NUST Business School

Competitive Analysis of Fauji Fertilizer Company

Submitted to;
Ms. Ayesha Pervaiz
Submitted by;
Muhammad Ali Khan Niazi, Mamoon Sabri, Urida Ali, Hassan
Mahmood & Ahmad Mohsin
BBA-A 2k15

Date:25thApril, 2019
Contents
BBA-A 2k15 ................................................................................................................................................... 0
Literature review........................................................................................................................................... 2
Industry Analysis ........................................................................................................................................... 3
Threat of Substitutes................................................................................................................................. 5
Barriers to Entry ........................................................................................................................................ 5
Bargaining Power of Suppliers .................................................................................................................. 5
Bargaining power of Buyers ...................................................................................................................... 6
Competitive Rivalry ................................................................................................................................... 6
Corporate Competitive Analysis ................................................................................................................... 8
Personality & Strategic Issues ................................................................................................................... 8
Financial Analysis ...................................................................................................................................... 9
Business Mix............................................................................................................................................ 12
Analyzing Competitive Business Units/Divisions ........................................................................................ 12
Marketing & Sales ................................................................................................................................... 13
Agribusiness ............................................................................................................................................ 14
Competitive Analysis Summary .................................................................................................................. 15
How will FFC Compete? .......................................................................................................................... 15
Value Chain Analysis ............................................................................................................................... 16
FFC’s Predicted Product Strategies ......................................................................................................... 17
Creating an Intelligence Gathering System for Engro ............................................................................. 18
Benchmarking Fauji Fertilizer Company ................................................................................................. 19
Applying the Benchmarks ....................................................................................................................... 20
Synergy Analysis ...................................................................................................................................... 21
Conclusion and Recommendations ........................................................................................................ 22
References .................................................................................................................................................. 26
Appendix ..................................................................................................................................................... 27
Appendix 1: ............................................................................................................................................. 27
Appendix 2: ............................................................................................................................................. 34
Literature review

Competitive intelligence is the concept of putting in effort by the company, in order to get useful
information about another competitive firm, industry, competitive products or the external
business environment. This information can then be used to benchmark your company against that
of the competitor, develop a competitive strategy and build on your competitive advantage.

Information can be obtained in a number of ways, for example, by monitoring a firm’s social media
posts to gauge their strategic moves and act accordingly beforehand. The sources of information
have to be both legitimate and legal. For example, CI can be collected by talking to credible contact
points in the competitor’s company etc.

With competitive intelligence comes competitive analysis, which is the identification of current
and future, potential competitors in order to be strategically adept. Every company operates in a
certain business environment. No company can exist alone therefore it needs to understand the
competitive landscape, so it can take advantage of potential opportunities and counteract threats.
Looking at competitors current and future objectives, current resources and strategies, an estimate
can be made about which future strategic direction they might be inclined to take.

A detailed and well thought out competitor analysis enables an organization to be aware of its
direct competition, devise competitive strategies, estimate market trends and patterns, understand
and predict the demand and supply patterns and identify possible areas where strength needs to be
built to sustain the competitive advantage, long term.

Several tools and techniques can be used in this regard which will be discussed further in the report.
Information gathered by this mechanism is then fed back into the organization to be used
collectively in the process of strategy development. This step requires intelligent use of the
extracted information, in a way that compliments the firm’s core competency and is relevant to its
area of operations.
Industry Analysis

An industry, by definition, is a cluster of firms working towards targeting the same audience with
some similar product offerings. In an industry, the nature of the competition needs to be gauged
by looking at the number of sellers in the industry and the degree of product differentiation that
exists. An industry can be a monopolistic, oligopolistic, and perfectly competitive.

The industry that this report is focused on is the fertilizer industry of Pakistan. Pakistan is an
agriculture based country which makes the need for fertilizers a never ending scenario. Historical
evidence is available to back up the argument that the demand for fertilizers has always been higher
than the supply provided, keeping in mind the amount that is exported. Same is the case today,
although a few advancements have been made that have helped counteract the issue. These include
technology upgradations, new entrants and expanding production facilities. All of this has led to
an increased capacity of 6 million tons/year. With this new development, the industry has been
able to satisfy domestic demand successfully since the past few years.

But alongside that, local demand has also increased rapidly due to factors such as increased
awareness of the Pakistani farmer about the need and significance of using fertilizers. Also, the
increase in the net income of the farmers who now can afford these products because of money
that they save on subsidized commodities. There is more rural credit available to farmers to finance
their fertilizer spending.

Currently, there are four major producers of fertilizer in the industry that include Fauji Fertilizer,
Engro fertilizer, Dawood Hercules and Fatima fertilizer. These companies are mosly consolidated
in the Punjab and Sindh region wih Fauji dominating in Punjab. This information is sufficient to
tell us that the fertilizer industry is an oligopoly. As of FY 2018, Fauji fertilizer is still the leader
of the industry with a 53% market share, followed by Engro at 34%, Fatima at 11% and Agritech
at 2%.

Alongside that, in the financial report FY18, Engro has seen a considerable increase in Urea sales
from 1739 kT to 1986kT. Fauji fertilizer has contributed 44% to the Pakistani urea production last
year. Also it has reported to have made the highest sales in 2018, with 2nd highest production of
Sona Urea. This increase in production and sales can be attributed to a new market trend that is
being witnessed at present. Media has uncovered that the Chinese are showing keen interest in
starting up fertilizer units and investing in the fertilizer industry of Pakistan. The Chinese
government has been reported to have promised loans and incentives to Chinese firms hoping to
invest in this lucrative sector. One rumor has it that the Chinese are aiming to build a fertilizer
plant in Pakistan, with a production capacity of 800,000 tons per annum.

In addition to increase in sales, the industry has experienced a decrease in inventory levels of urea
considerably. Levels have been down by 6%, translating into 5.17 million tons and there is a
consistent monthly downfall since 2017. This trend has been witnessed due to the fact that farmers
have shrunken their production in winters. Also, there is always a strong demand in Rabi season
which clears up supplies.

By looking at the competitive landscape of the industry, a lot can be learned about the dynamics
that exist and govern this area of business. In order to asses that, we are using the Porter’s five
forces model.

Threat of Substitutes

Fertilizers, in today’s world of technology and innovation, have no real substitutes. In an agrarian
country like Pakistan, taking care of plants and getting good yields is crucial. The high nitrogen
content in fertilizers make it hard to find substitutes that would yield the same results. Farmers
have used fish emulsions and composted manure in the past but that is no longer the case.
Therefore, threat of substitutes is not very high.

Barriers to Entry

This factor is considerably high in the fertilizer industry mainly because setting up a fertilizer plant
cannot be done overnight. It is a lengthy process that requires a lot of investment and know how.
Firms do not see positive cash flows for a long time before they finally get some return on their
investment. Therefore, it is hard for firms to enter into this industry. But keeping in mind the
amount of Chinese investment coming into the country, with CPEC, these barriers might be
lowered in terms of legal relaxations by the government in favor of foreign investment.

Bargaining Power of Suppliers

Fertilizer production mainly requires natural gas or methane as a raw material. This demand is
satisfied by the domestic gas industry. But recently, due to natural gas shortages in the country and
increased consumption of gas by power generation units, the supply to the fertilizer sector has been
compromised. This has affected the industry badly. Therefore, considering that gas is the main
ingredient in this recipe, the power of the suppliers is considerably high.
Bargaining power of Buyers

The end customers of fertilizers are the farmers who use them on their crops. Farmers have limited
income. So if the fertilizers are priced very high, farmers are not in a position to negotiate or buy
any eventually. Therefore, buyers don’t really have a bargaining power in this industry.

