Tetra Pak

http://www.tetrapak.com/pk

External Analysis

THREATS OF NEW ENTRANTS

Major players in the industry are well-established firms and have technological advancement
from their experience. The paper industry is already in crisis due to ruthless imports and
unfavorable government policies. However we can still conclude that there is a threat of new
entrants as the overall demand of paper is more as compared to its supply. This is evident from
the high import of paper in Pakistan.

THREAT FROM EXISTING RIVALRY

Company is involved in using all its paper and board production for its packaging division no
other firm is involved in a similar whole process chain. Quality in such an integrated set-up is a
competitive advantage, which faces no competition from the existing players. The industry is in
troubled waters as most existing paper and board mills are closed down due to financial reasons
and lowering of tariffs for imported paper and board from 145 % some 10 years ago to nearly
45% at present. There is therefore rivalry with imported paper and board so that to protect ones
standing it has to continuously upgrade its production facilities and be better cost efficient

THREAT OF SUBSTITUTES
The raw material for the paper and board mill constitutes a major portion of imported materials
for maintaining quality, as wood pulp is not obtained locally. A substitute for paper or a decrease
in use of paper could affect this industry. Substitutes could be use of electronic means rather than
printing paper and use of polythene, which could be biodegradable for packing or more emphasis
on the use of recycled paper.

BARGAINING POWER OF SUPPLIERS

A major constituent of the paper industry, wood pulp, is not locally available and thus has to be
imported from USA, Canada, Indonesia, Chile, Dubai etc. Wheat straw is easily available in the
market as well as sugarcane and cotton linter. These are usually a by-product waste of the sugar
industry and textile industries and therefore do not bargain a competitive situation. Being close to
these sources is the only advantage that can be availed and is, by Packages Limited.

BARGAINING POWER OF CUSTOMER

The bargaining power of the customer regarding this industry is not very much high. Local
production cannot sustain its present status if major turnarounds are not undertaken to improve
productivity and reduce wastage. Imported paper is available in large amounts yet supply does
not exceed demand and all that is available in the market is readily consumed. The two customer
segments existing are the consumer and industrial buyers. In the consumer segment offset
printing and books require the availability of paper to be used whether of good quality or bad.
Those in this segment that ask high quality opt to use imported paper. In the industrial segment
packing paper, board paper, craft paper is produced far less than the demand. And specifically for
Packages, demand is high, thus the bargaining power of the customers is almost negligible.

Internal Analysis
Competitive Advantage
Packages limited offering packaging solutions and other products to its customers under one
roof. Small or medium level companies only offering either packaging solutions or printing
while packages limited offering all of these under one roof. Other competitive advantage of
Packages limited includes:
Loyal customers
Core competencies:
High goodwill and brand name
Supply Chain (Backward
High Tech machinery
Integration)
Infrastructure
Knowledge and Intellects
Human Resource
Power Plant
R&D
ERP & CIM
Customized products
 Backward Integration
Association with worlds best companies
Control over suppliers and distributors

Internal Factor Evaluation Matrix

Strengths
Key Internal Factors Weight Rating Weighted Score
Own Power Plant 0.05 4 0.2
Best Location 0.02 3 0.06
Goodwill 0.05 4 0.2
Customer loyalty 0.10 4 0.4
High Tech Machinery 0.15 4 0.6
CIM 0.10 4 0.4
ERP 0.02 3 0.06
Marketing and Sales 0.02 2 0.04
Services 0.05 3 0.15
R&D 0.10 4 0.4
Knowledge & 0.02 1 0.2
Intellects
Backward 0.10 4 0.4
Integration
Certifications and 0.05 3 0.15
Rewards
Weaknesses
Finance 0.10 1 0.1
Production facility 0.05 2 0.1
Inflexible
Information flow 0.02 1 0.02
B/W regional office

Total 1.00 3.48

Strength:
Seven layer packaging coating process.
Environmentally friendly packaging.
R&D in production of packaging process
Training and development programs for employees
High quality and Standardize material usage.
Tetra Pak's strength in plant engineering and project management is reflected by 50 years of
experience in designing food processing and packaging plants
Recycling of tetra Pak aseptic cartons
Strong business relationship with their partners.
R & D
Specific, knowledgeable and experienced engineers

Supply chain initiatives like JIT (Just-In-Time), ECR (Efficient Customer Response) and VMI
(Vendor Managed Inventory) driven by organizations to make their supply chains more
responsive and keep all the supply chain members in tune with the end customer demand, both in
terms of the product and its volumes

has its own Paper & Board Mill. They are producing all types of paper and board packaging.
They are having the best positive image & reputation for quality packaging products in Pakistan.
They have ISO 9001 quality assurance certificate. In compliance with worldwide standards, the
ISO-9001 certificate has been awarded to Flexible line and Carton line of Packaging
division

Opportunities:

Consumption of milk and other liquid products is expected to increase from 15-25% locally.
Packaged milk consumption expected to reach 5-10% increase domestically.
Increase their product line
Environmental issues
Export policies: there are only dairy hubs in Bangladesh, can export to them

Consumers and companies are becoming more conscious about the quality of the products
and Packages is quality leader in Pakistans packaging industry and having continuous
development plans for quality. So in near future it can bring huge revenues in the Packages.
Demand for flexible packaging is increasing day by day.

Weaknesses:

Production facility is inflexible, in a sense that it is unable to operate for small orders due to
increased fixed cost. In this way, a lot of small orders are rejected. charge high prices for its
quality products but in this way, the companies who are not financially sound or in development
stage cant have access to the Packages.

High packaging prices for local manufacturers.

information Flow between regional offices
Finance Production facility inflexible
No internal hiring and Human Errors contributes significantly to excessive waste and quality
problems.

Threats:
 A new competitor in home market.
Competitors have superior access to channels of distribution.
Taxation is introduced on product or service.
Routine becomes become standardize procedures Economic instability and inflation