Asia Ghee Mill Report

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    Report on Asia Ghee Mill

    Chapter 1

    INTRODUCTION

    Introduction of Ghee/Oil Industry

    hee industry was introduced in the sub continent in mid thirties, and since then it hasgrown tremendously in face of all environmental hazards. t has been sub!ected toserious edible "il shortages, government inconsistent policies and severe variationsbetween demand and supply in the domestic mar#et.$

    %he country which was self sufficient in edible "il production &'.()* million M%+, till (-', andpaying not a single dollar against the import bill, is today importing well over (.(-' million M%against an import bill of no less that Rs.''' million per year, being the third largest edible "ilimporting country of the world, after /hina and the 0uropean 1nion. All these imports originatedfrom Malaysia.

    2uring the past 3( years of interrupted and partially half hearted efforts of successivegovernments since (4, the country has been able to procure only '.) million M% of edible "ilfrom indigenous resources while the rest of the (.( million M% is procured from imports.

    %he structure of $hee5"il industry is !ust li#e all the other developing industries of Pa#istan.%here are certain well6established companies wor#ing with good brand names, serving the nationas a whole. Along with them there are certain units, which are wor#ing in limited areas, meetingthe re7uirements of these niche mar#ets. 8ome of the vegetable $hee mills are wor#ing under thecontrol of government and other are held privately.

    %he raw material re7uired for the production of $hee5"il is imported from different countriesand this is the biggest imported item in food category. %he prices of $hee5"il are very muchinfluenced by the duties on these imports and the international price fluctuations of these items.

    n early ('9s there had been a serious crisis in the $hee industry, and the main reason for thiswas that production of $hee was greater than the demand. n this period due to the heavy looseson account of these units government privatize so many $hee producing units.

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    :egetable $hee is the commercial term for vegetable "il hardened by the process ofhydrogenation. /ottonseed, soybean "il, 8un Flower "il, corn "il, is being mainly used inPa#istan for the manufacturing of "il5$hee. Pa#istan is importing Palm "il and 8oyabean "ilfrom America, ndonesia and Malaysia. 2uring (63''' Pa#istan imports of soyabean "il andpalm "il has drastically decreased both in 7uantity and value. Pa#istan imported soyabean "il

    worth ;4).< million and Palm "il ;3-4.< million in year (63'''.

    Ghee Industry in Paistan

    n Pa#istan ghee industry is flourished over the years. %oday there are many =ocals and >ationalcompanies as well as international companies engage in the production of ghee and oil wor#ingin Pa#istan. Among multinational companies includes =ever Brothers &Pvt.+ =td. %heymanufacture 2A=2A and P=A>%A coo#ing oil and ghee. 8ome other companies are as follows.

    (+Al ?ilal :egetable $hee Mills engages in the production of 8ultan Banaspati $hee. t is

    situated in Multan.

    3+8hehbaz $hee Mills is engage in the production of 8hebaz Banaspati. t is situated in Rahim@ar han.

    +azeer Ali ndustries =td. engages in the production of %allo Banaspati ghee and coo#ing oil.t is situated in ?yderabad.

    *+Fatima 0nterprises =td.

    )+Refahan Maize Product /ompany involved in the production of Rafhan /orn "il and it is

    situated in Faislabad.

    -+Ahmad Food ndustries manufactures Ahmad 8oyabean "il.

    4+$hee /orporation of Pa#istan &$./.P+ under which 3- units engaged in the production of gheeare wor#ing all over the country.

    Apart from these combines there are many other firms manufacturing ghee..

    Introduction of Asia Ghee Mills

    Asia $hee Mill is situated ()#m away from Bahawalpur at arachi Road. %his $hee and "ilmanufacturing unit was established in (* and start production in thCune (4.

    Asia $hee Mill occupied a land area of approDimately acres.

    %he area of Asia $hee Mill is divided in two headsE

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    a.Production Area

    b.Non Production Area

    >on6production area consists of offices, par#ing facility, and a big lawn. n non6production area

    they have their own nursery. Asia $hee Mill has a very attractive outloo# because they havewide variety of plants and flowers in the lawn and nursery. %he office interior of Asia $hee Millis very good because the offices are fully air6conditioned and heaters are also available in coldweather.

    n production area there are different sections related to productions, stores, printing, andpac#aging of $hee and "il in different sizes.

