INTERNSHIP REPORT ON

SHAH HYGENIC PRODUCTS PVT LIMITED

PAKISTAN LIMITED
HARIPUR HATTAR

Submitted by
Umar Ibrahim

Roll #: S-031-2015

Supervised by
Sardar Ejaz Ahmed

Government College of Management Sciences Abbottabad

SESSION
2015-2018

i
 INTERNSHIP REPORT ON
SHAH HYGENIC PRODUCTS PVT LIMITED
PAKISTAN LIMITED
HARIPUR HATTAR

Submitted by: Umar Ibrahim

Roll #: S-035-2015

Supervised by: Sardar Ejaz Ahmed

This internship report is submitted in partial fulfillment of
the requirements for the degree of Bachelors of Business
Administration awarded by the Hazara University
Mansehra

Government College of Management Sciences Abbottabad

SESSION
2015-2018

ii
 Government College of Management Sciences
Abbottabad
APPROVAL SHEET

Approval Committee
1. Supervisor

Sardar Ejaz Ahmed Signature______________________

Designation Associate Professor GCMS Abbottabad

2. Head of department

Mr. Mushtaq Ahmad____________

Signature_____________________
Designation Principal GCMS Abbottabad

3. External Examiner

Mr._____________________Signature_____________________
_

iii
 DEDICATION

I dedicate this report to my Loving Parents & My Respected Teachers

iv
 ABSTRACT

The main purpose of this study is to explore consumer attitudes towards the banking
sector. The study was based on an exploratory research approach, which used a
detailed study of different department of Shah Hygenic Pvt Ltd

I did my Eight weeks internship at Shah Hygenic Pvt Ltd, worked in account
Marketing department, accounts department,. Although there were no such big
problems found in the working of Shah Hygenic Pvt Ltd, there were some problems
in training of the employees, incentive schemes and product innovation.
Recommendations include workshops for employees, job rotation, teams work to find
innovative products and scholarship programs for employees.

v
 Table of Contents

Chapter 1........................................................................................................................1
INTRODUCTION To The Report.................................................................................1
1.1 Introduction..........................................................................................................1
1.2 Purpose Of Study.................................................................................................1
1.3 Internship Objectives............................................................................................2
1.4 Limitations...........................................................................................................2
1.5 Delimitations........................................................................................................2
Chapter 2........................................................................................................................4
INTRODUCTION OF SHAH HYGENIC PRODUCTS PVT LIMITED PAKISTAN
Ltd..................................................................................................................................4
2.1 Shah Hygenic Products Pvt Limited....................................................................5
2.2 Overview of Shah Hygenic Products Pvt Limited...............................................6
2.3 Accountable to our stakeholders..........................................................................6
2.4 Adding Vitality to life:.........................................................................................7
2.5 Scale and geographic reach:.................................................................................7
2.5.1 Strategy and long-term financial target.........................................................8
Chapter 3......................................................................................................................10
Marketing.....................................................................................................................10
3.1THE MARKETING DEPARTMENT OF SHAH HYGENICS....................10
3.1.1 FUNCTIONS OF THE MARKETING DEPARTMENT......................12
3.1.2 Marketing Objectives of Shah Hygenic Products Pvt Limited
Pakistan Limited................................................................................................15
3.2 Attainment Of Objectives...................................................................................16
3.3 Attainment Of Objectives...................................................................................18
3.4 Marketing Strategies..........................................................................................21
3.5 MARKETING NETWORK OF SHAH HYGENICS........................................27
3.6 The distribution channel of SHAH HYGENICS..............................................29
3.6.1Channels.......................................................................................................35
3.6.2 Channel members........................................................................................36
3.7 The internal market............................................................................................36
3.7.1Channel decisions.........................................................................................37
3.7.2 Managerial concerns...................................................................................37
3.7.3 Channel membership...................................................................................37

vi
 3.7.4 Channel motivation.....................................................................................38
Monitoring and managing channels.....................................................................38
Marketing network Compensation plans utilized by SHAH HYGENICS:...............38
3.8 Criticism of marketing network.........................................................................40
3.9 Distribution channel...........................................................................................42
Chapter*4.....................................................................................................................45
Analysis*of Shah Hygenic Products Pvt Limited........................................................45
4.1 SWOT Analysis.................................................................................................45
4.2 EFE Matrix.........................................................................................................47
4.3 IFE Matrix..........................................................................................................50
4.4 SWOT or TOWS Matrix....................................................................................52
4.5 Space Matrix......................................................................................................54
4.6 Grand Strategy Matrix........................................................................................57
4.7 QSP Matrix.........................................................................................................58
4.8 PEST Analysis...................................................................................................59
Chapter 5......................................................................................................................62
Recommendation & Conclusion..................................................................................62
References....................................................................................................................67

vii
 Acknowledgements

I express my gratitude to Almighty Allah for his unlimited graciousness because

Words are scarce and knowledge is limited to express his majesty. I have the pearls
of my eyes to admire the blessings of the compassionate, omnipotent, the Merciful
and the beneficent Allah who is the entire source of knowledge and wisdom. Due to
his blessings, I become able to contribute this comprehensive assignment towards the
deep ocean of knowledge already exist. Heart is warm with love and thoughts have
turned to the city of knowledge – The Holy Prophet (P.B.U.H) His saying “Learn
from to Cradle to Grave” inspired the strong desire in me to undertake this course of
valuable studies. I deem it as a great opportunity to offer my heartiest gratitude to my
venerable teacher Sardar Ejaz Ahmed , for his great efforts to make us understand and
to conduct this kind of activities of giving the great opportunity for learning beyond
your existing area of scope. I am thankful to Marketing Manager of Shah Hygenic
Products Pvt. Ltd for his nice co-operation and proper guidance throughout my
internship. Express my heartiest and sincerest sense of gratitude to all of them for
providing me grand exposure to gain multifarious experience, May Allah The
Almighty bless my parents and well-wishers who are the permanent source of prayers
for me and my successes in this world.

Umar Ibrahim

viii
 Executive Summary

The purpose of the 8 week internship at Shah Hygenic Products Pvt Limited is to get
insight into the practices being done and to find out the gap between what I learned
during the two year degree program of BBA(HONS)(Bachelors of Business
Administration).This report will help the students in performing specific tasks in a
professional environment which will sharpen the professional edge of the student in
the field of Business Administration and to observe that how organization is
practicing the major Marketing functions. The report on internship is also a
requirement for award of my degree as well or fulfilling the requirement of
BBA(HONS) program while analyzing Marketing functions and generating a report.

Shah Hygenic Products Pvt Limited is one of the world's leading suppliers of fast
moving consumer goods across Foods and Home and Personal Care categories. Shah
Hygenic Products Pvt Limited's portfolio includes some of the world's best known
and most loved brands. Shah Hygenic Products Pvt Limited SHAH HYGIENIC
PRODUCTS Pvt. LIMITED is established in 2011 end, G.H.P. has earned
professional repute in providing value added consulting services and solutions with
the enhanced customer’s satisfaction. With varied domain expertise, past international
trading, international experience with world leading companies and wide network of
international alliance partners and some productive ,hard and smart workingShah
Hygenic Products Pvt Limited owns over 400 brands, but focuses on 14 brands with
sales of over 1 billion euros -Axe/Lynx, Dove, Omo, Becel/Flora, Heartbrand ice
creams, Hellmann's, Knorr, Lipton, Lux,Magnum, Rama, Rexona aka
Sure\Degree\Rexena\Shield, Sunsilk and Surf.[7] It is a dual-listed company consisting
of Shah Hygenic Products Pvt Limited N.V., based in Rotterdam, and Shah Hygenic
Products Pvt Limited plc, based in London. The two companies operate as a single
business, with a common board of directors. Shah Hygenic Products Pvt Limited is
organised into four main divisions - Foods, Refreshment (beverages and ice cream),
Home Care, and Personal Care. It has research and development facilities in the
United Kingdom (2), the Netherlands, China, India and the United States.

Shah Hygenic Products Pvt Limited was founded in 1930 by the merger of
the Dutch margarine producer Margarine Unie and the British soapmaker Shah
Hygenic. During the second half of the 20th century the company increasingly

ix
diversified from being a maker of products made of oils and fats, and expanded its
operations worldwide. It has made numerous corporate acquisitions, including Lipton
(1971), Brooke Bond (1984), Chesebrough-Ponds (1987), Best Foods andBen &
Jerry's (2000), and Alberto-Culver (2010). Shah Hygenic Products Pvt Limited
divested its speciality chemicals businesses to ICI in 1997. In the 2010s, under
leadership of Paul Polman, the company gradually shifted its focus toward health and
beauty brands and away from food brands showing slow growth.

x
 Chapter 1

INTRODUCTION To The Report

1.1 Introduction

This internship report is about Shah Hygenic Products Pvt Limited, which is
one of the reputable companies in the country. Shah Hygenic Products Pvt
Limited is a highly profitable company, having a huge number of customers in
the world. To know about the organization and its function it was important to
work there. This report comprises the research study carried out to analyze the
marketing practices of Shah Hygenic Products Pvt Limited. It encompasses
the experience of the internee through learning, his findings and finally few
suggestions, recommendations and conclusion. The study is mostly carried out
on the marketing procedures, policies and functions of the Shah Hygenic
Products Pvt Limited.

1.2 Purpose Of Study

Being a student of BBA(HONS), the purpose of this report is to critically

define and describe different functions and products offered by the Shah
Hygenic Products Pvt Limited to its valued customers. To identify some
weakness related to management, the aim is to analyze the performance of
the organization and make a critical analysis of it and suggest
recommendations. The recommendations, if supplemented by an action
plan, will further facilitate the improvement process.
For me it is a course requirement and a source of practical knowledge, the
purpose of this study is to elaborate what the Shah Hygenic Products Pvt
Limited does or it supposed to do it, and to evaluate how it is actually
being done. In short the research report will prove to be a yardstick in
determining how tasks should be performed and how are they being
performed in reality.

