ContentsCompany Profile4History of Surgical Industry:5Vision Statement:6Mission Statement:6Strategic Objectives:6Industry Analysis8Pest analysis8Political-Legal9Political instability12Antitrust regulations13Special incentives13Laws on hiring and promotion14Tax laws14Economical15GDP trends:15Interest rate:15Inflation rates:16Unemployment levels:17Energy availability and cost:17Socio cultural18Growth rate of population:18Life style change:19Career expectations:19Technological20Total government spending for R&D20Focus of technological efforts:20Productivity improvements through automation:21SWOT analysis22Opportunities:22Threats:22External Factor Evaluation Matrix (EFE)23PEST Impact Matrix24Internal analysis27Strength:27Weakness:27Internal Factor Evaluation Matrix (IFE)28Industry and Competitive Analysis29Question 1: What are the Industrys Dominant Economic Traits?30Export of surgical instrument of Pakistan30Profile of industry31Export of surgical to different countries in 2013-201431World Exports of Surgical Instruments33Top ten buyers of surgical instruments34Question 2: What Is Competition Like and How Strong Are the Competitive Forces?35PORTERS FIVE FORCES MODEL35Bargaining power of buyers35Threat of new entrant36Threat of substitute36Industry Rivalry36Impact on profitability37Strategy for minimizing the power of competitive forces38Question 3: What Forces Are at Work to Change Industry Conditions?39Question 4: Which Companies are in Strongest / Weakest Positions?40Question 5: What Strategic Moves Are Rivals Likely to Make Next?41Question 6: What are the Key Factors for Competitive Success?43Question 7: Is the Industry Attractive or Unattractive and Why?45TWOS Matrix46Strategic Factor Analysis summary (SFAS)47CPM Matrix48The Strategic Position and Action Evaluation (SPACE) Matrix49The Boston Consulting Group (BCG) Matrix51The Internal-External (IE) Matrix52The Grand Strategy Matrix53The Quantitative Strategic Planning Matrix (QSPM)54Decision:56Strategy FvaluationReferences:57

Company Profile

ContentInformation

NameIttehad Surgical

LocationSatellite Town, Gujranwala

Contact No+92-300-8621717

History of Surgical Industry:Surgical industry of Pakistan holds a history of more than 100 years when the craftsmen of Sialkot were famous during the Mughal period for their fine swords and daggers but the introduction of rifle in 1857 put them out of work. The opportunity for alternative work arose in 1905 when some broken equipment at the American Mission Hospital in Sialkot afforded a chance to adopt their skills. By 1920 Sialkot was exporting to all parts of British Empire including Afghanistan and Egypt and was later selected for supplying surgical instruments for the Allied forces in World War II. The Metal Industries Development Centre (MIDC) was established in 1942 to act as a supply and inspection agency for the Allied forces. Although the surgical instruments manufacturing factories were mostly owned by Hindus, the craftsmen were mostly Muslim and the industry was not affected by the partition of British India.When Pakistan got independence in 1947 it inherited 17 registered surgical instruments manufacturers in Sialkot. In 1958 the Surgical Instruments Manufacturers Association of Pakistan (SIMAP) got established to unite the manufacturers at one platform. The association since then has played an important role in addressing issues at the government level, nominating trade delegations and participants for trade fairs and exhibitions and representing the industry at various local and international forums. The surgical industry got its real boost in the 1960s, when the government of Pakistan gave various incentive and bonus schemes to this industry. In the 1980s the demand of surgical instruments from Pakistan increased worldwide. However, in 1994 US imposed restrictions by US authority Food and Drug Administration (FDA) on the imports of surgical instruments from Pakistan and forced the industry to improve its manufacturing.The city of Sialkot is very well known particularly in Europe for its surgical industry. At the end of 2014 there are 3400 small and large units of surgical; more than 500,000 workers are grossly engaged in manufacturing of Surgical Instruments to meet the export commitments in the International Market. There are 2 main types of the surgical instruments single use instrument and reusable instruments. Pakistan produces 80% of single use instrument and 20% of reusable instrument.

Vision Statement:To become a recognized leader of surgical industry in Pakistan by providing large range of product.Mission Statement:

To provide quality surgical instrument to our customers at competitive price by utilizing innovative technologies and select and retain the professional workers.Strategic Objectives: To continue to be providing the quality products to the valuable customers To select and retain the professional workers for theorganization To projectan outstanding corporate image To satisfy the customer through extra ordinary serviceSWOT analysisOpportunities: Positive GDP per capita shows purchasing power of people increase. Low inflation rate decrease the prices and increase the value of money. Increasing Growth rate of population would increase the number of consumers. Ceramic Fairs organized in Pakistan to attract foreign buyers. Capture new range of products.Threats: People perception about pollution (surgical industry is not environmental friendly and People are more caring about the environment now). Increase cost of raw material. Instability of government and energy crises in Pakistan(surgical instrument of Pakistan is one of the best in the world but because of the energy issue many of the foreigner order are not fulfilled in proper time that break the trust of the customer). Very high competition (The existing competitors have high reputation and have low price). Upcoming Increased competition at international level. Government Spend less on R&DExternal Factor Evaluation Matrix (EFE)External Strategic FactorsWeight RatingWeighted

Opportunities0.15

0.15

0.10

0.10

0.10

1

1

1

4

30.15

0.15

0.10

0.40

0.30

Positive GDP per capita shows purchasing power of people increase. Low inflation rate decrease the prices and increase the value of money. Increasing Growth rate of population would increase the number of consumers. Surgical organized in Pakistan to attract foreign buyers. Capture new range of products