Competitive Rivalry

The demand for fertilizers is very high. This leads to competition but not a very fierce one. It is
safe to say that the competitive landscape is healthy. The two major players are Fauji and Engro,
both of who are trying to expand production capacities in order to maintain and grow market share.

Another commonly used tool to conduct an industry wide analysis is the SWOT analysis for an
industry. The strengths, weaknesses, opportunities and threats are listed in the able below.

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

Strong local Demand exceeds Increasing quality Unavailability of

demand capacity availability can lead to better natural gas due to
customer retention shortages

Demand abroad, Lack of knowledge Educating farmers on Import of fertilizer

for exports available to farmers the proper use of urea due to unmet
and other fertilizers demand and lower
price than domestic
product

Financial stability Technological Government support The use of bio

of the firms in the backwardness of the in the fertilizer sector fertilizer due to
industry sector environmental
degradation done
 by factory
disposals

Agriculture based Exploitation of Foreign investment Dominance of

economy of farmers at the hands due to CPEC Chinese firms on
Pakistan of black markets local firms

Availability of Technological Increase in prices

cheap labor upgradation due to of gas and fuel
Chinese investment making it
expensive for the
poor farmer

Local competition
with Chinese firms
can lead to better
productivity

Pakistani fertilizer industry can flourish immensely if the government continues to play an
important role in form of subsidies on exports and fuel prices. Important decisions need to be taken
regarding GST and GIDC (Gas Infrastructure Development Cess). As of January 2019, the
government has decided to waive off 50% of the GIDC to textile, CNG and fertilizer sector. 200
billion rupees were waived off and each sector had to pay 80 billion rupees. This development had
led to a drop in the price of urea considerably, making it affordable to the local farmer.

Therefore, if such strategic moves are consistently taken by the government, the fertilizer industry
can prosper for a long time, proving to be a strong asset for the Pakistani economy in the long run.
Corporate Competitive Analysis

Personality & Strategic Issues

Fauji Fertilizer Company is a company with a rather conservative background in terms of

ownership but, it is a company that has not been so conservative in terms of actions.

The company has always been proactive in exploiting market gaps and has been able to establish
its brand of Sona Urea fertilizer in the market well, even though Engro fertilizer had been in the
market for longer. FFC has shown an ability to think ahead and an ability to read the market. It has
also shown a willingness to introduce new products into the Pakistani market, showing that it is a
company willing to take risks. This is evidenced by its being the first brand in Pakistan to introduce
DAP Fertilizer.

Taking the risk of bringing the fertilizer and establishing manufacturing infrastructure for a product
not yet seen to be successful in this market, shows that the company is able to think ahead and
make risky investments. Making the product a success, shows that the company has resilience and
is able to make solid ventures. The company has also shown this ability by being the first to export
fertilizer from Pakistan and becoming a leader at it.

The company background is of being primarily owned by the Army Welfare Trust. This compels
the company to hire retired Army personnel. This brings a slightly conservative culture to the
company while also disrupting the flow of the company. Thus, the personality of the company is
one of a mixture of conservatism and good decision making when it comes to taking risks. This
has been a healthy mix so far.

In terms of strategic risks, the company is facing the same risks as Engro. Firstly, a key strategic
problem is that the company has to face up to the fact that Pakistan is experiencing a shortage of
natural gas which is key for the production of Urea fertilizer.

This is a huge problem as FFC is established in Goth Machi and Mirpur Mathelo in Sindh primarily
due to the fact that those areas were home to Mari Petroleum Company and were rich in natural
gas deposits. However, due to wells drying up the company might have to move operations or
import gas.This is a problem for Engro as well, as Engro is based in the same area.
In addition, the coming Chinese owned fertilizer initiatives might also hurt both companies as the
Chinese are looking to establish a massive facility in the country that would counter the companies
influence.

One problem for FFC which is unique to the company is that FFC has to deal with constant
upheaval in its management as former army employees are given short term contracts to work in
FFC and this harms the continuity of management. This allows people with know how to exit and
brings in fresh people to work in the company, harming the company’s overall strategic growth.

Financial Analysis

In order to compare the financial performance of Engro Fertilizer and Fauji Fertilizer we shall be
looking at some key ratios for both companies. We shall be looking at the Return on Assets, The
profit margin and the Return on Equity. These are profitability related ratios and will provide us
with key insight into how strong each company is:

The Return on Assets for FFC is 9.18% while for Engro it is 14.60%. This shows that Engro might
be using its assets better than FFC and is earning greater profits with less of an investment on
assets

The profit margin of FFC is 15.02%, while for Engro it is 25.20%. This shows that Engro is able
to realize more profits from sales compared to FFC. This maybe because FFC uses a lot of its
revenue in after sales services which Engro does not use as much.

This may benefit Engro in term of cash availability but the after sales services provided by FFC
give them a key strength when it comes to farmers.

The Return on Equity for FFC is 28.63% compared to Engro which is 38.77% as per sctrades. This
shows that Engro is better at rewarding shareholders and this makes it a more attractive investment
for most people.

Both company’s ratios also show that both are in very good health. The industry is thus booming
and both companies are wildly profitable. They are in a strong position financially although, in
terms of profitability, Engro is currently better.
Strategic Analysis

In order to do a strategic analysis, we will be looking at the internal and external factors affecting
FFC. Internal analysis will be done by applying SWOT and external will be done by applying
PESTL analysis

SWOT Analysis:

Strengths

FFC has strong infrastructure and state of the art facilities, allowing for the manufacture of high
quality urea and other forms of fertilizer. FFC is also a well-known and very well respected brand.
Its main strength lies in its strong dealership network and its excellent after sales services. FFC
also has extremely capable staff that it uses to provide technical services to other companies for
extra revenue.

Weakness

Compared to Engro, FFC is weak in terms of its advertising campaigns in Pakistan. Since its focus
is on selling through personal relationships and as such it hasn’t focused on good advertising
campaigns.

It also has constant upheaval when it comes to its middle and sometimes its upper management as
army personnel are brought in and moved out due to it being owned by army welfare trust.

Opportunities

Opportunities for FFC abroad are growing as it continues to try to grow its export base. FFC
exports fertilizer to Afghanistan and places farther off like the continent of Africa. Due to domestic
demand tapering off these places, where demand is still growing are huge opportunities.

Threats

Threats for the company come in many forms. The incoming Chinese competition, which is tied
to CPEC is a huge threat. This along with the shortage of natural gas and the lack of an alternate
source in the short to medium term spells trouble for the company.
PESTL Analysis:

Political

Politically the company has no real issues. The company is known as a great brand name and one
of the highest tax paying companies in Pakistan. The emphasis in the country is on encouraging
the growth of Pakistan’s industry and in growing the countries food security. This will allow FFC
to sell more fertilizer as the government moves to boost agriculture. In addition, government
efforts to boost forex by increasing exports may help FFC export fertilizer.

Economic

The climate for FFC is economically uncertain as the Pakistani economy is not in a good place at
the moment. Fluctuating debt and liquidity levels as well as a constantly moving exchange rate
may harm exports as buyers in international market look to make sure they get the cheapest rates
for their purchase. The company could use some stability in the wider economy.

