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Gourmet Sweet Bakers Project 2 Final Final
Gourmet Sweet Bakers Project 2 Final Final
“Gourmet Bakers and Sweets” is the largest food retail chain of Lahore. It is
based in Lahore, the second largest city of Pakistan known for its traditional
foods and passion for eating. It was started with a single outlet in Ichra in 1987
by Mr. Muhammad Nawaz Chathha, in the begging they did not get good
response which resulted in shut down. He again started in 1992 at different place
at Muslim town, and Gourmet did not look back since then. Now with its 5
production units, 2 restaurants and 88 sales outlets, gourmet outreaches to a
huge population for their food needs. Mr. Chathha the founder of Gourmet stared
his business with 20 million rupees. He is holding the position of Managing
Director of the company. He was serving in Shezan Bakers as a General Manager
and later on he decided to make his own bakery. He started his business through
getting employees from Shehzan bakers in the beginning.
Gourmet produces a wide variety of bakery items, sweets and dairy products
and offers high quality services in their restaurants. Gourmet has introduced
many new items in bakery products categories which were previously not in the
market of Lahore. Gourmet stresses hard on quality and taste of their products
and making them affordable for their customers at the best prices in the market.
The company has shown an explosive annual growth of more than 25% till 2006
in its business since this unique business was started in 1992. Recently gourmet
shows 65% of annual growth in its business from 2006 to 2009. With his
commitment and strenuous effort to provide the consumers with best quality
food products in a convenient and unmatched displaying manner, Gourmet has
become a success story of business growth in Pakistan. At the moment Gourmet
has more than 4500 employees working in the organization.
Mission statement:-
Director
G.M Production
G.M Market
Assistant General Manager
Area Managers
Assistant Branch
Supervisor Purchaser
Store Supervisor
Sales Man
Industry analysis: -
The food items industry has been rising constantly at a considerable rate and
the eating habits of people are changing over time with the changing life styles.
With the growing trend of having light snacks with tea in the afternoon and other
readymade snacks for a meal instead of the traditional meals of curry n bread, the
demand and consumption for the products of this industry is growing rapidly.
Apart from that as more people and youngsters are working especially the
women, their daily lives are becoming very fast and they don’t have time to cook
at home. Due to this reason more people are now seeking convenience goods,
which act as a alternative to the traditional meals. Although people are becoming
more aware and more health conscious thus they demand high standards of
quality and hygiene along with a balanced nutrition.
Along with that the trend of celebrating events and having a get-together in the
West is now sweeping our culture as well and more people are now celebrating
many different events such as birthdays, ceremonies, anniversaries, New Year,
Valentine’s Day, Mother’s Day etc as compared to the few events celebrated
earlier such as Eid-ul-Adha, Ramadan, Eid-ul-Fitr, weddings, birthdays and get
to gether. These events boost the sales of this industry as people opt to buy things
from outside instead of cooking themselves.
The trends of dining out have also grown rapidly over the past few years and
that’s the reason why many new companies like Gourmet are entering the
Restaurants market.
The acceptance and need for such products are growing every passing day and it
is expected to grow at a higher rate in the future as well which is a very healthy
sign for companies like Gourmet to invest smartly and be in front.
PEST analysis:-
1) Political change= from one party (change of government) to another
Political analysis:-
Political scenario in Pakistan has seen many important changes in recent years.
The political environment directly influences all the industries working in the
country. Similarly the production distribution and use of Gourmet’s products are
subject to some federal laws, such as the Food and Drug Act. The businesses are
subject to the Government stability in the countries as the businesses are directly
subjected to the taxation policy of the country they are operating. They also have
to comply with federal, state and local environmental laws and regulations.
According to the prices above, a small office space of 12 x 38 square feet is rented
out for between PKR 29,640 (minimum) to PKR 91,200 (maximum) in
Islamabad. The productivity of a city and employment generation needs more
entertainment, hotels, shopping areas and offices in large complexes, but no
space has been provided for large complexes to develop. Trading policies are the
long run hurdles that cannot be resolved in near future.