Threats0.050.100.100.100.05244330.100.400.400.300.15

Increase cost of raw material Instability of government and energy crises in Pakistan Very high competition Less Government Expenditure on R&D Unemployment levels shows increasing trend

Total Score1.002.45

Pest analysisPolitical-Legal Political instabilityPolitical instability is big threat for our business and Pakistan is very unstable politically and has a lot of problem of violence that's why reputation in the global market is very bad for Pakistan. According to World Bank data for Political Stability Index for Pakistan from 1996 to 2013 is below in the table. The average value for Pakistan during that period was -2.04 points with a minimum of -2.81 points in 2011and amaximum of -1.14 points in 2000.CountryYearPolitical stability index

Pakistan1996-1.21

Pakistan1998-1.18

Pakistan2000-1.14

Pakistan2002-1.70

Pakistan2003-1.58

Pakistan2004-1.56

Pakistan2005-1.76

Pakistan2006-2.04

Pakistan2007-2.43

Pakistan2008-2.57

Pakistan2009-2.63

Pakistan2010-2.67

Pakistan2011-2.81

Pakistan2012-2.69

Pakistan2013-2.59

-2.81 are weak and -1.14 is strong value for the index and above table shows that Pakistan has worse condition in political stability and absence of violence.Antitrust regulationsAntitrust regulations are designed to promote economic competition and protect the individual from the resulting economic harm. Without competition, monopoly power may result. Monopoly power is the power to reduce output and increase prices. Thats why government develops Competition Commission of Pakistan to increase the competition. These antitrust regulations are not threat for surgical industry because these regulations are helpful for new entrant in this industry competition is already very much.Laws on hiring and promotionAccording to Pakistans Constitution act article (11.3) No child below the age of fourteen years shall be engaged in any factory or mine or any other hazardous employment in the surgical industry there are many child labor is working that law is threat for the industry.In Pakistan the hiring and promotion of employees can be followed according to the public service system which says that shall be recruited through advertisement and the advertisement should be clearly stated job specification, salary and designation and on the other hand same process would be followed in promotion but in promotion the process would be inside the organization. This could be huge threat for our business because following these processes in hiring and promotion increasing a lot of cost. Tax lawsAccording to SRO 565 and 567 under which currently manufacturers and commercial importers are allowed to import raw materials at concessionary rates. Surgical goods are also imported at concessionary rates under the SRO 567. Reduction in custom duty is a opportunity for the surgical industry.Economical:Interest rate:According to State Bank of Pakistan interest rate is 8.5% in 2015 As compared to previous years interest rate that was 9.5% which shows a positive sign in term of economy. It would be a great opportunity for new investors who want to invest their money in surgical industry.Unemployment levels:According to the recent statistics, approximately 5.10 percent of labor force is unemployed in Pakistan (World Bank Survey) and it shows increasing trend. It will be consider as a threat for our business because due to high unemployment people consumption and purchasing power is decreasing.Socio cultural

Growth rate of population: According to the recent statistics of World Bank annual growth rate in Pakistan population is almost constant in last few years that is 1.7% in 2013. It is indicated that the population of Pakistan has been increasing and this dramatically increases in population providing an opportunity to our business because increase in population can increase in consumer consumption and increase our sales.Life style change:Below graph shows that Pakistan has low life expectancy than other European countries, USA, Japan and Australian. Pakistan has average age of its citizens around 60 years and People are becoming more aware and health conscious. So low life expectancies can have cause as a threat for our business.Career expectations:Government of Punjab has Established a Technical Education and Vocational Training Authority (TEVTA) to train the workers in surgical industry and there are lot of banks and other institutions who provide different kinds of training development and career development programs related to meet the expectations of people related to their career. These are the opportunity for our business expectations high then the performance should be high.Technological Total government spending for R&DR&D covers basic research, applied research, and experimental development. Germany, USA and other European countries are the big market for the surgical and in the study of World Bank we can see that they spent almost 3% of the GDP on the research and development while on the other hand Pakistan only spend 0.5% of the GDP. That is threat for our business.Focus of technological efforts:In Pakistan no step was taken for surgical sector development whereas other countries of the world, through research have increased significantly its production capabilities. In our country mostly people used traditional method for production. So in that case poor technological efforts consider threat.Productivity improvements through automation:In surgical sector a lot of automated systems is installed which are increasing productivity and minimize the input cost. Automated machine/system usage can be an opportunity for sector and our business.PEST Impact MatrixName of changeImpact of changeOpportunityThreat Strategic response

Political ChangePolitical Stability is very low

Increase competition and reduce monopoly\Clarify the job description

Reduction in custom duty

Helpful for new entrant

import raw materials at concessionary ratesBad reputation in global market

increasing a lot of cost

Political instability

Antitrust regulations

Laws on hiring and promotion

Tax laws

Economic Change

Decrease in Interest rate

Decrease in Inflation rate

High unemployment level

Increase the net profit

Low prices and value of money is increasing

Interest rate

Inflation rates

Unemployment levels

Social ChangeIncreasing

low life expectancies

Trained worker

Increase in number of consumer

More skilled worker provide benefit to the firm

Threat

Growth rate of population

Life style change

Career expectations

Technological Change

Low spending on R&D

traditional method for production

Increasing

Increase Operating Cost but provides efficiency of work

Have less Knowledge of the market

Low production

Total government spending for R&D

Focus of technological efforts

Productivity improvements through automation

PORTERS FIVE FORCES MODELBargaining power of supplier (Low)The bargaining power of supplier is low in the surgical industry because there are large numbers of supplier in the industry and most of the big companies prefer to outsource their raw material rather than they produce by them self because they can get it on low price. Bargaining power of buyers (High)The bargaining power of buyers is high in the surgical industry because of Cost of switching to other brand is very low price competition in market number of manufacturer is very high