Social

FFC is a well looked upon brand in Pakistan. With its constant CSR programs and well trusted
brand the company has boosted its image and social standing. Initiatives like the Sona Welfare
Foundation. It has also won the UN Global Impact Best Sustainability Award, showing that it is
an environmentally responsible company. In addition, its research into farming and help towards
farmers has boosted its image.

Technological

The company is on the forefront of fertilizer manufacturing in Pakistan. FFC has equipment and
expertise brought in from abroad and used to create fertilizer. It also follows best practices in the
industry.

Legal

Currently, the company has no pressing legal issues that might affect its operations or that might
affect its long term future.
Business Mix

FFC is a company whose main business is providing fertilizer. It specializes in producing and
selling fertilizer to the Pakistani farmer and abroad. The main product is Sona Urea fertilizer but
FFC also sells fertilizer based products for use in industry all over Pakistan.

Sona Urea, DAP, SOP, MOP, Sona Boron and Sona Zinc are some of the fertilizers based on
different compounds that FFC sells.

FFC is also a massive provider of advisory and research services for farmers, especially through
its Kashtgar desk. The company is involved in advising farmers through quarterly newsletters,
advisors and other different methods, such as PTV documentaries and brochures and crop specific
reading material written in local languages. This is a huge part of the FFC product and helps to
boost Urea sales as well. The Company is providing quality farm advisory services all over the
country through its 5 Farm Advisory Centers and Regional Agri. Services Officers. Farm Advisory
Centers are located at Hassan Abdal, Sahiwal, Multan, Bahawalpur & Sukkur.

The company also provides engineering and technical design services on a small scale. Its
engineers have extensive experience in such matters from working on its own plant and as such
are able to offer these services to outsiders for a price. Primarily however, FFC uses these services
for sale very rarely and only when it has staff available for such projects.

Analyzing Competitive Business Units/Divisions

The main units FFC and Engro differ in is their marketing and sales divisions. Both companies lie
at the very top in terms of manufacturing, with both being well-known producers of excellent
products. However, where the companies differ is in how they sell their products to their
customers. FFC, although an older brand, is more widespread and more used in Punjab and Sindh.
This is not a problem in the short term as demand has outstripped supply however, in the long term
this maybe a problem. Looking at the Marketing and Agribusiness department of FFC will give a
better idea of how FFC is able to sell more fertilizer in Pakistan.
Marketing & Sales

The marketing and sales of FFC are handled by FFC Marketing Group which was established in
1978 to market products for FFC. The sales department of FFC is broken up into multiple regions.
The company has a Main office in Lahore and a separate sales department for different regions.
Primarily, sales are focused in Punjab and Sindh for the company. Most of the sales are done
through dealers.

In order to monitor the employees and to make sure sales targets are being met, the company holds
monthly sales meetings. In these meetings the company monitors performance, monitors
competitors and discusses objectives with General Manager Marketing. It also allocates rewards
and approves expenses. An annual meeting of all divisions is also held.

The company currently has 3 zones, 14 regions and over 3700 dealers spread across the whole of
Pakistan. This allows the company to have a wide footprint and to supply urea and other fertilizer
to regions all over Pakistan.

However, the key selling point for FFC lies in its marketing program. The company does not
believe it sells a product, but rather the company believes that it sells a program. This program
includes not just fertilizer but also services such as research into crops and the selling of education
programs and information to farmers about crops.

FFC has been known to use advertising to get its message across to farmers. In keeping with its
audience FFC uses traditional methods more often. As such, radio, TV and newspapers are used
extensively. The company uses channels like PTV to spread its message and even uses
documentaries on cotton and other crops to promote FFC Urea. These are displayed on widespread
channels such as PTV. Other mediums, such as the internet, are ignored as they are considered to
not be used by most farmers.

Although the company uses these mediums to deliver ad campaigns, its ads are not considered on
par with Engro. Instead the marketing for FFC is done through more effective channels that are
related to its agribusiness. This can be seen from the fact that Engro has won many awards for it’s
ad campaigns such as the Pakistan Advertisers Societies award for its “Aam Aadmi Nahin”
campaign, while FFC has not. FFC instead uses the links it creates through its agribusiness to
promote the sale of Sona fertilizer and create goodwill amongst all farmers.

As will be explained in the Agribusiness sector, FFC’s extensive investment in helping to educate
and research for farmers, has allowed it to create a trust amongst farmers and that gives it a core
marketing strength.

Agribusiness

FFC’s agribusiness department is the core strength that allows it to market Sona the most
effectively to its farmers. The primary goal of the Agribusiness dept. is to market the Sona
product to farmers by creating long term links and loyalty amongst farmers for FFC by providing
research and information that can help farmers in planting their crops.

FFC does this by using its 5 Farm Advisory Centers and Regional Agri. Services Officers. Farm
Advisory Centers are located at Hassan Abdal, Sahiwal, Multan, Bahawalpur & Sukkur. Each
center has a team of four Agricultural Experts, providing diverse advisory services through crop
demonstrations, field days, farmer meetings, crop seminars and farm visits. All the centers are
fully equipped with modern sophisticated computerized Soil & Water Testing Laboratories and
high-tech extension equipment. Moreover, FFC has also established a micronutrient and plant
tissue analysis laboratory at Farm Advisory Centre, Sahiwal having Atomic Absorption
Spectrophotometer and other analytical instruments. Soil testing is a valuable tool to propagate
appropriate and balanced use of chemical fertilizers and to identify soil problems. Soil/water
samples are collected from farmers’ fields and analyzed in the laboratories. Fertilizer
recommendations & reclamation reports are developed on the basis of soil analysis and delivered
to the growers for the balanced use of fertilizer and to reclaim the soil. The soil/water testing and
micronutrient analysis facility is offered free of cost. This allows FFC to create great links with
the farmers and to create vital goodwill. In addition, like Google is in control of the internet by
being the gateway to the internet, this puts FFC in control of farmer’s agriculture by being their
gateway to the research into all things farming, allowing FFC to manipulate all the information
about farming that a farmer receives, giving them ample opportunity to market Sona fertilizer.
This can be further seen by the fact, as mentioned before, that FFC produces documentaries for
farmers to watch online and on TV. In addition, FFC produces a quarterly newsletter called ‘Zari
report’ in Urdu and in Sindhi for farmers. This contains season specific information regarding
crops, fruits, vegetables, improved agronomic practices and articles on agricultural issues.

In addition, brochures are published on wheat, cotton, maize, sugarcane, rice, oil seed, potato,
vegetable, mango, citrus, banana, guava, apple and many other crops and their cultivation. In a
sly turn FFC also publishes a fertilizer guidebook on all fertilizers used in the country,
illustrating their uses and this allows them to advise farmers to use Sona more often.

These strategies are a core strength for FFC and these departments provide the main selling point
for FFC to farmers. Engro has only now caught on to these methods. Launching and earning
plaudits for its ‘Rahbar Scheme’, which has aimed to educate farmers about water conservation
in 2015. However, Engro still lags far behind FFC in developing brand loyalty through other
services than simply selling fertilizer.

Competitive Analysis Summary

How will FFC Compete?
FFC’s point of competition seems to perpetually be angled towards non technologically
challenging, stable growth with their only revolutionary changes being on external product
production or manufacturing facilities side. One of the massive problems that their management
turnover gives is that internal change through process or cultural innovation is hard to achieve.
Furthermore, with the military background of so much of the middle management, they’re quite
rigid in terms of the culture that has been drilled into them for the military’s sake - which doesn’t
necessary let them fill the shoes of a corporate entity very well.

