Fauji Fertilizer Company Limited

Management Audit Checklist of Questions

Management can be defined as the process of administering and controlling the affairs of the
organization, irrespective of its nature, type, structure and size. It is an act of creating and
maintaining such a business environment wherein the members of the organization can work
together, and achieve business objectives efficiently and effectively.

1. Does the firm use strategic-management concepts?

Fauji Fertilizer Company Limited is very well implementing all the strategy to be remaining
constant in their position in this changing economy of Pakistan.

2. Are company objectives and goals measurable and well communicated?

All objectives and goals of Fauji Fertilizer Company Limited are well communicated and are
measurable with respect of the sale volumes of the company.

Following are the goals and objectives of the company;

1. Honesty: Honesty in communicating within the Company and with the business
partners, suppliers and customers, while at the same time protecting the
Company’s confidential information and trade secrets.

2. Consistency: Consistency is in word and deed. (by providing same quality

premium product)

3. Compassion: Compassion is a relationship with the employees and the

communities affected by our business. (by providing high and satisfying bonuses
and salaries)

4. Excellence: Excellence in high-quality products and services sold to customers.

5. Fairness: Fairness to our fellow employees, stakeholders, business partners,

customers and suppliers through adherence to all applicable laws, regulations and
policies and a high standard of moral behavior.

3. Do managers at all hierarchical levels plan effectively?

Managers at FFC are working effectively irrespective of the hierarchy they belong to. One of the
major landmarks for Fauji Fertilizer Company over the years is management systems
certifications for international standards of Quality (ISO 9001:2008). Quality Management

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System certification at FFC-GM was first achieved in November 1997 which was an honor for
FFC being the first fertilizer plant in Pakistan to achieve this certification. Later on, FFC-MM
and Head Office (including RM Office Karachi) also obtained these international standards
certifications in 2010 and 2014 respectively.

The implementation of international standards of management systems is an important corporate

strategy of FFC. It is a sign of confidence between the company and its stakeholders for
conducting businesses. Obtaining Certification is a valuable approach to ensure reliable
manufacturing and delivery of consistent product while fostering continual improvement.

4. Do managers delegate authority well?

Employees at FFC are well educated and trained to take responsibility in line with their function,
authority and qualifications, this is effectively control by their first line managers.

5. Is the organization’s structure appropriate?

Organization structure at FFC is well defined. Roles and responsibilities are also well
communicated to its all level of employees. In view of the declining gas pressures due to
diminishing gas reservoir, the Company management has devised a long term sustainability plan
which includes installation of gas compressors to improve the diminishing pressure besides
evaluating various alternate fuel options including LNG, coal, SNG, power wheeling etc, to
ensure sustainable operations. This exhibits the upper management is concerned about the
ongoing concept of the company in today’s changing world.

6. Are job descriptions and job specifications clear?

The job specifications are well communicated to all its employees whether they are working in
offices or at plant. Engineers and Accountants are well communicated about their works.

7. Is employee morale high?

FFC has been awarded several awards in Corporate Reporting, Safety Standards, CSR and other
many such categories for previous several years. This is reflective of the fact that FFC has
achieved excellence in all areas of its operations. And become the first choice for its workers by
providing them with high amount of bonuses and salaries.

FFC ensures that fertilizers and their raw materials, additives and intermediate products are
processed and manufactured, handled, stored, distributed and used in a safe way. This show they
never compromise over the safety of their employees which keeps their works motivated and
their morale high during the work.

8. Are employee turnover and absenteeism low?

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The working hour at FFC is comparatively less than its competitors and scope of growth is also
there in the organization. The never compromise over the health and safety of their worker there
they are awarded with Occupational Health & Safety (OHSAS 18001:2007) and Environment
(ISO 14001:2004) for its Head Office and manufacturing sites at Goth Machhi (FFC-GM) and
Mirpur Mathelo (FFC-MM). This was followed by Occupational Health & Safety and
Environmental Management Systems standards Certifications in 2003 & 2004 respectively.

Therefore the employees are working with from long period of time and are actively involved in
the firm work.

9. Are organizational reward and control mechanisms effective?

Organization is working in very effective and reliable way. It is very much evident from its
rewards. During 2016, the Company raised its production benchmark with an ever highest Sona
urea production of 2,523 thousand tonnes, on account of restored gas supply and operational
efficiencies. The urea output surpassed last year’s production by 54 thousand tonnes while
contributing around 42% to the total indigenous urea production during 2016 and an aggregate
contribution of 54 million tonnes since inception of the Company.