    Asia $hee Mill is not incorporated in 8toc# 0Dchange. Asia $hee Mill has a capacity of ()' tonsper day but currently they are using )' of their total capacity.

    Ma!eed Group of Industries

    Mr. /huadry Abdul Ma!eed is the chairman of Asia group of industries, who is one of the bestbusinessmen in Bahawalpur region.

    Ma!eed $roup of ndustries involved in the following businessesE

    MA"OR #U$IN%$$%$

    Asia $hee Mills

    Asia Flour Mills

    Bismillah /otton ndustries

    Rohi /otton Mills

    Rasool Model ndustry Pvt. =td &"il G /otton+

    Ma!eed Brothers Pvt. =td.

    Products of Asia Ghee Mills

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    Asia $hee Mill is manufacturing both $hee and "il. %he brand names of the product are given inthe table along with their respective weights and prices.

    Ma!or #rands &ei'ht Pacs Prices Rs(

    A$IA#ANA$PATI

    (- $ %in Pac# 4-

    (' $ %in Pac# *-'

    ) $ %in Pac# 3)'

    3.) $ %in Pac# (34

    (3 $ ( /arton &(3 pac# of ($+ )*

    (3 $ ( /arton &3* pac# of '.)$+ )*

    (3 $ ( /arton &*< pac# of '.3)$+ )*

    ( $ Plastic Pac# *).4)

    (- $ %in Pac# 4-

    (' $ %in Pac# *-'

    ) $ %in Pac# 3)'

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    A$IAPUR

    %COO)ING

    OI*

    3.) $ %in Pac# (34

    (3 $ ( /arton &(3 pac# of ($+ )*

    (3 $ ( /arton &3* pac# of '.)$+ )*

    (3 $ ( /arton &*< pac# of '.3)$+ )*

    ( $ Plastic Pac# *).4)

    #y products of Asia Ghee Mills

    Asia $hee Mill has two types of by products, which areE

    =aundry 8oap

    /"3

    Asia $hee Mill has sold the laundry soap under the brand name of Asia Laundry Soapwhere as they dispose off the carbon dioDide into the air.

    Mana'e+ent ,eirarchy

    /hapter 3

    ntroduction

    $TRAT%GIC INT%NTION

    -ision

    Mr. Majeed is very social person and has an industrial mind, who always thin about

    the development o! people o! the country specially livin" in #ahawalpur throu"h the

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    creation o! employment and meetin" their basic necessities o! clothes and !oods $%lour,

    &hee ' (il).

    Proposed +ission

    Asia $hee Mill don9t have any written mission statement but through our discussion we came at,and the mission of the Asia $hee Mill should beE

    *e care the health o! our customers by providin" them, wherever they live, the

    superlative purity and best +uality oil ' "hee at comparable prices and continually

    improve our products to meet their needs which help us to maimi-e the wealth o!

    owners who in turn, create more employment opportunities and provide maimum

    bene!its to employees.

    Goals of Asia Ghee Milla+%o eliminate the burden of debt.

    b+%o utilize maDimum production capacity.

    c+%o ensure 7uality at each step of production for both ghee and oil to care the health of ourconsumers.

    d+%o improve the morale and efficiency of employees.

    e+%o increase mar#et share in Multan division.

    f+%o develop long lasting good relationships with distribution dealers.

    g+%o dispose and utilize the wastage in a better way.

    O.!ecties of Asia Ghee Mill

    a+%hey have financed the whole capital through e7uity and no any debt. %hey have (' croreauthorized capital and 4 crore paid up capital.

    b+%o increase production of ghee and oil from 34''' tons last year to )''' tons this year.

    c+nstallation of =evi bond %ento Meter Model to chec# the color of oil and 8pector Photo Meterto assure zero percentage of >ic#el in ghee.