Threat of new entrant (Moderate)In surgical industry threat of new entrant is moderate because in market to start business you need high capital because machinery is expensive but also there are no barriers to enter the surgical industry. Some other reasons for moderate threat are buyers demand is growing rapidly There is already high competition industry members generating high profitsThreat of substitute (Low)The competitive forces of substitutes product is low because surgical industry provide the instrument that are best of its kind and there are not best substitute for surgical instrument exist in the market.Industry Rivalry (High)Surgical industry is very competitive because there are lot of competitor exit within the country and even outside the country. The main things that cause the rivalry are Pricewar in thecompetitors Customer has low cost in switching to the other manufacturers which is indication of the strong rivalry Pakistan surgical industry is not much a innovative but competitors are very strongly gofor innovation by developing different products lines and segments Technology improvement is so high, competitors has their own R&D departments, heavy investments on the R&D by the Governments

CPM MatrixIttehad surgicalOrthotech enterprisesBonex

Key Strategic FactorsWeight RatingWeighted Score RatingWeighted ScoreRatingWeighted Score

0.15

0.10

0.10

0.10

0.10

0.10

0.10

0.05

0.10

0.10

1

1

4

4

3

3

4

3

1

3

0.15

0.10

0.40

0.40

0.30

0.30

0.40

0.15

0.10

0.30

4

3

4

3

3

3

3

3

4

4

0.60

0.30

0.40

0.30

0.30

0.30

0.30

0.15

0.40

0.40

4

4

4

2

2

4

2

2

3

3

0.60

0.40

0.40

0.20

0.20

0.40

0.20

0.10

0.30

0.30

O1 Positive GDP per capita shows purchasing power of people increaseO2 Low inflation rate decrease the prices and increase the value of money.O4 Surgical organized in Pakistan to attract foreign buyersT3 Very high competition

T4 Less Government Expenditure on R&D

S2 skilled labor force

S3 Stable and strong relationship with our customers

W1 reward and benefits mechanisms are not effective

W2 Lack of international market awareness

W4 Insufficient Quality Control

Total Score1.002.603.453.10

AInternal assessment of Itehad surgical companyCultureElements of culture that discussed in itehad surgical company.Rites Every organization has their own culture and itehad surgical instrument also have a some rites, ritual and cultural practices. Namaz prayers practices perform in Itehad surgical instrument. The facility of mosque room available for worker and other employee to perform their religious activities. But they have not in the proper form of environment to performing these activities. CeremonialCeremonial is like a several rites connected together in any organization. Itehad surgical has no ceremonial activities to perform main reason behind that its a local base organization and they cant focus on any ceremonial activities.Myth Ittehad surgical has no myth and has no case study methodology concept applied in the surgical.Saga and Legend There is no proper saga and legend of surgical instrument but they have narrative their CEO Muhammad Adeel as a hero and legend of the Ittehad organization.HeroThe main hero in the Ittehad narrates to the CEO Mr. Adeel and they have no any hero that they mention.ConflictDuring the interview of different management we examine that some of the conflict come when the G.M tell us we are participated all the management in the decision making process. But when the interview to middle management one supervisor tell us that all decision make through centralized decision making system.

