Strategic ManagementFinal Project Presentation

on

Shield Corporation Limited

Presented to:Dr. Hanif Mohammed

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Presentated by:

Shiraz S. Syed (ID: 1942)KASBITKarachi, Pakistan

Note: Data presented in this presentation were anticipated (educated guess).

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Purpose of the Presentation

Purpose of this presentation is to present the organizations strengths, weaknesses, opportunities, threats and then evaluates how organization is responding to it, using strategic management matrixes.

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Overview Of The Organization

Shield is the leading baby and oral care Product Company in Karachi, Pakistan. We believe Shield has a potential to become world class organization in its baby and oral care category.

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Organization’s History

Shield Corporation Limited came into existent about 30 years ago in 1976. Shield formerly used to known as “Transpak Corporation Ltd.”, it was renamed as Shield Corporation Ltd in July 2003. Shield is a part of Premier Group of companies, which came into existent during 1971 as Premier Distributors. Premier Distributors have one of the largest distribution net works in Pakistan. Now Premier Group consists of following companies;– Premier Distributors 1971– Premier Agencies 1975– Shield Corporation Limited 1976– Zaman Textiles Mills Limited 1985– PharmEvo (Pvt.) Ltd 1998

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Vision Statement

“To become the best personal and house care company and amongst the most

trusted names in product categories we decide to be in”

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Mission Statement (CW)

Shield is a house hold name (8) which provides products from birth to adulthood (1). Shield is the manufacturer of wide variety of dental and baby care products such as toothbrushes, baby feeders, soother, teether, toothpaste and baby toiletries (2). Our main emphasis is to retain position of a market leader in baby care products (3) we will continue to use environmental friendly technology (4) and not compromising on quality at any cost which will increase our profit and growth on long term basis (5). Shield uses world class food grade raw material. To be 100% sure that they are providing best for their consumers (7). Shield believes in a philosophy to have a purpose in all activity performed (6). Shield treats its employees as a business partner and an equal opportunity employer (9).

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S. No Opportunities Weight (0 to 1)

Rating (1 to 4)

Weighted Score

1 Opportunity for export 0.15 3 0.45 2 Availability of cheap labor 0.05 2 0.1 3 Local market demand 0.10 4 0.4 4 Technological advancement 0.10 2.5 0.25 5 Increasing product portfolio 0.05 2 0.1

Total 0.45 1.3

S. No Threats Weight (0 to 1)

Rating (1 to 4)

Weighted Score

1 Low cost Chinese product 0.15 2.5 0.375 2 Political instability 0.05 1 0.05 3 Costly imported raw material 0.10 3 0.3 4 Media restrictions 0.05 2 0.1 5 Un-certainty of power supply 0.20 2 0.4

Total 0.55 1.225

Grand Total 1 2.52

External Factor Evaluation (EFE)

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• We have provided highest weightage (0.15) on exploring export market. Overall there is a need to export from our region. Shield is responding well in exploring export market. Shield has done very well in meeting local market demand and acquiring technological advancement. Within a span of four years, Shield has launched 36 products in local market. However there are lots of imported products available that Shield need to provide it to local market.

• Major threat faced by local market is low cost Chinese products and un-availability of power supply on continuous basis. Shield has responded to it by introducing low cost products, however it still posting threat. Overall we have given 2.52 weighted score, because we believe Shield is above average organization.

External Factor Evaluation (EFE) Cont.

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Competitive Profile Matrix (CPM)

Shield Kidco Camera S. No

Critical success factor Weight Rating Score Rating Score Rating Score

1 Market share 0.05 4 0.20 2 0.10 1 0.05 2 Product Quality 0.2 4 0.80 3 0.16 1 0.20 3 Price Comparativeness 0.15 2 0.30 4 0.60 3 0.45 4 Customer loyalty 0.15 4 0.60 2 0.30 2 0.30 5 Advertisement 0.05 1 0.05 1 0.05 1 0.05 6 Sales distribution 0.15 3 0.45 1 0.15 1 0.15 7 Production Capacity 0.1 3 0.30 3 0.30 2 0.20 8 Customer Care 0.1 3 0.30 3 0.30 2 0.20 9 Global expansion 0.05 2 0.10 1 0.10 1 0.05

Total 1 3.10 2.06 1.65

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Overall Shield has an edge over their competitors when comparing with any critical success factors mentioned above. Following critical factors are making Shield a leader in baby care products; product quality, customer loyalty and group owned distribution channel. Shield has maintained its product quality and ensured timely availability, which has made them a house hold name from loyal customers for over thirty years.

Competitive Profile Matrix (CPM) Cont.