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    d+%o provide two bonuses to every employee in a year and 3) of basic pay as performancereward. And to provide minimum (' increment on their basic pay per year to eachemployee.

    e+%o sell

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    P08% analysis is used to assess what environmental factors are affecting the organization, whichof them are most important and how they will effect in neDt years. t is an indicator of political,economical, social and technological influences on organization. %he analysis of Asia $hee Millsis as underE

    Political and *e'al 2actors

    Industrial *a3s

    ndustrial laws regarding unions has no impact upon the Asia $hee Mills because no union eDitin the organization, but if in future it become so, then the company has to consider these laws intheir decision ma#ing concerning wage rates, bonuses, and benefits of the employees.

    2orei'n Trade

    %his matter will be of a #ey concern for Asia $hee Mills. Because the Asia $hee Mills isimporting four different types of oil from 8ingapore and Malaysia, which are not availablelocally, but the $overnment don9t provide any support to import these raw materials and don9tprovide any relaDation in import duty upon the imported raw materials. 8o if $overnment bringany change in its foreign policy, then it will be very much important to cope with that.

    %niron+ental Protection *a3s

    Although the laws regarding environment are not very sophisticated in Pa#istan but even if theybecome so, they will not be hampering for Asia $hee Mills, because in Asia $hee Mills all thewastes are considered as by products and used or sold. %he water is also recycled for reusespurposes. %he only emission is of the carbon dioDide, which is within the prescribed range ofpollution.

    Ta4ation Policy

    %he Asia $hee Mills is paying taD each year. n last year the Asia $hee Mills paid income taD* of net profit to the $overnment. But in this year Asia $hee Mills has to pay income taD of*) of net profit, which is e7ual for all the private companies.

    %+ploy+ent and Goern+ent $ta.ility

    0mployment is not a matter of high concern for the organization because it is already followingall the labor laws. But recently the $overnment increases the wages of the employees but Asia$hee Mills has not affected by that, because this is a private company. But they are paying morethan the $overnment announced.

    %cono+ic 2actors

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    Among the many of economic factors some are more important for Asia $hee Mills, the detail ofthese factors is in followingE

    Interest Rates

    nterest rates increase and decrease has no impact upon the financial performance of the Asia$hee Mills, because the company has no loan of any ban#. But it in future the company need tota#e the loan then it must has to consider this issue.

    Inflation

    At the moment inflation rate does not seem to be very much related matter, because any increasein oil prices will be off set by the increase in price of $hee and coo#ing oil. Because there is noclose substitute of $hee and coo#ing oil, so the sales will not be affected. But if we ta#e it inlonger perspective the inflation in the country will increase the cost of production, which willincrease the sale price. And at high sale price the product will become in6competitive in the

    international mar#et if the company will involve in the eDport. 8o the pan of eDport will beadversely affected by the inflation.

    Disposa.le Inco+e

    ithin the country the demand will be affected if the disposable income will be reduced. $heeand /oo#ing oil is a basic food ingredient and its primary demand cannot be eliminated. Butother than its direct use, it is also used in ba#ery and confectionery items and so many otherfoods whose demand is dependent on disposable. 8o any decrease in disposable income of theconsumers will also be affecting Asia $hee Mills negatively.

    Technolo'ical 2actors

    %echnology in ghee industry can be divided into two sectors. First is cotton seed and second isghee mills. %he technological factors, which are more concerned with Asia $hee Mills, are asunderE

    Goern+ent $pendin' on Research

    1sually in order to support some industry and improve economy, government allocates somefund to R G 2. 1nfortunately our government doesn9t have any money for R G 2. 2ue to this

    non6serious behavior of government this sector along with others, is suffering very much. >osingle mill owner can support R G 2 especially in the field of /ottonseed varieties. %he varietieswhich now a days are being cultivated are of sub6standard 7ualities. t gives less recovery andmore wastage. %here is a need to find out the seeds, which can give better recovery.

    Ne3 Discoeries and Deelop+ents

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    >ew discoveries in the field of raw material will be very much beneficial for the company, as itwill reduce the cost of production. But, if there will be any change in the technology of gheemills, or process development than it will be very difficult for the company to coup with thatchange. n fact the company has made much investment in latest plant and machinery in (*,and almost ow people, allaround the world, are becoming more and more health conscious. %hey are well aware that a

    high consumption of ghee will increase the cholesterol, which leads to heart disease. %hat is why,a significant change in the consumption of ghee is being observed in last many months. Althoughthe use of ghee cannot be fully eliminated but if this life style grows at same speed it will surelydecrease the demand of ghee but on the other hand the demand of the coo#ing oil is graduallyincrease in last many months due to the same reason.