Aspects of Itehad Surgical instrumentsDimensionLowaveragehigh

Strong work ethic

High ethical belief clear code of conduct practices

Formal dress

Informal dresses

Socialize together outside of work

Do not question supervisor decision

Be health conscious wellness program

Have numerous meeting

Participated management style

Allow substantial working from home

Preserve natural environment

Management functionsThere are four major functions of management of the ittehad surgical Company which are as follow: Planning Organizing Leading Controlling(1)PlanningThe ittehad surgical Company consists of just a three layers of flat hierarchy. Due to this the top level management has the duty of setting the goals and objectives of the company. Planning is also done by the upper level managers.(a) Strategic GoalsIn most of the companies the strategic goals are made for long term but ittehad surgical Companys goals are set for only three years, they change their strategies after every three years. The goals are set by the Managing Directors of the company after getting the clearance from the head quarters. Every year in the annual meeting they have a review of their strategy to make sure they are moving with the changing environment in the market. The following are the strategic goals of ittehad surgical Company: To continue to be an organization providing the quality products to the valuable customers. To select and retain the professional people for the organization. To project an outstanding corporate image. To satisfy the customer through extra ordinary service and an excellent service(b) Tactic GoalsTactic goals are set at the end of the year at annual basis. The top level management decides these goals with the consultation of the lower level employees. The following are the tactic goals of the company: To increase the revenues by 20% as compared to last year. To increase the total retail customers by around 10% To increase the market share by 5%(2)OrganizingOrganizing is the second management function. The following steps are taken by the ittehad surgical Company in organizing their goals and objectives: Departmentalization Work Specialization Delegation and Accountability Resource Allocation Organizing the Human ResourcesAll the steps are discussed below in detail:(a) DepartmentalizationOn the basis of functional approach the ittehad surgical Company is divided into different departments. Grouping of employees is done on the basis of their common skills and work activities. Such kind of approach helps the company in solving their problems and it also make the less the need of training the employees specially. The general manger is head of all the departments all the department have to report to the general manager in the ittehad surgical Company. There are five major departments in the company which are as follow: Production Department Industrial Relations Department Sales and Marketing Department Human Capital Department Finance Department(1) Production Department: This department looks around all the production of the company. All plants in the country are in under its control.(2) Industrial Relation Department: This department deals with the problems of the employees. The department listen the problems of the employees and send them to the high authorities for settling them up and stop them from becoming a hurdle in the work progress of the company. (3) Sales and Marketing department: This department makes sure that the product is easily available in the market for the customers to buy and deals with the issues of advertisement, promotion, and distribution of the product.(4) Human Capital Department: This department takes care of the efficient workers of the company, they select some efficient workers of in the company recommend their names for promotion in job so that the workers remain happy and dont leave the company. Management level employees are dealt by the department.(5) Finance Department: The department is concerned with cost and price of the products produced by the company. It also tackles with import related issues of the company. Finance department is assisted by the sales and marketing department in making invoices and payroll entries.(3)LeadingThe third management function is leading. The following major steps are taken by the ittehad surgical Company in the leading function: Motivation Communication Corporate Culture(1) Motivation Ittehad surgical Company gives high attention to the motivation of the employees. Promotions of hardworking employees are a part of the companys policy. Promotions of employees are done on the performance basis which is a great motivation for the employee that higher his performance there is more chance of his promotion. Beside from promotion strategy the ittehad surgical Company also uses the compensation strategy to motivate the employee; ittehad surgical is paying industrial average in compensation. Not only this different campaigns and competitions between the employees itself are also used to motivate the employees. Managers play a very important role in the motivation of the employees in ittehad surgical Company. They help them in all their problems either they are personnel or professional. They give them feedback on their performance which makes the employee feel good. Working environment and a challenging milestone are a major factor in employee motivation in the company.(2) CommunicationThere is an open environment in the ittehad surgical Company which allows the employees to communicate with each other and it allows the information to flow inside the company and discourages the barriers between members to share information. Before making the decisions the top level managers discuss it with the middle level managers and before decision making it is shared till the end of the hierarchy. (3) Corporate Culture The top management of the ittehad surgical tries to follow the prescribed culture of the organization. ittehad surgical has formal and documented values that are communicated to all the employees. The top level manager acts as role models to make sure that the rules and regulations are been applied in the company and closely administrator review their employees behavior.(4)Controlling The last and the most crucial function of management are Controlling. In this function the company evaluates that either they have achieved the goals which they had set before. If the answer is yes then the employees and managers are rewarded with bonuses and other ways and vice versa. In the following well come to know that how the Coca-Cola Company performs its controlling function?(1) Sales Persons Reporting System Sales person had to report to the market developer area every day about his activities. He give him record of the per day sales and he can get any kind of assistance by the area market developer anytime on any matter.Attendance of the sales person is taken with the punch card system, with the help of which the entry and exit time of the sales person is recorded.(2) Sales Person Evaluating System Evaluation of all the sales person is done on quarterly basis. Evaluation helps in the promotion of the people to higher levels in the organization. The evaluation is a great motivator for the sales person because due to this he works hard to get promotion or at least the monetary reward. Monetary rewards are not only given to the best sales person, they are also given to the best market developer and the best sales manager of the year.Performance development plan is kept as base to evaluate the performance of the employee. The measurement of performance is done on the basis of achievement of targets which were set and communicated at the start of the year in front of each sales manager, each quarter to market developer and monthly to ever salesperson.

Functions check listMarketing audit checklist:Is the organization positioned well among competitors?Yes the organization as well positioned among competitors. On the basis of product quality we positioned well among competitors, we provided high quality products. We have also strong core values on the basis of those values we positioned well among competitors.Are the present channels of distribution reliable and cost effective?Yes the present channel is reliable and cost effective. After the production medicine is given to distributor for delivery of product and distributer is responsible for the supply of medicine. Does the firm conduct market research?Yes, ittehad surgical conducts market research, after every four month firm conduct market research in order to identify market need and check availability of products. Are product quality and customer service good?The main focus of the company is to produced and provided high quality products. They never compromise on quality of medicine and always provided high quality products.Are the firm product and service priced appropriately?Their priced are fixed by government drug regulatory authority, companies cannot increase prices. Does the firm have an effective promotion, advertising and publicity strategy?No, firm did not use any type of advertising and promotion strategy.Does the firm have R&D facilities? Yes, firm did not have any R&D facility.ProductionAre supplier of raw material and parts are reliable and reasonable?ittehad surgical import raw material and parts from India and china, and Pakistan had strong relationship with these countries.Are machinery are in good condition?In surgical industry it is very necessary to maintain the conditions of machinery, all machinery present in ittehad surgical are in good condition and check on monthly basis.Are inventory control policies are effective?There are no such policies for inventory control because production of medicine is done through batch process Are quality control policies are effective?Yes quality control policies are effective in ittehad surgical.MIS An MIS provides managers with information and support for effective decision making, and provides feedback on daily operations. A manufacturing MIS can help managers monitor a manufacturing process to maximize the value to processes within an organization. Information is provided to managers through various summary reports that are usually generated through accumulation of transaction processing data. Each MIS is an integrated collection of subsystems, which are typically organized along functional lines within an organization. Thus, a financial MIS includes subsystems that address financial reporting, profit and loss analysis, cost analysis, and the use and management of funds.HRThe ittehad surgical HR department provides associates with the opportunities to develop knowledge and skills that lead to more effective job performance. The developmental process is a joint responsibility between managers and associates. This process includes determining development needs, agreeing on the development methods, and coaching. Methods of development may include on-the-job experiences, specific training programs, or other developmental approaches. Development, coaching, and feedback are extensions of the performance appraisal process, and prepare associates for current and future business needs.To enhance the performance of individuals and departments to meet business needs, a combination of internal and external resources may be utilized.Value Chain Analysis Manufacturing Standards Surgical industry is the sector where quality is major issue of concern. Recently its importance has increased manifolds given the increasing global competition and new regulations being enforced by the developed countries. These regulations require the exporters of the developing countries to introduce systems focusing on the improvement of management, labor, technology, and all the other fields which in any way affect the firm. The surgical instrument standards must be in conformance with WTO standards. Over 300 Companies have ISO-9002 Certification and about 250 have Certification of Good Manufacturing Practices.Manufacturing process In order to develop detailed understanding of the issues and problems faced by a particular industry, it is of prime importance 11 that an in depth analysis of the value chain is carried out. During the process of production, value is being added at each stage of the production, from the first stage of raw material to the final stage of finished product, a product undergoes a series of processes until it attains its final shape