According to our sources, this makes it so FFC will always look to compete via long-term
relationships and brand image rather than relying on internal company policy. Their relationships
with farmers and favorable image has been built to allow them to do that, and they will continue
to exploit it.
Furthermore, FFC’s focus on entering the daily life of their targeted farmers is very evident -
they’re not looking to be flashy or perhaps even the most efficient. Their after sales service is just
trying to have them be within the farmer’s lives for much longer in order to make it unlikely that
their customers will switch. Many of the farmers they have a direct relationship with don’t have
huge amounts of access to information which makes them long term clients of Fauji when FFC is
the only one giving them continual after sales service.

This is the one place where FFC actually has a small competitive edge due to their military
personnel. Since a lot of the military people are forced to live in areas across different regions of
Pakistan, they’re also a lot more familiar with the culture of places across the country. Our source
told us that they also generally have some link to the areas they’ve been posted at in the past via
prior relationships. In rural agricultural areas, personal linkages and understanding of the culture
is incredibly important, as word of mouth is given more importance there than anything else.

This is one distinctive capability that is very difficult to exploit - Engro can almost never have a
system similar to this due to their fixed middle management who comes from a heavily corporate
background. Fauji seems to have found the key to making their after-sales service the most
effective one in lieu of their constantly changing management.

Value Chain Analysis

The value chain of both companies is incredibly similar - particularly due to the manufacturing
locations being as close by as they are. The major difference in value chains - as mentioned before
comes down to the post-sales servicing.

FFC’s value chain out on top massively in this department. The difference is visible even just by
going to each one’s website - and this is something that Engro itself feels lacking in massively.
Where Engro even makes it difficult to find their line of products online, FFC’s services are boldly
displayed alongside their fertilizer list. Not only are they providing farm advisory services, they’ve
been focusing largely on creating a huge amount of content for farmers.

One of their most important advantages within the value chain, is their toll free helpline. Every
one of the farmers who they’re reaching out to have functioning mobile phones which can dial in
to their helpline to seek assistance. Moreover, they’ve advertised their offices for expert opinion
effectively across their brochures, with offices and experts conveniently spaced across Punjab and
Sindh.

Where Engro has tried to differentiate themselves from Fauji lies in marketing for their products.
Engro’s advertising is much more widespread in forms of TV commercials, radio advertisements
etc. Where Fauji focuses almost purely on educational content, Engro is trying to position itself on
the basis of more traditional advertisements.

Beyond this, if we compare the product portfolio of engro to that of Fauji, Engro’s created a much
more diverse set of products for the local market. These products allow much more fine-tuning of
the crops in comparison to what Fauji’s fertilizers do. Engro has literally twice the number of
products as what Fauji manages to provide. This comes down to the additional resources Engro’s
put into market research and R&D based on new product development in collaboration with
different firms in America - particularly Niha Corporation.

The importance of the differences in value chains is not immediately evident within the Pakistani
market - because currently demand far outstrips the supply of fertilizer. However, this is likely to
change in the future.

FFC’s Predicted Product Strategies

From our gathered intelligence, FFC is not willing to invest into new product development. A lot
of this comes down to the amount of resources that need to be put into initially developing the
product, then the additional resources needed to be devoted to spreading the benefits of the product
are enormous. Instead, they’ve put more focus into development of their agribusiness side by a
significant amount.

Furthermore, due to their already low (comparatively) profit margins due to additional emphasis
being put on after sales services, FFC can’t try to change their pricing structure for their fertilizers
beyond marginal increases to cater to inflation, and general changes in taxation. Although you’d
imagine that they could try pricing their fertilizers higher for a higher margin due to the high
amount of services they provide, the threat of customer turnover is too high in a market where
there’s already risk of Chinese firms penetrating.
However, FFC’s projected to be launching a new marketing campaign - including a new
documentary on PTV and broadcast radio information show. Since Fauji’s campaigns are always
built around the kharif and rabi seasons in Pakistan, it’s safe to assume that it should be launched
in quarter three of the year.

As for their market development direction, Fauji is predicted to also explore the industrial usage
for their fertilizers in order to occupy niche markets as well. Given the Fauji Group’s tendency to
diversify into different markets, as well as FFC’s widespread introduction of non-farming related
services on their website, it’s quite likely that they’re looking to branch into industrial usage
markets for their fertilizers as well - including the pharmaceutical market, food processing market,
and plastic manufacturing market.

Whether or not this will come in the form of flanker brands, or whether FFC will just use their
existing products to sell in these B2B transactions will be very telling. From the size of the markets
and with how invested Fauji is in developing the farmer-side business, it seems unlikely that FFC
will be launching an entire flanker brand within this year. However, given that the Chinese plant
is going to be opened very soon (expected 2021-22), it wouldn’t be surprising to see FFC attempt
to launch a flanker brand to cater to industries which require chemicals present within their
fertilizers towards 2021-22, by which time gas supplies are expected to have stabilized more as
well.

Creating an Intelligence Gathering System for Engro

The good thing for gathering information on competitors within the fertilizer industry is how
dependent it is on macroeconomic factors. In practice, Engro doesn’t really need much more than
the baseline minimum of keeping crop and soil situations in mind in order to know what Fauji’s
intended strategy is going to be.

However, in order to construct a bigger system, there’s a few things they can do in order to keep a
closer eye on Fauji.

 Relationship with dealers

Fauji’s primary mode of distribution still comes through fertilizer dealers. Engro needs to
incentivize these dealers to keep them up to date with any changes that are coming through in
terms of customer perception towards FFC’s brands - as well as giving them regular updates on
quantity sold etc.

 Relationship with production houses

Engro already has a functional relationship with several marketing agencies, including Ogilvy,
Bonds Marketing and D’Hamidi. Agencies as large as these always have direct links to production
houses, companies and television channels. These links can be used to keep up to date with Fauji’s
planned marketing campaign launches. Channels like PTV are very open to agencies with planned
programs and documentaries that are going to be launched soon - this can be used to keep an eye
out for any changes in positioning that FFC might be attempting to pursue.

 Regular soil checks within areas of operation

The state of soil is incredibly important for fertilizer companies to market different fertilizer and
push different products forward in order to maintain some crop-cycle which would allow
replenishment of nutrients. By instating regular soil testing mechanisms in different districts where
FFC has a certain degree of dominance, Engro can predict the production of different products in
upcoming seasons and years.

 Regular surveys through PARC (Pakistan Agricultural Research Council)

Engro already has a significant relationship with PARC as a result of attempting to collaborate to
look for alternate cropping patterns within Sindh and Punjab. As PARC already has farmer survey
systems set up and in place, Engro should look to extend the relationship to include facilitation of
their own research to keep an eye out on farmer needs and trends. In a market as scientifically
driven as fertilizer, this may not tell them as much as other consumer markets in terms of product
changes etc. that Fauji is coming up with, but should be a nice weathercock to point them in a
general direction.

Benchmarking Fauji Fertilizer Company

Benchmarking must be done on two levels - customer perception and product efficacy. Seeing as
the fertilizer industry has largely experienced competitive convergence in the value chain leading
up to after sales analysis, the major one has to be customer perception - to be measured through
buying patterns and survey results.
Product efficacy is important for comparisons in fertilizer between both companies, since that’s
where Engro has a slight edge due to their diversified product portfolio. In order to maintain the
competitive gap and to keep checks and balances on how Fauji’s doing in their own product lines,
Engro needs to ensure that their premium products function more effectively.

