Final Project on Rafhan Food Industries

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The company was established in early 50’s by Munno Family. RAFHAN was named from the combination of their two sons, Rafiq & Farhan. At that time the company used to deal both with industrial goods & consumers goods. In 90’s a multinational company CPC purchased it from Munno Family & named it CPC Rafhan. Then there came a change & CPC divided into two parts, i.e.:

The sector that produced industrial goods was named as Rafhan Naize Products & the sector that produced consumer goods was named as Rafhan Best Foods.

In October, 2000, Best Foods was purchased by Lever Brothers /Unilever all over the world. The deal will be the latest in a series of acquisitions for Unilever, which has pursued Best Foods in order to capture more top-name brands and boost revenue growth. It comes at a time when Unilever is streamlining its massive food, detergents and personal products business. The five-year plan calls for increased operating margins, job cuts and revenue enhancements.

Niall FitzGerald, Unilever chairman, said, "We are very excited about the combination of Unilever and Best-foods. This transaction creates the pre-eminent global food and Consumer Goods Company. Together we will have a portfolio of powerful worldwide and regional brands, with strong growth prospects."

Unilever said the Best Foods management team would play an "important role" in the combined company but gave no specifics.

"In addition to creating a premier portfolio of foods brands, the combination will bring together two of the world's top management teams, creating one which is capable of realizing the growth and synergy opportunity and leading the category agenda," FitzGerald said.

Already ranked No. 3 among world food companies, Unilever will now jump ahead of Philip Morris Kraft Foods and challenge Nestle AG for the top spot. Unilever's stable of brands includes Lipton teas, Close Up toothpaste and Calvin Klein fragrances.

The transaction is expected to be completed in the fourth quarter of fiscal 2000. It was also reported in June that Best Foods was assessing a potential acquisition of Campbell Soup Company.

The company's output in Energile/Glucose/Glaxose D division was 5,119 metric tons as compared to last year's production of 2,529 Tons. In the other products division, the company produced 4,048 metric tons as against 3,793 metric tons last year. The installed capacity of the plant per8 hour shift stands at 15 metric ton.

Rafhan Best Foods Limited is a multinational company headed by 11 Boards of Directors. The Board of Directors has appointed a full time general manager of all the departments of the organization.

All the General Managers of these departments are answerable to the board of directors.

RBL's diversified portfolio includes full product lines of Knorr, desserts, dextrose and dressings. During the year under review, the company continued its growth momentum in the Knorr range. Three new variants in 'Yakhni' and two spicy variants in noodles were introduced to expand customer base. Additionally, by introducing the "Chili-Garlic Sauce", company expanded its sauce range. A major portion of the dessert business was lost owing to government restrictions on marriage parties. However, this declining effect was reversed by introduction of the new products, flavors and smaller pack sizes. To increase product penetration, Rafhan Custard was introduced in sachet packs. Variants were launched in pudding and custard range to cater growing popularity of chocolate and strawberry flavors. Among dressings, new flavors of chicken, vegetable and chili garlic sandwich spreads were introduced.

Cater plan was launched in by Rafhan in 1993 in Pakistan which is entirely for institutions in commercial and social sector. Cater plan offers a special range of products including mayonnaise, tomato ketchup, salad dressings, soups, cooking aids, oils and desserts. The main reason behind the healthy growth of Cater plan during this year was the increase in "eating out" trend in the country and the emergence of international fast food chains like Pizza Hut, McDonalds, TGIF, Subway, KFC and Dunkin Donuts etc.

Best Foods as compared to other Multinational Companies is a smaller one. Their main focus is toward growth orientation of Novel Products. Marketing plays an important role in the prosperity of the organization. But unfortunately for the last two to three years, marketing department did not play any major part in Best Foods. From this year management is focusing more on the marketing activities, which increase the existence of marketing department in the organization.

Company itself is not engaged in the marketing research. For marketing research the company hired the services of different agencies and they do the research work for the company. They used Focused-based Research Group method for marketing research. In this method the agency’s employees are required to go to each and every house of their target area and examine the usage or the requirement of their customer and reported to the company. The company then makes their strategy according to the data provided by that agency.

Target market defined by the company is based on income level, age and behavior of the people. The target market is different for different products. For example, for corn-oil the target market is upper and middle class. The target market for the Knorr cubes is lower class.

Rafhan products are one of the major consumer products offered by Best Foods in the market. They are the only producer as well as the market leader of these products. The companies such as Kinza, which produces Ketchups, Fauji, which produces custard and jellies, are not considered as their competitors due to their low market shares. These products are basically for upper class.

Best Foods are the only producers of Knorr products in the market. There is no competitor of the Best Foods in the Knorr products. These products are basically for the middle class.

Energile is one of the major brands of Best Foods. These are basically for the sportsman. Tang is the only competitors of this brand but due the low market share they are not consider as a major competitor.

Best Foods purchase this brand from Glaxo-Wellcome Company. These are mainly for patients who use glucose for recovering their energy after doing some hard work. There is no competitor of this brand in the market.

The company has two small brands as well. They are Agro & Shahi. These are used for laundry purpose. These products are not very much renowned due to less or no promotion of these products. These products are basically for middle & lower class.

The pricing of the product is made on the basis of G.P Margin, comparative market prices and market shares at different price levels

While placing their products the company’s main focus is on retail not on whole sale. The 70% distribution of Energile and Glaxose-D is on whole sale while 30% is on retail. For getting more success it is necessary to distribute 80% on whole sale and 20% on retail. But the situation in inverse in the company’s prospective.