Raw material shearingDie makingAnnealingForging

TrimmingInitial Assembling & FilingHeat treatmentMachining

Labeling & packagingTesting & cleaningFinishing and final AssemblingElectro polishing

Internal Factor Evaluation Matrix (IFE)

Internal Strategic FactorsWeight RatingWeighted Score

Strength0.10

0.150.10

0.100.05

4

34

410.40

0.450.40

0.400.05

Good conditions of offices, equipment and machinery skilled labour force Stable and strong relationship with our customers Low production cost Continuous adoption of new technology

Weakness0.10

0.10

0.100.150.05

3

1

1330.30

0.10

0.100.450.15

reward and benefits mechanisms are not effective Lack of international market awareness doesn't have R&D facilities Insufficient Quality Control Lack of management system in the company

Total Score1.002.80

Industry and competitive analysisQuestion 1: What are the Industrys Dominant Economic Traits?Export of surgical instrument of PakistanAccording to SIMAP Pakistan's last five years exports of surgical instrument are given below. By seeing these number we can clearly see that Pakistan's export of surgical instrument show a significant increase every next year which is a good sign for the industry.Year Value (Millions of US Dollar)

2013-2014335.000

2012-2013303.094

2011-2012297.345

2010-2011242.000

2009-2010217.000

Profile of industrysize of industry3400 unit

Employment500,000

Single use Instrument80%

reusable instrument20%

Export of surgical to different countries in 2013-2014Pakistan's surgical instruments are one of the best in the world and these are some of the best customers countries of Pakistan. According to UN Com trade data USA, UK and Germany are the main market for our surgical goods because major portion of our surgical good goes to these markets. Below table show some other countries that have sufficient share in our export of surgical goods.Country% of Share

USA24.27

Germany13.41

United Kingdom10.46

France4.24

Brazil2.51

Italy2.04

Japan1.92

Australia1.79

Belgium1.46

Mexico1.17

United Arab Emirates0.89

Rest of the world35.84

World Exports of Surgical Instruments These statistics from UN Com trade source show that there was export of 105 billion dollar worldwide in 2013 and also show that USA is the main exporter of the surgical with having 24% share in the world. Below table show some of the major exporter share in the market. Pakistan has a 0.32% share of export in surgical goods.Value in Thousand US $Country2011% Share2012% Share2013% Share

World95,439,64498,847,001104,688,000

USA23,557,96024.6824,567,41324.8525,218,30024.09

Germany12,689,82413.3012,843,50612.9913,831,38013.21

Netherland8,143,8748.538,235,7308.338,107,1837.74

Belgium5,142,8315.395,341,3285.406,303,1756.02

Japan4,378,2444.594,466,3474.524,381,5254.19

Ireland3,793,2293.973,786,7383.833,990,8403.81

France3,199,0883.353,062,8183.103,322,3513.17

UK2,551,8802.672,375,1172.402,512,5462.40

Pakistan297,3450.31303,0940.31335,0000.32

Top ten buyers of surgical instruments According to the UN Com trade USA is not only the biggest exporter but also the biggest importer of the surgical goods. This table shows the last 3 years top 10 importer countries who import the surgical good from other countries and in all 3 year USA is on the top of the list.201320122011

CountryTrade ValueCountryTrade ValueCountryTrade Value

USA 18,066,015 USA 17,173,916 USA 16,615,557

Germany 8,597,619 Germany 7,871,892 Germany 7,871,709

Netherlands 6,185,813 Japan 6,360,737 Netherlands 5,913,339

Belgium 5,954,380 Netherlands 5,967,165 Japan 5,644,193

Japan 5,873,167 Belgium 4,987,579 Belgium 4,969,901

China 5,555,355 China 4,859,590 France 4,284,362

France 4,531,329 France 4,202,668 China 4,026,365

United Kingdom 3,641,115 United Kingdom 3,412,652 United Kingdom 3,293,629

Italy 3,043,778 Russian Federation 2,973,145 Italy 3,172,350

Canada 2,644,927 Italy 2,849,655 Canada 2,514,495

(Page no.13 in phase 1) already done this questionQuestion 2: What Is Competition Like and How Strong Are the Competitive Forces?

PORTERS FIVE FORCES MODELBargaining power of supplier (Low)The bargaining power of supplier is low in the surgical industry because there are large numbers of supplier in the industry and most of the big companies prefer to outsource their raw material rather than they produce by them self because they can get it on low price. Bargaining power of buyers (High)The bargaining power of buyers is high in the surgical industry because of Cost of switching to other brand is very low price competition in market number of manufacturer is very high

Threat of new entrant (Moderate)In surgical industry threat of new entrant is moderate because in market to start business you need high capital because machinery is expensive but also there are no barriers to enter the surgical industry. Some other reasons for moderate threat are buyers demand is growing rapidly There is already high competition industry members generating high profitsThreat of substitute (Low)The competitive forces of substitutes product is low because surgical industry provide the instrument that are best of its kind and there are not best substitute for surgical instrument exist in the market.Industry Rivalry (High)Surgical industry is very competitive because there are lot of competitor exit within the country and even outside the country. The main things that cause the rivalry are Pricewar in thecompetitors Customer has low cost in switching to the other manufacturers which is indication of the strong rivalry Pakistan surgical industry is not much a innovative but competitors are very strongly gofor innovation by developing different products lines and segments Technology improvement is so high, competitors has their own R&D departments, heavy investments on the R&D by the Governments