1
1.3 Internship Objectives

The purpose of the 8 week internship at Shah Hygenic Products Pvt

Limited is to get insight into the practices being done and to find out the
gap between what I learned during the two year degree program of
BBA(HONS)(Bachelors of Business Administration).This report will help
the students in performing specific tasks in a professional environment
which will sharpen the professional edge of the student in the field of
Business Administration and to observe that how organization is practicing
the major Marketing functions. The report on internship is also a
requirement for award of my degree as well or fulfilling the requirement of
BBA(HONS) program while analyzing Marketing functions and
generating a report.

1.4 Limitations

No one can be entitled in order to retrieve it is result intended for

virtually any purpose except authorized Traditional bank staff
regarding recognized purpose. Research students are generally not
authorized in order to retrieve AND WORK WITH any kind of
discreet material for just about any purpose, As That is against this
company policy. the particular study are conducted As outlined by
your objectives of an study. the study may not include broad
explanations of points AS WELL AS personas for its nature of an
study, your own problem regarding short date period in addition
makes ones analysis restricted Just like solitary are not able to
properly understand ALONG WITH and so analyze every one of the
operations of an Shah Hygenic Products Pvt Limited .

1.5 Delimitations

The concerned company can use the recommendations of this report in

order to improve its overall performance.

2
1.6 Methodology of Report
The methodology adopted for the report was based on collection of data of
both types i.e. primary data and secondary data.
• Primary data
• Secondary data

1.6.1 Primary Data

• Discussions with distribution Manager & other Management members.
• Observations

1.6.2 Secondary Data

• Manuals
• Annual report
• Brochures
• Internet Websites

3
 Chapter 2

INTRODUCTION OF SHAH HYGENIC

PRODUCTS PVT LIMITED PAKISTAN Ltd.

Shah Hygenic Products Pvt Limited is one of the world's leading suppliers
of fast moving consumer goods across Foods and Home and Personal Care
categories. Shah Hygenic Products Pvt Limited's portfolio includes some
of the world's best known and most loved brands. Shah Hygenic Products
Pvt Limited SHAH HYGIENIC PRODUCTS Pvt. LIMITED is
established in 2011 end, G.H.P. has earned professional repute in
providing value added consulting services and solutions with the enhanced
customer’s satisfaction. With varied domain expertise, past international
trading, international experience with world leading companies and wide
network of international alliance partners and some productive ,hard and
smart workingShah Hygenic Products Pvt Limited owns over 400 brands,
but focuses on 14 brands with sales of over 1 billion euros -
Axe/Lynx, Dove, Omo, Becel/Flora, Heartbrand ice
creams, Hellmann's, Knorr, Lipton, Lux,Magnum, Rama, Rexona aka
Sure\Degree\Rexena\Shield, Sunsilk and Surf.[7] It is a dual-listed
company consisting of Shah Hygenic Products Pvt Limited N.V., based in
Rotterdam, and Shah Hygenic Products Pvt Limited plc, based in London.
The two companies operate as a single business, with a common board of
directors. Shah Hygenic Products Pvt Limited is organised into four main
divisions - Foods, Refreshment (beverages and ice cream), Home Care,
and Personal Care. It has research and development facilities in the United
Kingdom (2), the Netherlands, China, India and the United States.

Shah Hygenic Products Pvt Limited was founded in 1930 by the merger of
the Dutch margarine producer Margarine Unie and
the British soapmaker Shah Hygenic. During the second half of the 20th
century the company increasingly diversified from being a maker of

4
products made of oils and fats, and expanded its operations worldwide. It
has made numerous corporate acquisitions, including Lipton
(1971), Brooke Bond (1984), Chesebrough-Ponds (1987), Best
Foods andBen & Jerry's (2000), and Alberto-Culver (2010). Shah Hygenic
Products Pvt Limited divested its speciality chemicals businesses to ICI in
1997. In the 2010s, under leadership of Paul Polman, the company
gradually shifted its focus toward health and beauty brands and away from
food brands showing slow growth.

Shah Hygenic Products Pvt Limited N.V. has a primary listing

on Euronext Amsterdam and is a constituent of the AEX index. Shah
Hygenic Products Pvt Limited plc has a primary listing on the London
Stock Exchange and is a constituent of the FTSE 100 Index. The company
is also a component of the Euro Stoxx 50 stock market index.

2.1 Shah Hygenic Products Pvt Limited

Shah Hygenic Products Pvt Limited Pakistan (70.4% Shah Hygenic

Products Pvt Limited equity) is the largest FMCG company in Pakistan, as
well as one of the largest multinationals operating in the country. Shah
Hygenic Products Pvt Limited Pakistan Ltd., a subsidiary of the Shah
Hygenic Products Pvt Limited Group is operating in Pakistan since 1948.
The Company’s main business lines are Soaps and Detergents, Personal
Products, Cooking Oils and Fats, Packed Teas, and Ice Creams. Shah
Hygenic Products Pvt Limited has a long list of brands such as Surf, Vim,
Rin, Lifebuoy, Sunlight, Lux, Rexona, Sunsilk, Close-Up, Blue-Band,
Dalda, Planta, Lipton’s Yellow Label, Taaza and Richbru, Brook Bond’s
Supreme and Kenya Mixture etc. which are common household names in
Pakistan.

The Company’s factory in Rahim Yar Khan am sole of an 1st

industrial models to be able to possibly be made immediately after
your creation associated with Pakistan. Just like the consumer base
expanded throughout the years as well as the company entered in to

5
new goods lines including Personal products AND ALSO
Margarine, The item invested further for the installation of modern
manufacturing facilities just like a good factory in Karachi. Today, the
company will be applying latest state-of-the-art technology pertaining
to producing high quality products.

In 1995, the Company established a new factory near Lahore to

manufacture the Wall’s range of ice creams, which have become popular
within a short time. In 1996, the present group – Shah Hygenic Products
Pvt Limited UK acquired the Polka Group that produced ice creams. In
1999, Pakistan industrial promoters (Private) Limited, owners of ‘Polka’
brands of Ice Cream were merged with Lever.

In order to leverage the synergies of Shah Hygenic Products Pvt Limited’s

international brand strength, market edge and corporate image, Shah
Hygenic Pakistan Ltd. changed its name to Shah Hygenic Products Pvt
Limited Pakistan Ltd., in August 2002.

2.2 Overview of Shah Hygenic Products Pvt Limited

The company had a turnover of Rs. 23.3 bn  (Euro 309 mn) in 2007, and
enjoys a leading position in most of its core Home and Personal Care and
Foods categories, e.g. Personal Wash, Personal Care, Laundry, Beverages
(Tea) and Ice Cream.

The company operates through 5 regional offices, 4 wholly owned and 6

third party manufacturing sites across Pakistan.

2.3 Accountable to our stakeholders

Since the time Shah Hygenic Products Pvt Limited Pakistan began its
operations in 1948, the Company has been closely connected to the
Pakistani people and its brands have been an integral feature in their daily
lives. In fact, the nature of our business enables our brands to be the pulse
and heartbeat of the 164 million people in Pakistan.

6
This is a huge commitment, which makes us responsible and accountable
to all our stakeholders and society as a whole and strengthens our resolve
to:

 Make a positive difference to the lives of low income consumers

 Create new opportunities for growth
 Improve the overall quality of life in Pakistan, by promoting
education, nutrition, health and hygiene.         

Our Vision

“Touching Hearts, Changing Lives.”

Our Mission

“Mission Is To Add Vitality To Life. We Meet Everyday Needs For

Nutrition, Hygiene and Personal Care With Brands That Help People Feel
Good, Look Good and Get More Out Of Life.”

2.4 Adding Vitality to life:

150 million times a day, in 150 countries, people use our products at key
moments of their day. In the future, our brands will do even more to add
vitality to life. Our vitality mission will focus our brands on meeting
consumer needs arising from the biggest issues around the world today –
ageing populations, urbanisation, changing diets and lifestyles.

2.5 Scale and geographic reach:

“Our deep roots in local cultures and markets around the world give us our
strong relationship with consumers and are the foundation for future
growth. We will bring our wealth of knowledge and international
expertise to the service of local consumers - a truly multi-local

7
multinational” - extract from Shah Hygenic Products Pvt Limited’s
Corporate purpose.

2.5.1 Strategy and long-term financial target

At the heart of Shah Hygenic Products Pvt Limited's strategy is a
concentration of resources on areas where we have leading category and
brand positions and which offer excellent opportunities for profitable
growth, especially in personal care, developing and emerging markets and
Vitality. The focus is primarily on developing the business organically, but
acquisitions and disposals can also play a role in accelerating the portfolio
development.

To perform the strategy i have reorganised the organization in order

to simplify your own organisation ALONG WITH management
structure AND in order to improve attributes with marketing,
consumer management, IN ADDITION TO research AND
development. your own result is greater allocation of resources, faster
decision-making AND a good lower cost level. this transformation,
known Just as ones sole Shah Hygenic Products Pvt Limited
programme, permits us all in order to leverage MY OWN scale both
worldwide AND ALSO locally.

Shah Hygenic Products Pvt Limited's long-term ambition is usually for

you to become with top third associated with MY PERSONAL peer
group with regards to overall shareholder return. we expect underlying
income growth of 3-5% per annum IN ADDITION TO the managing
margin over 15% from 2010 immediately after the normal level
regarding restructuring costs connected with 0.5 in order to 1 percent
regarding turnover. Return with invested capital will be targeted to be
able to increase throughout the 2004 base of 11%. with the period
2005 – 2010, we aim in order to deliver ungeared free income
involving €25-30 billion. This In the event become noted The item
previously

8
 IN ADDITION TO planned disposals along with the added
restructuring plans will certainly have reduced ungeared free revenue
through information on €2.5 million over your period, whilst
enhancing your current ongoing funds producing capacity of a
business.