    *eel of %ducation

    =evel of education is directly related with awareness and health consciousness. n countrieswhere education rate is high the ghee consumption rate is low. n Pa#istan, as well as in foreignmar#ets the rate of literary is increasing which will effect the organization negatively. ?igh levelof literacy will lead to low level of ghee consumption and people started switch towards coo#ingoil.

    $tructural analysis

    %he P08% analysis concerned with broad aspects of the environment while there is always a setof eDternal influences, which are more immediate, and directly affecting the organization. %hestructural analysis draws on Five Forces approach prepared by Porter. t is a structured mean ofassessing the competitive environment.

    Threat of Ne3 %ntrance

    %hreat of entry depends upon the eDtent to which there are barriers to entry. $hee mills re7uire abig manufacturing unit which re7uires a huge capital investment, li#e Asia $hee Mills has ('crore authorized capital and 4 crore paid up capital. 8o we can say that ghee6manufacturing unitis highly capital intensive and because of high capital investment it has high ris# for new to enterinto production.

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    $uppliers6 Po3er

    All organizations have to obtain resources and provide goods or services. %he suppliers canaffects on strategic freedom of an organization and can influence the margins of thatorganization. n Asia $hee Mills, there are two types of suppliers. "ne is a local supplier, and

    others are foreign suppliers. Because of many reasons the suppliers of oil have no powers. %hereasons areE

    a+As well as the foreign suppliers are concerned they have power of bargain because the materialis not available locally and the buyer don9t have any option other than import, so the buyercharge the high prices and transaction is done through ban#s by opening letter of credit andbuyer also has to bear high transportation cost and import duties.

    b+As well as the local suppliers are concerned they have small oil mills, which separate oil fromseed. $hee mills are highly capital intensive so they don9t have any power because they can9tdo forward integration.

    c+%here are large numbers of oil suppliers in Bahawalpur and in other cities so the buyer chec#sthe 7uality of suppliers9 oil and ma#e contract with any one which meet their re7uirementsregarding 7uality or price.

    #uyers6 Po3er

    %he buyers don9t have any power, because the prices of the products are fiD, but highcompetition among ghee5oil mills leads the company to minimize the prices.

    Co+petitie Rialry

    "rganizations will also be concerned with the eDtent of rivalry between themselves andcompetitors. %he eDtent of competitive rivalry depends upon the nature of four forces describedearlier. t could be concluded from previous discussion that the ghee mar#et is highlycompetitive.

    -alue chain analysis

    :alue chain analysis is widely used to determine where cost improvements could be made or

    value creation improved. %his process involves the analysis of all the activities starting from theraw material provisions to the distribution of final product. %hat is why it is necessary tounderstand the complete procedure of production and distribution &please see chapter J (+ beforedoing such analysis.

    Or'ani7ation -alue Chain

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    All these activities are broadly categorized into two main heads, which are Primary activities and8upport activities.

    Pri+ary Actiities

    %he primary activities of the organization are grouped into five main areasE inbound logistics,operations, outbound logistics, mar#eting and sales G services. /ottonseed oil mills perform theinbound activity in Asia $hee Mills, which provide basic raw oil to firm. %his activity should beefficient in order to increase recovery rate by obtaining good 7uality oil. 8o in order to receivegood 7uality of oil, Asia $hee Mills has its own cotton factories which provide re7uired 7ualityof cottonseeds. %he operations are the production process of ghee5oil where the ma!or valueaddition is made &production process of Asia $hee Mills is given on neDt page+. %hemanagement subcontracts the outbound activity, and the distribution is through dealers. %hecompany owner believes that mar#eting has no benefit until unless they don9t utilize the enoughproduction capacity. %he only thing they do for their mar#eting is to have good relationship withthe dealers and somewhat advertisement in print media in Ramzan. %he company doesn9t

    perform sales and services rather through dealers.