Question 3: What Forces Are at Work to Change Industry Conditions?The driving forces in an industry are the major underlying causes of changing industry and competitive conditions. They have the biggest influence on how the industry condition will be altered. Major driving forces in surgical industry are given belowIncreased globalizationCompetition begins to shift from regional & national level to an international level. Industry members begin seeking out customers in foreign market and Production activities begin to migrate to countries where costs are lowest. In surgical industry global competition really starts because of some major companies are working globally. Use of the productUse of the surgical instrument is increasing day by day especially in medical sector and there is a trend of single use of the product has been increasing especially in Europe. There are 2 main types of the surgical instruments single use instrument and reusable instrument. Pakistan produces 80% of single use instrument and 20% of reusable instrument.Advance in material & technologyAdvances in the material technology can dramatically alter an industrys condition. Because of these advancement companies are providing better product on low cost. In other countries government spend a sufficient portion of the budget on the R&D and companies also spend a lot on R&D that's why they capture big portion of the market. Entry of major firmPakistan is one of the biggest surgical providers in the surgical industry. In Pakistan competition is increasing every other day because of the new entrant in the industry. Labor cost is very low that's why foreigner also prefers to enter in Pakistan industry.

Question 4: Which Companies are in Strongest / Weakest Positions?Strategic group mapping is a valuable tool for understanding the similarities, differences, strengths, and weaknesses inherent in the market positions of rival companies. Rivals in the same strategic groups are close competitors, whereas companies in distant strategic groups usually pose little or no immediate threat.Strategic group mappingCompetitive characteristics that differentiate surgical companies are product line price

BonexHigh

Orthotech enterprises

Ittehad co. Price/quality

LowLow product linehigh

The above is the graph of the group matrix of the Surgical Instruments manufacturers. On X axis we take the product line while on the Y axis we take the price from low to high. Our company Ijaz and co. has low share and less number of products but its competitors like Hilbro and Dr. Frigz international offer a lot of types of instruments. There are a lot more competitors like Hilbro and Dr. Frigz companies.Question 5: What Strategic Moves Are Rivals Likely to Make Next?This analytical step involves identifying competitor's strategies, evaluating their competitive options and predicting their next moves. Some of the main strategies that our competitors are likely to make are theseProduct development strategyBusinesses are continuously making critical decisions about their product range. Product decisions will include whether to develop new products and how to manage existing products. Some competitors want to strengthen their number of product in order to capture new customers from market.GlobalizationTechnology is continually changing business, and these constant changes have been making it more feasible and profitable for businesses to expand their operations globally. Now, competitors taking advantage of the large revenue opportunities made possible by participating in global market. And some of them want to make an alliance or partnership with a foreign company in order to enter a foreign market. Partnering with a foreign company can provide the expertise, technology, capital or market access that you might not be able to afford on your own.Customized product developmentAfter the standard product development, product is now send for the customized development where it is developed for various advance and customized features of the product. Develop BrandThere are a lot of companies that provide the material to some well known firm but they don't have their own brands. That's why some suppliers of key components want to build their own position by developing their own identity through developing their brand and increase their market share.

R&D strategyR&D is key to respond to the uncertain business environments and an increasingly competitive market place. As new technology is being constantly introduce to the market some of the competitors want to spend a good portion of their investment to the R&D to understand customer's needs and to know what actually good for the company. InnovationAn effective innovation strategy of a company depends more on how much it spends on R&D because identifying customer's needs and then being the first to market with a product that addresses those needs is the key to success.Question 6: What are the Key Factors for Competitive Success?An industry's key success factors (KSFs) are the particular attributes that spell the difference between being a strong competitor and a weak competitor. Key success factors are so important to competitive success thatall firmsin the industry must pay close attention to them. Our industry's some of the key success factors are given below.Low cost productionCost of production can be determined by the sum of the cost of the resources that went into making it. The cost can comprise on the cost of labour, capital and land. In Pakistan labour cost is very low as compare to many developed countries. That's why even in surgical industry Pakistan is one of those countries who have benefit of low cost of production that help in competitive success.High labour productivityLabour productivity is concerned with the amount of output that is obtained from each employee. It is a key measure of business efficiency, high labour Productivity reduce the cost and increase the profits. In Pakistan we have very skilled labour in the surgical sector and productivity is very high because we can produce more at minimal cost.