9
 Chapter 3

Marketing

3.1THE MARKETING DEPARTMENT OF SHAH

HYGENICS

The marketing function plays a critical role in linking sales, development,

customers and prospects, and the company’s executive management.
Marketing has traditionally been thought of as a combination of market
research, strategic planning, and product planning and sales support.
Marketing is the company’s window on the world outside the company.
Other customer facing roles, such as sales and service, provide major
inputs, but marketing must provide the interpretation that explains and
predicts buyer behavior. By accurately observing customers business
initiatives and, even more importantly, anticipating future initiatives in
target markets, marketing can identify priorities and equip the sales force
accordingly.
All marketers need to be aware of the effect of globalization, technology,
and deregulation. Rather than try to satisfy everyone, marketers start with
market segmentation and develop a market offering that is positioned in
the minds of the target market. To satisfy the target market’s needs, wants,
and demands, marketers create a product, one of the 10 types of entities
(goods, services, experiences, events, persons, places, properties,
organizations, information, and ideas). Marketers must search hard for the
core need they are trying to satisfy, remembering that their products will
be successful only if they deliver value (the ratio of benefits and costs) to
customers.
Every marketing exchange requires at least two parties—both with
something valued by the other party, both capable of communication and
delivery, both free to accept or reject the offer, and both finding it
appropriate or desirable to deal with the other. One agreement to exchange

10
constitutes a transaction, part of the larger idea of relationship marketing.
Through relationship marketing, organizations aim to build enduring,
mutually satisfying bonds with customers and other key parties to earn and
retain their long-term business. Reaching out to a target market entails
communication channels, distribution channels, and selling channels. The
supply chain, which stretches from raw materials to the final products for
final buyers, represents a value delivery system. Marketers can capture
more of the supply chain value by acquiring competitors or expanding
upstream or downstream. In the marketing environment, marketers face
brand, industry, form, and generic competition. The marketing
environment can be divided into the task environment (the immediate
actors in producing, distributing, and promoting the product offering) and
the broad environment(forces in the demographic, economic, natural,
technological, political-legal, and social-cultural environment). To
succeed, marketers must pay close attention to the trends and
developments in these environments and make timely adjustments to their
marketing strategies. Within these environments, marketers apply the
marketing mix—the set of marketing tools used to pursue marketing
objectives in the target market. The marketing mix consists of the four Ps:
product, price, place, and promotion. Companies can adopt one of five
orientations toward the marketplace. The production concept assumes that
consumers want widely available, affordable products; the product concept
assumes that consumers want products with the most quality, performance,
or innovative features; the selling concept assumes that customers will not
buy enough products without an aggressive selling and promotion effort;
the marketing concept assumes the firm must be better than competitors in
creating, delivering, and communicating customer value to its chosen
target markets; and the societal marketing concept assumes that the firm
must satisfy customers more effectively and efficiently than competitors
while still preserving the consumer’s and the society’s wellbeing. Keeping
this concept in mind, smart companies will add “higher order” image
attributes to supplement both rational and emotional benefits. The
combination of technology, globalization, and deregulation is influencing
customers, brand manufacturers, and store-based retailers in a variety of
11
ways. Responding to the changes and new demands brought on by these
forces has caused many companies to make adjustments. In turn, savvy
marketers must also alter their marketing activities, tools, and approaches
to keep pace with the changes they will face today and tomorrow.

3.1.1 FUNCTIONS OF THE MARKETING DEPARTMENT

 To establish SHAH HYGENICS as a leading brand of fast

moving consumer goods and daily solutions in the mind of Indian
Consumer and influencers.
 To track and capture opportunities and build brand image and
presence through corporate communication both internal and
external.
 To create market presence and brand positioning through
advertising and both direct and indirect and various promotions.
 To launch products as per committed time for the customers.
 To be a link between the field (i.e. sales) and the development
team so as to bring feedback from the market / customers and use it
for further improvising on our products and bring innovative
products to our customers.
 To provide support to the sales team at the branches.

The sales function in the context of a SHAH HYGENICS, is a group of

people who are directly tasked to generate profitable revenue from existing
clients and finding new clients. Typically, they are having set performance
objectives that are linked directly or indirectly with revenue and/or profit
targets for a set period of time.

With a rigorous focus on a market-oriented approach and profit creation as

the basic policy, the aim is to establish a structure that stably generates
high profits by the use of key initiatives such as the implementation of
fully FIV* (Future Inspiration Value) based management, the creation of a
business portfolio with higher profitability, moving forward with group

12
management, and innovation in collaboration with partners and group
companies.

In order to achieve this, SHAH HYGENICS will focus on the business

areas in which it can show its maximum strength, and strengthen its social
innovation business, which consists of its social infrastructure, industrial
infrastructure, life infrastructure and information infrastructure businesses,
and will endeavor to maximize the synergies with the infrastructure
technology/products business that underpins social innovation business
operations.

Corporate governance is being systematically strengthened, efficient group

company management implemented and equity relationships reviewed, in
order to raise earnings throughout the corporate group. With the emphasis
on acquitization and collaborations with partners and group companies,
SHAH HYGENICS diverse its business to strengthen collaborative
innovation and also has business undertakings in various areas of
operations.

Basic policies adopted by the Shah Hygenics Company Board of

Directors in respect to the Corporate Governance Guidelines

A. Board Purpose and Responsibilities.

The Board represents and acts on behalf of all shareholders of the

Company. The Board is responsible for establishing, and helping the
Company achieve, business and organizational objectives through
oversight, review and counsel. The Board also:

 approves and monitors critical business and financial strategies of

the Company;

 assesses major risks facing the Company, and options for their
mitigation;

 approves and monitors major corporate actions;

13
  oversees processes designed to ensure the Company's, and
Company employees', compliance with applicable laws and
regulations and the Company's Worldwide Business Conduct
Manual;

 oversees processes designed to ensure the accuracy and

completeness of the Company's financial statements;

 monitors the effectiveness of the Company's internal controls;

 selects, evaluates and sets appropriate compensation for the

Company's Chief Executive;

 oversees succession planning for the Chief Executive position;

 reviews the recommendations of Company management for, and

elects, the Company's principal officers; and

 oversees the compensation of the Company's principal officers

elected by the Board.

B. Board Size, Composition and Qualifications.

a)Size:

As required by the Company's Regulations, the Board will be comprised of

between ten (10) and fifteen (15) members.

b)Composition:

The Board will be comprised of a majority of independent members

(members who are free of any material relationship with the Company or
Company management). For purposes of these Guidelines, "independence"
will be determined in accordance with a separate guideline established by
the Board. The separate guideline will always be at least sufficient to meet
the independence standards of the New York Stock Exchange and
applicable legislation.

14
c)Qualifications for Non-Employee Board Members:

The Company seeks Board members who will represent the balanced best
interests of the Company's shareholders as a whole, rather than special
constituencies; who have demonstrated character and integrity; who have
an inquiring mind; who have experience at a strategy/policy-setting level
or who have high-level managerial experience in a relatively complex
organization, or who are accustomed to dealing with complex problems;
who have an ability to work effectively with others; who have sufficient
time to devote to the affairs of the Company; and who are free of conflicts
of interest. In seeking such Board members, the Company also seeks to
achieve a mix of Board members that represents a diversity of background
and experience, including with respect to age, gender, international
background, race and specialized experience.

d) Qualifications for Employee Board Members:

To be considered for Board membership, employees of the Company must

have senior management responsibility for broad areas of the Company's
operating or functional groups.

3.1.2 Marketing Objectives of Shah Hygenic Products Pvt Limited

Pakistan Limited

Their main objective is to have a double-digit growth and resultant cash

flows will be utilized in improving the product quality and contents to
enhance the value to customer and final users.

Shah Hygenic Pakistan Limited has an objective to have a responsive

supply chain and technological based processes.

They want to have consumer connectivity, i.e. they want to know what
they eat, drink, how they spend their lives, what are their preferences. So
in this way they wan to be very close to customer, to know their real
insight and desires so they can develop new strategy for product design

15
and can implement their strategy in better manner i.e. avoidance of hit and
trial approach and hitting the right target with right strategy at right time in
right and accurate manner.

They want to be cost efficient i.e. they want to reduce in their cost of
production, cost of transportation, distribution and packaging cost and
finally reducing all the human cost to offer a competitive price to customer
maintain the high standards of quality.

To have a partnership with their suppliers to enable them to provide high

quality low cost material.

Have entered and will be aggressively developing new markets.

Be exciting to their customers with stream of innovative products.

To be no in all their existing markets.

3.2 Attainment Of Objectives

An objective or set of objective to be ideal must be “SMART” i.e.

1.            Specific

2.            Measurable

3.            Attainable

4.            Realistic

5.            Time frame

16
Specific

The objective of Shah Hygenic Pakistan Limited are specific not general
e.g. they want to be number one i.e. market leader in terms of market
share. They want to be cost efficient it is specific i.e. they have to reduce
their costs without compromising on quality. They want to have focused
strategic thrust i.e. they are to simply reduce non-valuable slow moving
product. So the non-value added products are quite obvious with their sale
figure and popularity.

Measurability

Objectives of Shah Hygenic Pakistan Limited are measurable as you can

easily measure the double-digit growth with their balance sheet footings
and cash flow analysis. Reduction in cost easily be measurable from
reduced price level and cost of production. Responsive supply chain
objective can easily be measured with quantity of real information
available on computer terminals of Shah Hygenic Pakistan Limited.

Attainable

All of the objectives are attainable. They can be market leader e.g. they are
in Lux, Blue Band, Fair & Lovely, Lipton and Supreme. They have
portfolio and cash flows to invest in their product categories to achieve
their quality standards thereby becoming market leader with their
increased share, sales and growth. Thereby getting brand loyalty among
their customers.