    Production Process

    hen decanting tan#s of oil entered in the factory first of all they have stored in main storagetan#s with the help of pumps. %hen they transfer oil from main storage to refinery section wherefirst of all the oil pass through pre6neutralizer then through post6neutralizer then after filtrationthey pass ghee and oil from pre6bleacher and then post bleacher. %hen they pass ghee and oilfrom deodorization then after deodorization they got the oil in the final stage where as for gheethey pass for hydrogenation at particular temperature in the presence of nic#el then after

    filtration they got ghee in the final stage which is free from nic#el. %he production process ofAsia $hee Mills is shown below

    $upport Actiities

    %he support activities can be divided into four groups, which are procurement, technologydevelopment, human resource management and infrastructure. As the prime input of ghee isavailable locally and some material has to import from out side countries. 8o procurement forlong time is not possible in case of raw material, which is locally available. here as thematerial that has to be import the company has a lead6time of 36 months. 8o the department ofinbound logistics is sufficiently performing the activity of procurement.

    R G 2 and Process development researches are very important in ghee5oil industry in Pa#istan.8o in the company value chain this thing should be emphasized much, rather it has a bigcontribution in total value addition. ?uman resource management involves the training anddevelopment of wor#ers and employees in order to increase their productivity and efficiency. Forthis purpose company ma#e their employees to wor# with the senior wor#er to get theeDperience, but they don9t have any separate training program for new employees. %he companyhas good planning, 7uality control systems and future orientation, which although does

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    contribute directly in value addition and increase the effectiveness of whole process. %heorganization has the policy that the dealer who distributes their product will not distribute theproducts of any other competitors or substitute.

    Analysis

    All the value creation does not happen in the organization itself rather much of it can be occur inthe supply and distribution chains. 8o the whole process needs to be analyzed. For this purposewe can divide it into three areasE suppliers, organization and channel members.

    $uppliers

    8uppliers play a very vital role in total value creation. %he whole of the profitability dependsupon the 7uality of raw material, if supplier does not provide the good 7uality of oil then thedesired level of 7uality of ghee5oil cannot be achieved. %he price structure of the country de6motivates the grower to produce better 7uality of cottonseed. But good relationship with the

    suppliers and fair and prompt payment can enforce the grower to cultivate better variety.

    Or'ani7ation

    ithin the organization the value addition activity is focused only on ghee5oil production, whichis their core competence. n order to provide the superior 7uality of ghee5oil to customers, Asia$hee Mills pass the raw material from two different machines for oil and ghee i.e. Post6>eutralizer and Post6Bleacher, hich are not performed by other mills. But they do nothing forby6products of ghee5oil. %he carbon dioDide has directly released in the air and the laundry soaphas been pac#ed and sold under the brand name of 8Asia *aundry $oap9. >ow the furtheraddition in ghee5oil is not possible due to the mar#et conditions but there is a lot of space toimprove in by6products. ith a little effort and investment.

    Channel Me+.ers

    %here is a difference of (63 rupees per ilogram in the 0D6mill price and mar#et price and themiddlemen create this difference. As shown in the distribution networ# diagram, the ghee5oil isnot directly sold to the ultimate consumer rather it goes through a long process. And everyoneinvolves in this process ta#e its share in terms of commission. ?ere the value addition ta#esplace in terms of price increase. /urrently the company is using traditional distribution networ#for ghee5oil sale but with a forward integration the company can increase the profit margin.

    Distri.ution Net3or

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    $&OT Analysis

    $tren'ths of Asia Ghee Mills

    Professional *eadership

    1sually in such #ind of traditional organizations leadership is deficient. People are usuallyguided through specified rules and regulations. Also the professionalism is lac#ing in most of thecases. But Asia $hee Mills is clearly different in this aspect from other organizations. After

    ta#ing charge of many responsibilities Mr. /h. Abdul Ma!eed has wor#ed very hard for thesuccess of the mill. 2ue to his professional abilities and leadership 7ualities he has also achievedmany of his ob!ectives. And now this is the result of his efforts that the company is showing verygood performance and operating on professional basis.

    $illed *a.or &ith ,i'h Morale

    n most of the factories s#illed and semi s#illed labor along with uns#illed labor is hired fromoutside. %here is always a ris# associated with them that whether they wor# properly or not. Firstof all Asia $hee Mills always hire the educated people, you can ta#e the eDample that theyre7uire at least Matric pass candidate for the post of helper. Asia $hee Mills has placed its new

    employees with the senior employees and trained them before they actually placed on !ob. %heyhave the career opportunity to move upward to become an operator because helper has #nown allthe responsibilities of the operator. 8o this will create the most loyal employees with highmorale, which are more productive.

