Letter of Transmitter

I had been assigned the job to prepare this report by my Business

Policy instructor Mr. N. Riaz. This report provides in-depth analysis on
National Foods Limited of Pakistan by the application of major strategic
management tools.

In the end, the results can be used to draw important conclusions

about the organization and what future paths it must take to gain and
maintain its edge.

Contents

1. Company
Introduction
4
2. Vision and Mission
statement 5

2.1 Analyzing the Vision and Mission

Statement 5

3. Core
Values
6

4. National Foods Limited

Products:
6

5. PEST-C
Analysis
7

5.1 Political/Economic
Conditions 7

5.2 Social Activities/ conditions

7

5.3 Technological Analysis

7

5.4 Competitor’s
Analysis 7

6. Porter’s 5
Forces
8

6.1 Rivalry among competing

firms 8

6.2 Potential entry of new

competitors 8

6.3 Potential Development of substitute products

8
6.4 Bargaining Power of
Suppliers 8

6.5 Bargaining Power of

Consumers 9

7. National Foods Limited’s progress over the

years 10

7.1 Top Line

Performance
10

7.2 Margin
Analysis
12

8. External Factor Evaluation

(EFE) 13

9. Competitive Profile Matrix

(CPM) 14

10. Internal Factor Evaluation (IFE)

15

11. SWOT
Analysis
16

12.
Conclusion
18

Company Introduction

National Foods was founded in 1970 and started out as a Spice

company. 3 decades later it has diversified into a versatile Food
Company with over 110 products and 165 and above SKUs (Stock
Keeping Unit) for the domestic market and over 100 different products
for the international markets.

The vision to see National Foods as a professionally managed Human

Resource company, set more then 7 years ago, was realized by
transforming a local company into a very dynamic and progressive
management structure in line with industry practices.

Competent Human Resources from within the company have fuelled

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

In this innovative age of ever changing lifestyles, fuelled by the

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

The brand delivers its ultimate promise by consistently delivering value

to its consumers. National Foods enriches family relationships by
bringing people together for family traditions, feasts, seasonal holidays
and of course - everyday life.

Vision and Mission Statement

To be a Rs.50 billion food company by the year 2020 in the

convenience food segment by launching products and services in the
domestic and international markets that enhance lifestyle and create
value for our customers through management excellence at all levels.

Analyzing the Vision and Mission Statement

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

It includes the following components of a mission statement:

 Customers

 Concern for Survival, Growth &Profitability

 Markets

Core Values:
Passion

People-Centric

Customer Focus

Leadership

Teamwork

Ethics

Excellence in Execution

Accountability

National Foods Limited Products:

Plain Spice

Salt

Basic Recipes

Recipe concoction
 Chinese salt and vinegar

Pickles

Ketchup

Jam Jellies and Marmalades

Snacks

Desserts

Ingredients

PEST-C Analysis

Political/Economic Conditions:

Economic changes, terrorist activity and political unrest may result in

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

Social Activities/ conditions:

The fluctuations or changes in social /cultural activities in the areas of

operations may also affect the National Foods business activities.
 Technological Analysis:

The innovation and making of new products is a proof that National

Foods is equipped with latest technology and committed employees
that has enabled it to earn a good reputation in the global market.

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

Competitor’s Analysis:

National Foods is also carrying out competitor's analysis and in order

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

PORTER’S 5 FORCES
Porter’s 5 Forces Model on NFL:

Rivalry among competing firms:

National Foods is having many well known competitors amongst whom

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

Potential entry of new competitors:

In this era of technological advancement, numerous new firms are

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

Potential Development of substitute products:

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

Bargaining Power of Suppliers:

NFL is in compliance with its suppliers in every area of its

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

Bargaining Power of Consumers:

NFL is focused towards services to gain customer loyalty. They offer

competitive prices which leaves little bargaining power in the hands of
the customers. Great quality with reasonable pricing has long achieved
NFL the success it continues to hop on.
 National Foods Limited’s progress over the years

Before moving on to the EFE (external factor evaluation) and

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

Top Line Performance

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

In the last financial year, 2007, through operational efficiencies and

process automation, the company has achieved the highest ever gross
and net margins in the recent history of National Foods.