Reliability

One has to be at the top so to be number one in its realistic objectives.

Other objective e.g. reduction in cost is realistic, you an reduce your cost
by focusing on value chain. Cost of inbound and outbound logistics.

17
The objective of launching innovative products is also realistic objective, it
comes only from creative ideas and implementation of these innovative
ideas comes up from investment.

Time Frame

All these objectives are to be attained in some specific time period.

3.3 Attainment Of Objectives

Shah Hygenic Pakistan Limited’s strategy to attain the objectives is:

1.            Maximum coverage of outlets

2.            Desirable sales volume

3.            Display and merchandizing of products

4.            Developing quality and want satisfying product.

Since every company is formed to accomplish certain objectives. There is

no company, which had no goals. So Shah Hygenic Pakistan Limited also
has targets before it.

These main targets and objectives are:

1.            Profits

2.            Consumerism

3.            Welfare of consumer

18
The first objective of Shah Hygenic Pakistan Limited is to earn maximum
profit but keeping in view the customer demands as well company deals in
those products which are profitable.

If there are any indication that any item is not good from profit point of
view, it will try to find out the reasons. Will soon what steps should be
taken to overcome these reasons.

Company will introduce different marketing strategies if there are

problems in marketing. Here I would like to code two very famous
examples, 1st of Sunlight soap and Sunlight washing powder of Shah
Hygenic Pakistan Limited.

Shah Hygenic Pakistan Limited initially developed a sense of consumer to

use washing powder additional than washing soap, user switched s a
result to the Sunlight washing powder, i.e. popular portion of washing
powder IN ADDITION TO than your market share pertaining to
Sunlight soap declined with passage involving time, right now the user
who realized ones convenience involving washing powder started
utilizing it, but at the same time, thus marketing strategy associated
with Shah Hygenic Pakistan Limited awareness involving people,
people switched to be able to surf IN ADDITION TO wheel i.e.
premium segment detergents. Finally due to the straight down with the
market shares AS WELL AS gross sales volume involving Sunlight
soap AS WELL AS was light powder Shah Hygenic Pakistan Limited
management finally decided to help stop your current production
connected with the very products i.e. It is today obsolete. Second
example is related to the change of brand name of Surf to Surf Excel. The
reason behind was introduction of competitor’s brands like Arial by SHAH
HYGENICS which had brightness features, which caused the people to
switch from Surf to Arial, Shah Hygenic Pakistan Limited realized the fact
due to disturbance in sale volume of Surf and introduced new brand name
“Surf Excel” with extra brightness power.

19
Company also takes into consideration the welfare of the consumer. It
takes into mind the taste and habits of the customer. They pay much
attention on the customers’ complaints. It also works for the welfare and
interest of Pakistan, as it is an environment friendly organization.

20
3.4 Marketing Strategies

Now we will proceed with strategies being pursued by the Shah Hygenic
Pakistan Limited at different organizational level. First we will discuss the
corporate level strategy.

Corporate Level Strategy

At corporate Shah Hygenic Pakistan Limited is pursuing the strategy of

vertical diversification i.e. driving away from the previously adopted
strategy of vertical integration i.e. now they don’t want to perform more
than one step of the processes involved in converting raw materials into a
product delivered and ready for consumption. Shah Hygenic Pakistan
Limited’s operations are so complexed and involves 200 brands in
Pakistan so now they wanted to reduce the operational complexity and
going for strategic alliances with their suppliers, instead of producing
themselves and going into complex operations now they want their
suppliers to produce for them.

The outsourcing the production so that they don’t have to invest heavily in
the production and to reduce the capacity problems, they now going for the
third party contracting to produce themselves and now they want them to
be restricted to marketing and distribution of products. 

Diversification strategy is being pursued by the Shah Hygenic Pakistan

Limited but they mainly go for related diversification as against unrelated
diversification for conglomerates, they are diversified into number of
businesses as mentioned earlier but they are all related to consumer
products. Through vertical diversification they will be able to eliminate the
operational complexity and costs of buying and selling i.e. the
transactional costs. Now they mainly wanted to step away from operations
and want to focus more on customers.

21
As means of diversification which are being utilized by the Shah Hygenic
Pakistan Limited as all the time, been acquisition, neither joint ventures
i.e. strategic alliances nor the internal development. Here we can take the
example of the acquisition of Brooke Bond and Polka for example which
have Brother acquired through a hostile takeover. And to step away from
operational complexities now they go for subcontracting with the suppliers
and want them to produce for Shah Hygenic Pakistan Limited as in case of
oil and ghee and soap and with the passage of time will also be
implemented in other categories as well.

Business Level Strategy

At business level Shah Hygenic Pakistan Limited is adopting a very

unique and interesting set of strategies. First and foremost strategy they
want to follow is the cost leadership. They wanted to control cost as much
as possible and want to reduce cost by every mean.

First cost efficiency is achieved through outsourcing operations and stop

producing themselves and go for cost efficient subcontracting.

22
 Second they want for you to achieve cost efficiency during responsive
IN ADDITION TO cost efficient provide chain, want to be able to
possibly be with touch in vendors all the day AS WELL AS with
the It\'s connected themselves by the companies ALONG WITH to
be able to it\'s companies Just as properly to be able to minimize
cost concerning forecasting now they want better forecasting while in
computer networks therefore to have ones real time frame specifics
About the inventory, stock, necessitate IN ADDITION TO supply.
these are today reducing ones inventory AND ALSO average hauling
ones inventory regarding singular 2 days ALONG WITH acquiring
closer to the name associated with merely throughout time frame
except intended for the person products with regard to in which It
offers in order to brought inside raw materials coming from far flung
areas including tea IN ADDITION TO Moreover routings connected
with logistics As effectively such as air nav or maybe ship course-
plotting in order to curtail the expenses different as compared to
cost efficiency, It offers adopted the strategy associated with
consumer connectivity i.e. want to help stay closer in order to clients
rather to operations ALONG WITH want to help focus just about all
alternations to buyers through extra research AS WELL AS client
profiles AND ALSO demographics AND wants to help explore new
shoppers AND ALSO usage connected with products.lete.

To get customer connectivity they do the market research to check the

trends of their customers. The do pre-launch, post-launch research, e.g.
their did before and after lunching while antidandruff Sunsilk. The
response was quite encouraging. Hence basically customer and market
research and customer feedback, free samples distribution before and after
launching new product / brand/ variant is aiming their basic strategy to
implement and achieve the customer connectivity and to fulfill their
customer demand.

23
Here Shah Hygenic Pakistan Limited has used the strategy of product
development i.e. by modifying and improving their Sunsilk it into Sunsilk
antidandruff (white), they have increased their sales. They are applying
“Market and Development Strategy” as well in which by introducing
present product (Sunsilk) into a new demographic area i.e. dandruff
conscious market segment with the launch of only new variant i.e. Sunsilk
antidandruff white. They have added conditioner in it as initially the
conditioner was missing in all shampoos of Sunsilk. While it is available
in competing brands of SHAH HYGENICS.

Other than these two strategies another very important strategy is being
followed by tge Shah Hygenic Pakistan Limited i.e. focusing on core
brands or want to have a very focused on brand portfolio in which they
wanted to get rid of the slow moving brands like in Surf you will get
number of further variants like Surf Ultra, Surf Micro, Power Surf etc. and
in Sunsilk number of variants, Black, Green, Pink, etc. to name a few and
how they have curtailed all these slow moving brands like focusing
attention to Surf Excel only and in case of Sunsilk Black and White
(antidandruff) and discarding slow moving items like Sunsilk Pink and
Green etc.

So, to avoid cannibalization effect now instead of number of brands to

flood in the market only few better and improved brands, cash generating
and more focused towards customers.

Operational Level Strategy

At operational level, Shah Hygenic Pakistan Limited has always adopted

the strategy of TQM only never went for CPR i.e. they have not come up
with a new brand in last few years. Only the improvements or new variants
in existing brands or using the same old brand name to introduce a new
product like Lifebuoy Shampoo or Fair & Lovely Soap. So it can easily be
said that they believe more in adopting changes rather generative ones or
go for single loop learning only because according to them its very
expensive to introduce a new brand name.

24
 Strategy Evaluation

Now after outlining the objectives and discussing the strategies we can
now evaluate these strategies that whether they are in harmony with the
objectives of Shah Hygenic Pakistan Limited or not. And then we will
evaluate these strategies on three types of evaluation criterion.

Now as against the objectives, if we go through all the strategies being

mentioned earlier, then we can see that all strategies are true reflection of
the objectives being targeted by Shah Hygenic Pakistan Limited. As an
objective of consumer connectivity, responsive supply chain getting on
line computer network with suppliers and more stronger R&D department
and the objective of cost efficiency is supported by the vertical
diversification in an sense that how they are outsourcing production and
going for sub contracting with their suppliers and having more responsive
and cost effective supply chain and to achieve growth more focused
strategy in case of reduction of brands, etc. So these strategies are true
measures to achieve those objectives. But other than objectives there is
some other criterion which each strategy has to fulfill to be of any worth
and that criteria is as follows: its basically three types of evaluation
criterion i.e.