The Pakistan Pure Food Laws (PFL) of 1963 is the basis of the existing trade-
related food quality and safety legislative framework. These laws cover 104 food
items falling under nine broad categories: milk and milk products, edible oils and
fat products, beverages, food grains and cereals, starchy food, spices and
condiments, sweetening agents, fruits and vegetables and miscellaneous food
products. The regulations address purity issues in raw food and as well as
additives, food preservatives, food and synthetic colors, antioxidants, and heavy
metals. All these improvements will help Gourmet baker to enter in new markets
which are conscious about traditional food items and also with security measures
such as Sharjah, Dubai and other Middle East countries.
Existing system of General Sales Tax would be reformed to eliminate multiple tax
rates and replace it with a single lower rate of 15%.
The reformed GST will not apply on health, education and food items consumed
by the poor. The GST will not apply to turnover less than Rs. 7.5 million per year
whereas the current threshold is Rs 5 million per year and would be automated
thus reducing possibilities of corruption and refund delay.
Above situation analysis of taxation structure for 2010-11 shows some mixed
trends for the future prospectus of gourmet baker of Pakistan. Increase in
exemptions for income tax will increase the buying potential of gourmet
customer and will stabilize the employee the gourmet baker by strengthen there
economical conditions. In the mean while increase in GST and Surcharges on
electricity consumption will lower down the sales volume of gourmet products
due highly cost of production resulting in high product prices.
In Pakistan sugar industry is operated almost in all by some political families and
in food industry sugar is a major raw material. For the sake of fetching good
profits these groups put a strong pressure and prove themselves a strong
lobbying group. Employee union is also an other lobbing group that pushes the
gourmet baker for higher wages that will result in high cost of productions.
Strong transport unions may also create some logistic problems for Gourmet
baker distribution channel.
India is a leading manufacturer of sweet and bakery items. Low labor costs in
India has enable Indians to get more share in international markets. In the mean
while Indian lobby is strong enough as compare to Pakistan to reach in foreign
markets. Gourmet and many other entrepreneurial needs strong government
assistance and coloration to enter in international markets
Economic analysis
Technological analysis
Pakistan is considered as developing country. Although it is a nuclear power yet it
lacks behind in other technologies. Technology plays a secondary role in this
industry, as it is not heavily dependent on technological advancements like the
consumer electronics industry, or the software industry. Because bakery and
beverages products are non-tech based in nature, technology in this industry is
therefore limited to function as a catalyst to improve production capacities, speed
of product manufacturing cycles, inventory management. It has to pay attention
to the new distribution techniques as well. Even though one have to take into
account that specialized factors involve a heavy and sustained investment, but
also at the same time if one is able to achieve them, he could generate competitive
advantage. The new technology of internet and television which use special
affects for advertising through media. They make products look attractive and
this help in selling of the products. Due to affective transport facility the company
has achieved great success in distributing its products to all over the country.
SWOT Analysis:
Strengths:
Gourmet has a well organized structure. All the departments perform their work
according to the organizational structure. 100% of production at Gourmet is
carried out at automated plants.
Gourmet has an organized database; all the activities are recorded in the
database. Computerized database provides error free center. It is updated on the
regular basis.
Team Work:
All the departments are working as a team such as Quality assurance, Marketing,
MIS, HR and Administration etc. Working as a team increases the efficiency of
the Gourmet.
Low cost:
Keeping costs lower than their competitors and keeping the cost advantages helps
Gourmet Baker Pakistan pass on some of the benefits to consumers.
Supplier relationship:
Supplier relationships are strong at Gourmet Baker Pakistan, which can only be
seen as strength in their overall performance.
Quality:
By applying the various strengths Gourmet offers the product to the customer.
Gourmet never compromise on quality that is why they are able to capture a huge
market share. Sweet and other bakery products are prepared with immense care
using traditional and authentic recipes to give unforgettable taste.
Customer Retention:
Weakness:
Less Financial resources for advertisement:
Latest machinery is the key strength of any organization, but Gourmet lacks in
this point. By using the latest machinery Gourmet can increase the production
rate.
Opportunities:
One of the most important opportunities is that Gourmet can increase their
target market by capturing other cities which consist of the potential customers.
Brand Worth:
It is the great opportunity for Gourmet to expand their business and market by
exploring the new markets nationwide and internationally.