    $ophisticated Technolo'y

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    %here are no hard and fast rules in ghee5oil industry regarding the technology or process implied.0ven in some factories fifty years old machinery is also used. 8uch type of machinery affects the7uality of oil5ghee. Asia $hee Mills has the latest machinery and plant. As it is one of the latestghee5oil mills build in Pa#istan whose machinery is locally available from Multan G =ahore, soit is using the most modern technology available in Pa#istan. %his machinery also gives an edge

    to the organization over its competitors, because all the ghee5oil industries wor#ing in Pa#istanare using 8#y Pass9 operations means that the same machinery is used for the production ofghee and oil. here as the only Asia $hee Mills has separate processes for both ghee and oil toassure the good 7uality products.

    #ac3ard *ina'es

    $enerically the company has got an advantage of access to the sources of raw material. n factthe owner of the company is big business man of Bahawalpur. %he raw materials, which areavailable in Pa#istan, are mostly available in Bahawalpur. %he other strength of the company isthat they ta#e the oil from their own cotton factories but their cotton factories meet only (' of

    the total raw material re7uired for the current capacity utilization

    &eanesses of Asia Ghee Mills

    *ac of A3areness

    %he ma!or wea#ness of the Asia $hee Mills is the lac# of awareness among the consumers,because the Asia $hee Mills don9t go for any type of advertising program. Asia $hee Mills useprint media one time in a month, where as they had used electronic media in start but now theydon9t have any advertisement for their products, so that9s why ma!ority of the people even don9tlisten the name of company.

    *i+ited Distri.ution Net3or

    %he other wea#ness of the Asia $hee Mills is of having limited distribution networ#. As we havealready told that Asia $hee Mills is distributing their products only in Bahawalpur, where theyare distributing their products at mass level and having a mar#et share of 4'6

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    Opportunities

    Generic Opportunities

    %he ghee5oil has so many opportunities due to its product nature. t is a necessity and no one can

    avoid it. n Pa#istan, the consumption rate of ghee5oil is high in the world, and as the populationgrowth rate is also very high so the company has an opportunity to meet the demand of localmar#et. Also the product has no substitute, so people have to buy it in any case. %hese are thenatural opportunities, which the company is en!oying.

    Threats

    *o3 Production of Cottonseed

    %he cotton is not produced sufficiently in the country. t is due to the low productivity of the

    varieties and due to the less area cultivation. 2ue to this low production the mill faces a shortageof raw oil, which is always a problem for the company.

    Decrease in Consu+ption

    2ue to the increase in awareness level of the people the consumption rate is decreased. %hereduction in disposable income is also a cause of decrease consumption of ghee. %he high rate ofheart disease in the country is another cause, which restrict the people to use ghee. Because of allthese factors the consumption rate of ghee is decreasing in Pa#istan. hich is a source ofcontinuous threat for the company.

    2inancial Analysis

    n order to see the viability of the company, Financial Analysis is necessary. n this analysis wecalculate financial ratio and some financial indicators.

    Profita.ility Ratio

    A profitable company will have to be eDpanded further. 8o we can analyze its profitabilitythrough following indicators. %he company has authorized capital of (' crore, and the paid upcapital of 4 crore.

    Gross Profit Mar'in

    Gross Profit Mar'in : Gross Profit / Net $ales

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    Gross Profit Mar'in : 11;=?> / =@1>?>>> : 1?B

    Asia $hee Mills is getting () profit margin after paying its cost of goods sold. From that ()margin company can easily pays its operating eDpenses and taDes. As firm is not raising anylong6term dents, so, the profit for the company is enough to pay its operating eDpenses.

    Net Profit Mar'in

    Net Profit Mar'in : Net Profit / Net $ales

    Net Profit Mar'in : / =@1>?>>> : 0(0B

    /ompany is earning very good profit margin, and it is improved from previous year by '..hich shows good performance the main reason for that is the increase in sales from previousyear. /ompany is utilized its e7uity very well. 8hareholder9s value is also increased.