External Factor Evaluation (EFE):

Opportuniti Weight Rating Weighted

es Score
Growing export 0.2 3 0.6
of spices from
Pakistan
Growing 0.1 4 0.4
demand for
ready made
mixed herbs,
spices & sauces
New markets 0.1 3 0.3
being developed
for enhancing
Horizontal
penetration in
various
segments
Launch of NFL 0.15 3 0.45
products in India
through an
authorized
distributor
Pakistani 0.2 3 0.6
economy has
achieved 7%
plus GDP and
promoted
confidence of
foreign & local
investors
Threats
Mitchell’s 0.1 2 0.2
recently
dropped its
prices on some
products
Mitchell’s has 0.05 2 0.1
strong
advertising
Political unrest 0.05 3 0.15
in the country is
skyrocketing
costs (inflation)
Tax policies are 0.05 3 0.15
fluctuating
Total 1 2.95

Competitive Profile Matrix (CPM)

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

Their CPM analysis is done as under:

National Foods
Shan Mitchell’s

Critical Weight Rating Score Rating Score Rating Score

Success
Factors
Advertising 0.05 3 0.15 2 0.10 3 0.15
Product 0.20 4 0.80 3 0.60 4 0.80
Quality
Financial 0.15 3 0.45 3 0.45 4 0.60
Position
Market Share 0.05 3 0.15 2 0.10 3 0.15
Customer 0.10 3 0.30 3 0.30 3 0.30
Loyalty
Price 0.10 4 0.40 3 0.30 3 0.30
Competitivene
ss
Global 0.20 3 0.60 2 0.40 4 0.80
Expansion
Sales 0.05 3 0.15 2 0.10 3 0.15
Distribution
Management 0.10 4 0.40 3 0.30 4 0.40
Total 3.40 2.65 3.65

As the results indicate, NFL is at a good point when compared to its

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

Internal Factor Evaluation (IFE):

The Internal Factors identified in the internal audit process are

analyzed as follows;

Strengths Weight Rating Weighted Score

NFL has Over 110 0.1 4 0.4
products
NFL has 165 and 0.09 3 0.27
above SKUs (Stock
Keeping Unit) for
the domestic
market
NFL has over 100 0.06 4 0.24
different products
for the international
markets
NFL has been 0.05 4 0.2
serving since 1970
with huge
distribution
channels
NFL has a Corporate 0.1 3 0.3
Gross Sales Growth
of over 25%
NFL is recognized as 0.1 3 0.3
being one of the 10
best Human
Resource Managed
companies in
Pakistan
NFL got Rs. 3 Billion 0.2 3 0.6
plus turnover
including USD 4.64
million of export
NFL is the clear 0.15 3 0.45
leader of products
in the Canadian
market
Weaknesses
NFL has poor 0.1 3 0.3
internal control and
monitoring when
performing audit
NFL does not have a 0.05 3 0.15
strong advertising
campaign like
Mitchell’s
Total 3.21

SWOT Analysis

The strengths, weaknesses, opportunities and threats for NFL

are identified according to the internal and external factor
evaluation as under:

Strengths:

• NFL has Over 110 products.

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

• NFL has over 100 different products for the international markets.
• NFL has been serving since 1970 with huge distribution channels.

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

• NFL is recognized as being one of the 10 best Human Resource

Managed companies in Pakistan.

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

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

Weaknesses:

• NFL has poor internal control and monitoring when performing

audit.

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

Opportunities:

• Growing export of spices from Pakistan.

• Growing demand for ready made mixed herbs, spices & sauces.
• New markets being developed for enhancing Horizontal penetration
in various segments.

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

• Pakistani economy has achieved 7% plus GDP and promoted

confidence of foreign & local investors.

Threats:

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

• Mitchell’s has strong advertising.

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

• Tax policies are fluctuating.

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

Competitively, NFL is established and enjoys a big market share and

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

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

References
www.nfoods.com

Annual Report of NFL 2007

http://nationalfoods2.rozee.pk/

http://www.thehindubusinessline.com/2007/08/01/stories/2007080151
451600.htm