Project of Sitara Chemical

Strategic Management

PROJECT OF

STRATEGIC MANAGEMENT

ON "SITARA CHEMICAL INDUSTRY"

1


2


ACKNOWLEDGMENT

All acclamation to Allah who has empowered and enabled us to accomplish the task successfully. First of all we would like to thank our ALLAH Almighty who really helps us in every problem during the project. We would like to express our sincere and humble gratitude to Almighty who’s Blessings, help and guidance has been a real source of all our achievements in life.

We would like to admit that we completed this project due to parents who pray for our success. We also

wish to express our appreciation to our supervisor “Sir SHAHID TUFAIL” who giving us valuable suggestions and support to prepare this report

Last but not the least I would like to thank all the management team of Sitara Chemical for their cooperation in providing us the information.

3


RESEARCH METHODOLOGY

The research techniques that are adopted for the purpose of this study are as follows:

Primary Data Collection

Formal InterviewThe formal interview include people from management in Sitara Chemical and their name are

Ubaid A. Khan DGM (Marketing) Tariq Mahmood (Manager HR)

QuestionnaireThat is formally filled by Managers

Secondary data collection

www.sitara.com.pk

Limitation

One of the major limitations while carrying out this research was the lack of cooperation on the part of the management in providing the data regarding the company and its policies.

Contents

4

http://www.sitara.com.pk/


• Introduction & History (stage # 1)

• Vision & Mission

• SWOT

• Formulation Stage

Input Stage (stage #2)

EFE

IFE

CPM

Matching Stage (stage#3)

SWOT

IE MATRIX

SPACE MATRIX

BCG MATRIX

GRAND MATRIX

Decision Stage (stage #4)

QSPM

• Implementation

INTRODUCTION

5


Strategic management is all about

Formulation

Implementation

& evaluation of strategies

So our project will revolve on these critical parameters.

Strategy Formulation

– Input /action stage

– Matching stage

– Decision stage

Strategy Implementation

Strategy evaluation

STAGE # 1INTRODUCTION

6


Introduction of Sitara Chemical

Sitara Chemical Industries Limited (Sitara Chemical) is a chemical product manufacturing company. The company operates through its two core divisions namely chemical division and textile division. These two divisions include Chlor Alkali plants and yarn spinning units. The company is engaged in manufacturing Caustic Soda and Allied Products as well as yarn. Its product line includes caustic soda solid, sodium hypochlorite, caustic soda liquid, hydrochloric acid, liquid chlorine, caustic soda flakes, Specialty Chemicals, Fertilizers, Polyester Cotton (PC) and Polyester Viscose (PV). The company is headquartered in Faisalabad, Pakistan and employs 343 people.

SCIL was incorporated in 1981 and began producing caustic soda in 1985, initially at a rate of 30 metric tons Caustic a day. The plant’s capacity was gradually increased over years to current level of 545 metric tons a day. In addition, various by-product facilities have been added and expanded from time to time to cope with growing demand. Company entered into Textile Spinning Business in 1995. Its specialty chemicals and export division was established in 2001 and agri chemicals division in 2003.

We present strategic analysis of Sitara Chemical Industries Limited. The report provides a comprehensive insight into the company, including business mission, vision and key competitors. The company’s strengths and weaknesses and areas of development or decline are analyzed as well. The hallmark of the report is the detailed strategic analysis on the company

VISION & MISSION

• Vision Statement

"Strive to develop and employ innovative technological solutions to add value to business with progressive and proactive approach."

• Mission Statement

“Continuing growth & diversification for the bottom line result with risks well contained”

SWOT ANALYSIS

7


(Internal-External Factor Evaluation)

8

Strengths Weaknesses

Opportunities Threats

Largest manufacture(caustic soda)

Largest Shareholder

Advance Technology

Plant Infrastructure

Strong Management

Strong Brand name

Financially Sound

Need Sizable Market to Sustain

Lack of Operations in Abroad

Relying on Permanent Customers

Increase Production Capacity

Increase Product Line

Taking Advantage of Geographic position

Provide Online Customer Service & Ordering System

Competitors

Economic Environment

Energy Crises

Threat of Stakeholders

Unstable Law & Order Situation


STAGE # 2 INPUT STAGE

IFE (INTERNAL FACTOR EVALUATION MATRIX)

