STRATEGY FORMULATION FOR PARTEX BEVERAGE LTD Introduction Partex Beverage Ltd is one of the most leading companies

in the soft drinks business sector of Bangladesh. It produces soft drink with the US based international brand of Royal Crown Cola Co. International in short RC. Partex Beverage is also pioneer introducer of PET bottled drinking water in Bangladesh. The factory is in Rajendrapur, 40km away from Dhaka city. The company commenced commercial production on 6th October 1997 Vision The vision of the company is to establish and secure the top position in the beverage industry of Bangladesh by providing highest quality product along with new inventions and technologies; keeping in mind all aspect including freshness, purity and safety and making it easy available to the consumer at very affordable price. Our Mission Our mission is to provide value at an economic cost, progress in diversity, and continue to contribute to the growth of industrialization in Bangladesh by being the market challenger Objectives To To To To increase market share at 20%. increase the companys net profit in 2012 by 5% over 2011. introduce at least 3 new product in the current financial year. increase production efficiency and reduce cost by 3%.

History of Partex Beverage In 1994, Mr. M. A. Hashem, Chairman of Partex Group visited an International Trade Exhibition in the US, where he happened to meet the executives of Royal Crown Cola Co. International. From then on he started conceptualizing the idea of RC beverage brand in Bangladesh. With international brand name recognition and quality he expected that it would gain acceptability in the Bangladesh market. When he returned, a wide range of marketing research was carried out by Partex as well as RC International. After positive results, in 1996, the Corporate Head and the Directors formed Partex Beverage Ltd.(PBL) Mr. Rubel Aziz, one of the pioneers of the concept of RC, was given the position of Managing Director. Funds worth Tk. 10 Crore were raised as part of Equity from the Group. Although registered as a Public Limited Company, no public offerings have been made as yet. The factory was setup in Rajendrapur, 40km away from Dhaka city. The company commenced commercial production on 6th October 1997, and RC was launched in Dhaka on

20th October 1997. This is the story of how Partex Beverage Limited became the sole official bottler of Royal Crown Cola Co. International. Now it has been almost 15 years since then, and a number of new products, in new and innovative packages have been introduced to the market. Partex Beverage has also introduced RC outside Dhaka into unexplored markets. We are proud to say that we have stuck to our mission and are now worth over Taka 80 crore (US$ 16 Million). 1998, Market Presence 25th June Introduction of RC Flavors ( RC Cola, Royel Cloudy Lemon, Royel Orange, Upper 10) in 300ml Glass bottle in Greater Chittagong, through 10 distributors. 1998, Market Presense 25th June Introduction of RC Flavors ( RC Cola, Royel Cloudy Lemon, Royel Orange, Upper 10) in 300ml Glass bottle in Greater Chittagong, through 10 distributors. 24th August Introduction of RC Flavors ( RC Cola, Royel Cloudy Lemon, Royel Orange, Upper 10) in 300ml Glass bottle in Greater Noakhali. Four Distributors were mobilized. 28th October Just before the closing stages of 1998, after assigning of few new distributors, Partex Beverage began distributing in Comilla, which added to its penetration in the southern region. 1999, Market Presence 20th May To add its line of products, Partex Beverage introduced three of RCs flavours (RC Cola, Cloudy Lemon and Royal Orange) in 1 liter Glass bottles. In one short, this new size was introduced to all its existing markets ( Greater Dhaka, Chittagong, Noakhali and Comilla ). 2000, Market Presence 15th March For the first time in Bangladesh, as planned, Partex Beverage launched RC flavors in the revolutionary food grade PET bottles in two sixes- 1.0 and 1.5 Liter, in Greater Dhaka. Within a few weeks, Partex Beverage, went on to penetrate not only their existing markets, but also markets that they had left unexplored due to the constraints of glass packaging. 26th March Just before the Asia Cup, which was held in Dhaka, Partex Beverage added a feather to its cup, by launching its own mineral water brand, MUM. It was introduced in food grade PET in two sizes- 0.5 and 1.5 Liter. 6th April Partex Beverage launched their products in Sylhet, one of the largest markets in Bangladesh, with the introduction of RC Flavors and MUM in PET. This PBL did by mobilization of distributors of Danish Distribution Network. By this pointing time, Partex Beverage had mobilizing a total of 101 distributors.

