Final Project on Mitchell's Fruit Farms

Introduction of Mitchell's fruit farms

Mitchell’s is playing a vital role in the Pakistan’s economy. For the last two years, the company is receiving The Top 25 Companies Award. Mitchell’s has been in the market long before independence and still enjoys a good repute. This is the evidence of the company’s dedication, trust and commitment to provide the best quality products in the market. Despite all the odds, Mitchell’s is still the Market Leader in Squashes, Preserves, Sauces and Countlines.

Many Multi-National and National Companies have entered the competition.  Therefore, the quantity-wise difference between the Mitchell’s and its close competitor has squeezed.

Mitchell’s growing and processing facilities are situated in Renala Khurd, Distt. Okara. The head office of the company is situated in Lahore for ensuring the effective distribution and marketing.

DEPARTMENTS OF MITCHELL’S FRUIT FARMS LIMITED

         Human Resource Department

         Commercial Department

         System Department

         Finance Department

         Production Department

         Planning and Stores Department

         Technical Services Department

         Quality Control Department

         Marketing Department

BUSINESS UNITS OF MITCHELL'S

The business operations of the Mitchell's can be divided into following strategic business units:

GROCERIES BUSINESS

We choose the groceries business of Mitchell's fruit farms limited for further study and analysis.
PRODUCTS OF GROCERIES BUSINESS

In groceries business, the Mitchell's has many product lines and offering depths to its customers. The brand names of the product are given in the table along with their respective weights and prices.

            STRATEGIC INTENTION

VISION

“To be competitive in the growing market as the quality managed company”.

MISSION

1.      To be a Leader in the markets we serve by providing quality products and efficient services to our consumers while learning from their feedback to set even higher standards for our products.

2.      To be a Company that continuously enhances its superior technological competence to provide innovative solutions and superior products as per requirement of the market place.

3.      To be a Company that attracts and retains outstanding people by creating a culture that fosters openness and innovation, promotes individual growth, and rewards initiative and performance.

4.      To be a Company which combines its people, technology, management systems, and market opportunities to achieve profitable growth while providing fair returns to its investors.

5.      To be a Company that endeavors to set the highest standards in corporate ethics in serving society. 

CORPORATE PHILOSOPHY

The success of Mitchell’s brands is the result of the corporate emphasis laid upon Quality Control reinforced by Research & Development. The R & D section prepares new recipes and formulations whereas the QC section ensures selection of the finest fruits and error free processing and packaging, thus ensuring that all products live up to the consumers’ high expectations.

Human Resource is also of the pivotal importance for the Management and employee skills are constantly being updated through training courses and study tours both at home and abroad.

QUALITY POLICY

“We, at MITCHELL’S Fruit Farms Limited, are committed to produce best quality products meeting our customers’ requirements at competitive prices, strengthening our position as a Quality Managed Company. To meet this obligation, the company will continue:

ü  Updating of employee skills by training.

ü  Acquisition of new technology.

ü  Re-evaluation of its quality control and quality assurance systems.”

GOALS OF Mitchell's FRUIT FARMS LIMITED

1. To provide such human resources that will helpful for run the operations of the company in effective and efficient manner, and look after the benefits and interests of personnel of the company so that they can become more productive for the company.

2.      Objective of the System Department of the company is to computerize the business operations of the MITCHELL’S Fruit Farms Limited. 

3.      The objective of the Finance Department is to arrange the finance for the business operations from various sources, control the activities that are related with the finance, maintain and update the company’s accounts.

4. The objective of the Production Department is to produce quality goods at minimum cost by utilizing the company’s resources in an efficient manner.
5. To ensure hygiene, and arrangements of all materials in stores and successful execution of orders.
6. To ensure that all the products, make by MITCHELL’S Fruit Farms Limited are of standard quality by inspection and testing of incoming material, in-process and outgoing products.

7.      The Marketing Department is responsible for planning and developing products and executing their sales at an affordable price through promotional activities.

Problem statement

Apart from the macro, there are few microenvironment problems.  These include:

1.      Lack of long-term & short term planning.

2.      Determination of future goals.

3.      Product availability.

There is not formal planning for the schedules of productions and for achieving the objectives of the Mitchell's. Whenever any specific raw material is needed, the suppliers of the company are bound to provide desired raw material within specified time. Sometimes, the production operation has to stop because of unavailability of raw material. But this happens rarely. In the most cases, the suppliers who give much value to Mitchell's provide the raw materials in time. But commercial department has to face many problems and confusions just because of this careless attitude of the production, planning & stores department. They give very less time to suppliers and commercial department for procurement purpose.

The same time of problem is facing in the determination of future goals and objectives. This is the resultant of above mentioned problem. Because this problem is not only restricted to production, planning & stores department, this is occupying the whole corporation.

When we compare Mitchell's with its competitors, the product availability is very poor in case of groceries products. Retailers have fewer profit margins in the Mitchell's. The promotional activities of Mitchell's are also poor than competitors. So availability of products is a dilemma for the company.

SITUATION ANALYSIS

PEST ANALYSIS

PEST analysis is used to assess what environmental factors are affecting the organization, which of them are most important and how they will effect in next years.  It is an indicator of political, economical, social and technological influences on organization.  The analysis of Mitchell’s is as under:

POLITICAL AND LEGAL FACTORS

Industrial Laws

Industrial laws regarding unions have no impact upon the Mitchell’s because there is already an independent labor union and officers association in the organization.  The company considers these laws in their decision making concerning wage rates, bonuses, and benefits of the employees.