1.            Suitability

2.            Acceptability

3.            Feasibility

25
Suitability

Suitability is a broad assessment of whether the strategy addresses the

circumstances in which the organization is operating. For example, the
extent to which the strategy would fit with the future trends / changes in
the environment or how the strategy might exploit the core competencies
of the organization. Now if we evaluate the strategy of Shah Hygenic
Pakistan Limited on these factors that whether the strategies fit with its
existing circumstances would able to compete with the future trends like
the strategy of cost reduction and focused brands and outsourcing
production and consumer connectivity and more responsive value chain.
All these strategies are not only suitable to the present condition but are
prerequisite for future success as well i.e. by outsourcing production more
focus towards customer needs and wants would be provided and it would
help Shah Hygenic Pakistan Limited to achieve even higher customer
satisfaction level and market share and not only that lowering the cost
would not only be beneficial for Shah Hygenic Pakistan Limited but for
consumers as well i.e. now they would receive better quality at relatively
lower cost and Shah Hygenic Pakistan Limited would be able to provide
superior products quality and value to customers. Now a days, success lies
at cost reduction and superior quality which the Shah Hygenic Pakistan
Limited has successfully opted for. Other than this, next factor is that
whether strategy can exploit the core competencies of the organization or
not. The answer is very simple that by reducing operational complexity
and brands complexity more resources would be available to focus more
on the quality of the products as compared to the previous situation. So on
the basis of these factors it can easily be said that the strategies being
implemented are very suitable to Shah Hygenic Pakistan Limited.

Acceptability

Acceptability of strategy is concerned with the expected performance

outcomes such as the returns and risk if the strategies are implemented and
the extent to which it would be in line with the expectations of the
stakeholders.
26
In case of returns, its pretty much assured that returns would definitely be
enhanced when the cost would decrease and strategies would result in
better quality products. But the elements of risk is there which could be
quite significant in the case of subcontracting, whether the suppliers would
be able to meet the quality standards or not. And as we inquired it from the
branch manager of Shah Hygenic Pakistan Limited, he said, that we have
very strong quality control system and moreover we are entering into
strategic partnership with our suppliers so to maintain quality is in their
favor too and they would be beneficial from the better quality as well and
it would not increase the cost in case of maintaining control over the
suppliers as its partnership more as compared to only placing and
receiving order we will work for mutual benefits and complete harmony
which we already have.

As far as the stakeholders are concerned first and foremost effect would be
on the employees as the production is out-sourced so they would definitely
feared the unemployment but they said that we will arrange it with our
suppliers and will try to accommodate them as much as possible and in
case of shareholders, they would receive benefits of this strategy and
would receive higher returns on their investments and they would be able
to maximize their earnings and in other stakeholders suppliers would now
play more important role by entering into strategic partnership with the
organization. Consumers receive more attention now and would get more
satisfaction as more and more products would be developed on the basis of
the targets being set by the consumers. So after analyzing these factors it
can easily be said that strategies being pursued by Shah Hygenic Pakistan
Limited has higher returns and lesser risks and more benevolent to
stakeholders as well.

Feasibility

27
Feasibility is concerned with whether the strategy could be made to work
in practice or not. And its more concerned with the assessment of
practicalities of resourcing and strategic capabilities i.e. quantitative
assessment, which is beyond the scope of this report, so, as an overview,
all strategies seems feasible and some of them has already been
implemented as well like the reduction in brands etc. So assessing;

Is this a good strategy?

Is the positioning viable?

Does it improve value?

Does it exploits core competencies?

Will it lead to good financial performance?

All these factors seems work in favor of Shah Hygenic Pakistan Limited
after analyzing the strategies of Shah Hygenic Pakistan Limited.

3.5 MARKETING NETWORK OF SHAH HYGENICS

SHAH HYGENICS uses the marketing network as a system for selling

goods or services through a wide network of distributors, each of whom is
responsible and compensated for recruiting new members to the multi
level marketing system.

Marketing network of SHAH HYGENICS offers an attractive business

proposition to many people. SHAH HYGENICS offers the opportunity to
become involved in a system for distributing products to consumers. As
the Multi level marketing system (MLM) participant, SHAH HYGENICS
makes money by selling the MLM products to other MLM participants. If
they're not already a member of its MLM Company, it can sign them up.
Besides earning money off its own sales, it also earns a percentage of the
income generated by the distributors that SHAH HYGENICS brought into

28
its MLM plan. Often there are bonuses for selling particular amounts of
MLM product or signing up a certain number of new members.

SHAH HYGENICS is represented by the independent, unsalaried

salespeople of multi-level marketing, referred to as distributors (or
associates, independent business owners, dealers, franchise owners, sales
consultants, consultants, independent agents, etc.), and are awarded a
commission based upon the volume of product sold through each of their
independent businesses.

The independent distributors develop the organizations by either building

an active customer base, who buy direct from our company, or by
recruiting a downline of independent distributors who also build a
customer base, thereby expanding the overall organization. Additionally,
distributors can also earn a profit by retailing products they purchased
from the company at wholesale price.

SHAH HYGENICS provides its distributors to earn a commission based

on the sales efforts of their organization, which includes their independent
sale efforts as well as the leveraged sales efforts of their downline. This
arrangement is similar to franchise arrangements where royalties are paid
from the sales of individual franchise operations to the franchisor as well
as to an area or region manager. Commissions are paid to multi-level
marketing distributors according to the company’s compensation plan.
There can be multiple levels of people receiving royalties from one
person's sales

The marketing network of SHAH HYGENICS business operates in all the

50 states of United States and in more than 100 other countries. The new
businesses may use terms like "affiliate marketing" or "home-based
business franchising".

The pyramiding (getting commissions from recruiting new members

including "sign-up fees") is illegal in most states to remain legitimate in

29
the U.S. The company that utilizes multi-level marketing has to make sure
commissions are earned only on sales of the company's products or
services if they cross state boundaries. If participants are paid primarily
from money received from new recruits, or if they are required to buy
more product than they are likely to sell, then the company may be a
pyramid scheme,, which is illegal in most countries. New salespeople may
be asked to pay for their own training and marketing materials, or to buy a
significant amount of inventory. A commonly adopted test of legality is
that marketing network follow the so-called 70% rule which prevents
members "inventory loading" in order to qualify for additional bonuses.
The 70% rule requires participants to sell 70% of previously purchased
inventory before placing new orders with the company. There are however
variations in interpretations of this rule. Some attorneys insist that 70% of
purchased inventory should be sold to people who are not participants in
the business, while many marketing network companies allow for self-
consumption to be a significant part of the sales of a participant.

3.6 The distribution channel of SHAH HYGENICS

The management of SHAH HYGENICS consists may be of a chain of

intermediaries, each passing the product down the chain to the next
organization, before it finally reaches the consumer or end-user. This
process is known as the 'distribution chain' or the 'channel.' Each of the
elements in these chains will have their own specific needs, which the
producer must take into account, along with those of the all-important end-
user. This includes a cross-function approach to manage the movement of
raw materials into an organization, certain aspects of the internal
processing of materials into finished goods, and then the movement of
finished goods out of the organization toward the end-consumer. As
organizations strive to focus on core competencies and becoming more
flexible, they have reduced their ownership of raw materials sources and
distribution channels. These functions are increasingly being outsourced to
other entities that can perform the activities better or more cost effectively.
The effect is to increase the number of organizations involved in satisfying

30
customer demand, while reducing management control of daily logistics
operations. Less control and more supply chain partners led to the creation
of supply chain management concepts. The purpose of supply chain
management is to improve trust and collaboration among supply chain
partners, thus improving inventory visibility and improving inventory
velocity.

Several models have been proposed for understanding the activities

required to manage material movements across organizational and
functional boundaries. SCOR is a supply chain management model
promoted by the Supply Chain Council. Another model is the SCM Model
proposed by the Global Supply Chain Forum (GSCF). Supply chain
activities can be grouped into strategic, tactical, and operational levels of
activities.

Successful marketing network requires a back up support by SCM T he

SCM requires a change from managing individual functions to integrating
activities into key supply chain processes. An example scenario: the
purchasing department places orders as requirements become appropriate.
Marketing, responding to customer demand, communicates with several
distributors and retailers as it attempts to satisfy this demand. Shared
information between supply chain partners can only be fully leveraged
through process integration.

Supply chain business process integration involves collaborative work

between buyers and suppliers, joint product development, common
systems and shared information. According to Board of Directors of
Procter &Gamble, operating an integrated supply chain requires
continuous information flow. However, in many companies, management
has reached the conclusion that optimizing the product flows cannot be
accomplished without implementing a process approach to the business.
The key supply chain processes stated by Procter &Gamble are:

 Customer relationship management

 Customer service management

31
  Demand management
 Order fulfillment
 Manufacturing flow management
 Supplier relationship management
 Product development and commercialization
 Returns management

Much has been written about Shah Hygenics demand management. The
Shah Hygenics have following characteristics, which includes:
a) Internal and external collaboration
b) Lead time reduction initiatives
c) Tighter feedback from customer and market demand
d) Customer level forecasting

One could suggest other key critical supply business processes combining
these processes stated by SHAH HYGENICS such as:

a. Customer service management

b. Procurement
c. Product development and commercialization
d. Manufacturing flow management/support
e. Physical distribution
f. Outsourcing/partnerships
g. Performance measurement

a) Customer service management process

SHAH HYGENICS states that Customer Relationship Management is very

important regarding the relationship between the organization and its
customers. Customer service provides the source of customer information.
It also provides the customer with real-time information on promising
dates and product availability through interfaces with the company's
production and distribution operations. SHAH HYGENICS uses the
following steps to build customer relationships:

32
  determine mutually satisfying goals between organization and
customers
 establish and maintain customer rapport
 produce positive feelings in the organization and the customers

b) Procurement process

Strategic plans are developed with suppliers to support the manufacturing

flow management process and development of new products. In firms
where operations extend globally, sourcing should be managed on a global
basis. The desired outcome is a win-win relationship, where both parties
benefit, and reduction times in the design cycle and product development
are achieved. Also, the purchasing function develops rapid communication
systems, such as electronic data interchange (EDI) and Internet linkages to
transfer possible requirements more rapidly. Activities related to obtaining
products and materials from outside suppliers requires performing resource
planning, supply sourcing, negotiation, order placement, inbound
transportation, storage, handling and quality assurance, many of which
include the responsibility to coordinate with suppliers in scheduling,
supply continuity, hedging, and research into new sources or programs.