    Actiity Ratio

    From available data we are only able to calculate inventory turnover ratio. As firm is utilizing itscapacity about )' and from that, they have to #eep some inventory as safety stoc#.

    Inentory Turnoer

    Inentory Turnoer : CG$ / Inentory

    Inentory Turnoer : @;=?0; / 1>;?1 : 0(; ti+es

    t means the firm is able to sell its inventory to * times a year. 2ue to uncertainty they nave to#eep about 3) inventory as ending inventory.

    Chapter ;

    %4istin' $TRAT%GI%$

    Corporate *eel $trate'ieesorporate level strategy focuses on strategies for enterprises consisting of more thanone business. Asia $hee Mills, for instance, comprises several businesses, includingconsumer goods and industrial goods. Asia $hee Mills involve more than one businessis said to be diversified./

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    Concentric Diersification

    HAdding new, but related products or servicesK.

    Asia $hee Mills involved in concentric diversification because Asia $hee Mills has two by

    products, laundry soap and /"3gas. Asia $hee Mills has developed a setup to sold laundry soapunder brand name of Asia Laundry Soapso Asia $hee Mills is adding new but relatedproducts in to the mar#et. nstead of selling laundry soap as a raw soap to any other soapmanufacturer, they themselves start cutting and pac#aging of the soap and sold in the mar#et astheir own new products under their own brand name. %hen we said it concentric diversificationbecause they manufacture the soap from the by products they receive.

    #ac3ard Inte'ration

    H8ee#ing ownership or increased control of a firm9s suppliersK.

    Asia $hee Mills involved in bac#ward integration because they receive the cottonseed oil fromtheir own cotton factories. Although these three cotton factories provide only (' of its totalre7uirement but this will increase the bargaining power of the Asia $hee Mills if it has tonegotiate upon the prices of oil purchasing from other factories.

    #usiness *eel $trate'y

    Firms compete directly with one another at what is called the business level of strategicmanagement, so we will focus on crafting successful competitive strategies. Because competition

    ta#es place at the business level, strategic management at this level is crucial to the overallsuccess of the firm.

    Cost *eadership

    n manufacturing and especially in industries where the product differentiation is not possible the

    only strategy the organization is left with is 1Low 2ost Production1or cost leadership. n factcost reduction is the only way to stay in the industry. Asia $hee Mills has cost leadershipstrategy. Asia $hee Mills has the following two ma!or competitorsE

    Ma!or Co+petitors eights Prices &Rs.+ eights Prices &Rs.+

    8ultan Banaspati (#g *< (- #g 4*'

    $heh.a7 #anaspati (#g *4 (- #g 4-

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    Asia $hee Mills is following cost leadership because the competitors especially 8ultan Banaspati

    has a very old name in the ghee industry so Asia $hee Mills has to charge the low prices tocompete with the competitors.

    ?ere from the above table we can see that the price of the 8hehbaz Banaspati is e7ual to theprices of the Asia Banaspati. But in Bahawalpur the sale of Asia Banaspati is more than 8hehbazBanaspati, but in Multan division the sale of 8ultan Banaspati and 8hehbaz Banaspati has moresales than Asia Banaspati.

    According to the teDt, the low cost strategy is good when, product cannot be differentiated,industry is producing standardized product, product has same usage and switching cost is low.All the characteristics are fully applied in ghee industry. 8o company is using right strategy.

    Operation *eel $trate'y

    "peration level strategy focuses at how to develop capabilities in process eDecution that willyield competitive advantages for a firm. %his involves applying strategic management conceptsto what is #nown as the operations level, the level at which wor# inside the organization actuallyta#es place. e focus on how organizations go about improving their process capabilities,including both total 7uality management and core process reengineering.

    Product Deelop+ent

    H8ee#ing increased sales by improving or modifying present products or servicesK.

    /urrently Asia $hee Mills is following the product development strategy, because the Asia $heeMills is continuously improving the 7uality of the ghee5oil for the consumers. Asia $hee Millshas a good image in the Bahawalpur, and they try to develop the same good image in all over thecountry, so that9s why they are improving their products through %LM.

    Chapter ?