Foreign Trade

This factor is very much important for the Mitchell's fruit farms limited. It is because the Mitchell’s is importing many raw material items from different countries of the world. These items include cocoa powder, cocoa butter, lecithin, tin, aluminum foil, pectin, metal caps, lemon concentrate, hydrogenated palm kernels and pineapple concentrate. The major importing countries are Philippine, Germany, china, Indonesia and Malaysia. Most of the foreign suppliers are working with Mitchell's from last many years. And there are collaborative relationships between Mitchell's and foreign suppliers.

The Government doesn’t provide any support to import these raw materials and any relaxation in import duty upon the imported raw materials. So if Government bring any change in its foreign policy, then it will be very much important to cope with that.

Environmental Protection Laws

Although the laws regarding environment are not very sophisticated in Pakistan but even if they become so, they will not be hampering for Mitchell's fruit farms limited, because in Mitchell's, there is very sophisticated system for the drainage of  the wastes.  In the wastes, there is not any such item that may be harmful for the environment.

Taxation Policy

The Mitchell's fruit farms  is a public limited company. The company is paying all sorts of taxes that are due to the Mitchell's. As the honesty is the dominant value of the company, all the payments to government are made fairly and honestly.

Employment and Government Stability

Employment is not a matter of high concern for the organization because it is already following all the labor laws. But recently the Government increases the wages of the employees but Mitchell's  has not affected by that, because the minimum wage limit in Mitchell's is Rs. 3000 that is high from the minimum wage limit of the government of Pakistan..

Economic Factors

Among the many of economic factors some are more important for Mitchell’s; the detail of these factors is in following:

Interest Rates

Interest rates increase and decrease has significant impact upon the financial performance of the Mitchell's, because the company has take loans from the banks. It is also noticeable that the company takes the long term loans from the banks on the regular basis. So, if in the future the interest rates increase, it will be unfavorable for the Mitchell's. But such increase is not expected in near future.

Inflation

In the short run, the effects of inflation are minimal on the performance of the Mitchell's. But if we take it in longer perspective the inflation in the country will increase the cost of production, which will increase the sale price.  And at high sale price the product will become in-competitive in the international market as the company is involved in the export.  So the pan of export will be adversely affected by the inflation.

Disposable Income

Within the country the demand will be affected if the disposable income will be reduced.  There are lot many substitutes of the groceries products of the company.  But other than its direct use, these are also used in bakery and confectionery items and so many other foods whose demand is dependent on disposable.  So any decrease in disposable income of the consumers will also be affecting Mitchell's fruit farms negatively.

Socio-cultural factors

Socio cultural factors like demographics; income distribution, life style etc. can also affect the company in different ways.  Let’s see which of them are more concerned to Mitchell's fruit farms limited. 

Life Style Changes

The consumption of jams, jellies, marmalades, squashes, sauces, pickles and squashes is very much related with the life styles of people. Now people, all around the world, are becoming more and more health conscious.  They are well aware that a high consumption of heavy foods will increase the cholesterol, which leads to heart disease.  That is why, a significant change in the consumption of foods is being observed in last many months.  As the growth rate of fast food industry is spectacular in the country. That is most favorable for the Mitchell's. it is because more consumption of fast foods will increase the demand of Mitchell's products.

Level of Education

Level of education is directly related with awareness and health consciousness.  In countries where education rate is high the people more like the nutritious products.  In Pakistan, as well as in foreign markets the rate of literary is increasing which will effect the organization positively.  High level of literacy will lead to high level of nutritious products consumption and people started switch towards the products that are more favorable for their health and fitness.

Technological Factors

Technology in food industry is very important for the maximum output, product standardization and hygienic process of production.  The technological factors, which are more concerned with Mitchell’s, are as under:

Government Spending on Research

Usually in order to support some industry and improve economy, government allocates some fund to R & D.  Unfortunately our government doesn’t have any money for R & D.  Due to this non-serious behavior of government this sector along with others, is suffering very much.  There is more need of R&D work in this industry in Pakistan than any other industry. It is because of the sensitivity and importance of this industry in our lives. It is a fact that our food industry is very poor in the field of technological advancement. Mitchell's is well aware of this fact, the company has the best and most advance technology in the respective industry. Mitchell’s continuously upgrading it on annual basis. The 15% of total net profit invest on the automation of the technology every year.

New Discoveries and Developments

 It has already mentioned that Mitchell's has the best technology for the operations of the business. Mitchell's is competing the market with its qualitative and innovative products. All these are possible as the result of intense R&D, new product developments and new recipes for the fulfilling the changing needs and wants of the market.

STRUCTURAL ANALYSIS

The PEST analysis concerned with broad aspects of the environment while there is always a set of external influences, which are more immediate, and directly affecting the organization.  The structural analysis draws on Five Forces approach prepared by Porter. It is a structured mean of assessing the competitive environment.

Threat of New Entrance

Threat of entry depends upon the extent to which there are barriers to entry. A food company requires a big manufacturing unit which requires a huge capital investment; like Mitchell’s has more than 800 crore paid up capital. So we can say that groceries-manufacturing unit is highly capital intensive and because of high capital investment it has high risk for new to enter into production.