Applying the Benchmarks

Customer Perception:
In order to measure customer perception Engro fertilizer will have to increase engagement with
farmers all over the country. Since Engro cannot currently compete with Fauji Fertilizer in that
area, due to Fauji having a head start in farmer relations Engro will need to invest large amounts
of time in developing these relations. Farmer perceptions cannot be measured online or through
the internet in any automated way. As such, Engro will have to use personal interviews and surveys
to see how they are perceived in the market compared to FFC’s Sona brand.

This information can then be condensed to measure certain metrics. These include, perceived
quality, brand recognition, brand awareness, fertilizer availability, company perception and the
reaction to the behavior of company personnel during education and other initiatives. These
metrics, although hard to obtain, will give a clear picture of how Engro is perceived next to FFC’s
Sona Urea and other fertilizer brands. This will allow the company to make key competitive
decisions. Most farmers are not able to obtain information too freely on the different types of
fertilizers. Since FFC is one of the main sources of their information on this topic, it is not
uncommon to see them favoring Sona and perceiving it to be better. Measuring these metrics will
allow Engro to see which areas its own brand is lacking in, where the farmer is uneducated about
its own brand and it will also allow the company to measure the success of any measures taken to
improve brand image.

Product Efficacy:
Engro’s product efficacy can be measured using some simple metrics. Simply measuring the
output of the farms before and after using Engro brand fertilizer and comparing to FFC brand
fertilizer will give a picture. In addition, monitoring chemical content of FFC products will allow
the company to make sure the fertilizers are at least comparable. This is not that big an issue for
Engro as most top quality fertilizer in the world have well known makeups and are not difficult to
adjust.
However, where Engro is lagging behind is the after sales service that Fauji provides as a product.
Engro may be able to benchmark and measure its own efforts against Fauji using methods similar
to what it used while measuring the success of its ‘Rahbar Scheme’, where it partnered with
farmers to educate them on water conservation. Measuring farmer perception (using customer
perception metrics) and farm output before and after the scheme was applied, for e.g. the company
recorded that farms under ‘Rahbar’ were 20% more productive, and then comparing these to
Fauji’s initiatives will allow Engro to measure how well they do in these areas. In addition,
measuring farmer engagement in education schemes provided by Engro and Fauji and amounts of
reading material bought from Fauji etc. will allow the company to measure how well their
initiatives are doing compared to FFC. In addition, number of calls made to research centres and
help lines like FFC’s ‘Kashtgar’ desk will allow Engro to see where the company lies in these key
services compared to FFC, which is the market leader.

These activities can be carried out by sales teams and divisions. Main statistical analysis can be
done by main offices and marketing branches. However, the research can be done by dealers, in a
partnership or by personal sellers. In addition, most of the personnel involved in educating farmers
can also do this research

Synergy Analysis
Given current macroeconomic issues, Fauji is not being paid off a significant amount of money
owed to them by the Pakistani government as a result of massively subsidized fertilizer. With the
accrued debt mounting higher and higher, it wouldn’t be surprising to see them attempt to ramp
up exports at slight cost to the local market in order to gain foreign exchange reserves once again.

This is particularly likely when we consider that China’s expected plant set up comes to 800,000
tonnes of production a year - a massive number considering that total production capacity is
considered to be around 6 million tonnes a year in Pakistan across multiple players. Seeing as
China’s price of debt is going to be lower than most companies as it is, should Fauji choose to try
and expand their operations through acquisition or through direct expansion, they’re going to need
a lot of capital reserves in order to do so. However, given that they’ve had over 20 billion rupees
invested within 2018 after saving up cash in 2017, it’s understood that much of the money is being
funnelled into Africa for a plant that they’re trying to set up there.
With their credit lines stretched thin as is (due to short term borrowings of 28bn rupees), it’s
unlikely that they’re looking to make strategic moves within Pakistan in the near future. The
process of building up foreign reserves once again after this much investment into different areas
is necessary, thus their goals are going to remain export-focused.

The important factor to keep in mind is also that there’s evidence to say that Pakistan is likely to
discover gas reservoirs in the near future, making it so that fertilizer companies have opportunity
to expand outwardly even further, and ramp up production capacity to a point where they are all
ready to export even heavier amounts, Fauji may be looking to invest further into power resources
in the future - a theory supported more by their 1.6bn rupee investment into the Thar Power Plant
in 2018. With the plant expected to finish production by early 2021, that should be around the time
where Fauji wants to have their own outwards expansion of production set up aptly as well.

Overall, it’s unlikely that FFC aims to have a merger with another company within the fertilizer
space, but given their partial ownership of Askari bank which affords them with significant benefit
in terms of cost of debt, it’s possible that one of the other major players who do not own a bank
but are also looking to aggressively expand outwardly would be interested in the future.

Although very unlikely, the Fatima Fertilizer group - which is currently attempting to invest into
setting up a power plant as well, comes to mind for a potential merger in the future. This would
allow them to have the additional power, combined finances, and monetary support to create a
powerhouse of fertilizer production within Asia and Africa. However, given the financial presence
of the Fatima group as well as differences in culture with the heavily military focused FFC, it’s a
little bit unlikely that this happens unless threat of Chinese dominance rises by a significant
amount.

Conclusion and Recommendations

Ultimately, FFC is looking to raise its head and be a global powerhouse within the African, and
Asian markets. While doing so, the amount of investment they can put into development internal
to Pakistan is significantly more limited than what the Engro group can potentially put forward.

With Engro already being in the lead as far as product quality and diversification goes, they also
potentially have a window of opportunity to exploit the comparatively limited amount of capital
that can potentially be invested by Fauji. This is where our recommendations come into play.
Engro’s in a position where they’re trying to negate Fauji’s loyalty via different educational
programs of their own. One key difference between both their programs, is that Engro is carrying
theirs out in partnership with different entities including USAID, and the European Union via
various embassies and consulates. This makes it so that Engro’s position of profitability for their
product is substantially higher as discussed earlier.

Engro’s power lies in two factors: their higher profit margins and additional ability to create
partnerships with major brands. Due to FFC’s military affiliation, many diplomatic entities hesitate
to create direct partnerships with them for major campaigns in comparison to a privately owned
group without such affiliations like Engro.

This, combined with Engro’s current partnership with various governmental agencies makes it so
they are in a place where they could very quickly catapult themselves to the forefront of the
Pakistani market.

One of the major bottlenecks within producing more fertilizer, as mentioned before, is gas. Since
there’s been problems in gas supply, alternatives have been looked at. LPG is one that was brought
up as a viable alternative within FFC around the 2010 LPG scandal where they were looking to
import LNG via a partnership with Vitol, but it was dismissed since it reduced their profit margins
by too much. The view is still shared to date despite significant consideration given time and time
again.

However, seeing as Engro’s profit margin is a whole 10% higher, the use of LPG to ramp up
production in order to cater to the growing export and local market on an immediate basis is much
more feasible. Instead of going the Fauji route and trying to open up new plants in different regions
which have ample gas supplies such as Africa, Engro has the option of importing LPG in order to
ramp up production as well.

Furthermore, currently Fauji is the biggest exporter of fertilizer within the company. However,
this has nothing to do with their product quality etc. This simply comes down to them having
higher production capacity - which, using LPG, Engro could overcome as well. Additionally, due
to Engro’s already present highly-diversified line of fertilizers and relationships with American
research firms for use of their patents, they are even better suited to import specific to different
countries - compared to FFC only really exporting to Afghanistan - which have different
requirements for their soil.