STEP Analysis:

Social Environment and how it affect the Company.

Environmental scanning is the monitoring, evaluation and dissemination of information from the external and internal environments to key people within the corporation. A corporation uses this tool to avoid strategic surprise and to ensure its long-term health. In undertaking environmental scanning, strategic managers must first be aware of the many variables within a corporations natural, societal and task environments. Economical. Economical factors include GDP trend, energy availability and cost, economic growth, interest rate, exchange rates, inflation rate. These factors have major impact on how the business operates and make decisions. As the purchasing power of the people of Bangladesh is increasing, especially for the middle class society. So the economical environment is suitable for Partex Beverage Ltd (PBL) to expand the business and also to introduce new products. Technological. Technological factors of Partex Beverage Ltd (PBL) includes technological aspects such as productivity improvements through automation, R&D activity, technology incentives and the rate of technological changes. Technological shifts can affect costs, quality and lead to innovation. Social & Cultural. Social factors include the cultural aspects and include lifestyle changes, growth rate of population, health consciousness, age distribution, career attitudes and emphasis on safety, religious beliefs, level of education etc. Trends in social factors affect the demand for the company's. As the education level of Bangladesh is improving and people are becoming more health conscious, so it is suitable for Partex Beverage Ltd (PBL) to expand the business. Now a day, any social or cultural programs like marriage ceremony, social gathering, festivals or seminars cannot be considered without providing bottled drinking water. Political Legal. Political factors are governments intervenes in the business sector by implementing tax policy, labor law, environmental law, trade restrictions and political stability. Industry Matrix Analysis An industry Matrix summarizes the key success factors within a particular industry. As shown below a comparison between Partex Beverage Ltd (PBL) vs Akij Food and Beverage Ltd (AFBL); considering their key success factors. The matrix gives a weight for each factors based on how important that factor is for success within the industry. The matrix also specifies how well various competitors in the industry are responding to each factor. Weight for each factor may be given from 1.0 (most Important) to 0.0 (Not Important) based on that factors probable impact on the overall industrys current and future success. All weights must sum to 1.0 regardless of the number of strategic factors. 5.0 4.0 3.0 2.0 1.0

4.5

3.5

2.5

1.5

Outstanding Above Average Average Below Average Poor Rating Scale The rating for each Key Factor of the companies will be from 5 (Outstanding) to 1 (Poor) based on the companys current response to that particular factor. Each rating is a judgment regarding how well that company is specifically dealing with each key factor. Weighted Score is calculated by multiplying the weight and Company Rating. The total weighted score indicates how well each company is responding to current and expected key success factors in the industrys environment. SWOT Analysis The best SWOT analysis will be more than a simple checklist. It will consider the degree of strength and weakness versus its competitors to determine how good that strength really is. A company may have a strong research and development team but a competitors could be even stronger. A good SWOT should also look the size of an opportunity or threat and show how these inter-relate with its strengths and weaknesses. The biggest advantages of SWOT analysis are that it is simple and only costs time to do. It can help generate new ideas as to how a company can use a particular strength to defend against threats in the market. If a company is aware of the potential threats then it can have responses and plans ready to counteract them when they happen.