Suppliers’ Power

All organizations have to obtain resources and provide goods or services. The suppliers can affects on strategic freedom of an organization and can influence the margins of that organization.  In Mitchell's fruit farms; there are two types of suppliers. One is a local supplier, and others are foreign suppliers.  We can evaluate the power of suppliers with the help of following important points that cannot be ignored:

a)      As well as the foreign suppliers are concerned they have power of bargain because the material is not available locally and the buyer don’t have any option other than import, so the supplier charge the high prices and transaction is done through banks by opening letter of credit and buyer also has to bear high transportation cost and import duties.

b)      As well as the local suppliers are concerned they have small fruit farms. Food companies are highly capital intensive so they don’t have any power because they can’t do forward integration.

c)      There are large numbers of fruit, vegetables, sugar and other raw material suppliers so the buyer checks the quality of suppliers’ products and make contract with any one which meet their requirements regarding quality as well as price.

d)     Another reason of no influence of the suppliers over the Mitchell's is that the company itself producing large amount of fruit, vegetables, milk and butter. The in this way, backward integration reduces the power and influence of suppliers of the raw material.

e)      Mitchell's has very good repute in the market since from the 1933. another fact is that Mitchell's is the market giant in its industry, so every supplier want to work with the Mitchell's.

Buyers’ Power

The buyers don’t have any power, because the prices of the products are fix, but high competition among food companies leads the company to face problems in the price competitiveness.

Competitive Rivalry

Organizations will also be concerned with the extent of rivalry between themselves and competitors. The extent of competitive rivalry depends upon the nature of four forces described earlier. It could be concluded from previous discussion that the food market is highly competitive.  And the degree of competition in the industry is increasing day by day.

VALUE CHAIN ANALYSIS

Value chain analysis is widely used to determine where cost improvements could be made or value creation improved.  This process involves the analysis of all the activities starting from the raw material provisions to the distribution of final product.  That is why it is necessary to understand the complete procedure of production and distribution.

ORGANIZATION VALUE CHAIN

All these activities are broadly categorized into two main heads, which are Primary activities and Support activities.

Primary Activities

The primary activities of the organization are grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales & services. 

Inbound logistics

Fruit, vegetables, sugar, packing material and other raw material items like chemicals, salts milk and butter perform the inbound activity in Mitchell's. This activity should be efficient in order to increase recovery rate by obtaining good quality raw material. So in order to ensure the high quality of raw material, following measures are taken by the Mitchell's.

1. The company has its own orchards, animal farms for the acquisition of high quality fruit, vegetables, milk and butter.
2. There is a well-equipped lab for testing the quality of raw material, packing materials and other chemicals that are used in the production process. Before storing the raw material, the approval of quality control department is essential.
3. In case of 30% of damaged fruit and vegetables, the quality control department of Mitchell's disapproved the material and the commercial department refused to accept the raw material.
4. There is an approved list of suppliers from the quality control department. The commercial department is bound to procure the raw material from only the listed suppliers of the company. This list is made after assessing and evaluation of many factors of the suppliers like their market repute, capacity of production, quality of raw material and their past performance in the market.
5. Frequent visits are also made to the production facilities of the suppliers by the executives of commercial and quality control department for the inspection of the quality and other related considerations.

operations

The operations are the production process of groceries where the major value addition is made.  For ensuring the production process of the products according to the international quality standards, the Mitchell's take the following steps.

1. All the production process from transferring the juices and raw material to production hall from juice stores to the packing of the products is completely automatic. The Mitchell's invest huge amounts of profits for serving this purpose every year.
2. The Mitchell's was the first company who achieve such high level of automation in its relevant industry. The company is serving the industry as the trend setter.
3. During the production process, the well trained lab technicians inspect the production process and its quality before the packaging of the final products.
4. Even after the packaging, the few items of the lot bring into the quality control department for further inspection of quality in the labs of the department.
5. few items are preserved even after the approval of its quality, to check its shelf life and use as reference in case of any complaint from distributors or customers.
6. After ensuring all sorts of considerations, a written permission is given to stores & planning department from quality control department to float the products in the market.

Outbound logistics

The management subcontracts the outbound activity, and the distribution is through dealers.  The products of the Mitchell's directly supply to the distributors of the company. But the supply of production is also take place by the regional sales offices of the Mitchell's. They also serve as the warehouse of the company.

Marketing & sales

As far as marketing and sales is concern, there is an export and marketing department, who control and monitors the activities of regional sales offices of the company that are situated in Lahore, Islamabad and Karachi. These regional sales offices are responsible for effective distribution of the products of the company.  The marketing department is responsible for the marketing and promotion of new and existing products of the company.

services

The nature of the products not requires any significant level of services for the customers. However, there is a formal system for taking corrective actions upon the complaints of the customers. Proper feedback is given to the customers who have any complaint regarding the quality of the Mitchell's products.

Support Activities

The support activities can be divided into four groups, which are procurement, technology development, human resource management and infrastructure.

procurement

As the prime inputs of fruit, vegetables, sugar are available locally and some material has to import from abroad. So procurement for long time is not possible in case of raw material, which is locally available. Where as the material that has to be import the company has a lead-time of 2-3 months. So the planning and stores department is sufficiently performing the activity of procurement with the collaboration of commercial department. 

Technology development

R&D and Process development researches are very important in food groceries industry in Pakistan.  So in the company value chain, this thing should be emphasized much, rather it has a big contribution in total value addition. The Mitchell's working on the technology development on continuous basis. The most advance and automation of the plant and machinery is the top priority of the Mitchell's fruit farms limited.

