Shabbir tiles

8/10/2019 Shabbir tiles

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CASE STUDY ON

Processed & Packaged Milk Industry

in Pakistan

(In te conte!t o" #

Presented By:

Mr. Fawad Kaleem - 2666

Ms. Uzma Mehmood - 17749

Reham Abdul Satar

Ammara

(2ndMarch 2014)


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1. Evaluate the Dominant Economic Traits of the Processed & Packaged Milk Industry of

Pakistan?

Ans: Dom!a!t "#o!om# $rats are evaluated on the following basis

1. Market size

Mar!et si"e of the Mil! industry in Pa!istan is #$%2 billion liters of &il!' with 0 of &ar!et

share is of unbranded and o*en &il! (non *ac!aged &il!) and 20 i%e% !."# $illion liters market

of %rocessed and %ackaged milk% +a&ily consu&*tion is around 1 lter %er %erso! %er da&(one

of the highest level of &il! consu&*tion around world)%

". Industry ro'th

Mil! is a&ongst the &ost i&*ortant consu&able and &ar!etable co&&odities of the world with

enor&ous de&and in do&estic and international &ar!ets% Processed and *ac!aged &il! industry

in Pa!istan has been one of the &ost leading businesses in this sector with a continuous growthas Pa!istan being 4thlargest &il! *roducing country in the world%

(. )um$er of *ivals

,urrently there are &ore than 2- dairy *rocessing *lants o*erating in the country% .o&e &a/or&ar!et *layers are as follows:

1% estle Pa!istan

2% etra Pa!istan#% ngro +oods

4% Millac +oods

-% oon Pa!istan 3i&ited$% Pri&e airies

#. S#o%e o' #om%ett(e r(alr&

5ndustry is facing local co&*etition and envisions being the world6s &ost co&*etitive diary

sector by beco&ing e7*orters in its long ter& co&*etitive success%

+. Economic ,actor

Mil! industry contributes 11 share in 8P and e&*loys #09#- &illion rural *eo*le andconstitutes #0940 of their inco&e% he diary sector serving as an ngine of cono&ic

8rowth; of the country and develo* the socio9econo&ic landsca*e of rural Pa!istan%


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-. ertical integration

Processed and *ac!aged &il! industry has a vertical integration with far&ers% .o&e far&ers arealso su**ly Mil! directly to the custo&ers% he integration with far&ers and distributors are not

strong as 20 of &il! goes waste owing to ina**ro*riate &ethods of storage and lac! of ti&ely

trans*ortation%

!. Pace of technology change

Advance and i&*roved technology being used in the industry to increase *er ani&al &il!

*roduction%

/. Economies of scale

,hange in technology hel*s in attaining econo&ies of scale by reducing cost and &ini&i"e the

co&*etition a&ong far&ers to invest in dairy far&ing and &il! *rocessing industry%


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". 0%%ly the ,ive ,orces Model of om%etition to analyze the overall attractiveness of the

Processed & Packaged Milk Industry in Pakistan?

Ans: = Plants

3and and e?ui*&ents

2% ,o&*etitive @ivalry :


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+actors =>+ M>+ eutral M+ =+ ,o&&ent

,o&*osition

of,o&*etitors

M!t% 8rowth

rate

.co*e of

co&*etition

+i7ed storage

,ost

,a*acity

5ncrease

egree of

differentiation

?ual .i"e

.low

8lobal

=igh

3arge

,o&&odity

>ne?ual

.i"e

=igh

o&estic

3ow

.&all

=igh

iffer on basis of

technology

,ontinuously growing

&ar!et

3ocal co&*etition with

vision to globalco&*etition

20 of &il! wasted

0 still with raw &il!