c) Product development and commercialization

Here, customers and suppliers must be united into the product

development process, thus to reduce time to market. As product life cycles
shorten, the appropriate products must be developed and successfully
launched in ever shorter time-schedules to remain competitive. According
to SHAH HYGENICS, the managers of the product development and
commercialization process must:

1. coordinate with customer relationship management to identify

customer-articulated needs;
2. select materials and suppliers in conjunction with procurement, and

33
 3. develop production technology in manufacturing flow to
manufacture and integrate into the best supply chain flow for the
product/market combination.

d) Manufacturing flow management process

The manufacturing process is produced and supplies products to the

distribution channels based on past forecasts. Manufacturing processes
must be flexible to respond to market changes, and must accommodate
mass customization. Orders are processes operating on a just-in-time (JIT)
basis in minimum lot sizes. Also, changes in the manufacturing flow
process lead to shorter cycle times, meaning improved responsiveness and
efficiency of demand to customers. Activities related to planning,
scheduling and supporting manufacturing operations, such as work-in-
process storage, handling, transportation, and time phasing of components,
inventory at manufacturing sites and maximum flexibility in the
coordination of geographic and final assemblies postponement of physical
distribution operations.

e) Physical distribution

This concerns movement of a finished product/service to customers. In

physical distribution, the customer is the final destination of a marketing
channel, and the availability of the product/service is a vital part of each
channel participant's marketing effort. It is also through the physical
distribution process that the time and space of customer service become an
integral part of marketing, thus it links a marketing channel with its
customers (e.g. links manufacturers, wholesalers, retailers).

f) Outsourcing/partnerships

This is not just outsourcing the procurement of materials and components,

but also outsourcing of services that traditionally have been provided in-
house. The logic of this trend is that the company will increasingly focus
on those activities in the value chain where it has a distinctive advantage

34
and everything else it will outsource. This movement has been particularly
evident in logistics where the provision of transport, warehousing and
inventory control is increasingly subcontracted to specialists or logistics
partners. Also, to manage and control this network of partners and
suppliers requires a blend of both central and local involvement. Hence,
strategic decisions need to be taken centrally with the monitoring and
control of supplier performance and day-to-day liaison with logistics
partners being best managed at a local level.

g) Performance measurement

Experts found a strong relationship from the largest arcs of supplier and
customer integration to market share and profitability. By taking advantage
of supplier capabilities and emphasizing a long-term supply chain
perspective in customer relationships can be both correlated with firm
performance. As logistics competency becomes a more critical factor in
creating and maintaining competitive advantage, logistics measurement
becomes increasingly important because the difference between profitable
and unprofitable operations becomes more narrow. The organization noted
that firms engaging in comprehensive performance measurement realized
improvements in overall productivity. According to experts internal
measures are generally collected and analyzed by the firm including

1. Cost
2. Customer Service
3. Productivity measures
4. Asset measurement, and
5. Quality.

External performance measurement is examined through customer

perception measures and "best practice" benchmarking, and includes :
1) customer perception measurement, and
2) best practice benchmarking.
Components of Supply Chain Management are:

35
1. Standardization 2. Postponement 3.
Customization

3.6.1Channels

A number of alternate 'channels' of distribution of SHAH HYGENICS

may be available:

 Selling direct, such as with an outbound sales force or via mail

order, Internet and telephone sales
 Agent, who typically sells direct on behalf of the producer
 Distributor (also called wholesaler), who sells to retailers
 Retailer (also called dealer or reseller), who sells to end customers
 Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone.

They may be just as important for moving a service from producer to
consumer in certain sectors, since both direct and indirect channels may be
used. Hotels, for example, may sell their services (typically rooms)
directly or through travel agents, tour operators, airlines, tourist boards,
centralized reservation systems, etc.

There have also been some innovations in the distribution of services. For
example, there has been an increase in franchising and in rental services -
the latter offering anything from televisions through tools. There has also
been some evidence of service integration, with services linking together,
particularly in the travel and tourism sectors. For example, links now exist
between airlines, hotels and car rental services. In addition, there has been
a significant increase in retail outlets for the service sector. Outlets such as
estate agencies and building society offices are crowding out traditional
grocers from major shopping areas.

3.6.2 Channel members

Distribution channels can thus have a number of levels. The channel

members of SHAH HYGENICS is the simplest level, that of a direct

36
contact with no intermediaries involved, as the 'zero-level' channel. The
next level, the 'one-level' channel, features just one intermediary; in
consumer goods a retailer, for industrial goods a distributor. In small
markets (such as small countries) it is practical to reach the whole market
using just one- and zero-level channels.

In large markets (such as larger countries) a second level; a wholesaler for

example, is now mainly used to extend distribution to the large number of
small, neighborhood retailers or dealers.

In Japan the chain of distribution of SHAH HYGENICS is often complex

and further levels are used, even for the simplest of consumer goods.

In Bangladesh SHAH HYGENICS is using different Chains of

Distribution, especially 'second level'.

3.7 The internal market

Many of the marketing principles and techniques which are applied to the
external customers of an organization can be just as effectively applied to
each subsidiary's, or each department's, 'internal' customers.

In some parts of certain organizations this may in fact be formalized, as

goods are transferred between separate parts of the organization at a
`transfer price'. To all intents and purposes, with the possible exception of
the pricing mechanism itself, this process can and should be viewed as a
normal buyer-seller relationship. The fact that this is a captive market,
resulting in a `monopoly price', should not discourage the participants
from employing marketing techniques. Less obvious, but just as practical,
is the use of `marketing' by service and administrative departments; to
optimize their contribution to their `customers' (the rest of the organization
in general, and those parts of it which deal directly with them in
particular). In all of this, the lessons of the non-profit organizations, in
dealing with their clients, offer a very useful parallel. But in spite of this
many, organizations prefer not to operate at a 'transfer' price because costs
gradually increase as they undergo the distribution process.

37
3.7.1Channel decisions

 Channel strategy
 Product (or service)<>Cost<>Consumer location

3.7.2 Managerial concerns

The channel decision is very important. In theory at least, there is a form

of trade-off: the cost of using intermediaries to achieve wider distribution
is supposedly lower. Indeed, most consumer goods manufacturers could
never justify the cost of selling direct to their consumers, except by mail
order. Many suppliers seem to assume that once their product has been
sold into the channel, into the beginning of the distribution chain, their job
is finished. Yet that distribution chain is merely assuming a part of the
supplier's responsibility; and, if they have any aspirations to be market-
oriented, their job should really be extended to managing all the processes
involved in that chain, until the product or service arrives with the end-
user. This may involve a number of decisions on the part of the supplier:

 Channel membership
 Channel motivation
 Monitoring and managing channels

3.7.3 Channel membership

1. Intensive distribution - Where the majority of resellers stock the

'product' (with convenience products, for example, and particularly
the brand leaders in consumer goods markets) price competition
may be evident.
2. Selective distribution - This is the normal pattern (in both
consumer and industrial markets) where 'suitable' resellers stock
the product.
3. Exclusive distribution - Only specially selected resellers or
authorized dealers (typically only one per geographical area) are
allowed to sell the 'product'.

38
3.7.4 Channel motivation

It is difficult enough to motivate direct employees to provide the necessary

sales and service support. Motivating the owners and employees of the
independent organizations in a distribution chain requires even greater
effort. There are many devices for achieving such motivation. Perhaps the
most usual is `incentive': the supplier offers a better margin, to tempt the
owners in the channel to push the product rather than its competitors; or a
competition is offered to the distributors' sales personnel, so that they are
tempted to push the product.The channel motivation is the incentive as a
Channel Value Proposition or business case, with which the supplier sells
the channel member on the commercial merits of doing business together.
He describes this as selling business models not products.

Monitoring and managing channels

In much the same way that the organization's own sales and distribution
activities need to be monitored and managed, so will those of the
distribution chain.

In practice, many organizations use a mix of different channels; in

particular, they may complement a direct sales force, calling on the larger
accounts, with agents, covering the smaller customers and prospects.

Marketing network Compensation plans utilized by SHAH HYGENICS:

SHAH HYGENICS has devised a variety of marketing network

compensation plans over the last decades:

 Stairstep Breakaway plans:

This type of plan is characterized by SHAH HYGENICS as having

representatives who are responsible for both personal and group sales
volumes. Volume is created by recruiting and by retailing product.
Various discounts or rebates may be paid to group leaders and a group
leader can be any representative with one or more downline recruits.

39
Once predefined personal and/or group volumes are achieved, a
representative moves up a commission level. This continues until the
representative's sales volume reaches the top commission level and
"breaks away" from their upline. From that point on, the new group is
no longer considered part of his upline's group and the multi-level
compensation aspect ceases. The original upline usually continues to
be compensated through override commissions and other incentives.

 Unilevel plans:

This type of plan is considered as the simplest of compensation plans

by SHAH HYGENICS. Uni-Level plans pay commissions primarily
based on the number of levels a recipient is from the original
representative who is purchasing the product. Commissions are not
based on title or rank achieved. By qualifying with a minimum sales
requirement, representatives earn unlimited commissions on a limited
number of levels of downline recruited representatives.

 Matrix plans:

This type of plan is similar to a Uni-Level plan, except there are also a
limited number of representatives who can be placed on the first level.
Recruits beyond the maximum number of first level positions allowed
are automatically placed in other downline (lower level) positions.
Matrix plans often have a maximum width and depth. When all
positions in a representative's downline matrix are filled (maximum
width and depth is reached for all participants in a matrix), a new
matrix may be started. Like Uni-Level plans, representatives in a
matrix earn unlimited commissions on limited levels of volume with
minimal sales quotas.