Marketing Audit Checklist of Questions

1. Are markets segmented effectively?

Every company needs to manage its marketing activities effectively. Especially the company
needs to know how to analyze the market opportunities, select appropriate target markets,
segmenting the market in proper segments, establishing the effective marketing mix and manage
the marketing efforts effectively. To fulfill these requirements, marketing department is
established in almost all well-known organizations. Fauji Fertilizer Company has major
marketing strategy that involves;

• Identifying the market style and market trend.

• Identifying the customer trend and style.
• Identifying the customer needs and demands.
• Identify the segments within your market.
• Understand company's strengths and weaknesses.
• Implementation of 4p's price place product promotions.
• Understand where you want your brands to be in the future, and write marketing plan on
regular basis to help you get there.
• Internal service quality of customer satisfaction.

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 2. Is the organization positioned well among competitors?

All heads of departments meet every Tuesday to

• Present weekly reports to GMM

• Discuss sale situation
• Look competitors activities
• Monitor performance against monthly and annual plans
• Monitor fertilizers supply and demand situation
• Tries to devise strategies to overcome problems if any.

In every month a monthly meeting is held in which reports for a month of all departments are
presented to GMM. In monthly meeting the targets and plans for next month are set. In these
meeting monthly sales of FFC against the same period of last year and monthly sales of
competitors are also analyzed. Sales of all regions are reviewed.

Sales performance of all sales officers are compared with targets. Best sales officer of the month
is selected and rewarded. Expenses for the month are approved.

These meetings are presided over by GMM in Lahore Marketing Office. Annual meeting of all
division is also held.

3. Has the firm’s market share been increasing?

One of the problems with FFC is that it belongs to a mature industry with clogged overall market
share. And that market is already on its saturation point.

4. Are present channels of distribution reliable and cost effective?

Distribution Department is major department helping the sales force. Primary function of
Distribution department is to ensure effective and efficient distribution of product from plants to
final customer. The distribution channel at FFC is quite big and reliable. They Ship out entire
production of FFC plants and imported fertilizer in accost effective manner. There are over 3800
dealers and 184 warehouses. They plan and undertake self-exports and imports and ensure
prompt handling, quality packing, correct weight, timely delivery and arrange safe storage of
surplus product during lean months. Follow up is being taken of product quality complaints.
Distribution department works in co-ordination with plant management to ensure smooth
operations. This department also maintain liaison with Pak Railways, NLC, Port authorities and
suppliers.

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 5. Does the firm have an effective sales organization?

FFC focus on after sales services to the farmers and industrialists. They also have an effective
sale accounting system and sales promotion system which is of great help to the firm. These
systems help in;

 Maintenance of dealership records

 Processing and banking of sales and proceeds received from sales force for the
sales of fertilizers
 Transfer of data to plants for shipment
 Transfer of funds to head office recording of invoice for sales ex-warehouse
 Receiving data from plants for direct sales
 Processing of bank guarantees for secured credit sales
 Monitoring of unsecured credit sales of Fauji sugar mills/forms
 Preparation of pricing and discount structure for fertilizer
 Receiving data from plants for warehouse shipment
 Recording of stock movement reports
 Overall reconciliation of stock movement with intimation of head office
 Follow up of receivables for sale through rail
 Recording of stocks received from FFBL for sale on their behalf
 Sending the information regarding dealers balance to field force for recovery of
receivables on various accounts

6. Does the firm conduct market research?

It is part of basic strategy of FFC to conduct is proper research of market for its success and
ultimate survivor.

7. Is the firm’s Internet presence excellent as compared to rivals?

FFC views excellence as FFC is the market leader in the fertilizer having 60% of the market
share. Company being the market leader sets standards for the industry. The company continues
to enhance the facility of providing farmers free farm advisory services through farm advisory
centers. FFC is using a single brand name SONA for its products like SONA urea, SONA DAP
helping farmers to remember the name. FFC is only Fertilizers Company in the industry
conducting seminars on core agricultural issues, inviting local and foreign luminaries. Company
is fully automated having the extensive information systems for the plant site as well as the
marketing division, countrywide location of plants.

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