Finally, using Engro’s capability of being an active private company is also important. One area
where Engro has significantly higher ability to form partnerships is that they do not have partial
ownership in a bank. Despite this being a negative in many ways, one way where it’s a huge bonus
to them, is that they do not have any cannibalization of products by helping promote microfinance.

This is already being pursued by them via partnership with Bank Alfalah signed in 2018 to promote
microfinancing options within rural areas. However, seeing as Jazz is trying to aggressively market
their mobile banking services within those areas, it would be very beneficial for Engro to attempt
to partner with the Jazz Bakhabar Kissan program, which is used by Jazz to promote crop
awareness, fertilizer awareness etc. within farmers.

This works on two different dimensions:

1. It helps combat FFC’s perceptual gap by having continual relationship programs similar to
what they do, without having to build up an entire network themselves. With Jazz having
over a million farmers underneath their ambit as it is, there’s already a massive customer
base to work with.
2. It helps promote financing ability to sell more of the premium fertilizer brands that they’re
attempting to introduce to Pakistan, as well as more of the brands that have specialized
packaging for small acreage farmers to encourage farmers of the sort as well. This,
combined with their numerous other programs, would allow them to edge FFC out while
keeping their costs low due to most of the infrastructure development being done through
partnership with another company

At the same time, if Engro manages to succeed with this partnership, another vital fact to keep in
mind is that Jazz is the only Telco with a sizable farmer program which isn’t directly fully funded
by the government (in comparison to Telenor’s mobile agri program) and so they have much more
freedom to create partnerships and linkages with companies like Engro. An exclusive alliance
would make this a massive distinctive capability for Engro too.
Overall, Engro has to strategically exploit the fact that FFC is unlikely to be able to be fully
invested within the local market given how much investment they’re trying to put in abroad.
Should Engro want to accelerate growth and try taking the top spot, now would be the time.
References
Shopify. 2019. Competitive Intelligence Definition - What is Competitive Intelligence.
[ONLINE] Available at: https://www.shopify.com/encyclopedia/competitive-intelligence.
[Accessed 25 April 2019].
Competitor Analysis - Meaning, Objectives and Significance. 2019. Competitor Analysis -
Meaning, Objectives and Significance. [ONLINE] Available
at: https://www.managementstudyguide.com/competitor-analysis.htm. [Accessed 25 April 2019].
Business Recorder. 2019. Fertilizer industry of Pakistan | Business Recorder. [ONLINE]
Available at: https://fp.brecorder.com/2018/07/20180708388748/. [Accessed 25 April 2019].
Pakistan & Gulf Economist. 2019. Reversing fortune of fertilizer sector - Pakistan & Gulf
Economist. [ONLINE] Available at: http://www.pakistaneconomist.com/2018/01/08/reversing-
fortune-fertilizer-sector/. [Accessed 25 April 2019].
Appendix
Appendix 1:
Interview of Asif Tajik. Senior VP Manufacturing for Engro Fertilizer Company

Semi structured interview to probe the interviewee and catch his words in order to extract in
depth information about the company and its products, competencies and strategies.

Q. WHAT DO YOU FEEL IS YOUR COMPANY'S CORE STRENGTH?

I think our core strength will definitely be the quality of the products we provide, the excellency
and the stan33dards that we have set, defines our core competency. It’s been more than 60 years
since we are in the business, and we have never compromised on our quality, we have more than
satisfied customers and that is our most important strength, apart from that we have really
excelled in promoting our product, we have seen over the years that our marketing campaigns
have been really affective, we have been successful in attracting more and more customer. Also
our marketing campaigns have won many awards in recent years, this also shows that product
promotion is our main strength as-well.

Q. WHAT SETS YOU APART FROM THE COMPETITION?

Our brand name gives us advantage over the competition, we are the oldest ones in the fertilizer
business and that is still a big advantage. Our brand name has been bestowed in the hearts of our
customers who are loyal to us, we have customers who are tied to us since so many years, a
whole generation has passed on our brand name to the next one, and that’s because people trust
us, our customers trust the brand name because they know what quality comes with it. Apart
from the brand name, the names of our quality products also stand out in the market, we have a
variety of fertilizer products, each having a different name and every name has something special
associated to it by our customers, this really sets us apart from the competition. In recent years
we have won many brand of the year awards and this clearly illustrates the strength our brand
name possesses.

Q. DO YOU PERFORM REGULAR ANALYSIS ON WHAT COMPETITION IS

DOING?
We do a semi regular analysis on what our competition is doing, like every other business we
would also want to know what our competitor is doing and what new strategies it is developing
or which new markets is the competitor targeting, this is key for us as we are constantly
jockeying for market position with well-known customers. To stay ahead of our competitor and
to know its every move we perform analysis on a semi regular basis, I have mentioned ‘semi
regular’ here because until recent years, we have had a surplus of demand so we are not really
concerned about the competition, that’s why we have a competitor analysis performed on and off
but not regularly

Q WHAT DO YOU FEEL IS YOUR COMPETITORS CORE STRENGTH?

Fauji fertilizer’s core strength in my point of view is their production and dealership network,
having a vast supply network makes it easier for them to spread and establish themselves more,
also their production network is strong which makes sure their product is never out of the
market. Apart from that their after sales service is also something which should be appreciated,
they make sure they see through their customer well and cater to their needs and problems even
after the product is sold, we should learn from their core strengths, even though we are not
threatened by them, but room for improvement is always there and the learning process should
never end, that’s how you succeed.

Q. WHAT DO YOU DO TO IMPROVE AND MONITOR PERFORMANCE?

A lot is done to improve and monitor performance as I mentioned earlier that room for
improvement is always there, and for that we have monthly meetings in which we discuss new
agendas and check how much of we have met the previous goals and agendas successfully, most
importantly we follow the six sigma method of constant monitoring of performance. Six sigma
method helps us in target setting and then later achieving those targets in sales, also it is useful in
managing time and reducing cycle time which gives us advantage. Strategic planning is also
done through six sigma method and this method in strengthening our supply chain network.

Apart from using the six sigma method we continuously monitor farmer’s reaction to our
different ad campaigns and new products, this helps us in improving constantly, by doing this we
get to know what our customer is looking for and what has really satisfied him.

Q. HOW DO YOU TARGET YOUR CUSTOMERS?

Our main customers are the farmers. Although, we sell from dealers we have recognized the
need to analyze farmer behavior. FFC was ahead of us but for the last 4 years we have been
giving similar education schemes through ‘Rahbar Campaign” for water conservation and have
produced great results with 20% greater yield etc.

This allows us to recognize customers and we run ads through traditional channels such as radio,
newspaper etc. as our farmers are able to access those. Our as have been really successful in
capturing more customer, as recent times have shown us that our marketing campaign through
different channels have been really effcective and famers show a really positive response to our
ad campaigns. Also now a days technology is spreading like wild fire and now everyone even in
rural areas have access to cell phones and some even have access to internet aswell, so sms
marketing also comes in handy here, as more useful information is effectively delivered through
it in a short span of time.

Q. HOW DO YOU RETAIN YOUR CUSTOMERS?

We have loyal and satisfied customers and that is mainly because of our brand name, we retain
our customers by emphasizing on quality of Engro Urea and other products. We do not
compromise on the quality of our products which we are delivering for so long now and that is
only why our customers do not leave us because they know what quality of crops our product
will provide with an increase in the yield of the product as well. Our Urea is well known and
recognized being one of the oldest brands and also we have received many excellency award in
recent years, which again plays a vital part in not only retaining our customers but also capturing
new ones.