Threats:
BCG Matrix
The BCG matrix method is based on the product life cycle theory that can be used
to determine what priorities should be given in the product portfolio of a business
unit. To ensure long-term value creation, a company should have a portfolio of
products that contains both high-growth products in need of cash inputs and low-
growth products that generate a lot of cash. It has two dimensions:
Market share
Market growth
The basic idea behind it is that the bigger the market share a product has or the
faster the product's market grows the better it is for the company.
Placing products in the BCG matrix results in 6 categories in a portfolio of a
company:
Stars generate large amounts of cash because of their strong relative market
share, but also consume large amounts of cash because of their high growth rate;
therefore the cash in each direction approximately nets out. If a star can maintain
its large market share, it will become a cash cow when the market growth rate
declines. The portfolio of a diversified company always should have stars that will
become the next cash cows and ensure future cash generation.
As leaders in a mature market, cash cows exhibit a return on assets that is greater
than the market growth rate, and thus generate more cash than they consume.
Such business units should be "milked", extracting the profits and investing as
little cash as possible. Cash cows provide the cash required to turn question
marks into market leaders, to cover the administrative costs of the company, to
fund research and development, to service the corporate debt, and to pay
dividends to shareholders. Because the cash cow generates a relatively stable cash
flow, its value can be determined with reasonable accuracy by calculating the
present value of its cash stream using a discounted cash flow analysis.
Dogs have low market share and a low growth rate and thus neither generate nor
consume a large amount of cash. However, dogs are cash traps because of the
money tied up in a business that has little potential. Such businesses are
candidates for divestiture.
Question marks are growing rapidly and thus consume large amounts of cash, but
because they have low market shares they do not generate much cash. The result
is large net cash consumption. A question mark (also known as a "problem
child") has the potential to gain market share and become a star, and eventually a
cash cow when the market growth slows. If the question mark does not succeed in
becoming the market leader, then after perhaps years of cash consumption it will
degenerate into a dog when the market growth declines. Question marks must be
analyzed carefully in order to determine whether they are worth the investment
required to grow market share.
5. War Horses
They have high market share, but the market has negative growth; the problem
for management is to decide whether the product is in an irreversible decline, or
whether it can be revived, perhaps by repositioning into another market.
6. Dodos
They have a low share of a negative growth market, and are probably best
discontinued.
DATA
FAZAL SWEETS:
Avg. per day sale of Fazal sweets in 2010= 75000
Avg. per month sale of Fazal sweets= 2250,000
Estimated sale of 2010= 27000,000
NIRALA SWEETS:
Avg. per day sale of Nirala Sweets in 2010= 60000
Avg. per month sale of Nirala Sweets = 1800,000
Estimated sale of 2010= 21600,000
GOURMET SWEETS:
MARKET GROWTH
Company Growth of 2008 to 2009 2009 to 2010
Each year
Fazal sweets (2448-2268)/2268*100=7.94% (2700-2448)/2448*100=10.29%
Nirala Sweets (1440-720)/720*100=100% (2160-1440)/1440*100=50%
Gourmet Sweets (2520-1800)/1800*100=40% (3060-2520)/2520*100=21.45%
INTERPRETATION:
In the BCG matrix, Relative market share is given at the x-axis with a median
point of 0.8 and market growth is given at y-axis with a median point of 38.83%
and with positive growth upward and negative growth downward. Positive
growth upward and negative growth downward.
Gourmet (2008-2009)
0
1.5 1.4 1.3 1.2 1.1 1.0 .9 .8 .7 .6 .5 .4 .3 .2 .1 .0
WAR HORSES
DODOS
CUSTOMER CHARACTERISTICS
1. Brand Positioning:
Quality
Freshness
2. Brand Image/Personality:
Strong Commitment
Positioning:
Product Analysis:
The main product because of which Gourmet was able to make a name for it and
has been continuing to go on and on is mithai and they are famous for it but their
bakery products and beverages also give value to their customers. The product
includes:
1. Product Attributes/Features:
The products being sold at Gourmet carry the following attributes which are:
• Quality:
Gourmet has been very careful and has been following a very strong standard for
maintaining its quality so that customer is not complaining about its products.
Since they are dealing in food products where quality plays a very vital role so
they believe in quality good and healthy product to the customer.
• Purity:
It’s another attribute which has been taken care of. In products such as mithai
where people like that they get pure things specially in milk and better where
there are chances that the customers don’t get pure products. Gourmet has made
sure that they use pure materials in making of the product so that when the
customer gets it they don’t feel that it’s not pure.