There are two methods from which a company can promote its products. These are:

ATL includes promotion through media. Media can be of any kind i.e. T.V. Radio, News papers etc. BTL includes promotion through sales level activities. They emphasis mainly on BTL promotion from the past few years. But from the recent year they are more concerned with ATL promotion. RBL enhanced marketing investment to further strengthen its brands and increase consumer pull for products. The focus was continued on the recipe oriented educational cooking program "Knorr kay zaiqay" which helped the company to educate the consumers on multiple product usage. The effective consumer promotions also helped to achieve double-digit volume growth in dessert business during the year under review. An effective "village marketing" program was initiated to generate healthy sales of dextrose. Trade discounts are also offered in the nearby future on many of their products to attract the customers. Further emphasize is on pull not on push.

The company is not emphasizing on proper launching of product. Their strategy is just to throw the product in the market and it will be sold on its own. This cause failure of the product.

For example, Rooh-e-Summer is the product of summer season and it should be launched in March-April for better results. But the company launches that product in the rainy season in which people do not like or they do not go for Lal Sharbat.

Similarly, Sporty is a drink which is glucose based and sugar free. It is especially for the sportsman and it be launched when there is more sports activities. But the company launched that product in the month of Ramadan when there is used to less spots activities. In such kind of competitive no company use to go for launching their three products at the same time. But they launched there three products, Rasbhare, Shahi and Agro at the same time. This cause the failure if the product because the company can not properly concentrate on one particular product. Now the company has changed its strategy. All these products are relaunched with a proper plan in the coming future.

The strong point of the company is they have many innovative ideas which make them the market leader of the food industry. This is the main strength of the company that they always presented the things with new ideas.

The company has enterpreneural culture. It helps the company to take the decision on the spot. Less time is used for the innovation of products.

The company has very much flexibility. It has the tendency to adopt the changes quickly. So the company molds according to the circumstances.

The company has no competition in some of its products. For example, in Glaxose-D, Custard, Jelly, Pudding, Corn oil and Cubes. The company earns much more from these products.

The company has not properly emphasized on the promotional activities. ATL activities are very low.

The company has not equal emphasis on all the products. Seventy to eighty percent of the company revenue depends on three products. These three products are Energile, Glaxose-D and Rafhan corn oil. The company can generate more profit if it emphasizes more on other products.

The company is more sales oriented. But this era is not fit for sales oriented. All the companies go for marketing activities but they are emphasized more on sales oriented.

The company is very weak in competition. The company is performing very well in the areas of monopoly, but where there is competition company is not up to the mark.

Twenty percent of company’s goods have the opportunities in growth. There is not much growth in these twenty percent products. The company can earn more if the growth of these twenty percent is increased.

Lever Brothers is a very large consumer goods producing company. Its best practices must be used to take the advantage and to have competitive edge on the company’s competitors.

The company’s biggest threat is the competitors in some of its product. The company emphasizes more on those products in which they are the market leaders but they are not emphasizing more on those products in which they are facing a strong competition.

Company is a threat for itself. It can not properly promote and place its products in the market. They are just throwing their products which cause abundance of the product and ultimately the prices of the product go down due to excess of supply. This cause the company to cut back its prices which is not acceptable by distributors.

During our visit to the regional office of Best Foods Ltd. I found the company’s culture is not ordinary. Though it is not bureaucratic, but is unrealistic. The company is not system based. System is not strong in the company rather personalities are stronger.

The company’s aim is that in every house any of its products must be used daily. So, to achieve this aim the company should realistic. It most adopts the strategies that help the company florish. More emphasize should be given on marketing and promotion activities.

Ü Entrepreneurial culture exists in the company, which helps in quick decision.

Ü The company launches its product without analyzing the trend in the market, which cause failure of certain products.

Ü The company emphasize more on its two or three products and ignore the other which cause less revenue.

Ü The company can use best practices of Lever Brothers to have competitor edge on the market.

Ü 80% of the revenue is generated by the company is from two or three products. They can increase the revenue by emphasizing on other products as well.

Ü Biggest threats for the company is strategy they are using in launching the products. They can launch their products without analyzing the market.

Ü Competition is another threat for the company. Companies performing well in monopolistic products, but in competition its performance is very poor.

Ü There are very few programs for career development of the employees. People working in one section or department from years are still with the same knowledge and style of doing job. There should be proper career planning of employee that not only sharpens the skills of the employee but also results in better and improved output of the organization.

Ü Some employees are working in the same department or the section since they are appointed.

Ü Employees should be transferred with in departments so there is job variety that develops their interests, update their information and versatility in their performance.

Ü Proper planning is needed to treat the competitors in those goods where there is competition.

Muhammad Hassan Naseem

Roll # 0057

Ü Many times company introduce different types of products and make changes in than old products with an exist in the market.

Ü In different products, they have no competitor like Gloxose-D, Custards, Kanorr, Pudding, and Jelly.

Ü There is much flexibility in company decisions which halp them to change them according to the atmosphere and help them to adopt the changes.

Ü Company is very weak in the promotion of their products, very low in advertising of production lose. In the promotion of the product.

Ü One third of the company products have a opportunities to promote their product, which give a huge promotion to company.

Ü The big threats for company is itself. Strategies are very poor. Cost year they introduce products in off-season, and also introduce 3 products at a time. In the future company suffers for that.

Ü Competition is another threat, for the company. in monopolistic products company is performing very well. But where competition comes company is very weak. It is future the company comes the competition in the monopolistic products.

During our visit to the regional office of Best Foods Ltd. I found the company is not system based, but personality based. The company’s culture is unrealistic.

The company must adopt such strategies that help the company to pros pound in the future. It should have to emphasize more on marketing and research activities.

Muhammad Hassan Naseem

Roll # 0057

Faisal Nawaz