Q. DO YOU CONDUCT RESEARCH BEFORE LAUNCHING PRODUCTS?

Research is very important before launching a new product, the company should have a fair
knowledge of what the market is demanding and whether the new product will create a
noticeable difference amongst the choices of the customers or everything will go in vain, to
prevent huge losses and to be more efficient research is very important, we learnt this the hard
way as in the past we have been guilty of lagging behind others in launching new products such
as DAP, but since we have fewer production facility we have to be careful. Careful, because we
have a few production facilities, we cannot produce everything at all the times so there is a
choice which has to be pondered upon carefully. This is why we first monitored FFC and used
them to see if market reacted well to their introduction of product and after seeing a visible
reaction we launched DAP.

Q. SO YOU SPEND ON R&D TO DEVELOP INNOVATIVE PRODUCTS?

Instead of spending majorly on R&D to develop innovative products, spending on R&D to

improve existing products is more appreciated. We do not spend on developing innovative
products because we look abroad to find new products, which makes it easier for us to introduce
something new in the Pakistani market, obviously after carefully shaping the product according
to the environment and the needs of the customer. Of course R&D is there but it works only to
improve existing products but most new products are imported from abroad with the knowhow.

Q. DO YOU HAVE ANY NEW PRODUCTS IN YOUR STREAM?

No currently we are not looking to introduce something new in the market as first of all we don’t
think there is an immediate need of something new and different, secondly there is a problem of
shortage of gas, we are dealing with that problem because shortage of gas is a serious problem
and Engro is in a tough spot because of it.

Lastly CPEC is bringing in the advantage of many businesses in the country but some of it will
be a threat to us because there will be an introduction of Chinese fertilizer plants in near future
which are far more ahead of us in production systems, machinery, quality and cost, so the
immediate requirement is to solidify current dealership networks and customer relationships and
cover gaps, before the Chinese brand comes in Pakistan, Engro should be ready to meet the
challenges which the Chinese plants will bring and should work hard to cover existing gaps and
strengthen their supply chain network.

Q. HOW DO YOU DETERMINE WHICH PRODUCTS TO LAUNCH?

Like I said in past we have had to follow our competitors and watch them launch first due to
limited capacity in our plant that requires substantial spending in order to accommodate new
products. So we see if they do well and decide if it’s worthwhile. This is very important as we
cannot produce everything without knowing what’s the reaction to it in the market and because
of limited plant capacity we have to produce only what will be surely favorable for us, also this*
allows us to keep an eye on the competitor and learn from their mistakes to make our product
even better.

However, this does not happen every time for example when introducing Zingro (our award
winning micro nutrient fertilizer) we found the need for zinc based fertilizer in Pakistan through
research by consulting many experts of the field and by judging the environment and then
drawing out the need to introduce it into the market. So to determine which products to launch,
studying the competitors and research is done.

Q. DO YOU WATCH AND STUDY COMPETITOR PRODUCTS?

Studying your competitor products is very important for any business as it helps in keeping an
eye on what they are doing to improve their products and what new products are they introducing
to cater the needs of the market. Sometimes by studying the competitor’s products you learn
something new which can be helpful in developing or improving your own product as competitor
might be better than you in some areas so you have to take advantage of their expertise to make
you product better, likewise we do the same, we study them vociferously and make sure we look
at their chemical content to see where farmer trends are going. FFC may have a better insight
into the farmer due to their agribusiness network so that may sometimes give us information.

Q. DO YOU MONITOR INDUSTRY BEST PRACTICES?

As I mentioned earlier that you have to learn from the best practices to improve yourself
sometimes, even if it is your competitor’s best practices, to become the best in the business you
have to closely monitor the industry’s best practices and learn from them to improve yourself
and later excelling your way to become the best, and I can proudly say that we are one of the best
companies in the world when it comes to fertilizer manufacturing along with excellent human
resource and best operations.

Q. DO YOU HAVE ONLINE OPERATIONS?

There has been a big shift in technology in recent years, and the access of mobile phone and
internet availability has increased even in rural areas so that’s why we do have online operations,
but our customers are farmers which are mostly uneducated or not literate enough to us our
online services so we do not focus a lot on our online operations, also another reason is that
people do not have internet access in all the rural areas of Pakistan where most of our customer
lies, so they cannot use the internet facilities even if some of them want to. Our online operations
are mainly for dealers who mostly are our direct competitors, so we use them to provide
information to the farmers or the investors, but there is no ecommerce yet, maybe after a decade
or so if the infrastructure gets better and if there is more awareness, we can think about taking
our business online in a proper way.

Q. DO YOU USE ANY ERP SOLUTIONS?

Yes, Engro uses SAP for ERP solutions, it has been really helpful for un since we have installed
it, Engro implemented it long before FFC did, it implemented it in 2013 and it helps in keeping
our operations steady and smooth. It makes operations run smoothly. It helps in managing
heavy logistics and inventory of raw material. It optimizes inventory tracking, cross
docking distributing and informing when stock is at minimum level. 3

Q, DO YOU HAVE AN ACTIVE MARKETING DEPARTMENT?

Engro does have an active marketing department and it also hires different marketing graduates
from top business school in the country, but even then most of Engro’s ad campaigns are
outsourced to different brand/advertisement agencies. For example, Bonds marketing etc.

Engro has won many awards on ad campaigns and as discussed earlier Engro has seen these ad
campaigns effecting people so some of the credit also goes to people working in the marketing
department at Engro.

Q. DO YOU RELY ON Marketing FOR SALES?

Yes, and no. We rely on marketing to an extend which are done through traditional methods to
boost sales like TV commercials, ads in newspapers, ads on radio etc. But most of the sales are
done through b2b links and personal contact between dealers, farmers and our sales
representatives. B2b links are crucial to us and we rely heavily on these because we know that
our customer(farmers) will rely on these to a large extent.

Q. DO YOU PARTNER WITH ANY MARKETING FIRMS?

Yes. Currently we partner with Bonds and previously we partnered with D’Hamidi for creative
ad campaigns. This is why our ads have been some of the best and our core strength as I
mentioned earlier, these firms helped us perfectly is telling the farmers what we are selling and
how they can benefit from it also ensuring them the quality of the product, it was because of
these marketing firms that we were able to communicate with our customers in a way which
increased our sales. The ‘Aam Aadmi Nahein’ campaign one the Pakistan Ad Society Award for
2018 and that shows how good it was.

It also helped us build relationships with farmers by talking about their achievements, and also
by including their life experiences which made them develop a special ownership feeling with
the Engro brand.

Q. DO YOU CONSIDER COMPETITOR AND COSTUMER INSIGHTS WHEN

DEVISING YOUR STARTEGY?

Yes, it is very important to have in front of you what your customer has to say to you and what
your competitor is doing while devising and formulating a strategy, each time we devise a new
strategy it is often directed by our customer’s and competitor’s insights. Keeping these in mind
helps in continuous improving, and in developing a strategy which is right for the organization in
every way. FFC is one of those competitors on which we study closely along with Fatima
Fertilizers and others.
Appendix 2:
Interview of Ahmed Rizwan. Deputy Manager Sales & Marketing

Semi structured interview to probe the interviewee and catch his words in order to extract in depth
information about the company and its products, competencies and strategies.

Q. WHAT DO YOU FEEL IS YOUR COMPANY'S CORE STRENGTH?

A. Over the years FFC has developed a number of competencies and efficiencies that together
create value for FFC and would require a long time for competition to acquire. FFC’s dense and
established dealership network, nationwide trusted Agri Services and of course product strength
could be argued as our core competencies or where we are strongest. The quality of our product is
unmatched by our competition and the market is aware of that. People associate trust with our
brand.