• Freshness:
Food products all over the world are loved for their freshness and if we talk about
products which Gourmet is selling they should be fresh otherwise customer won’t
purchase it. Gourmet promises to give fresh products to their customers by giving
them those products which they feel are good and healthy to eat and if any
product they feel is not fresh enough they won’t give it to the customer.
• Good Taste:
2. Benefits:
• Same taste:
This is one of the biggest benefits of coming to Gourmet that the consumer will
get the same taste whenever he purchases products from Gourmet it’s not that at
one time the products will taste different and other time they would be different.
• Uniqueness:
One of the strong aspects of Gourmet is that its sweet (mithai) has a unique and
at the same time very nice taste which no other player in the market is providing.
• Large Variety:
The customers can benefit from a large range and variety which Gourmet is
providing them not only in its major products which is sweet (mithai) but lot of
other products such as dairy products etc.
Cleanliness:
• Social Class:
From Gourmet point of view they are benefiting from segment they are targeting
which is the upper middle and upper class as they enjoy a large amount of profit
by charging handsome amount and are enjoying huge amount of financial
reward.
Gourmet is different from others because they have been continuously upgrading
themselves over the years. They started their business from the inner city
congested
Locality as traditional sweet shop mostly found in cities doing small scale
business and selling only mithai related products or dairy products.
But Gourmet has learned a lot from the changing tastes of their customers and
their preferences. They changed their stores outlook made them more modern
and updated and introduced more updated functions in stores operation. They
have been successfully able to shift their small scale business to a company level
business. Their initial area of business was their hometown Lahore, but they
successfully expanded their business to other big cities of Pakistan.
Secondly they continuously keep working on their products and for over the years
been able to launch different successful products in market. Their major focus is
on quality of their products so to maintain strict laws of quality they have
separate quality control department.
The other example of their continuous learning about the market is their
successful launch of snacks product category and their dairy products. They
launched Gourmet milk in the market a few years back although their milk was
not the big success as it has to compete industry giants like nestle, haleeb etc. but
their snacks category is successful and been able to capture a large portion of the
market. These snacks and beverages are not only available at gourmet stores but
at some other stores also.
Demographics:
People of all:
Age
Gender
Generation
Family Size
People belong from all ages generally love sweets and our core products so there
is no exception likewise teenagers like it whereas old people don’t like it, but in
one sense gourmet is targeting more towards people belong from age group
approx 10 to 50 years
I.e. including teenagers, youngsters, mature people however age group exceeding
50 years i.e. old usually suffers from different sugar prohibit diseases. So this
sector is a low consumer of their traditional product.
New generation is more concern about new taste and looks, gourmet’s seems
quite conscious about this factor. It is continuously modifying its products
according to the changing needs of the new generation i.e. virtual placement in
order to facilitate the customers worldwide.
Being a server of eastern society like Pakistan where family size is usually large
which means strong concern about events and occasions. Gourmet as one of the
largest sweet dealers was always be there to facilitate them i.e. whether it’s a
joyful moment like marriages or a moment of sorrow.
Geographic:
Psychographic:
Marriages, cultural occasions and personal events are the events from which no
social class can be excluded. However being a sole marketer of high quality which
ultimately leads to higher price, Gourmet’s focus is more towards society’s middle
and upper class.
Media Graphics
Capital Requirements:
High capital cost is required for acquiring good places for the outlets if anyone
wants to jump in the market.
Government Policy:
In our country the government has no policies for this industry.
Own Distribution System:
It’s very difficult for newcomer to own a distribution channel because it needs
huge investment. Gourmet has its own distribution systems.
Brand Identity:
To identify a brand in the market is more difficult for any new entrants, because
gourmet already has introduced such type of taste & quality in this industry that
it is very hard to compete.
Gourmet has a well organized structure. All the departments perform their work
according to the organizational structure. More than 20% of Mithai production at
Gourmet sweets is carried out at automated plants.
Gourmet has an organized database; all the activities are recorded in the
database. Computerized database provides error free center. It is updated on the
regular basis.
Team Work:
All the departments are working as a team such as Quality assurance, Marketing,
MIS, HR and Administration etc. Working as a team increases the efficiency of
the Gourmet sweets.