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Internal Factor Evaluation (IFE)S No Strengths

Weight (0 to 1)

Rating (1 to 4)

Weighted Score

1 Largest baby care in Pakistan 0.05 3 0.15 2 Well known brand name 0.2 4 0.8 3 Foreign qualified management staff 0.05 3 0.15 4 Using food grade material 0.1 4 0.4 5 Long term planning 0.1 4 0.4

Total 0.5 1.9

S No Weakness Weight (0 to 1)

Rating (1 to 4)

Weighted Score

1 Factory located in Landhi area 0.05 2 0.1 2 High employee turn over 0.1 1 0.1 3 High operating cost 0.1 2 0.2 4 No niche market 0.2 2 0.4 5 HR merge with Admin Department 0.05 2 0.1

Total 0.5 0.9

Grand Total 1 2.8

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• On one hand, following are the major strengths; using food grade raw materials in producing baby care products, long term planning with respect to meet increasing market demand and well know trusted house hold name. On the other hand, a major weakness is; Shield has no niche market product and high operating cost.

• Overall Shield is above average organization with the weighted score of 2.80. They are responding well to the internal factors.

Internal Factor Evaluation (IFE) Cont.

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SOWT Analysis

Weaknesses -W

1. Factory located in Landhi

2. No niche market

3. Higher employee turnover

4. High operating cost

5. HR merged with admin

Strengths-S

1.  Largest baby care in Pakistan

2. Well known brand in Pakistan

3.   Foreign qualified staff

4.   Long term planning

5. Using food grad material

Opportunities-O SO-Strategies WO-Strategies

1.   Export opportunities 1. Global expansion of business to cater foreign customer(S2,S3,O1,O2)

1. Investment in product development will capture the new segment (W2, O5, O4)2.   Cheap labor available

3.   Local market demand

2. Increasing investment in R & D to increase the market share(S3,S4,O4,O5,O3)

2. Investment on technological equipment will decrease the payroll (W4, O4)

4.   Technology advancement in production machine

5. Increasing product portfolio

Threats-T ST-Strategies WT Strategies

1. Low cast Chinese product 1. Advertisement to create awareness about Shield product verity & higher quality food grad material (S4,S5,T1,T4)

1. Investment in local raw material will decrease cost of production (W3,T3) 2. Political instability

3. Costly imported raw material 2. Investment in power generation plant to

increase the efficiency of smooth production (S2, T5)

4. Media restriction

5. Un-certainty of power supply

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Boston Consultancy Group (BCG) Cont.

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• Baby feeder is considered as Star with high market share and growth rate, toothbrushes and toothpaste are considered as Question Marks with high growth rate but low market share and toiletries are considered as Dog with low market share and growth rate

Boston Consultancy Group (BCG) Cont.

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Internal External Matrix (IE)Internal Factor Evaluation (IFE)

S No

Strengths Weight (0 to 1)

Rating (1 to 4)

Score

1 Largest baby care manufacturer in Pakistan 0.2 3 0.6 2 Well Known (house hold) Brand name 0.25 4 1.0 3 Using food grade raw material 0.15 4 0.6

S No

Weaknesses Weight (0 to 1)

Rating (1 to 4)

Score

1 No niche market 0.1 2 0.2 2 High operating cost 0.2 2 0.4 3 Media restriction on baby care products 0.1 1 0.1

Total 1.0 2.9

External Factor Evaluation (EFE)

S No

Opportunities Weight (0 to 1)

Rating (1 to 4)

Score

1 Opportunity for export 0.2 2 0.4 2 Increase product portfolio 0.3 3 0.9 3 Technological Advancement 0.25 4 1.0

S No

Threats Weight (0 to 1)

Rating (1 to 4)

Score

1 Low cost Chinese products 0.10 1 0.10 2 Costly imported raw material 0.10 2 0.20 3 Un-certainty of power supply 0.05 3 0.15

Total 1.0 2.75

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Internal Factor Evaluation (IFE)

S No

Strengths Weight (0 to 1)

Rating (1 to 4)

Score

1 Well Known (house hold) Brand name 0.20 3 0.60 2 Using food grade raw material 0.25 3 0.75

3 Largest baby care manufacturer in Pakistan

0.10 2 0.20

S No

Weaknesses Weight (0 to 1)

Rating (1 to 4)

Score

1 No niche market 0.20 1.0 0.20 2 Expensive raw material 0.15 1.5 0.25 3 Low awareness activities (Marketing) 0.10 1.0 0.10

Total 1 2.75

External Factor Evaluation (EFE)

S No

Opportunities Weight (0 to 1)

Rating (1 to 4)

Score

1 Export opportunities 0.2 2 0.4 2 Increase in product portfolio 0.2 3 0.6 3 Cheap labor 0.2 2 0.4

S No

Threats Weight (0 to 1)

Rating (1 to 4)

Score

1 Low cost Chinese products 0.15 1 0.15 2 Increase in inflation rate 0.15 2 0.30 3 Un-certainty of power supply 0.10 1 0.10

Total 1 1.95

Internal External Matrix (IE) Cont.