Q. WHAT SETS YOU APART FROM THE COMPETITION?

A. We believe in selling a program rather than a product and as such have great support services
and farmer education programs (Kashtgar). We build long term relationships with our customers
and try to help them out in any way we can.

We have been providing agricultural advisory services to the farming community throughout
Pakistan since 1982. We aim to increase the agriculture production in general and the farmers’
economic returns in particular.

We have 5 farm advisory center in Shahkot, Sahiwal, Bahawalpur, Multan and Sukkur. We also
have 18 regional services offices.

Each center has a team of four agricultural experts providing all sorts of advisory services through
crop demonstrations, field days, farm visits and through meetings with farmers along other ways.
All the centers are fully equipped with modern technology, purpose built soil and water testing
laboratories and high tech extension equipment. Shahkot plant has latest. Soil Testing is also done
regularly. Soil/water samples are collected from farmers’ fields and analyzed in the laboratories.
Fertilizer recommendations are developed on those bases and delivered. And we do this for free.

We also publish crop, vegetable, and other posters and pamphlets containing latest information
regarding production technologies of crops, and orchards grown in Pakistan. We also publish a
quarterly Urdu and Sindhi newsletter. All this extra effort is a core strength for us. It helps us keep
ahead of our competitors and retain the largest share of the market as I’m sure your research will
show.

Q. DO YOU PERFORM REGULAR ANALYSIS ON WHAT COMPETITION IS DOING?

A. There is a surplus of urea in Pakistan so we export while maintaining a strong footprint in the
local market. Hence we have to keep an eye on competitors.

In Pakistan we ask the farmers for information about competitors and how they are targeting etc.

We were the first ones to start exporting hence we have older ties and channels. You could say we
have a first mover advantage. Such as in Afghanistan. Contracts in such places come through
contacts so not much competitor analysis is needed. And this is a huge market.

Q. WHAT DO YOU FEEL IS YOUR COMPETITORS CORE STRENGTH?

A. They have an older product. Naturally this gives their product more exposure. Their ad
campaigns are really good. Their brand name is also very strong as Engro produces good quality,
however, Sona as a brand has come on leaps and bounds over time.

However, we have more dealers which are more widespread in the market. We also have a higher
production capacity.

Q. WHAT DO YOU DO TO IMPROVE AND MONITOR PERFORMANCE?

A. All heads of departments meet every Tuesday. They present weekly reports to GMM. They
discuss the sale situation and competitor activities. They monitor performance against monthly
and annual plans. They discuss the fertilizer supply and demand situation and devise strategies to
overcome any problems.

In every month a monthly meeting is held in which reports for a month of all departments are
presented to

GMM. In monthly meeting the targets and plans for next month are set. In these meetings, monthly
sales of FFC are measured against the same period of last year and monthly sales of competitors
are also analyzed. Sales of all

regions are reviewed.

Sales performance of all sales officers are compared with targets and best sales officer of the month
is selected and rewarded. Expenses for the month are approved.

These meetings are presided over by GMM in Lahore marketing office.

Q. HOW DO YOU TARGET YOUR CUSTOMERS?

A. We target our customers according to the crops they are growing and we also sell them
brochures etc. based on their land and how they are using it to suggest ways to increase yield and
returns for farmers.

We have two main ad campaigns i.e. Kharif and Rabi that target customers according to seasons
and the respective crops that are grown in those seasons.

We give Sindhi language services as well to boost sales in regional areas and connect with our
customers on a personal level.

Q. HOW DO YOU RETAIN YOUR CUSTOMERS?

A. We provide excellent after sales services and believe in selling packages which keep our
customers tied down to us. Our brochure provides valuable information and insights to the
customers. We do extensive research on agriculture and with specific attention to the needs pf each
customer based on crop and water and soil conditions. With Seed development we help our
customers to increase their yields and returns. We provide free advice and newsletters. We use
local languages to connect better with our customers and retain constant contact to keep our
competitors from stealing our customers.

Q. DO YOU CONDUCT RESEARCH BEFORE LAUNCHING PRODUCTS?

A. Yes of course. We do most of our research through our links with farmers. We remain inconstant
contact through interviews, seminars and meetings. This allows us to forecast needs and get
feedback on our services and products. This also allows us to tailor our advertising campaigns and
understand our customers at a personal level. This also helps in creating deeper bonds and long
term rations with the farmers.

Q. SO YOU SPEND ON R&D TO DEVELOP INNOVATIVE PRODUCTS?

A. We have always spent well on R&D but mostly we do not develop products. We do research
on new techniques and better farming practices and also seed development. Our focus is to increase
yields and returns for farmers. We import technology and expertise from abroad for new forms of
fertilizer and then produce that in our local plants.

Q. DO YOU HAVE ANY NEW PRODUCTS IN YOUR STREAM?

A. Well we sort of do but not in terms of fertilizer. We have a new marketing product that is being
launched. We are about to launch documentaries on cotton etc. on PTV that are going to be running
constantly for farmer education and SONA promotion.

Q. HOW DO YOU DETERMINE WHICH PRODUCTS TO LAUNCH?

A. Foremost, we ask the farmers. We analyze the markets based on seasons, general soil conditions
and competitor activities. We use our own expertise and international advancements on new
technologies and types of fertilizers to launch products that meet latest market needs.

Q. DO YOU WATCH AND STUDY COMPETITOR PRODUCTS?

A. Yes, we measure content of phosphorous etc. but all products are essentially similar and it’s the
marketing that’s important. We have a better dealer network which is denser and more widespread.
We also provide excellent after sales service which helps us overcome the competition and capture
more market for our product.

Q. DO YOU MONITOR INDUSTRY BEST PRACTICES?

A. Yes, both international and national best practices. FFC is a multinational and as such it needs
to be at the top of the industry in fertilizer. It also needs to make sure safety and other standards
are kept at par with international standards to ensure export and secure more international business.

Q. DO YOU HAVE ONLINE OPERATIONS?

A. Yes, we have a website for agriculture services but no e-commerce as such to sell our fertilizers
online. Though we have sometimes experimented but have failed. Probe: (why do you think you
failed?)

It is largely because our customer base is unacquainted with internet technology and mobile and
internet penetration is not as high in the rural Sindh where farmers are based. We are however
increasing awareness and understanding through our online services which provide valuable
information for the farmers.

Q. DO YOU USE ANY ERP SOLUTIONS?

A. Yes, we use SAP for all our functions and this really helps for efficient distribution of resources
across the organization and also amongst our supplier network.

Q. DO YOU HAVE DEDICATED DISTRIBUTION NETWORKS?

A. Yes, as discussed earlier one of our strengths is our widespread and dense distribution network
that is spread across Sindh and Punjab, including rural villages. We have 18 regional offices that
constantly coordinate with our distribution channels.

Q. DO YOU CONSIDER COMPETITOR AND COSTUMER INSIGHTS WHEN

DEVISING YOUR STRATEGY?

A. As discussed earlier, we conduct constant research on our customers through our network of
farmers. We also conduct research on our competitors and their products. We analyze international
opportunities for export as well as new technologies. We use regional sales data and consider
seasonal demand patterns. We incorporate our research and expertise and put all these together to
formulate strategy and future action plans. We keep revising and updating our action plans to
achieve optimum performance standards.