Quality:
By applying the various strengths gourmet offers the product to the customer.
Gourmet never compromise on quality that is why they are able to capture a huge
market share. Sweet is prepared with immense care using traditional and
authentic recipes to give unforgettable taste.
Gourmet bakers
Gourmet deals in multi products and it possess:
A distinct mission
Own managers
Identifiable customer segments
Specific competitors
Ability to plan independently
BCG Strategies
Question marks- products with low market share in industries with high
growth potential- Covert to star, or Exit market.
Stars- products with high market share in industries with high growth
potential- make heavy investment because of sales/profit potential.
Cash cows- products with high market share in industries with low market
growth potential-maintain status as long as possible-products produce
strong positive cash flows.
Cash cows support Gourmet because of good will and market share.
Dogs-products with low market share in industries with low market
growth potential-minimize position-withdrawal.
HIGH LOW
HIGH
Stars Question?
Build
The product or SBU’s market share needs to be increased to strengthen its
position. Invest in one or more SBUs to build a share .This strategy are suited to
Question Marks.
Hold
Gourmet objective is to maintain the current share position and it lies in
cash cows and this strategy is often used for Cash Cows so that they continue to
generate large amounts of cash.
Gourmet invests just enough to maintain a share in the
market.
Harvest
Here management tries to increase short-term cash flows as far as possible
(e.g. price increase, cutting costs).
It is a strategy suited to weak Cash Cows or Cash Cows that are in a
market with a limited future.
Harvesting is also used for Question Marks where there is no possibility
of turning them into Stars, and for Dogs.
Divest
The objective of this strategy is to rid the organization of the products or
SBUs that are drain on profits and to utilize these resources elsewhere in the
business where they will be of greater benefit.
This strategy is typically used for Question Marks that will not become
Stars and for Dogs.
Gourmet lies in Cash cows and these are cash generators and require an
invest or hold strategy while maximizing cash flow. Gourmet aim is to
achieve a balanced portfolio, sustaining or holding the Cash Cows.
Market Attractiveness
Organizations strength
Market Share
Growth in market share
Brand Equity
Distribution Channel Access
Production Capacity
Profit margin relative to competitors
Technological or other innovation
Customer Loyalty
GE Matrix
(Gourmet sweets & bakers)
Gourmet sweets & bakers
The RED ZONE consists of the three cells in the lower right corner. A
position in the red zone is not attractive. The suggested strategy is that
management should begin to make plans to exit the industry.
Best Strategy: HARVEST or DIVEST.
SCORPIO TECHNIQUE
This technique is used to justify the strategies that we have selected while
doing the analyses of BCG Matrix. Scorpio technique is a continuous process of
every company and each and every company have own time frame to review the
technique may be in 0ne year or one month ,may be in one week or other .
Industry or Market
Industry or technology thinking
1. Example:- online complaint centre, e-commerce, research &
development.
CUSTOMER:-
1. Differentiation marketing.
2. high quality and good position
3. more and more improvement in quality of the product and position to
built relation to customer to improve brand loyalty
4. To innovate different product and services and built a positive image in
the mind of the customer.
5. Establishment a complete bakery of first choice to facilitate the customer.
6. Customer trust increases
7. Increase promotional activities like advertising on different channels,
pamphlets, concerts etc.
Retention Strategies
OFFERINGS
1. Superior values and services with attractive and hygienic and healthy
products.
2. Different products, beverages, cakes, pastries.
3. Provide banking facility that influence the customers, provide value,
improved brand image, introduced new innovative products.
4. Sugar free ice creams.
5. Providing more healthy products to satisfy each and every type of
customers
6. Yes we are managing the life cycle.
7. Through Advertisement, print media, number of branches increase.
11. By adopting reduce price strategy they can make more and permanent
customers. Not only more customers will come there will be increase in the
number of loyal customers as well.
12. They have to acquire new technology for production if they don’t move
towards acquiring new technology then they won’t be able to meet the needs
of customers.
13. Sales promotions like prizes, lucky draw schemes should be introduced to
attract more customers and involve kids and children to increase sales.
14. Must capture some special events like local sports series, convocations &
charities shows by sponsoring these shows as would give a good image
about the company to the consumer.