Human resources management

Human resource management involves the training and development of workers and employees in order to increase their productivity and efficiency.  For this purpose company make their employees to work with the senior worker to get the experience, apart from this on-the job training, they have separate training program for new employees. The company has good planning, quality control systems and future orientation, which although does contribute directly in value addition and increase the effectiveness of whole process.

infrastructure

The company has a strong distribution system in the Pakistan. The Mitchell's has more than 270 distributors in the country for ensuring the product availability and supportive promotion activities. Apart from the strong distribution system, the entire necessary infrastructure is available to the Mitchell's. Mitchell's is the only one food processing company in the Pakistan who has all the production facilities at single location. This include from orchards to the warehouses of the finished products.

Analysis

All the value creation does not happen in the organization itself rather much of it can be occur in the supply and distribution chains.  So the whole process needs to be analyzed.  For this purpose we can divide it into three areas: suppliers, organization and channel members.

Suppliers

Suppliers play a very vital role in total value creation.  The whole of the profitability depends upon the quality of raw material; if supplier does not provide the good quality of raw material, then the desired level of quality of products cannot be achieved.  The price structure of the country de-motivates the grower to produce better quality of fruit, vegetables, sugar cane and other raw material items. But good relationship with the suppliers, fair and prompt payment can enforce the grower to cultivate better variety.  It is exercising by the Mitchell's already.

Organization

Within the organization the value addition activity is focused on groceries production, which is their core competence. In order to provide the superior quality of groceries to customers, total quality management system is practicing by the Mitchell's. Although in the production of the products, Mitchell's role is spectacular in its industry. But when we talk about the market development and marketing and promotional activities of the Mitchell’s, we will come to know that this particular area is lacking behind the other market players. Without the marketing support Mitchell's cannot achieve its goals and objectives successfully.

Channel Members

Mitchell's fruit farms limited has strong footing in the market because of its quality products and good repute. The company is full aware about this strong point, and the people of Mitchell’s are getting benefits from this strength. The customers of the Mitchell's are loyal with the company and make purchase of such products that are labeled Mitchell's. There is strong distribution channel in the country that is the strength of the company. The company also directly deals with the large customers like PIA,  KFC, PIZZA HUT, MCDONALD’S, HOLIDAY INN,  and many other  prestigious institutions of the country. Apart from these institutions, Mitchell's deals with the large retailers itself like PACE, HKB stores, UTILITY STORES, CANTEEN DEPARTMENTAL STORES, SHEZAN BAKERS and so on.  So in this way we can say that company targeting its customers not only by the distributors but also go directly to retailers and other institutions for creating value for the business operations of the Mitchell's.

Distribution Network

            SWOT Analysis

STRENGTHS

1. Mitchell’s fruit farms limited is the oldest food processing company of Pakistan.  The company was incorporated in 1933.   This is a distinctive feature of the company because all other food-processing companies start their operations at least after the independence of Pakistan.
2. In 1998, Mitchell’s achieve another destination: ISO 9001 certification, and at no better time than the successful completion of sixty-five years of bringing quality products to the consumers.  It is a matter of human pride that the Mitchell’s has become the first food company in Pakistan to achieve this prestigious distinction.
3. Today, in Pakistan, Mitchell’s is the only major company with fully- integrated operations having its own growing and processing facilities at one location.  Modern, high-volume industrial equipment, professional management and a trained workforce ensure that Mitchell’s maintained its lead.
4. In 1983, Mitchell’s golden jubilee was celebrated with great funfair.  A chocolate bar, appropriately named jubilee, was launched to commemorate the event.  Mitchell’s is the pioneer in Pakistan for chocolate production.
5. Molded chocolate (praline) is very popular in all over the world but till 2001 no national company was producing molded chocolate in the country.  So Mitchell’s launched molded chocolate with the successful commissioning of a molded line in 2001.
6. The process of toffee making was automated in 2000 with PLC-based machines/systems, to ensure uniform quality of products.  Mitchell’s is the first national company that takes this step.  Thus, the modernization of operation has always been top priority with Mitchell’s.
7. Mitchell’s is the single national company that has so large product mix.

WEAKNESSES

1.      The management style that has adopted by the company is bureaucratic.  Degree of formalization and centralization is high.

2.      The promotion mix of the company and advertisement programs is not very good.  It is justifiable to say that company is not so much serious in promoting its brands.  The company only enjoying the good repute of the brand name Mitchell’s.

3.      There is lack of short term and long-term decision-making regarding production schedules, purchasing decisions and marketing programs.

4.      As we know that there is severe competition in the food industry, but still the availability of Mitchell’s products is very poor.

5.      Company is offering fewer discounts as compare to other relevant industry’s companies like Shezan, National, Rafhan, Salman’s and Ahmed to retailers and distributors.

OPPORTUNITIES

1. Increasing proportion of working women, school going children and office going men increase the size of target market of the food industry.  These factors cause growing demand of jams, jellies, marmalades, sugar free products and caned vegetables and juices open a wide window of opportunities for MITCHELL’S Fruit Farms Limited.
2. As the rural populations of the country tend to migrate to cities for multiple purposes, for this trend enhanced the market size for the food processing companies.  It is also an opportunity for the MITCHELL’S Fruit Farms Limited to avail this opportunity and get benefits from this growing market.
3. Now people are much conscious about their health and fitness as before the past. They have tendency to use the foods that are nutritious and best for their health. So this market trend is also creating new horizons for the food processing companies.
4. It is fact that the market size of fast foods and snacks remarkably. As the many products are the complimentary for these kinds of fast food and snacks item. This thing is growing the demand of tomato ketchup, sauces and preserves.
5. There is an opportunity for the company to increase the depths of its existing products categories. For example, company may introduce the squashes, sauces and tomato ketchup in more packaging like in buckets as this strategy has adopted by other competitors of the company. The company may introduce the pet bottle of 1.50 ml like Jam-E-Sheren and Rooh Afza. It will expand the target market of MITCHELL’S Fruit Farms Limited.
6. Other very open opportunity for the company is that the company may invest in new product categories like mineral water, cheese, snakes and other dairy products.