STRENGTH. Trust For Brand and Corporate Reputation RC Cola is a US based internationally recognized brand of soft drinks. So it is a trusted brand and the consumers has accepted it nicely. More over MUM Drinking water is the first bottled drinking water in Bangladesh which has been established as a popular brand. So the Partex Beverage Ltd is enjoying the advantages of trusted brand, for their products. Large Range Of Products Partex Beverage Ltd offers a large range of products which attracts consumer of all categories. For example : 3 RC Flavors : Different Container Other soft drinks Drinking Water : : Cola, Diet and Lemon. : RC Pet Bottle 500 ml, 1 ltr, 1.5 ltr and 2 ltr RC Can 250 ml RC Orange, Upper 10, Danish Juice MUM Mineral Water 500 ml, 1.5 ltr

Marketing PBL has promoted its products by an aggressive print & TV advertisement. TV is backed by a Hoarding & point of sale material. Every interface with customer is used as an opportunity to reinforce. For example: - All vehicles used for supply have been painted with relevant product color, logo and & Slogan Freedom of Choice. Quality Standard Every bottle of RC cola and MUM drinking water is put through a rigorous Multi stage purification processes which includes micron filtration and ozonisation. It acquires 6 stages of purification processes which ensure quality water which is pure and safe for drinking purpose. Good manufacturing are the strength all the time processing in religiously monitored at every stage. R&D Intensity and Innovative Technology A companys R&D intensity (as a percentage of sales revenue) is a principal means of gaining market share in global competition. In recent years it has been observed that R&D is vital to the success and survival of almost any form of business. Technological innovation is a primary competitive factor across all industries. For the first time in Bangladesh, Partex Beverage launched RC flavors in the revolutionary food grade PET bottles. WEAKNESS. Distribution Network. Though PBL has used the distribution network of other products of Partex Group, but still the remote rural areas have not been covered due to the city and urban area oriented distribution network. Not Meeting The Demand of The Customer The use of 12 ltr or 20 ltr big packs is increasing in the restaurants, offices, schools and households also. But the company is unable to meet the demand of the consumers. But as the company is not producing 12 or 20 ltr pack, so his is affecting the demand for the product. People are compelled to use other brands of mineral water. Lack of Employee Retention. Lack of employee retention is a problem for PBL. A remarkable number of efficient staffs have left the company in the last few years, consecutively. OPPORTUNITY Fast Growing Field The best beverage for Bangladesh in the new millennium seems to be drinking water. In recent years, the bottled drinking water market has been witnessing high decibel level of activity. Due to the Economical and SocioCultural change, people are becoming more health conscious and at the same time the demand of safe drinking water is increasing. Moreover, due to the change of Culture, now a day we consider soft drinks as a part and parcel of social gathering, marriage ceremony, festivals like Eid and so on. This has increased a lot of scope for beverage market in Bangladesh. Utilize Existing Distribution Channel. Partex Group is well established group of company, doing business in different sector and segment of the country. It has its distribution Channel for different products like Danish Condensed Milk and other products. So at the beginning the company got an advantage of ready distribution

channel. And later on it improved the distribution channel for the beverage products. Unfulfilled Customer Need The company may expand the business area by utilizing the unfulfilled demand of the rural and remote areas. There is an opportunity in the premium product range. This may be launched for the expensive hotels and other premium customer. THREAT Existence of Strong Competitors and Entry of New Competitors To get some share in the market many new players are entering in the market. Like Akij Food and Beverage Ltd (AFBL), ACME Pharma Ltd, Fresh Mineral water, Virgin soft drinks etc. More over two world wide well known beverage company Coke and Pepsi is prevailing in the country from long before. Water Filter Manufacturers PBL is not only getting competition from mineral water maker (against MUM Drinking water) but is also facing a tough competition from various water filter manufacturers. They have been marketing there purifiers in the market which has decreased the sales of bottled water supply to homely customers. Illegal Manufacturers Company is facing a tough competition from illegal manufacturers. The illegal manufacturers provide water at a very cheaper rate then the branded manufacturers. There are 100s of illegal manufacturers which are providing the water at a very cheaper rate. This is a serious problem for branded reputation and hampering the revenue earning for the company. The illegal manufacturers use the fake name or the used bottles and sells after refilling poor quality water in the market. Strong Distribution Channel of The Competitors Analysts feel that the companies having strong distribution channel will only survive. This rings the warning bell for PBL, because among other players like Coke, Pepsi, Akij Food and Beverages Ltd (AFBL) are having a strong distribution network. Even though the PBL has a strong networks but its concentration on bulk segment can lead to improper network. Internal Environment Analysis Internal Environment Analysis is concerned with the analysis of the factors related to the internal organizational environment. The factors for which the company is at a strong position is considered as Strengths and other internal factors for which the company have lacking are considered as Weaknesses. The IFAS (Internal Factor Analysis Summary) Table is one way to organize the internal factors into the generally accepted categories of strengths and weaknesses as well as to analyze how well a particular companys management is responding to these specific factors in light of the perceived importance of those factors to the company. We should use the VRIO framework (Value, Rareness, Imitability & Organization) assess the importance of each of the factors that might be considered strengths.

