIES:
As stated above, the company is facing multiple problems which are internal and external. The main issue was also highlighted by us which in our opinion was lack of sales. This lack of sales was mainly due to low advertisement and marketing efforts. Company’s focus is towards making themselves a market leader as stated by Mr. Hamid in the head office located in Lahore while the vision of Mr. Idrees was that Mitchells needs to become a world class manufacturer first. This showed that the company had mismatched vision statements which is troubling, especially when a company is not performing well on paper. The other main issue was the generational gap and the exposure of the brand. Generations over 30 years or 40 years of age could easily identify and relate to the brand where as the newer generations, 10 years and 20 years of age, could not easily do so. This again was mainly due to lack of innovation and insight by the firm in the years when they were the market leaders of Jams jellies and marmalades. The company was performing well in the early 2000s but was not following a strategic plan or even a well-developed plan for the future. It showed one of the best results to a “Planning by Hope” and the assumption that “If it ain’t broke, don’t fix it.”
To overcome this issue, we have several different alternative solutions to Mitchell’s dilemma which we predict can bring the company towards a steady revenue stream and then profitability in the future. We have used 3 different types of strategy matrices to form a defined