THREATS

1. The competition in the food processing industry is much severe than the past. Now the many national companies are joining hands with multi-national corporations for additional support in terms of marketing activities, production expertise and financial resources.

Financial Analysis

ANALYSIS OF FINANCIAL STATEMENTS

While assessing the financial position of any organization’s (in evaluating the internal resources) one should be very careful about the figures because mostly the organization based on its financial structure and the right effective and efficient allocation of money to different needs. Best technique in this regard is of ratio analysis, which without many complexities provides as an increase look of the company. For the assessment of the financial resources of the Mitchell's we also use the ratio analysis in order to get a clear vision with simple interpretation. For this purpose we can analysis the financial statements following ways:

1. ANALYZING LIQUIDITY
2. ANALYZING DEBT
3. ANALYZING ACTIVITY
4. ANALYZING PROFITABILITY

ANALYZING LIQUIDITY

The liquidity of a business firm is measured by its ability to satisfy its short-term obligations as they came due. Liquidity refers to the solvency of the firm’s overall financial position__ the ease with which it can pay its bills. The three basic measures of liquidity are (1) net working capital, (2) the current ratio, and (3) quick ratio.

Net Working Capital

Net working capital, although not actually a ratio, is commonly used to measure a firm’s overall liquidity. This requirement is intended to force the firm to maintain sufficient operating liquidity and helps to protect the creditor. Mitchell's show a sufficient amount of working capital that is Rs. 77,322,892

Current Ratio

A current ratio of 2.0 is occasionally cited as acceptable, but a value’s acceptability depends on the industry in which the firm operates. A current ratio of 1.0 would be considered acceptable for a utility but might be unacceptable for a manufacturing firm. The more predictable a firm’s cash flows, the lower the acceptable current ratio. Mitchell's current ratio is 1.69 that is quite acceptable.

Quick Ratio

The quick ratio is similar to the current ratio except that it excludes inventory, which is generally the least liquid current asset. Quick ratio is an extended version of current ratio in which only very quick assets (which can be quickly liquidated) are considered. A rule of thumb is that figure of 1.00 or more is good and indicates a good financial position of the company. The Mitchell's has its quick ratio is 0.54.

ANALYZING ACTIVITY

Activity ratios are used to measure the speed with which various accounts are converted into sales or cash. With regard to current accounts, measures of liquidity are generally inadequate. The three basic measures of activity are (1) Inventory turnover, (2) fixed assets turnover, and (3) total asset turnover.

Inventory Turnover

Inventory turnover commonly measure the activity, or liquidity, of a firm’s inventory. An inventory turnover of 20.0 would not be unusual for a grocery store, whereas a common inventory turnover for a manufacturer would be 4.0. Mitchell's inventory turnover is 5.46, this figure is excellent for a manufacturer firms.

Fixed Asset Turnover

The fixed asset turnover measures the efficiency, with which the firm has been using its fixed, or earning, assets to generate sales. Generally, higher fixed asset turnovers are preferred, because they reflect greater efficiency of fixed asset utilization. Mitchell's fixed assets turnover is 6.60; this means the company turns over its net fixed assets 6.60 times a year.

Total Assets Turnover

Total assets turnover indicates the efficiency with which the firm uses all its assets to generate sales. Generally, the higher a firm’s total asset turnover, the more efficiently its assets have been used. This measure is probably of greatest interest to management, because it indicates whether the firm’s operations have been financially efficient. Mitchell's turns its asset over is 2.30 in a year.

ANALYZING DEBT

The debt position of a firm indicates the amount of other people’s money being used in attempting to generate profits. In general, the financial analyst is most concerned with long-term benefits, because these commit the firm to paying interest over the long rum as well as eventually repaying the principally borrowed. Because the creditors claims must be satisfied before, the distribution of earnings to share holders. The two basic measures of debt are (1) Debt ratio, and (2) debt-equity ratio

Debt Ratio

The debt ratio measures the proportion of total assets financed by the firm’s creditors. The higher this ratio, the greater the amount of other people’s money being used in an attempt to generate profits. Mitchell’s debt ratio is 0.39.

Debt Equity Ratio

The debt-equity ratio indicates the relationship between the long-term funds provided by creditors and those provided by the firm’s owners. It is commonly used to measure the degree of financial leverage of the firm. Mitchell’s debt equity ratio is 0.12.

ANALYZING PROFITABILITY

There are many measures of profitability. Each related the return of the firm to its sales, assets, equity, or share value. As a group, these measures allow the analyst to evaluate the firm’s earnings with respect to a given level of sales a certain level of assets, the owners’ investment, or share value. With out profit, a firm could not attract outside capital. The three basic measures of profitability are (1) gross profit margin, (2) operating profit margin, (3) net profit margin, (4) return on investment, (5) return on equity, and (6) earning per share.

Gross Profit Margin

The gross profit margin measures the percentage of each sales dollar remaining after the firm has paid for its goods. The higher the gross profit margin, the better and the lower the relative cost of merchandise sold. Mitchell's gross profit margin is 18.7%. 

