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Asia Ghee Mill

STRATEGIC INTENTION Vision Mr. Majeed is visionary person and has an industrial mind, who always think,

To be best quality manufacturer of oil and ghee in the Ghee industry


Asia Ghee Mill dont have any written mission statement but through our discussion we came at, and the mission of the Asia Ghee Mill should be: We care the health of our customers by providing them, , the superior purity and best quality oil & ghee at comparable prices and continually improve our products to meet their needs which help us to maximize the wealth of owners which in turn, create more employment opportunities and provide maximum benefits to employees. Goals of Asia Ghee Mill a) To bring the company out of financial crisis, by decreasing its debt dependency. b) To utilize the full potential of the mill by arranging raw material, modernizing the process, and the workers mo. c) To ensure quality at each step of production for both ghee and oil to care the health of our consumers. d) To improve the morale and efficiency of employees. e) To increase market share in Multan division. f) To develop long lasting good relationships with distribution dealers. g) To dispose and utilize the wastage in a better way. Objectives of Asia Ghee Mill a) To increase production of ghee and oil from 35000 tons last year to 4500 tons this year. b) To sell 2000 tons of ghee and oil in coming year in Multan division, specially in Malsey, Wehari, Khanewal, and mia channoo. c) To manufacture the laundry soap from the wastage of ghee & oil and recycle the water for reuses purposes in the production. Problem statement In start the organization has faced a plenty of problems but due to proper planning and well implementation problems are decreasing day by day. But still the organization is not totally out of trouble, and facing a problem. problem

The major problem is related with the distribution network and utilization of production capacity of the organization. The organization is utilizing limited production capacity because it has a limited market and not supplying its products all over the country but only in Bahawalpur and Multan. Furthermore firm is relying on private dealers for distribution of its final products. So because of limited market some times these dealers refuse to take the supply because of having old stock unsold, so thats why inventory remains in the stores which cause the increase in holding cost and cash shortage problems Problem: The Company does not follow any standard procedure for purchasing, selling, receipts and payments. No proper records are made and no proper rules are followed. In fact the wok is less structured in the organization. It causes a lot of time wastage and mismanagement. This mismanagement causes different types of costs, which increases the overall expenses of the company. SWOT Analysis Strengths of Asia Ghee Mills Professional Leadership Usually in such kind of traditional organizations leadership is deficient. People are usually guided through specified rules and regulations. Also the professionalism is lacking in most of the cases. But Asia Ghee Mills is clearly different in this aspect from other organizations. After taking charge of many responsibilities Mr. Ch. Abdul Majeed has worked very hard for the success of the mill. Due to his professional abilities and leadership qualities he has also achieved many of his objectives. And now this is the result of his efforts that the company is showing very good performance and operating on professional basis. Skilled Labor With High Morale In most of the factories skilled and semi skilled labor along with unskilled labor is hired from outside. There is always a risk associated with them that whether they work properly or not. First of all Asia Ghee Mills always hire the educated people, you can take the example that they require at least Matric pass candidate for the post of helper. Asia Ghee Mills has placed its new employees with the senior employees and trained them before they actually placed on job. They have the career opportunity to move upward to become an operator because helper has known all the responsibilities of the operator. So this will create the most loyal employees with high morale, which are more productive. . Backward Linkages Generically the company has got an advantage of access to the sources of raw material. In fact the owner of the company is big business man of Bahawalpur. The raw materials, which are available in Pakistan, are mostly available in Bahawalpur. The other strength of the company is that they take the oil from their own cotton factories but their cotton factories meet only 10% of the total raw material required for the current capacity utilization Weaknesses of Asia Ghee Mills Lack of Awareness The major weakness of the Asia Ghee Mills is the lack of awareness among the consumers, because the Asia Ghee Mills dont go for any type of advertising program. Asia Ghee Mills use print media one time in a month, where as they had used electronic media in start but now they dont have any advertisement for their products, so thats why majority of the people even dont listen the name of company.