In the IFAS Table, shown above, most important Internal Factors of PBL are shown. The factors are classified as Strengths and Weaknesses. In the Column 2, weight is given to each factor with in 1.0 (Most Important) to 0.0 (Not important). The sum of all the weight is equals to 1.0 regardless the number of factors. In Column 3, rating to each factor is given within 5.0 (Outstanding) to 1.0 (Poor), based on the response of the managements to the particular factor. And finally the Weighted Score is calculated by multiplying the weight in Column 2 and rating in column 3. The Total Weighted Score indicates how well the PBL is responding to currently and expected factors in its internal environment. The Total Weighted Score for an average firm in an industry is always 3.0. So we can see that the position of PBL is close to Above average (3.92). External Environment Analysis External Environment Analysis is concerned with the analysis of the factors related to the likely external factors for their corporation. The strategic managers identify the external factors by scanning the societal and task environments. The external factor for which the company is at a better position is considered as Opportunities and other external factors for which the company have lacking are considered as Threats. The EFAS (External Factor Analysis Summary) Table is one way to organize the external factors into the generally accepted categories of opportunities and threats as well as to analyze how well a particular companys management (Rating) is responding to these specific factors in light of the perceived importance (Weight) of those factors to the company.

In the EFAS Table, shown above, most important External Factors of PBL are shown along with their response (rating) and importance (Weight). The factors are classified as Opportunities and Threats. In the Column 2, weight is given to each factor with in 1.0 (Most Important) to 0.0 (Not important). The sum of all the weight is equals to 1.0 regardless the number of factors. In Column 3, rating to each factor is given within 5.0 (Outstanding) to 1.0 (Poor), based on the response of the managements to the particular factor. And finally the Weighted Score is calculated by multiplying the weight in Column 2 and rating in column 3. The Total Weighted Score indicates how well the PBL is responding to currently and expected factors in its external environment. The Total Weighted Score for an average firm in an industry is always 3.0. So we can see that the position of PBL is Above average (3.87). Strategic Factors Analysis Summery The resulting SFAS Matrix is a listing of the firms external and internal strategic factors in one table. The SFAS Matrix includes only the most important factors gathered from environmental scanning and thus provides information that is essential for strategy formulation. The use of EFAS and IFAS Tables together with the SFAS Matrix deals with some of the criticisms of SWOT analysis. The use of the SFAS Matrix reduces the list of factors to a manageable number, puts weights on

each factor and allows one factor to be listed as both a strength and a weakness or as an opportunity and a threat. When the EFAS, IFAS and the SFAS when used together, they are a powerful analytical set of tools for strategic analysis.