Operating Profit Margin

The operating profit margin measures the percentage of each sales dollar remaining after all costs and expenses other than interest and taxes are deducted. It represents the pure profits earned on each sales dollar. A high operating profit margin is preferred. Mitchell's operating profit margin is 8.5%.

Net Profit Margin

The net profit margin measures the percentage of each sales dollar remaining after all costs and expenses, including interest and taxes, have been deducted. The higher the firm’s net profit margin, the better. The net profit margin is commonly cited measure of the firm’s success with respect to earnings. Mitchell's net profit margin is 4.64 %.

Return on Investment

Return on investment (ROI) measures the overall effectiveness of management in generating profits with its available assets. The higher the firm’s return on investment, the better. Mitchell's ROI is10.6% that is good in the industry.

Return on Equity

The return on equity (ROE) measures the return earned on the owners’ (both preferred and common stockholders’) investment in the firm. Generally, the higher this return, the better off is the owner. Mitchell's ROE is 17%.

Earning Per Share

The firm’s earnings per share (EPS) are generally of interest to present or prospective stockholders and management. The earnings per share represent the number of dollars earned on behalf of each outstanding share of common stock. They are closely watched by the investing public and considered am important indicator of corporate success. The EPS of Mitchell's is Rs. 7.52.

  Existing STRATEGIES

CORPORATE LEVEL STRATEGIES

Corporate level strategy focuses on strategies for corporation consisting of more than one business. Mitchell's fruit farms limited, for instance, comprise several businesses, including groceries, confectioneries and chocolates business. Mitchell’s involve more than one business is said to be diversified.

Foreign Licensees
In recognition of its dedication to quality and technical expertise, Mitchell’s was also given proprietary rights by L. Rose and Company Ltd. of England in 1946 to become the sole manufacturer and distributor of their world famous Rose’s brand of Lime Juice Cordial and Lime Marmalade in Pakistan and Afghanistan.
Concentric Diversification

“Adding new, but related products or services”.

Mitchell’s involved in concentric diversification because it has three related businesses that are groceries, confectioneries and chocolates. The raw material, production process, required expertises are very much same. Further more the product lines like squashes, syrups, pickles, jams, jellies, marmalades, sauces, diet preserves, vinegars, candies and chocolates are the product lines that are closely related in context of many business aspects. So we can say that Mitchell's is exercising the concentric diversification.

Backward Integration

“Seeking ownership or increased control of a firm’s suppliers”.

Mitchell's fruit farms limited is acting on the concept of backward integration. Mitchell's has its own orchards and dairy farms for the smooth flow of raw material that is used in the production of Mitchell's products.  450 acres of land is used for cultivation of raw material.

Following fruits requirements are being fulfilled by Mitchell’s own agriculture land.

                        Lemon                                     100%

                        Grape Fruit                              100%

                        Sevlik Orange             100%

                        Tomato                                      30%

                        Garlic                                       30%

Apart from the Mitchell's own orchards, Mitchell's has sound control over its suppliers. For example, the raw material that is used in the Mitchell's is of two types. First is the raw material that is used in the production process and the second is the raw material that is used for the packaging of the products. Package (Pvt) limited is the sole supplier of the packaging material of the Mitchell's. Mitchell's and packages (Pvt) limited have the same directorships, so in this way we can say that Mitchell's has good enough influence over the management of the packages (Pvt) limited.

BUSINESS LEVEL STRATEGY

Firms compete directly with one another at what is called the business level of strategic management, so we will focus on crafting successful competitive strategies. Because competition takes place at the business level, strategic management at this level is crucial to the overall success of the corporation.

Differentiation

If we closely look at the operations of Mitchell's fruit farms limited, we will come to know that the corporation is practicing the differentiation strategy.  Mitchell's has more than fifteen product lines and a large product mix of more than 90 products. The product mix of Mitchell's is the largest one in its respective industry. This fact reveals that Mitchell's is exercising the strategy of product mix differentiation.   Mitchell's is charging 7 to 8 percent higher prices of their products as compare to their competitors.  Because they consider their products superior as compare to remaining ones.

Customer focus

Apart from product differentiation Mitchell's is also implementing customer focus strategy.  The continuous process of research and development, product differentiation, marketing research and technological innovation make this possible for Mitchell’s to introduce more than four products in a year.  This is a clearer indicator of customer focus that is being implemented by the corporation.  The Mitchell's customer is loyal to the company and he wants to purchase the brand MITCHELL'S.  So it is necessary for the company to introduce not only innovative products but also gives quick response to its customers.

OPERATION LEVEL STRATEGY

Operation level strategy focuses at how to develop capabilities in process execution that will yield competitive advantages for a firm. This involves applying strategic management concepts to what is known as the operations level, the level at which work inside the organization actually takes place. We focus on how organizations go about improving their process capabilities, including both total quality management and core process reengineering.

Product Development

“Seeking increased sales by improving or modifying present products or services”.

The company is focusing on product development not on market development.  It may be considered as strength or weakness. Strength in this way that company is giving full priority to satisfy the wants of existing customers.  But it might also be termed as weakness of the company because it is keeping the large market remained untouched.

RECOMMENDed strategies AND IMPLIMENTATION

We can say that the food processing industry of Pakistan is one of the most rapidly growing industry of Pakistan.  Many new markets players have entered to acquire their share in the market.  Although the economic conditions of the country are poorer but the quality of life is towards improvement.  This improvement also leaves favorable impact on the tastes of people.  Once there was a time when only Mitchell's was running its business in the Pakistan in its relevant industry.  Now Mitchell's is facing competition from many national and multinational food companies in the country.  Many national companies are joining hands with multinationals for strong footing, financial support and other required professional expertise.  Mitchell’s now is facing many problems in today’s world of business.  So for avoiding swerve consequences we recommend following strategies to Mitchell's. 