Key Internal factors Weight Rating Weighted Score

Strengths

Largest manufacturer(caustic soda)

Largest shareholder

Advance technology

Plant infrastructure

Strong management

Strong brand name

Financially strong

0.12

0.11

0.13

0.10

0.09

0.10

0.10

4

3

4

3

4

4

3

0.48

0.33

0.52

0.30

0.36

0.40

0.30

Weaknesses

Need sizeable market to sustain

Lack of operations in abroad

Relying on permanent customer

0.10

0.08

0.07

1

2

2

0.10

0.16

0.14

Total 1.00 3.09

EFE (EXTERNAL FACTOR EVALUATION MATRIX)

9


Key External factorsKey External factors WeightWeight RatingRating Weighted Weighted ScoreScore

Opportunity

Increase production capacity

Increase product line

Taking advantage of geographic position

Provide online customer service and ordering

system

0.11

0.08

0.13

0.09

3

2

4

3

0.33

0.16

0.52

0.27

Threat

Competitors

Economic environment

Energy crisis

Threat of stakeholders

Unstable law and order condition

0.12

0.10

0.15

0.12

0.10

3

3

4

3

3

0.36

0.30

0.60

0.36

0.30

Total 1.00 3.20

CPM (COMPETITIVE PROFILE MATRIX)

10


STAGE # 3MATCHING STAGE

TOWS MATRIX

11


TOWS

MATRIX

Strengths - S1. Largest

manufacture(caustic soda)2. Largest Shareholder3. Advance Technology4. Plant Infrastructure5. Strong Management6. Strong Brand name7. Financially Sound

Weakness – W1. Need Sizable Market to

Sustain2. Lack of Operations in

Abroad3. Relying on Permanent

Customers

Opportunities – O1. Increase Production

Capacity2. Increase Product Line3. Taking Advantage of

Geographic position4. Provide Online

Customer Service & Ordering System

SO - strategies (S4, S5,S7,O1,O2)

(Add new product line )

& purchase land to build new plant) (S1,S2,S6,O3)

(Enter in new market by taking advantage of largest manufacture in industry)

WO – strategies (W2,W3,O3)

(Geographic expansion ) (W1,O1,O2)

(Need to improve infrastructure)

Threats - T1. Competitors2. Economic

Environment3. Energy Crises4. Threat of Stakeholders5. Unstable law & order

situation

ST – strategies (S1, S5,S6, T1,T4)

(stable environment & Compete competitors by taking advantage of management & brand name ) (S3,T3)

(Install & update new technology)

WT – strategies (W2,T1)

(Launch products in other

geographical areas)

INTERPRETATION

Critical Region:

“WO”

12


(Weakness, Opportunity)

Managerial Decision:

"Market Development"

"Product Development"

SPACE (STRATEGIC POSITION & ACTION EVALUATION MATRIX)

13


Internal Strategic Position External Strategic position

Financial Strengths (FS) Environmental Stability (ES)

Return on Investment

leverage

Working Capital

Liquidity

Cash flow

Price earnings ratio

Total

Average

+4

+5

+5

+4

+5

+4

+27

4.5

Technological changes

Rate of Inflation

Price range of Competing products

Competitive pressure

Risk involved in business

Demand variability

Total

Average

-2

-4

-3

-2

-3

-5

-19

-3.16

Competitive Advantage (CA) Industry Strength (IS)

Market Share

Product Quality

Customer Loyalty

Technological know-how

Control over suppliers and distributors

Total

Average

-1

-2

-3

-2

-3

-11

-2.2

Growth Potential

Profit Potential

Financial Stability

Resource Utilization

Capacity utilization

Technological know-how

Total

Average

+5

+5

+4

+5

+4

+5

+28

+4.67

14


15

-6 -5 -4 -3 -2 -1

+1 +2 +3 +5 +6

+6

+5

+4

+3

+2

+1

-1

-2

-3

-4

-5

-6

Aggressive

Conservative

Competitive

Defensive

ISCA

X-axis =CA + IS

= -2.2+(4.67)

= 2.47

Y-axis = FS + ES

= 4.5+(-3.16)

=1.34

FS

ES


INTERPRETATION

According to the space matrix score SITARA CHEMICAL falls in the “AGGRESSIVE Quadrant”. Their strategies should be one of the following:

• Vertical and horizontal integration

• Market penetration

• Market development

• Product development

• Diversification

16


IE (INTERNAL-EXTERNAL MATRIX)

INTERPRETATION

Sitara Chemical falls in first region of IE matrix according to this the strategy will be “GROW AND BUILD” and they have to focus on strategies which are:

• Market Development

• Product Development

17

Strong 3.0 – 4.0

Average 2.0 – 2.99

Weak 1.0 – 1.99

2.03.04.0

IFE Total Weighted Score 3.09

1.0

2.0

3.0

Low

1.0 – 1.99

Medium

2.0 – 2.99

High

3.0 – 4.0

EFE

TOTA

L W

EIG

HTE

D S

CORE

3.

2


GRAND STRATEGY MATRIX

INTERPRETATION

Sitara Chemical has rapid market growth and strong competitive position so it falls in first quadrant and the most suitable strategies for Sitara Chemical over here are:

• Market Development

• Product Development

18

Slow market growth

Rapid market growth

Stro

ng c

ompe

titive

po

sitio

n

Wea

k co

mpe

titive

pos

ition


STAGE # 4DECISION STAGE

QSPM (QUANTITATIVE STRATEGIC PLANNING MATRIX)

Key Internal Factors PRODUCT DEVELOPMENT

MARKET DEVELOPEMNT

Strengths Weight

AS TAS AS TAS

Largest manufacture 0.12 3 0.36 4 0.48

Largest shareholder 0.11 3 0.33 4 0.44

Advance technology 0.13 4 0.52 3 0.39

Plant infrastructure 0.1 -- -- -- --

Strong management 0.09 2 0.18 3 0.27

Strong brand name 0.1 2 0.20 3 0.30

Financially sound 0.1 3 0.30 4 0.40

Weaknesses

Need sizeable market to sustain 0.1 2 0.20 3 0.30

Lack of operations in abroad 0.08 2 0.16 3 0.24

Relying on permanent customers 0.07 1 0.07 2 0.14

19


Total weight 1.00

Key External Factors PRODUCT DEVELOMEN

T

MARKET DEVELOMENT

Opportunities weight

AS TAS AS TAS

Increase production capacity 0.11 3 0.33 4 0.44

Increase product line 0.08 2 0.16 1 0.08

Taking advantage of geographic position

0.13 2 0.26 3 0.39

Provide online customer service & ordering system

0.09 -- -- -- --

Threats

Competitors 0.12 3 0.36 4 0.48

Economic environment 0.1 1 0.10 2 0.20

Energy crises 0.15 3 0.45 2 0.30

Threat of stakeholders 0.12 3 0.36 2 0.24

Unstable law & order situation 0.1 -- -- -- --

Total weight 1.00

Sum Total Attractive Score 4.34 5.09

INTERPRETATION

20


According to the Total Attractive Score of QSPM Sitara Chemical should go for

“MARKET DEVELOPMENT”

Because the TAS of Market Development is more than TAS of product development

RECOMMENDATIONS

• We could not found much discrepancies in the Strategy Analysis of Sitara Chemical industry

they are performing pretty well and have strong strategic direction

• According to our recommendation we suggest them that they could go for “Market

Development” because there is opportunity for them to export their product in new markets

• The reason behind the selection of this strategy is that they have strong management team

including Human Resource, Finance, Marketing, Production & R & D Departments. And HRM plays very important role in all activities so Sitara Chemical industry focuses on its function and scope for the betterment in present and future.

• They have stong financial position, Brand name & they are largets manufacture in industry

so they could take advantage of all these stenghts to capitalize opportunities and avoid threats.

• There is another opportunity for Sitara Chemical industry that they have to make segment in

their website through which they can provide online customer services in which customer can place order and colud provide Feedback as well, this will help them to capture more customers throughout the world.

• They can also increase their production capacity because they have proper infrastructure ,

advance technology & strong financial position and these all enable them to take advantage to increase the production capacity.

CONCLUSION

We have learnt a lot from this project because this project provides a real picture that how an organization performs Strategy Analysis and what are the factors that they considering most important while performing the analysis. According to the current position of Sitara Chemical they have strong strategic direction, growing day by day and they have largest market share in industry so they should go for Market Development. They continue to strive towards its goal of being the leader in a manufacturing of caustic soda & their presence in industry is a big threat for competitors.

21


22

Documents

Project of Sitara Chemical