In Colum 1 of the SFAS Matrix, the most important strategic factors (from EFAS and IFAS) are listed. Then in column 2, weights will be assigned for all the internal and external strategic factors. The sum of all the weight must be 1.00. In this case the earlier weights (as given EFAS and IFAS) might have to be re-adjusted. In column 3, rating will be given for each strategic factor. These rating will probable (but not always) be the same as in the EFAS or IFAS Tables. Weighted Score will be calculated as usual by multiplying the weight and the rating for each strategic factor. For Duration, the strategic factors will be considered as Short Term less than 1 year, Intermediate- 1 to 3 years and Long Term Over 3 years effect. Position in BCG Matrix as a part of Portfolio Analysis One of the most popular aids to developing corporate strategy in a multiplebusiness corporation is portfolio analysis. Two of the most popular portfolio techniques are the BCG Growth-Share Matrix and GE Business Screen. BCG Matrix The BCG (Boston consulting Group) Growth-Share Matrix is the simplest way to portray a corporations portfolio of investments. Each of the corporations product line or business units is plotted on the matrix according to both the growth rate of the industry in which it competes and its relative marked share. A units relative competitive position is defined as its market share in the industry; divide by that of the largest other competitor. By this calculation, a relative market share above 1.0 belongs to the market leader. The matrix assumes that, other things being equal, a growing market is attractive.

The BCG matrix considers two variables, namely

2.

1. Business Growth Rate (Market Growth Rate) Relative Competitive Position (Relative Market Share)

The market growth rate is shown on the vertical (y) axis and is expressed as a %. The range is set somewhat arbitrarily. The overhead shows a range of 0 to 20% with division between low and high growth at 10% (the original work by B Headley Strategy and the business portfolio, Long Range Planning, Feb 1977 used these criteria). Inflation and/or Gross National Product have some impact on the range and thus the vertical axis can be modified to represent an index where the dividing line between low and high growth is at 10. Industries expanding faster than inflation or GNP would show above the line and those growing at less than inflation or GNP would be classed as low growth and show below the line. The horizontal (x) axis shows relative market share. The share is calculated by reference to the largest competitor in the market. Again the range and division between high and low shares is arbitrary. The original work used a scale of 0.1, i.e. market leadership occurs when the relative market share exceeds 1.0. Question Marks. New products with the potential for success but require a lot of cash for development. There are the products or business, that compete in high growth markets but where share is relatively low. Stars. Market leaders that are typically at the peak of their product life cycle and are able to generate enough cash to maintain their high share of the market and usually contribute to the companys profits. Successful question marks become stars. Cash Cow. Cash cow typically bring in far more money than is needs to maintain their market share. In this declining stage of their life cycle, those products are milked for cash that will be invested in new question marks. Advertising and R&D expenses are reduced in this stage. Dogs. Dogs have low market share and do not have the potential to bring in much cash because they are in an unattractive industry. According to BCG Growth-Share Matrix, dogs should be either sold off or managed carefully for the small amount of cash they can generate. Partex Beverage Ltd (PBL) has low market share compared to competitors, however it is doing business in high-growth market. There are well established businesses in this market and new competitors are trying to grow and capture more market share. PBL is growing and there are opportunities for new businesses. At the same time there is risk involved with investing in this business because of this we may plot PBL at the quadrant of Question Mark.

Question Marks have to develop and grow by investing and continuously improving the business. Challenges Existing and new competitors. Holding market reputation Sudden seasonal extra demand Technological change in the production process. Utilizing the niche and sweet spot in the market. Recommendation Should improved and more expanded distribution network. Arrange necessary security measure (special break away seal) to safe guard misuse of the bottles by the illegal manufacturers. Improve quality and ensure minimum level of fault in production level by proper supervision and with improvement by new technology and machineries. Allocate more money for R&D to improve product quality and develop new products. Utilize Sweet Spot in the market by identifying it before other competitors. Conclusion The Beverage market is a fast growing business in Bangladesh. And at the same time it is very challenging because of the existence of strong competitors and potential new entrance in the market. So PBL must work for the improvement of both Product Development and Market Development. By contentious improvement in the product and its distribution channel, PBL will be successful in the market.

References http://www.partexbeverage.com/about_us.html Long Range Planning, Vlo. 10, No. 2, 1977, Hedley, Strategy and the Business Portfolio, p. 12. Copy right 1977

Concept in Strategic Management and Business Policy, Thomas L. Wheelen and J. David Hunger