FORWARD INTEGRATION

“Gaining ownership or increased control over distributors or retailers”.

In forward integration we not suggest to Mitchell's to gain ownership of distribution system but it is need of the hour to increase control over distributors as well as retailers.  The major de-motivator for retailer and distributor is fewer profit margins to them.  Mitchell's is the company that is offering minimum profit margin to its distributors and retailers.  It converts the interests and priorities of distribution channel member to other market players.  When the prices of products are high comparatively to competitors it will be necessary for the producer to give attractive margin to distributors and sellers and retailers so that they promote company’s products effectively. The increase in trade promotion will also enhance the control of company over its distributors and retailers.

Customer Focus

The company is not offering its products in the various packages. For example the competitors of Mitchell's like Shezan, Rafhan, Qurshi, Humdard and Galaxy are offering their products like preserves, ketchups and sauces in buckets but this area is ignoring by the Mitchell's. It will be good for the company to offer its products in more different weightings. It will not only increase the sales of the company but also helpful for market development.

• It is suggested that company should introduce more flavors of squashes like plum and peach. 
• The squashes and syrups must also be introduced in 1.5 litre and 500 ml packages like Rooh Afza and Jame Shereen.
• It is also recommended by us to Mitchell's that to be competitive in the market, the company should also preserves like jams, jellies, marmalades and ketchups, sauces in  more economy packs for the customers.

Market Development

“Introducing present products or services into new geographic areas”.

At this time, the Mitchell's fruit farms limited is utilizing its 70 % of total capacity. So there is need to market development. More markets will help company to utilize its full capacity but also increase the profitability and competitiveness of company.

Mitchell's can explore new markets not only in the country but also in the abroad.

ü  Although the company exporting its products to Middle East, Canada, Gulf, Saudi Arabia, U.S.A and European countries. But in these countries, still need of market development is exist.

ü  Still there are many cities in the country, where the product availability of the Mitchell's is very much poor, even in big cities there are many areas in which the company distributors have not access. The company should ensure and improve its products’ availability.

RELATED DIVERSIFICATIN

Mitchell's can diversify its businesses in other related areas of operations. The main reason of going to such diversification is that the company has good repute and vast experience of food processing industry. The customers of the company have brand loyalty and ask for Mitchell's products to retailers. Such kind of diversification will facilitate the company to remain prominent in the market and milk its reputation.

ü  We recommend that Mitchell's must go for the business of butter, cheese, mineral water and snacks etc. this will be related diversification for the company.

ADVERTISEMENT

From last few months, the Mitchell's is not advertising its products on the electronic media. It is affecting the sales of the company very severely. The main area of focus is trade promotion that is not enough in tough market conditions and competition.

ü  More consumer and trade promotion

ü  Advertisement on T.V for hammering the minds of Mitchell's consumers.

ü  More outdoor advertisement like its main competitors. Significant increase in the number of sign boards, MMT boards and banners on the public places will increase the product awareness and interest of the customers.

MITCHELL'S CORPOPRATE LANGUAGE

All the documentation and written communication of Mitchell's is in English language. However, verbal communication may be in Urdu, particularly the executives of the company speak Urdu or Punjabi with the workers as per workers’ convenience. But it is the restriction of the company to deal external people in the Urdu and in case of foreign people; mode of communication should be English. The management executives are trained by the Mitchell's to negotiate with foreigners in the English language.

IN-HOUSE SLOGANS OF MITCHELL'S

There are three in-house slogans that are permanent in nature. Apart from these slogans, one slogan is called the slogan of the month.

Three permanent slogans are as following:

1. love with customer… love with company
2. Customer happy, company prospers.
3. Customers help us grow.

THE SLOGAN FOR THE TARGET MARKET

The slogan for the target market of the Mitchell's is as under:

      Giving the New Generations a Fresh Start...

       From Our Orchards to Your Table

CORPORATE VALUES OF MITCHELL’S

EMPLOYEES AS COMPANY’S ASSET

The professional management and skilled labor force is considered as the asset of the company; so MITCHELL’S Fruit Farms Limited take it very serious for the betterment of employees skills and expertise. The company sent the management people in the foreign countries for attending various seminars, workshop and refresher courses.

The company in different hotels for updating also holds the seminars on different topics the professionalism of the executives. Apart from these seminars, the executives also take part in the different course that are offered in all over the country on various informative topics like information technology, quality control systems and new production methods and techniques.

RECRUITMENT CRITERIA

Recruitment practice is done after particular period of time in the MITCHELL’S Fruit Farms Limited. But if we practically see the recruitment process in the company, we will come to know that the top priority is given to those candidates who have the experience in relevant job and strong internal references.

PROMOTIONS

The Mitchell's fruit farms limited provide an attractive career path to their employees. The promotions of the employees are base on their performance as well as experience. Both are considered by the human resource department. The Mitchell's take care of their employees and serve their career goals in a marvelous manner.

LEARNING ORGANIZATION

Mitchell's is a learning organization. The company tries to utilize the capabilities, skills and knowledge of its people at maximum. For this purpose, employees work in the form of teams for the completion of various projects. Top management encourages risk-taking among the employees. In return, there is an attitude of tolerance on mistakes in the Mitchell's management.