Advanced echnology


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#% Power of Buyer:

+actors =>+ M>+ >@A3 M+ =+A ,o&&ent

u&ber of 5&*ortant

buyers

hreat of Bac!ward

integration

Product su**lied

.witching cost

5&*ortance to final

?uality of buyers

Product%

+ew

=igh

,o&&odit

y

=igh

=igh

3ow

Many

3ow

.*ecialty

3ow

=igh

nly 20 &!t and

lac! of distributors

=ave owndistribution channels

Processed and

*ac!aged *roduct

,hances to switch to

other industry

Mil! &ay get

e7*ired and give

good food to buffalo

and goat


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4% Power of .u**lier:

+actors =>+ M>+ M+ =+ ,o&&ent

o' of

i&*ortant

.u**liers

.witching cost

Availability ofsubstitutes

hreat of

forward

integration

5&*ortance of

Buyer industry

to su**liers

5&*ortance of

su**lier6s

*roduct to thebuyer6s

business

+ew

=igh

ifficult

=igh

Buys s&all

Pro*ortion

=igh

5&*ortance

Many

3ow

Many

3ow

Buys large

*ro*ortion

3ow

5&*ortance

@aw &aterial fro&

&any far&ers

@aw &aterial fro&

&any far&ers

@aw &il! is the onlysubstitute but &any

far&ers are available

@aw &il! is used notin as &any other

industries

Always buy large*ro*ortions

P P de*end" on

sraw &il!


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-% hreat of .ubstitute Product:

+actors =>+ M>+ M+ =+ ,o&&ent

hreat of

bsolescence

of 5ndustryProduct

Aggressiveness

of substitute*roduct in

*ro&otion

.witching cost

Perceived Price

Calue

=i

=igh

3ow

=igh

3ow

3ow

=igh

3ow

5ncreasing nu&ber of

PP consu&ers

o *ro&otions by raw

&il!

*en &il! is chea*er

in *rice

*en &il! is chea*er

in *rice

)(erall *!dustr& Attra#t(e!ess

+actors >nfavorable eutral +avorable

ntry Barriers

7it Barriers

@ivalry A&ong 7isting +ir&s

Power of Buyer

Power of .u**liers

hreat of .ubstitutes

+)MM",$S

"!tr& arrers

here was a ti&e when there was not a big threat of new entrants in this industry' however withti&e and with &aturity of dairy industry infrastructure threat of new entrants has increased

slightly% As in *ast it was considered to be a very e7*ensive and costly industry in ter&s of *lants


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for *ac!aged and *asteuri"ed &il!' whereas now with so&e govern&ent su**ort and so &any

o*tions in ter&s of financing activities' entering dairy industry is not longer a big deal% As with

ti&e and within cou*le of years so &any co&*anies have entered the &ar!et which was neverthe case if we loo! bac! into last # or 4 years% .o' dairy industry will be facing higher threats if

we loo! into current situation of &ar!et o**ortunities and &ar!et *otential' because dairy

industry does carry a high *otential of growth in it% his factor can also be /ustified with the factthat this industry was not well established in ter&s of technology and !nowledge base of not only

consu&ers but the *roducers of raw &aterial and *roduction so as the infor&ation and

syste& is being develo*ed' with good *otential of growth this industry will definitely be havingnew entrants in co&ing *eriod of ti&e

"!tr& arrers

7it barriers are very unfavorable as the cost of *lant' e?ui*&ent and land is very high%

R(alr& Amo!/ "0st!/ Frms

irect co&*etitors are fresh &il! su**lied directly by the 8awalas to consu&ers' but they have a

need of dire cash so it is easy and favorable for *rocessed and *ac!aged &il! industry toco&*ete with the&% 5ndirect co&*etitors are Duices or cola industries%

ower o' u&er

Bargaining *ower of custo&ers is relatively i&*roving with ti&e as new entrants have entered

the &ar!et% But still as this industry is so&ething that relates to health issues and re?uires

sensitive and taste related issues so bargaining *ower has been reduced by so&e &a/or *layersusing their brand i&age and ?uality i&age in the &ar!et% But with ti&e and awareness in the

