Final Project on National Foods

Letter of Transmitter

I had been assigned the job to prepare this report by my Business Policy instructor Mr. N. Riaz. This report provides in-depth analysis on National Foods Limited of Pakistan by the application of major strategic management tools.

In the end, the results can be used to draw important conclusions about the organization and what future paths it must take to gain and maintain its edge.

Contents

1.        Company Introduction                                                                                                                                              4             

2.        Vision and Mission statement                                                                                                                                  5

2.1    Analyzing the Vision and Mission Statement                                                                                              5

3.        Core Values                                                                                                                                                                  6

4.        National Foods Limited Products:                                                                                                                           6             

5.        PEST-C Analysis                                                                                                                                                          7

5.1  Political/Economic Conditions                                                                                                                          7

5.2  Social Activities/ conditions                                                                                                                               7

5.3  Technological Analysis                                                                                                                                       7

5.4  Competitor’s Analysis                                                                                                                                        7

6.        Porter’s 5 Forces                                                                                                                                                          8

6.1  Rivalry among competing firms                                                                                                                       8

6.2  Potential entry of new competitors                                                                                                                  8

6.3  Potential Development of substitute products                                                                                                              8

6.4  Bargaining Power of Suppliers                                                                                                                          8

6.5  Bargaining Power of Consumers                                                                                                                      9

7.        National Foods Limited’s progress over the years                                                                                                               10

7.1  Top Line Performance                                                                                                                                         10

7.2  Margin Analysis                                                                                                                                                   12

8.        External Factor Evaluation (EFE)                                                                                                                             13

9.        Competitive Profile Matrix (CPM)                                                                                                                          14           

10.     Internal Factor Evaluation (IFE)                                                                                                                               15

11.     SWOT Analysis                                                                                                                                                            16

12.     Conclusion                                                                                                                                                                   18

Company Introduction

National Foods was founded in 1970 and started out as a Spice company. 3 decades later it has diversified into a versatile Food Company with over 110 products and 165 and above SKUs (Stock Keeping Unit) for the domestic market and over 100 different products for the international markets.

The vision to see National Foods as a professionally managed Human Resource company, set more then 7 years ago, was realized by transforming a local company into a very dynamic and progressive management structure in line with industry practices.

Competent Human Resources from within the company have fuelled tremendous growth by excelling in Functional Management. Even after 3 decades the company's focal point still remains on Customer's needs through Product development in line with the changing market trends.

In this innovative age of ever changing lifestyles, fuelled by the rampant development of technology; consumers have been compelled to change their eating habits. National Foods responds to this challenge of developing innovative food products based on convenience and fast preparation in line with modern lifestyles and yet retains traditional values through its impressive collection of food products.

The brand delivers its ultimate promise by consistently delivering value to its consumers. National Foods enriches family relationships by bringing people together for family traditions, feasts, seasonal holidays and of course - everyday life.

Vision and Mission Statement

To be a Rs.50 billion food company by the year 2020 in the convenience food segment by launching products and services in the domestic and international markets that enhance lifestyle and create value for our customers through management excellence at all levels.

Analyzing the Vision and Mission Statement

It is clear from the statement that NFL (National Foods Limited) of Pakistan has a clear aim to expand its market share in the near future and grow globally.

It includes the following components of a mission statement:

ü  Customers

ü  Concern for Survival, Growth &Profitability

ü  Markets

Core Values:

      Passion

      People-Centric

      Customer Focus

      Leadership

      Teamwork

      Ethics

      Excellence in Execution

      Accountability

National Foods Limited Products:

      Plain Spice

      Salt

      Basic Recipes

      Recipe concoction

      Chinese salt and vinegar

      Pickles

      Ketchup

      Jam Jellies and Marmalades   

      Snacks

      Desserts

      Ingredients

PEST-C Analysis

    Political/Economic Conditions:

Economic changes, terrorist activity and political unrest may result in business interruption, inflation, deflation or decreased demand for National Foods products. The success will depend in part on the company's ability to manage continued global political and/or economic uncertainty, especially in  significant geographical markets, as well as any political or economic disruption due to terrorist and other hostile activities.

    Social Activities/ conditions:

The fluctuations or changes in social /cultural activities in the areas of operations may also affect the National Foods business activities.

    Technological Analysis:

The innovation  and making of new products is a proof that National Foods is equipped with latest technology and committed employees that has enabled it to earn a good reputation in the global market.

Its latest innovation in the line of spices has been its new RONAK masala.

    Competitor’s Analysis:

 National Foods is also carrying out competitor's analysis and in order to be competitive and win the competitive value equation National Foods is focusing on tight control of capital spending, improved inventory control, and lower product and manufacturing costs through standardized manufacturing platforms etc. Its main competitors are SHAN industries and Mitchell’s.