QualityOne of the cornerstones of business success is offering a high-quality product. If you want to build a good reputation for your business you have to provide the good quality at reasonable price that will make your customers loyal to you. Our biggest customers are foreigner and they focus a lot on the quality of the product. Thats why quality is one of the key success factors for surgical industry. Strong relation with customerCustomer relations have become such an importantsuccess factorin modern business because the purpose of a business is to get and keep customers. The key to successful customer relations is to give them what they need, not just what you want to sell. The stronger the relationships with your customers, the greater will be their trust andloyalty in your business and customer keeps buying your product and recommending it to others. Pricing strategyWe realize that business success cannot be defined by one particular aspect of a business but pricing is one of other key success factor for business. Developing the right pricing strategy for each market is one of the critical factors for business to successfully expand. A business can use a variety ofpricing strategieswhen selling aproduct. The Price can be set to maximize profitability for each unit sold. It can be used to defend an existing market from new entrants, to increase market share within a market or to enter a new market. Businesses may benefit from lowering or raising prices, depending on the needs and behaviours of customers. Finding the right pricing strategy is an important element in running a successful business. We have different markets in surgical like domestic and some foreign proper pricing strategy is key to target different markets. Convenient locationThere are many factors to consider in choosing the locationfor your business but the ideal location would be one where costs are minimised. The key to picking a profitable location is determining the factors that will increase customer volume for your business. Sialkot is key place for surgical industry because of availability of raw material and airport for the imports and exports. Question 7: Is the Industry Attractive or Unattractive and Why?Surgical industry of Pakistan is a moderate industry because there are some benefits and some threats too. Porter 5 force model also show that the surgical industry of Pakistan is a moderate industry. Factors that make it attractive are Pakistan's export of surgical instrument show a significant increase every next year which is a good sign for the industry The bargaining power of supplier is low in the surgical industry because there are large number of supplier in the industry The competitive forces of substitutes product is low because surgical industry provide the instrument that are best of its kind Cost of production like labor cost is very low in Pakistan Some of the factors that make it unattractive are The bargaining power of buyers is high in the surgical industry because of less cost of switching, price competition and high number of manufacturer Surgical industry is very competitive because there are lot of competitor exit within the country and even outside the country.

TWOS Matrix Internal Factor Analysis (IFAS)

External Factor Analysis (EFAS)Strengths:1. Good conditions of offices, equipment and machinery2. skilled labour force 3. Stable and strong relationship with our customers4. Low production cost5. Continuous adoption of new technology have sufficient working capital

Weaknesses:1. reward and benefits mechanisms are not effective2. Lack of international market awareness3. doesn't have R&D facilities4. Insufficient Quality Control5. Lack of management system in the company6. Less product diversity

Opportunities:1. Purchasing power of people increase.2. Low inflation rate decrease the prices and increase the value of money.3. Increasing Growth rate of population 4.Capture new range of products Create a good brand image as the purchasing power of peoples increasing. (S1,O3)

Create new range of products as we have a good experience of 20 years. S5,O4)

Target the foreign market by getting the full awareness of the foreign market.(O1, W2) Expand the number of product by getting information about customer needs by developing R&D facilities in the company.(O4, W3)

Threats:1. Increasing cost of raw material2. Instability of government and energy crises in Pakistan3. Very high competition 4. Less Government Expenditure on R&D5. surgical industry Impact on environment

Because of the low cost of production we can reduce the effect of increasing cost of raw material.(S4,T1) By adopting new technology we can reduce the negative impact of surgical industry on the environment.(S5,T5) By using working capital we can develop our R&D department.(S6,T4)

By developing our own R&D department we can get the market awareness.(W3,T4) By using the diversification in product we can reduce the competition.(W6,T3)

Strategic Factor Analysis summary (SFAS)Key Strategic FactorsWeight RatingWeighted Score

0.150.10

0.100.10

0.10

0.100.10

0.05

0.10

0.10

11

44

3

34

3

13

0.150.10

0.400.40

0.30

0.300.40

0.15

0.100.30

O1 Purchasing power of people increase.

O2 Low inflation rate decrease the prices and increase the value of money.

O4 Capture new range of products

T3 Very high competition

T4 Less Government Expenditure on R&D

S2 skilled labour force

S3 Stable and strong relationship with our customers

W1 reward and benefits mechanisms are not effective

W2 Lack of international market awareness

W4 Insufficient Quality Control

Total Score1.002.60

CPM MatrixIttehad & co.HilbroDr. Frigz International

Key Strategic FactorsWeight RatingWeighted Score RatingWeighted ScoreRatingWeighted Score

0.15

0.10

0.10

0.10

0.10

0.10

0.10

0.05

0.10

0.10

1

1

4

4

3

3

4

3

1

3

0.15

0.10

0.40

0.40

0.30

0.30

0.40

0.15

0.10

0.30

4

3

4

3

3

3

3

3

4

4

0.60

0.30

0.40

0.30

0.30

0.30

0.30

0.15

0.40

0.40

4

4

4

2

2

4

2

2

3

3

0.60

0.40

0.40

0.20

0.20

0.40

0.20

0.10

0.30

0.30

O1 Purchasing power of people increaseO2 Low inflation rate decrease the prices and increase the value of money.

O4 Capture new range of products

T3 Very high competition

T4 Less Government Expenditure on R&D

S2 skilled labour force

S3 Stable and strong relationship with our customers

W1 reward and benefits mechanisms are not effective

W2 Lack of international market awareness

W4 Insufficient Quality Control

Total Score1.002.603.453.10

The Strategic Position and Action Evaluation (SPACE) MatrixThe axes of the SPACE Matrix represent two internal dimensions (financial position and competitive position) and two external dimensions (stability position and industry position). These four factors are perhaps the most important determinants of an organizations overall strategic position.

Internal strategic positionExternal strategic position

Competitive Advantage (CA) Industry strength(IS)

X axis ( -7 worst, -1 best) -5 Market share -7 Brand image -3 Technological know-How -2 Product life cycle -4 Control over supplier -2 Customer loyalty

( +1 worst, +7 best) +5 Growth potential +6 Resource utilization +6 Financial stability +4 Consolidation +5 Profit potential +5 Ease of entry

Average -3.83Average + 5.16

Total axis X score + 1.34

Financial strength(FS)Environmental strength(ES)

Y Axis

(+1 worst,+7 best)

+5 Working capital +6 Return on investment +3 Return on asset +4 Liquidity +6 Net income +3 Inventory turnover (-7 worst, -1 best)

-5 Technological changes -2 Competitive pressure -2 Inflation rates -4 Barriers to entry -3 Price elasticity of demand -1 Demand variability

Average +4.50Average -2.83

Total axis Y score + 1.67

SPACE strategy matrix

Score on X-axis is +1.34 and score on Y-axis is +1.67 the resultant vector is in first quadrant which needs aggressive strategy.