    R%COMM%NDed strate'ies

    reco++eded $trate'ies

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    t this time when industry is fully mature, and the competition in terms of access tofinal consumer is very high the companies usually face the problems of slow demandgrowth, emphasize on cost and services, topping out and loss of profitability. %heAsia $hee Mills is also facing the same problems. Although it has tac#led the ma!or

    problems very well but still there is some room of improvement in its eDisting strategy.A2or3ard Inte'ration

    H$aining ownership or increased control over distributors or retailersK.

    %he firm should use their own distribution networ# because the motive behind that when theyhave their own distribution system the additional cost will be avoided which had been #ept bydealers as their own margin. n this dynamic and competitive environment the firm has tomaintain its current position of cost leadership to be competitive.

    Concentric DiersificationAsia $hee Mills is involving in the concentric diversification because of having two by products."ne is laundry soap and the other is /"3gas. %he firm is using laundry soap as the new productand is selling under their own brand name. But they are disposing off the /"3gas in the air. %heycan generate good cash flows if they use /"3gas as the new product of the factory and sold tosoda water or you may receive the application from different contractors.

    Maret Deelop+ent

    Hntroducing present products or services into new geographic areasK.

    As it is already mentioned that the firm is only distributing in Bahawalpur and Multan division.%he firm should go for mar#et development, means that the firm should introduce their productsin new mar#ets or new geographical areas. %his can increase the demand of the firm9s products.%hen increase in demand will lead the company to utilize the full capacity of the production.hen the company utilizes the full capacity its sales will increase along with the profitability ofthe owners.

    Adertise+ent

    Asia $hee Mills is not using any mode of advertisement, because of low demand andunavailability of the their products. %hey believe that advertisement without availability of theproduct is useless and creates a bad image. n order to create awareness Asia $hee Mills must gofor advertisement.

    I$O Certificate

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    Although the firm is wor#ing more better than re7uired 8" certificate but the firm should ta#ethe 8" certificate. Because 8" certificate create a good image among the consumers.

    Dispensary

    Asia $hee Mills has no dispensary in the factory for the employees9 in!uries during theproduction. Asia $hee Mills must ta#e some action to establish a full fledge dispensary fordealing the employees9 in!uries. %his will provide the safety to the employees and they will bemore satisfied, productive and having high morale.

    Chapter @

    i+ple+entation

    Asia $hee Mills can implement on our proposed strategies in following waysE

    2or3ard Inte'ration Maret Deelop+ent

    Asia $hee Mills has following options available for distribution of its products.

    %hrough private dealers

    %hrough their own networ#s.

    As we already suggested Asia $hee Mills should distribute its products through its ownnetwor#s. 8o for this it should ta#e following steps.

    Purchase its own vehicles.

    Appoint more sales officers.

    0stablish its own distribution networ#s in ma!or cities of Pa#istan i.e. Bahawalpur, Multan,

    hanewal, Mianchannoo, 8ahiwal, =ahore, Faisalabad. %he sales officers are re7uired tosold the product of the company directly to the retailers. hen they got success in thesecities then the company should approach to other cities of the country to eDplore newmar#ets.

    Concentric Diersification

    For establishment of /"3$as plant, Asia $hee Mills should ta#e following measuresE

    /onstruction of /"3gas crac#ing plant andE

    8old to 8oda ater producers or any other contractor.

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    $as crac#ing plant re7uires approDimately -.) lac of investment. %his plant has the capability toe!ect the /"3gas from the disposable gases. %he disposable gases have transferred to sulphertower where these gases are re7uired to be refined at ewspapers

    oMagazines

    Asia $hee Mills should advertise on electronic media especially on %:, Because %: is morecapable to create awareness about the company9s product among the people and can facilitate itssales officers during sales to retailers. %he timing of advertisement should be during hawatinprograms.

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    Allied Ban# =imited N nternship Report

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    0ducation =earning and %raining&*+

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    Finance&3+

    Financial Accounting&+

    Financial Management&(3+

    Food and 2rin#s ndustry&(*+

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    ?ealthcare 8ervices and ?ospitals&-+

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    mport and 0Dport&3+

    ndia&(+

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    Managerial&(+

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    >atural Resources&(+

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    8ocio60conomic&(3+

    %elecommunication&estl &>estl Pure life+

    /omplete Research Report on nformation %echnology

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