PORTER’S 5 FORCES

Porter’s 5 Forces Model on NFL:

      Rivalry among competing firms:

National Foods is having many well known competitors amongst whom Shan Industries and Mitchell’s are worth mentioning. To sustain the competitive advantage over the competitors, National Foods has not only increased its products but has also added many features to them via innovation and technology. 

      Potential entry of new competitors:

       In this era of technological advancement, numerous new firms are entering the industry producing products equipped with great features and characteristics, which may also make the already existing firms increase their efforts to maintain their market reputation. National Foods is also facing competition from Mitchell’s in many product lines such as sauces.

      Potential Development of substitute products:

This is another threat many industries face. Fortunately for NFL, there are not many substitutes for their products. There is no threatening substitute for pickles, spices or sauces. Just more competitors making the same products can pose as threats. 

      Bargaining Power of Suppliers:

NFL is in compliance with its suppliers in every area of its operation.NFL also provides information to current NFL suppliers who want to enhance their understanding and connectivity with NFL. The strategic cooperation of NFL with its suppliers has enabled the company to reduce inventory and logistics cost, enhance the quality of materials being supplied and reduce defect rates.

      Bargaining Power of Consumers:

NFL is focused towards services to gain customer loyalty. They offer competitive prices which leaves little bargaining power in the hands of the customers. Great quality with reasonable pricing has long achieved NFL the success it continues to hop on.

National Foods Limited’s progress over the years

Before moving on to the EFE (external factor evaluation) and IFE (internal factor evaluation) of National Foods Limited and its CPM (competitive profile matrix), let us take a look at its growth & progress over recent years.

Top Line Performance

Last year, the company achieved landmark sales of Rs.3 billion and registered the robust growth in value and quantity in both export and local markets.

Margin Analysis

In the last financial year, 2007, through operational efficiencies and process automation, the company has achieved the highest ever gross and net margins in the recent history of National Foods.

External Factor Evaluation (EFE):

Competitive Profile Matrix (CPM)

The main competitor of NFL is SHAN. After that Mitchell’s can also be considered a rival as Mitchell’s has a strong name in many products that NFL also produces.

Their CPM analysis is done as under:

                                                      National Foods                  Shan                      Mitchell’s      

As the results indicate, NFL is at a good point when compared to its competition, especially SHAN. Mitchell’s is a bit ahead in the CPM analysis but there is just a minor difference and NFL must attempt to overcome this threat as Mitchell’s is in a good position in the industry.

Internal Factor Evaluation (IFE):

The Internal Factors identified in the internal audit process are analyzed as follows;

SWOT Analysis

The strengths, weaknesses, opportunities and threats for NFL are identified according to the internal and external factor evaluation as under:

    Strengths:

·         NFL has Over 110 products.

·         NFL has 165 and above SKUs (Stock Keeping Unit) for the domestic market.

·         NFL has over 100 different products for the international markets.

·         NFL has been serving since 1970 with huge distribution channels.

·         NFL has a Corporate Gross Sales Growth of over 25%.

·         NFL is recognized as being one of the 10 best Human Resource Managed companies in Pakistan.

·         NFL got Rs. 3 Billion plus turnover including USD 4.64 million of export.

·         NFL is the clear leader of products in the Canadian market.

    Weaknesses:

·         NFL has poor internal control and monitoring when performing audit.

·         NFL does not have a strong advertising campaign like Mitchell’s.

    Opportunities:

·         Growing export of spices from Pakistan.

·         Growing demand for ready made mixed herbs, spices & sauces.

·         New markets being developed for enhancing Horizontal penetration in various segments.

·         Launch of NFL products in India through an authorized distributor.

·         Pakistani economy has achieved 7% plus GDP and promoted confidence of foreign & local investors.

    Threats:

·         Mitchell’s recently dropped its prices on some products.

·         Mitchell’s has strong advertising.

·         Political unrest in the country is skyrocketing costs (inflation).

·         Tax policies are fluctuating.

Conclusion

By carrying out various strategic management processes, it can be concluded that National Foods Limited is in a strong position to use its strengths while minimizing its weaknesses. This is indicated by a good score in the IFE (3.21 points). Similarly, a score of 2.95 is a reasonable score in the EFE, although it can benefit from some attention as currently it seems that NFL may not be completely making use of the external forces at work.

Competitively, NFL is established and enjoys a big market share and does well to stay ahead of the competition. However, some areas must be focused upon to eliminate potential competitive threats. Advertisement is one area where attention must be given and another is global expansion, both are the ones Mitchell’s capitalizes on.

Seeing how NFL is playing its game it can be said that they are on the right path toward prosperity and success and may well within a few years out smart its competition. We will let time be the judge of that for now.

References

www.nfoods.com

Annual Report of NFL 2007

http://nationalfoods2.rozee.pk/

http://www.thehindubusinessline.com/2007/08/01/stories/2007080151451600.htm