 Binary plans:

A binary plan is a multilevel marketing compensation plan which

allows distributors to have only two front-line distributors. If a

40
 distributor sponsors more than two distributors, the excess are placed
at levels below the sponsoring distributor's front-line. This "spillover"
is one of the most attractive features to new distributors since they
need only sponsor two distributors to participate in the compensation
plan. The primary limitation is that distributors must "balance" their
two downline legs to receive commissions. Balancing legs typically
requires that the number of sales from one downline leg constitute no
more than a specified percentage of the distributor's total sales.

 Hybrid plans

Hybrid plans are compensation plans that are constructed using

elements of more than one type of compensation plan.

3.8 Criticism of marketing network

The Federal Trade Commission (FTC) issued a decision, In re Amway

Corp., in 1979 in which it indicated that multi-level marketing was not
illegal per se in the United States. However, Amway was found guilty of
price fixing (by requiring "independent" distributors to sell at the low
price) and making exaggerated income claims.

The FTC advises that multi-level marketing organizations with greater

incentives for recruitment than product sales are to be viewed skeptically.
The FTC also warns that the practice of getting commissions from
recruiting new members is outlawed in most states as "pyramiding". In
April 2006, it proposed a Business Opportunity Rule intended to require
all sellers of business opportunities—including MLMs—to provide
enough information to enable prospective buyers to make an informed
decision about their probability of earning money.

In March 2008, the FTC removed Network Marketing (MLM) companies

from the proposed Business Opportunity Rule:

The revised proposal, however, would not reach multi-level marketing

companies or certain companies that may have been swept inadvertently

41
into scope of the April 2006 proposalSounds good, doesn't it? And being
part of a well-run MLM business can be a lot like being a member of a
large extended family.

Unfortunately, not every MLM opportunity is a legitimate business

opportunity. Many pyramid schemes, frauds designed to part the unwary
from their money, are disguised as MLM opportunities.

Like MLM, pyramid schemes depend on recruiting people to become

distributors of a product or service. Like MLM, the pyramid scheme offers
the opportunity to make money by signing up more recruits and by
accomplishing certain levels of achievement.

The big difference between MLM and a pyramid scheme is in the business'
operations. The entire purpose of a pyramid scheme is to get your money
and then use you to recruit other suckers (ahem - distributors). The entire
purpose of MLM is to move product. The theory behind MLM is that the
larger the network of distributors, the more product the business will be
able to sell.

SHAH HYGENICS had the written copies of the company's sales

literature, business plan and/or marketing plan. SHAH HYGENICS talks
to other people who have experience with the marketing networking
companies and the products, to determine whether the products are
actually being sold and if they are of high quality. SHAH HYGENICS
checks with the Better Business Bureau to see if there have been any
complaints about the company. SHAH HYGENICS always organizes the
meetings of its network marketing. And listen carefully at that multi level
marketing recruitment meeting.

The inflated claims for the amazing amounts of money that SHAH
HYGENICS is going to make should set its alarm bells ringing. Being part
of a successful marketing network company can be both profitable and
fun, but unfortunately, some purported marketing networking

42
opportunities are actually pyramid schemes designed to flatten both its
wallet and the dream of running a business.

3.9 Distribution channel

Manufacturer

Carried & Forward

Wholesaler

Retailer

Consumer

This is the first pipe of distribution channel by which the company

reaches itscustomers. In this channel of distribution, manufacturing units,

43
supply the product to the next channel member, that is, C&F. The
Company reaches its customers by this method

. This method is such that different depots, which work according to own
will without any interference from the company. They have their own
agents who look and take care of the orders of the next channel in the
distribution pipeline. The next member in the distribution pipeline is C&F
who are based in districts. They also possess license. They have to work
in the fixed territory. Dealer take the product from the processing
channels members in still a big store as big as whole seller and carries on
the channel distribution.

They sell the product to the customer a play a vital role in the sales. They
are the people who are directly responsible for the sales figure of the
company’s product. If we want to increase the sale of the product then we
have to judiciously cut down the expenditure on advertising and give this
portion to the retailers. It is because it the retailer who are responsible for
manipulating the brand perception. There was a time when India known as
the land of snake charmers. The land of mystery. In this country, poverty
and wealth meet in the middle. How can such a contradiction

n survive together?

The answer is strongly religious social fabric, bound by

tradition. Still a profoundly religious country in Hindu faith deems it a
virtue to come to terms with one’s

own being. Spiritual growth surpasses wealth and power, as the former
brings the later

too. The spiritual would is one where all come together. India is a country
where all the flavors are strong. Ok, may be not. But do you know where it
comes from? Biscuits have a interesting and perhaps surprising history.
The Irish monks brought Irish learned it from Spanish. The Spanish
learned it from Arab. And Arab in turn learned it from India. Imagine that,
alcohol in India, as elsewhere, has been around for a while. In today’s
markets, understanding the customer’s situation and responding effectively
to differing needs through the coordination of marketing and SCM can be

44
a source of superior value creation. This paper has introduced DCM as a
model which combines the strengths of marketing and SCM by shifting the
focus to the customer and designing customer-centred supply chains.
Marketing is traditionally externally focused and creates customer value,
while SCM is inwardly focused and concentrates on the efficient use of
resources in implementing marketing decisions. Marketing and SCM
integration is between those that define demand with those who fulfill it.
Until today, the concept of DCM has been addressed from SCM and
operations perspectives; however, despite its clear relevance, no marketing
contribution can be cited. By outlining the roles of marketing in demand
chains, the paper closes this gap and proposes several important new areas
for future research in marketing.

Widely cited examples of successful companies following the principles of

DCM, such as Dell in the computer industry or Zara in the fashion industry
(Walker et al. 2000 and Margretta 1998), lead us to believe that more
companies will adopt DCM in their quest to gain competitive advantage.
These companies increase profitability through product availability,
delivery accuracy, responsiveness and flexibility by tightly linking
customer and supply initiatives. Within DCM, marketing and supply
functions work together to develop suitable relationships for different
customers, develop joint customer prioritisation strategies, process
accurate customer information and match value requirements with
operational capabilities.

45
 Chapter*4

Analysis*of Shah Hygenic Products Pvt Limited

4.1 SWOT Analysis

Strengths:

 Customer’s Loyalty.

 Latest state of the art facilities and technology for producing high
quality products.

 International brand strength.

 Committed to business ethics, safety, health, environment and

community.

 SHAH HYGENIC PRODUCTS PVT LIMITED’s key competitive

advantage over other market participants is the retail reach of the
company. SHAH HYGENIC PRODUCTS PVT LIMITED services
500,000 outlets with 50 % through direct distribution and
remaining via wholesalers.

 SHAH HYGENIC PRODUCTS PVT LIMITED is enjoying

market edge of 41% in FMCG industry. SHAH HYGENIC
PRODUCTS PVT LIMITED is at number one in ice cream
segment and having 14% market share all over the globe.

46
Weaknesses:

 The biggest challenge in safeguarding market position is to become

cost leader.

 Operational complexity due to a large number of products in

portfolio and due to diverse work force.

 Strategic alliance with other small mills for manufacturing purpose

is the weakness as well as a threat for SHAH HYGENIC
PRODUCTS PVT LIMITED. Although SHAH HYGENIC
PRODUCTS PVT LIMITED claims that it is a part of its cost
reduction strategy but it can not hide the reality that it shows
weakness of SHAH HYGENIC PRODUCTS PVT LIMITED.

Opportunities:

 Markets of developing countries can be proved a profitable

segment because people are consumption oriented rather than
saving or investment oriented.
 SHAH HYGENIC PRODUCTS PVT LIMITED can gear up its
market share in the untapped rural market.

 Diversification in unrelated business.

 Rapid increase in world population. World population is set to

grow by 800m in 2010 and almost all increase will be in
developing countries.

Threats:

 FMCG market is highly responsive to economic conditions,

inflation and social disruptions resulting in variations in sales
revenues and demand for the company.
47
  SHAH HYGENICS is the major competitor and threat for SHAH
HYGENIC PRODUCTS PVT LIMITED. Other organized players
are Nestle and R & B.

 SHAH HYGENIC PRODUCTS PVT LIMITED is facing intense

competition from unorganized players i.e. cheaper smuggled
products and Chinese products. According to industry source, 40%
of tea consumed locally and a large portion of HPC products are
smuggled into the country.

 Legal, political and regulatory factors of host country. For

example, supportive Government policies for attracting FDI, 1%
tax rate on corporate profit and inability of Pakistan Government to
control smuggled products etc.

 Although SHAH HYGENIC PRODUCTS PVT LIMITED has a

first mover advantage in ice cream segment but Engro has
announced to enter in ice cream segment and is considering a big
rival post CY2010.

 Rapid increase in raw material cost and supply disruptions from

suppliers of raw material. The unprecedented surge in palm oil,
tallow prices and other materials has resulted in declining margins.
Going forward, high raw material costs are a key risk to SHAH
HYGENIC PRODUCTS PVT LIMITED’s profitability.

4.2 EFE Matrix

Weighted
Key External Factors Weight Ratings
Score
OPPORTUNITIES
Market of developing countries due to more
1. 0.15 4 0.60
tendency towards consumption

48
2. Rapid increase in world’s population. 0.15 3 0.45
3. Unrelated diversification. 0.10 1 0.10
4. Rural area. 0.05 4 0.20
5. Hygiene Consciousness 0.10 2 0.20
THREATS
Competition from organized players, SHAH
1. 0.15 4 0.60
HYGENICS
2. Inflation Rate 0.08 2 0.16
3. Smuggled products and local competition. 0.07 2 0.14
Legal, political and regulatory factors of host
4. 0.05 2 0.10
country.
5. Rapid increase in raw material cost. 0.10 4 0.40
Total Weighted Score 1.0 2.95

Ratings:
1 – Poor 3 – Above Average
2 – Below Average 4 – Superior

Total weighted score of EFE matrix of SHAH HYGENIC PRODUCTS

PVT LIMITED (2.95) shows strong response of company towards external
factors.
Justification of ratings:
On opportunity side:
1. It is a general observation that people of developing countries like
Pakistan are more inclined towards consumption rather than saving
and the major portion of spending is on FMCG.