INNOVATION

The mission of the Mitchell's is to provide the innovative products to the markets where the company serves. So innovation in product mix has much importance in the company.  It is required by the top management to introduce three or four new products every year. For this purpose, R&D work continues throughout the year. Ideas are collected from the Mitchell's people, then after initial screening, these ideas are referred to product design panel, who work on these ideas for producing final products.

TECHNOLOGICAL ADVANCEMENT

The company positions itself at top and consider best in the technology. For remain best in technology, the company following the strategy that Mitchell's will invest 15% of its profits on the advancement of technology. This amount is more than Rs. 200 million every year. This advancement is done for achieving more product standardization, maximum output and hygienic process of production.

IMPLIMENTATION OF TQM

Mitchell's was the first company in the respective industry that get ISO 9001 certification in 1998. Mitchell's is the trend setter in its industry. Mitchell's believes on quality. The company implements the quality notion from product design to provide the products in the hand of ultimate consumers. During all the processes quality is managed as the top priority. Mitchell's makes its image as the quality managed company. All the measures regarding TQM that are possible in the present environment of the country are possible has been taken by the Mitchell’s.

BE HONEST

The most important value that is promoted within the company is honesty. It is required from the employees of the Mitchell's that they not only deal with their colleagues with honesty but also deal with suppliers and customers of the company honestly. One classic example of the Mitchell's commitment to honesty is their products.  According to the rules of the government, there should be atleast 35% pulp in jams, jellies, marmalades, ketchups and sauces. But the food companies not careful about this restriction except Mitchell’s.

BENEFITS & SERVICES

Salaries and incentive packages of the company is very attractive.  All head of departments are given automobiles and mobile phones by the company at its expenses. The salary package of the head of departments is also not less than sixty thousand. The executives of the company have the medical facilities and accommodation facilities .The salaries of clerical staff are also not merely less than six thousand.  The entire management and staff member have the T.A and D.A facility.  All the staff members and workers are also awarded with the overtime benefits. The minimum wage rate is Rs. 3000 in Mitchell’s. The workers and executives enjoy at least two bonuses in a year. The number of bonuses depends on the company’s profit at the end of its financial year on the end of September. For many times, employees are awarded five or even six bonuses in a year. Gratuity and pension is also awarded to the retired employees.

IMPRESSIONS ABOUT MITCHELL'S CULTURE

1. The people at Mitchell's are quite satisfied in the company. They considered their job challenging and attractive for theirself.
2. The company is promoting the values like punctuality, hardworking, participation and honesty. All these values have strong support from the top management of Mitchell's. Even the top executives like chairman, managing director and executive director of Mitchell's come in office in time even before time, they follow the rules and regulations of the Mitchell's like there is restriction on the employees of the company to attach their company’s identity card at the front of their dress. So this rule is for all even for the owners and director of the Mitchell's.
3. It is the matter of immense pleasure for the employees to be the part of Mitchell’s. They feel proud to be the part of oldest and best food company of the country.
4. They are committed to their jobs and enjoying sound monetary and non- monetary benefits from the Mitchell's. The turnover rate in the Mitchell's is near about nil. This shows the employees loyalty that they have with Mitchell's.
5. So, my viewpoint about the Mitchell's culture is that they have very different culture that I observed in other national companies. They have strong culture that provide supportive working environment to their employees, take care of their participants and all the employees working in the relation-bond culture.
6. All the employees have written duties and responsibilities. However, sometimes for the sake of job rotation, they have to work on some additional assignments but in the form of teams not on the individual level.
7. Authority has defined broadly in the Mitchell's. Mission statement, quality policy, goals, objectives and short term planning is demonstrated and communicated among the employees to all over the company. Apart from these facts, the past performance of the company is also demonstrated with the help of various instruments at many times in the Mitchell's.

EMPLOYEES FORMAL IMPRESSIONS

1. According to employees, they are happy with the Mitchell's fruit farms and they are enjoying collaborative relationships with the management of the Mitchell's.
2. Their jobs are challenging to them and not feel any sort of job boredom.
3. There are good working environment in the Mitchell's and they are free to participate in the matters of the company. The employees work without any pressure and fear.
4. They have formal as well as informal relationships with their colleagues.
5. The behavior of management is friendly with the employees of the company.

EMPLOYEES GRAPEVINE IMPRESSIONS

1. The employees are unhappy about the strict control of the Mitchell's management upon them. According to the employees of the company, with the passage of time, they have to work harder and now there is more accountability of the actions of the employees that was not in the past.
2. The employees also claim that the management of the company is exercising the discrimination among the employees without any legitimate or performance related reason.
3. Apart from these negative impressions, the employees have same informal impressions as they have formal. The employees are happy and satisfy with Mitchell's policies and managerial practices. They consider their company prestigious in the country and have strong sense of belongingness with the Mitchell's.

MANAGEMENT STYLE OF MITCHELL'S

One can elaborate the management style of any organization on the following grounds.

1.      Planning

2.      Organizing

3.      Staffing

4.      Leading

5.      Controlling

Now we see the management style of Mitchell's on the basis of above mentioned points.

Planning

Goals are set with a few deal of participation.

Decision making is transferring to decentralization from centralization.

Organizing

Authority is shared.

Authority is broadly defined in the Mitchell's.

Staffing

People are selected on the basis of performance criteria. But sometimes, internal references are also used for recruitment.

Training is in few functional areas.

Leading

Managers practice participative leadership, but not much extent.

Communication flow is top-down and bottom-up.

Controlling

Individuals exercise some deal of self-control in the Mitchell's.

Focus on multiple criteria.