Limited Distribution Network The other weakness of the Asia Ghee Mills is of having limited distribution network. As we have already told that Asia Ghee Mills is distributing their products only in Bahawalpur, where they are distributing their products at mass level and having a market share of 70-80%, but in Multan division the firm has started its distribution. Because of this limited distribution network the company is unable to utilize its full capacity because currently Mill is utilizing 50% of its full capacity which is enough to meet the need of consumers in Bahawalpur, and other than Bahawalpur the company dont have so much demand because of no advertisement, and absence of distribution network which forced the company to operate half capacity. Dealership Marketing Asia Ghee Mills distribute its products through outside dealers which cause increase in price of the products which the consumers receive, because the dealers and retailers take their margin which cause a 1-2 rupees difference in the Ex-factory price and Retail price. Opportunities Generic Opportunities The ghee/oil has so many opportunities due to its product nature. It is a necessity and no one can avoid it. In Pakistan, the consumption rate of ghee/oil is high in the world, and as the population growth rate is also very high so the company has an opportunity to meet the demand of local market. Also the product has no substitute, so people have to buy it in any case. These are the natural opportunities, which the company is enjoying. Threats Low Production of Cottonseed The cotton is not produced sufficiently in the country. It is due to the low productivity of the varieties and due to the less area cultivation. Due to this low production the mill faces a shortage of raw oil, which is always a problem for the company. Decrease in Consumption Due to the increase in awareness level of the people the consumption rate is decreased. The reduction in disposable income is also a cause of decrease consumption of ghee. The high rate of heart disease in the country is another cause, which restrict the people to use ghee. Because of all these factors the consumption rate of ghee is decreasing in Pakistan. This is a source of continuous threat for the company. STRATEGIES CORPORATE LEVEL STRATEGIES orporate level strategy focuses on strategies for enterprises consisting of more than one business. Asia Ghee Mills, for instance, comprises several businesses, including consumer goods and industrial goods. Asia Ghee Mills involve more than one business is said to be diversified. C Concentric Diversification Adding new, but related products or services.

Asia Ghee Mills involved in concentric diversification because Asia Ghee Mills has two by products, laundry soap and CO2 gas. Asia Ghee Mills has developed a setup to sold laundry soap under brand name of Asia Laundry Soap so Asia Ghee Mills is adding new but related products in to the market. Instead of selling laundry soap as a raw soap to any other soap manufacturer, they themselves start cutting and packaging of the soap and sold in the market as their own new products under their own brand name. Then we said it concentric diversification because they manufacture the soap from the by products they receive. Backward Integration Seeking ownership or increased control of a firms suppliers. Asia Ghee Mills involved in backward integration because they receive the cottonseed oil from their own cotton factories. Although these three cotton factories provide only 10% of its total requirement but this will increase the bargaining power of the Asia Ghee Mills if it has to negotiate upon the prices of oil purchasing from other factories. Business Level Strategy Firms compete directly with one another at what is called the business level of strategic management, so we will focus on crafting successful competitive strategies. Because competition takes place at the business level, strategic management at this level is crucial to the overall success of the firm. Cost Leadership In manufacturing and especially in industries where the product differentiation is not possible the only strategy the organization is left with is "Low Cost Production" or cost leadership. In fact cost reduction is the only way to stay in the industry. Asia Ghee Mills has cost leadership strategy. Asia Ghee Mills has the following two major competitors: Major Competitors Sultan Banaspati Shehbaz Banaspati Weights 1kg 1kg Prices (Rs.) 48 47 Weights 16 kg 16 kg Prices (Rs.) 790 785

Asia Ghee Mills is following cost leadership because the competitors especially Sultan Banaspati has a very old name in the ghee industry so Asia Ghee Mills has to charge the low prices to compete with the competitors. Here from the above table we can see that the price of the Shehbaz Banaspati is equal to the prices of the Asia Banaspati. But in Bahawalpur the sale of Asia Banaspati is more than Shehbaz Banaspati, but in Multan division the sale of Sultan Banaspati and Shehbaz Banaspati has more sales than Asia Banaspati. According to the text, the low cost strategy is good when, product cannot be differentiated, industry is producing standardized product, product has same usage and switching cost is low. All the characteristics are fully applied in ghee industry. So company is using right strategy. Operation Level Strategy Operation level strategy focuses at how to develop capabilities in process execution that will yield competitive advantages for a firm. This involves applying strategic management concepts to what is known as the operations level, the level at which work inside the organization actually takes place. We focus on how organizations go about improving their process capabilities, including both total quality management and core process reengineering. market Development

Seeking increased sales by improving or modifying present products or services. Currently Asia Ghee Mills is following the product development strategy, because the Asia Ghee Mills is continuously improving the quality of the ghee/oil for the consumers. Asia Ghee Mills has a good image in the Bahawalpur, and they try to develop the same good image in all over the country, so thats why they are improving their products through TQM. recommeded Strategies this time when industry is fully mature, and the competition in terms of access to final consumer is very high the companies usually face the problems of slow demand growth, emphasize on cost and services, topping out and loss of profitability. The Asia Ghee Mills is also facing the same problems. Although it has tackled the major problems very well but still there is some room of improvement in its existing strategy. Forward Integration Gaining ownership or increased control over distributors or retailers. The firm should use their own distribution network because the motive behind that when they have their own distribution system the additional cost will be avoided which had been kept by dealers as their own margin. In this dynamic and competitive environment the firm has to maintain its current position of cost leadership to be competitive. Advertisement Asia Ghee Mills is not using any mode of advertisement, because of low demand and unavailability of their products. They believe that advertisement without availability of the product is useless and creates a bad image. In order to create awareness Asia Ghee Mills must go for advertisement. ISO Certificate Although the firm is working better than required ISO certificate but the firm should take the ISO certificate. Because ISO certificate create a good image among the consumers.