&ar!et' which include both the custo&ers and the su**liers the bargaining *ower of custo&ers

has been i&*roving but still it6s not so&ething that can create big fear for the &ar!et *layersto be afraid of%

ower o' Su%%ler

Bargaining *ower of su**liers is not very high in this industry as &ostly the su**liers6 lac! of

!nowledge in their field and otherwise the &il! collections centers are owned by the *rocessors

the&selves or either they have a long ter& contracts with these collection centers% n the other

hand the *rocessing *lants or buyers offer lower *rice to these collection center based on the factthat these collection centers have their own syste& of *ay&ents to the far&ers' based on the

&ore the *ay&ent is *aid in advance less is the *rice in ter&s of litters' so sa&e is going through

the su**liers and *rocessing units%

$hreat o' Substtutes

he PP &il! industry has the highest threat of substitute fro& the 8awalla &ar!et' where a

8awalla (&il! &an) delivers the *en &il! in the ho&es by hi&self% he P P &il! industry

has it the highest threat because the 8awalla &ar!et is ca*turing 0 share of the total &il!

industry and *rocessed or *ac!ed &il! industry has only 20 of the total &ar!et share%


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herefore the only &a/or and biggest substitute of P P &il! industry is 8awalla industry% 5t is

the fact that the consu&ers &ay ?uic!ly switch to the o*en &il! when there is an increase in the

*rices of P P &il! *roducts or decrease in the ?uality of the P P &il!%


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(. 2hat are the Drivers of hange in the Processed and Packaged Milk Industry of

Pakistan? 3o' are these Drivers likely to affect the industry in the future?

Ans: 5ncreasing urban *o*ulation' &ore educated consu&ers and an e&erging &iddle class

have hel*ed increase the growth of *ac!aged &il! industry in Pa!istan% 5ndustry changes as

forces are driving industry to alter their actions%

E uter ring ( &acro9environ&ent)

E 5nner ring ( &icro9envoir&ent)

Macro nviron&ent +actors:

E 5ncreasing co&*anies in the si&ilar field%E @a*id increase in consu&*tion of the &il!%

E =ygiene factor connected with the usage of &il!%

E 5ncreasing literacy rate which increase the sense of health care issues%

E 5t contributes 11 of 8P%E &*loys #09#- &illion rural *eo*le and constitutes #0940 of their inco&e%

E he diary sector serving as an ngine of cono&ic 8rowth; of the country and develo*the socio9econo&ic landsca*e of rural Pa!istan%

Micro nviron&ent +actors:

E ,o&*etition is being &ore intense as the re e&ergence of the *re e7isting co&*anies and

entering into the &ar!et with si&ilar *roduct yet being cost effective%

E 5ndustry *rofitability to be high%E 5ncreasing co&*etition i%e% ifferent co&*anies entering into si&ilar business%

E =igh &ar!et secured by gawalas % (o*en &il! )

E Price differentiation with o*en &il!%E As the de&and of the *roduct is increasing co&*anies have to be &ore affective in

*roducing &ore units thus invest&ent is being is &ade in the technology%

E ew techni?ues have been ado*tedE 8lobali"ation *laying vital role%

E Being technologically advance yet cost effective %

E .etting u* #rdgeneration *lant%


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#. reate an E,04 for Engro ,oods?

Ans:

"0ter!al Strate/# Fa#tors e/ht Rat!/ e/td S# +omme!ts)%%ortu!tes

7*ansion 0%10 - 0%-0 5nvest&ent in other business

8rowth 0%1- 4 0%$0 .till 0 &ar!ets is with o*en &il!

Advance echnology 0%10 # 0%#0 ew technologies gives econo&ies of scale

5ncrease in e&and 0%20 2 0%40 Annual consu&*tion increases

5&*roved ?uality 0%10 # 0%#0 +eed of ani&als i&*roves the ?uality

hreats

Prices of *en Mil! 0%1- - 0%F- 3ow *rices offered by *en &il!

3ac! of trans*ortation 0%10 4 0%40

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