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S No Divisions Sales Sales % Profit

Profit % IFE EFE

1 Baby Care Products 7.6 mil 76% 1.5 mil 75% 2.90 2.75 2 Dental Care Products 2.4 mil 24% 0.5 mil 25% 2.75 1.95

Total 10 Million 100% 2 mil 100%

Internal External Matrix (IE) Cont.

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We have chosen baby care and dental care to be used in IE matrix. Our baby care division comes in Intensive or Diversification strategy which is hold and maintains strategy. Shield baby care sales and profit are greatest among other organizations product. Dental care division comes under defensive strategy which is harvest or divest.

Internal External Matrix (IE) Cont.

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Internal External Matrix (IE) Cont.

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The Strategic Position & Action Evaluation Matrix (SPACE)

Variables

Financial Strength (FS) 1. Our equity ratio is 0.7, which is 10% above required ratio. 2

2. Being a group of companies help obtain funds. 3 3. Companies EPS increased by 10% due to increase in revenue. 5 Total 10

Industry Strength (IS)

1. Largest baby care manufacturers in Pakistan. 4

2. Trusted brand name for 30 years. 5

3. Shield has its own distribution channel. 4 Total 13

Environmental Stability (ES)

1.High inflation rate -5

2.Un-stable political condition -3

3.High taxes on imported raw material -4

-12

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The Strategic Position & Action Evaluation Matrix (SPACE) Cont.

Competitive Advantage (CA)

1. Food grade raw material used. -1

2. Quality and environmental certified system. -3

3. Largest market share in baby care. -2 Total -6

Conclusion

ES Average -12/3 = -4 Y-axis

IS Average 13/3 = 4.33 X-axis

FS Average 10/3 = 3.33 Y-axis

CA Average -6/3 = -2 X-axis

Directional Vector Coordinates (2.33, -0.77)

X-axis: 4.33+(-2) = 2.33

Y-axis: 3.33+(-4) = -0.70

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The Strategic Position & Action Evaluation Matrix (SPACE) Cont.

Conservative Aggressive

Defensive(2.33, -0.70) Competetive

FS

ES

ISCA

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The Strategic Position & Action Evaluation Matrix (SPACE) Cont.

Our organization is emerging as Competitive, a lower right quadrant of SPACE matrix. Market development, horizontal integration and concentric diversification are the strategies best suitable for

Shield

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The Grand Strategy Matrix (GSM)

Shield come in quadrant 1, because they have high growth rate as found in BCG Matrix and showing strong Competitive position as found in SPACE Matrix.

1. Market Development. Strategy 1 Exploring export market

2. Horizontal Integration. Strategy 2 Acquiring competitors

3. Concentric Diversification Strategy 3 Product development

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The Quantitative Strategy Planning Matrix (QSPM) Strategy 1 Strategy 2 Strategy 3 Key Factors Weight AS TAS AS TAS AS TAS Opportunities 1. Explore international Market 0.25 4 1.00 2 0.50 1 0.25 2. Technological Advancement for production 0.15 4 0.60 4 0.60 4 0.60 3. Increasing product portfolio. 0.45 3 0.45 3 0.45 4 0.60

Threats 1. Low cost Chinese product 0.15 1 0.15 3 0.45 3 0.45 2. Political un-stability 0.1 2 0.20 2 0.20 2 0.20 3. Costly imported raw material 0.2 4 0.80 4 0.80 4 0.80

Weaknesses 1. No niche market 0.1 - - - - - - 2. High operating cost 0.2 4 0.80 4 0.80 4 0.80 3. High cost of debt 0.1 3 0.30 3 0.30 3 0.30

Strength 1. Largest baby care in pakistan 0.25 4 1.00 4 1.0 4 1.00 2. Well known brand name. 0.20 4 0.80 2 0.4 3 0.60 3. Using food grade raw material 0.15 4 0.60 2 0.3 3 0.45

6.70 5.8 6.05 Attractive Score: 1 Not Attractive, 2 Somewhat Attractive, 3 Reasonable Attractive, 4 Highly Attractive

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When comparing different strategies we found that strategy 1 is best suited for Shield. Strategy 1 score is 6.7 compare to 5.8 and 6.05 for strategy 2 and 3 respectively. It is recommended that Shield should strive hard to export

The Quantitative Strategy Planning Matrix (QSPM) Cont.