The Boston Consulting Group (BCG) MatrixSurgical industry has 95% sales in the exports and the sales of surgical instruments have been increased 10.5% last year from US$ 303.00 Million to US$ 335.00 Million. Hilbro (Pvt) Ltd is the market leader of the surgical industry with 20% of market share. And Ittehad and company has market share less than 1% but it's not clear so its relevant market share also less than 5%. Industry sales growth is rapid but Ittehad and company has less market share that's why it lies in 1st quadrant.

The Internal-External (IE) MatrixThe IE Matrix is based on two key dimensions, the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis. The IFE total weighted scores is 2.80 and the EFE total weighted scores is 2.45.

The EFE and IFE total weighted scores falls in the V cell of I/E Matrix. The company can follow hold and maintain strategies which include Market Penetration and Product Development.

The Grand Strategy MatrixGrandstrategymatrix ispopular toolforformulatingalternativestrategies. Grand strategy evaluation based on two dimensions market growth and competitive position of the firm. Surgical industry has 95% sales in the exports and The value of exports of surgical instruments has been increased 10.5% last year from US$ 303.00 Million to US$ 335.00 Million. And company also has strong competitive position. That's why Ijaz and Company falls in first quadrant of Grand Strategy matrix.Ijaz and Company falls in the first quadrant. The company can follow the strategies like Market development, Market penetration, Product development, Forward integration, backward integration and related diversification.

The Quantitative Strategic Planning Matrix (QSPM)Thelaststageofstrategyformulationisdecisionstage.In thisstageit isdecidedthatwhichwayismostAppropriate orwhichalternativestrategyshould beselect.Product DevelopmentMarket Penetration

Key Strategic FactorsWeight ASTAS ASTAS

Strength0.10

0.150.10

0.100.05

4

4-

230.40

0.60-

0.200.153

4-

230.30

0.60-

0.200.15

Good conditions of offices, equipment and machinery

skilled labour force Stable and strong relationship with our customers Low production cost Continuous adoption of new technology

Weakness0.10

0.10

0.100.150.05

-

-

43--

-

0.400.45--

-

33--

-

0.300.45-

reward and benefits mechanisms are not effective Lack of international market awareness doesn't have R&D facilities Insufficient Quality Control Lack of management system in the company

Total Score1.00

Opportunities

0.150.15

0.10

0.100.10

33

4

32

0.450.45

0.40

0.300.20

42

2

31

0.600.30

0.20

0.300.10

1. Positive GDP per capita shows purchasing power of people increase.2. Low inflation rate decrease the prices and increase the value of money.3. Increasing Growth rate of population would increase the number of consumers. 4. Surgical organized in Pakistan to attract foreign buyers.5.Capture new range of products

Threats

0.050.10

0.100.10

0.05

3-

33

-

0.15-

0.300.30

-

3-

31

-

0.15-

0.300.10

-

Increase cost of raw material Instability of government and energy crises in Pakistan Very high competition Less Government Expenditure on R&D Unemployment levels shows increasing trend

Total Score1.004.754.05

Decision:After all analysis we have selected two strategies (product development and market penetration) in QSPM. Total attractive score of product development is much better than the market penetration. So our final strategy to implement is product development in which we have many dimensions but the main is develop the finish good as we are just making a raw form of surgical instrument and sell it to other companies. By making our own finish good we can increase our market share and take the advantage of the increasing growth of the surgical industry.

Suitability: Suitability deals with the overall rationale of the strategy. The key point to consider is that strategy would address the key strategic issues underlined by the organizations strategic position.Tools: Ranking strategic options Decision trees

Decision treesIn this evaluating tool we evaluate that there are different options for the company that they can adopt and what is the best for them. As we suggest in matrices that the market penetration, market development or product development are the alternative strategies for them. The best suitable is only market development because they can easily adopt this strategy. Ranking Strategic Options:Market development strategy is suitable for Ittehad surgical because their market share is high and they have to increase more. By adopting this strategy they are able to increase the share worth more by adopting simple steps.Acceptability:Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder reactions.Tools: Return Culture Risk

Return:The first tool on which the acceptability will be judged is return that the amount invested in this option will get how much return. As we suggested the market development, in this strategy there is enough need of investment. They can invest in marketing campaigns or hire new specialists. They will able to get there benefits in short term. So, on this tool it is acceptable. According to our assumption it will pay back them in 4.5 years. Culture:The culture of Ittehad surgical is almost supportive. The power structure is high. The employees can direct connect to the top management. The manager and employees relation is very supportive therefore it is possible that this strategy will be implemented successfully and people also easily accept it. Risk:In Ittehad surgical risk is very low because it has very strong market share. Therefore it is low risk of getting no pay off. It is obvious that the market campaign or hiring of specialists will definitely get payoff.Feasibility:Feasibility is concerned with the resources required to implement the strategy are available, can be developed or obtained. Resources includefunding,people,timeandinformation. cash flow analysis and forecasting break-even analysis resource deployment analysis

Financial Feasibility:It is related about the financial resources of the organization that they have the resources to adopt properly the strategy or not. The suggested strategy is market development in which they have to do with their existing and new resources. In this strategy enough resources will be needed as compared to alternative strategy market development. Because company has enough cash flows. Human Resource:The other thing which will be in mind about feasibility is HR that the employees or management are able to run the strategy or not. As the HR is strength of Ittehad surgical, so it is possible for Ittehad surgical to run easily this strategy. The employees can adopt it easily.

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