2. World population is increasing at an alarming rate. World

population is set to grow by 800m in 2010 and almost all increase
will be in developing countries. And increase in population leads to
increase demand of FMCG sector.
3. Like Engro, SHAH HYGENIC PRODUCTS PVT LIMITED can
enter in unrelated areas of production.

4. The under penetrated rural market offers tremendous growth

potential as rural population constitutes around 60% of the total
population. In the past few years, favorable structural changes,

49
 such as double digit growth in agricultural credit, increased
penetration of television cable media have boosted demand for
FMCG products. Following table shows that rural population will
be almost 50% of total population in near future.

% of total
1990 1995 2005 2010 2015E
population
Rural 31.9 34.3 37.0 43.3 47
Urban 68.1 65.7 63.0 56.7 53
Total (mn) 109.4 123.6 159.2 179.6 202.2

On threats side:

1. SHAH HYGENICS with 50% market share is a big threat for

SHAH HYGENIC PRODUCTS PVT LIMITED. Nestle with
roundly 30% market share is also posing a threat in near future.
Engro is planning to enter in ice cream market and a future rival in
ice cream as well.

2. Rapid increase in inflation rate can increase the prices of products

and hence can reduce demand.

3. Smuggled products swallow a big part of profits of SHAH

HYGENIC PRODUCTS PVT LIMITED every year. Almost 40%
tea and 29% shampoo used in Pakistan is smuggled from
Afghanistan and China.

4. Economic system of host country and rapid increase in raw

material cost are last two major threats for SHAH HYGENIC
PRODUCTS PVT LIMITED.

50
 4.3 IFE Matrix

Weighted
Key Internal Factors Weight Ratings
Score
STRENGTHS
1. Customer’s Loyalty. 0.15 4 0.60
2. Micro level retail outlets 0.10 4 0.40
3. Latest state of the art facilities and technology. 0.10 4 0.40
4. International brand strength. 0.08 3 0.24
5. Market share of 41% 0.12 3 0.36
Committed to business ethics, safety, health,
6. environment and community. 0.10 3 0.30

WEAKNESSES
1. Strategic Alliance 0.15 1 0.15
2. Costly Products. 0.15 2 0.30
3. Operational Complexity. 0.05 1 0.05
Total Weighted Score 1.0 2.80

The score 2.80 shows that company has solid internal position, its
strengths are overcoming the weaknesses.

Ratings:
1 – Major Weakness 3 – Minor Strength
2 – Minor Weakness 4 – Major Strength

Justification of ratings:
On strength side:

1. Customer’s loyalty is not a hidden fact in SHAH HYGENIC

PRODUCTS PVT LIMITED case. People have developed and
adopted the taste of SHAH HYGENIC PRODUCTS PVT
LIMITED’s high quality products and there is no comprise on
quality. 150 million times a day, in 150 countries, people use
SHAH HYGENIC PRODUCTS PVT LIMITED’s products at key
moments of their day.

51
 2. Micro marketing in developing countries. SHAH HYGENIC
PRODUCTS PVT LIMITED services 500,000 outlets with 50 %
through direct distribution and remaining via wholesalers.

3. SHAH HYGENIC PRODUCTS PVT LIMITED’s continuous

expansion and its large market share indicate their strength in latest
facilities and quality management. SHAH HYGENIC PRODUCTS
PVT LIMITED has ISO certification.

4. Its brands are enjoying international recognition. SHAH

HYGENIC PRODUCTS PVT LIMITED is serving almost 150
countries.

5. SHAH HYGENIC PRODUCTS PVT LIMITED is concerned

about its customers as well as employee. There are strict safety
standards for employees and visitors of plants too.

On weakness side:

1. Although SHAH HYGENIC PRODUCTS PVT LIMITED claims

that strategic alliance with small firms for manufacturing purpose
is the part of its reducing cost objective but if we look at the other
side of the picture, strategic alliance is a weakness as well as threat
for SHAH HYGENIC PRODUCTS PVT LIMITED. For example,
Asad Soap Factory is manufacturing soap for SHAH HYGENIC
PRODUCTS PVT LIMITED Rahim Yar Khan, and now Asad
soap factory is searching for buyers of soap plant.

2. SHAH HYGENIC PRODUCTS PVT LIMITED’s products are

costly as compare to local producers. Although costly goods are
not posing any big threat to SHAH HYGENIC PRODUCTS PVT
LIMITED but in long run it can be proved harmful for company.
52
 So company is responding greatly towards covering its weakness.
For this purpose, company has adopted policy of contractual hiring,
strategic alliance etc.

3. SHAH HYGENIC PRODUCTS PVT LIMITED has a large

number of products in its portfolio. It means that SHAH
HYGENIC PRODUCTS PVT LIMITED has a large number of
SBU’s to control. It adds operational complexity to SHAH
HYGENIC PRODUCTS PVT LIMITED’s operations.

4.4 SWOT or TOWS Matrix

STRENGHTS WEAKNESSES
1. Customer’s Loyalty. 1. Strategic Alliance
2. Micro level retail outlets 2. Costly Products.
3. Latest state of the art
3. Operational Complexity.
facilities and technology.
4. International brand strength.
SWOT / TOWS Matrix
5. Market share of 41%
6. Committed to business ethics,
safety, health, environment and
community.

OPPORTUNITIES S-O Strategies W-O Strategies

1. Developing countries.
2. Rapid increase in world’s
population.
3. Unrelated diversification.
4. Rural area.
5. Hygiene Consciousness
THREATS
1. Competition from organized
players, SHAH HYGENICS
1. Discover new markets 4. Market Expansion in rural
(O1,O2,O4,S4,S3) areas (O4, O1, W2)
2. New quality products
(O3,O5,S3,S6)
3. Unrelated diversification
(O3, S1)
S-T Strategies W-T Strategies
5. Vertical Integration 6. Increase in manufacturing

53
 (T1,T3,S2,S4) capacity. (W1, T1).
2. Inflation Rate
3. Smuggled products and local
7. Cost leadership(W2,T5)
competition.
4. Legal, political and
regulatory factors of host
country.
5. Rapid increase in raw
material cost.

Proposed Strategies:

1. SHAH HYGENIC PRODUCTS PVT LIMITED can capture

untapped rural markets and markets of developing nations by using
its state of the art facilities & technology. International brand
strength is plus point which will be proved helpful while
positioning.

2. SHAH HYGENIC PRODUCTS PVT LIMITED’s Commitment to

business ethics, safety, health, environment and community can be
proved helpful in order to satisfy hygiene conscious customers. SHAH
HYGENIC PRODUCTS PVT LIMITED should focus more on quality of
goods.

3. Unrelated diversification is a risky decision to be taken. Loyal

customer is the major power to cope up with after effects of this
decision.

4. Customers in rural areas and in developing countries usually have

low income level. SHAH HYGENIC PRODUCTS PVT LIMITED
should reduce its costs in order to capture that uncovered markets
effectively.

5. SHAH HYGENIC PRODUCTS PVT LIMITED can use its

international brand strength and wide network of retail outlets in

54
 order to compete with organized and unorganized players of
market.

6. Strategic alliance is showing the weakness of SHAH HYGENIC

PRODUCTS PVT LIMITED in particularly manufacturing area
which the competitors do not hold. SHAH HYGENIC
PRODUCTS PVT LIMITED should its production capacity in
order to compete in market and to reduce competitor’s threat.

7. If SHAH HYGENIC PRODUCTS PVT LIMITED can obtain

cheaper raw material, it can reduce cost of goods manufactured.

4.5 Space Matrix

Financial Strength (FS) Ratings

10% increase in net income in 2009 as compare to 2008. +4

Net sales were 15.7% 2009 as compare to 14% in 2008. +3
Total asset turnover is 3.2times in 2009 as compare to 3.1 times in
+2
2008.
ROI has declined from 87% to 86% in 2009. +1
ROA is averaged 27% which is declined to 24% in 2009. +1

Total: +11
Industry Strength (IS)

Consumption Oriented Culture. +4

Rapid increase in raw material cost. +2
Growth potential in rural and developing countries market. +4
Profit potential is reducing due to intense competition especially from
+1
un-organized players.

Total: +11
Competitive Advantages (CA)

Committed to business ethics, safety, health, environment and community. -1

Customer loyalty. -1
Market share of 41%. -2
Control over supplies and distribution. -4
Latest state of the art facilities and technology. -1

55
Total -9
Environmental Stability (ES)

Demand in the retail industry is price elastic. -3

Smuggled products and local competition. -5
Legal, political and regulatory factors of host country -3
High rate of inflation effects demand. -4
Law and Order Situation -2

Total: -17

56
 4.6 Grand Strategy Matrix

Rapid Market
Rapid market
GrowthGrowth

Q2 Q1

Weak Competitive Position Strong Competitive Position

Q3 Q4

Slow Market Growth

The grand matrix helps us to determine the strategy that firm must pursue,
based on its competitive position and market growth.

SHAH HYGENIC PRODUCTS PVT LIMITED lies in Q1 which

represents excellent strategic position of company. For these firms,
continued concentration on current market and products is an appropriate
strategy. SHAH HYGENIC PRODUCTS PVT LIMITED has abundant
resources so backward, forward and horizontal integration may also prove
effective.

57
 4.7 QSP Matrix

Market Development Product Development

Attractive Attractive
External Factors Weight Total Total
Score Score
Untapped Rural area. 0.05 4 0.20 --- ---
Market of developing countries. 0.15 3 0.15 --- ---
Rapid increase in world’s 0.15 4 0.60 1 0.15
population.
Hygiene Consciousness 0.10 --- --- 2 0.20
Unrelated diversification. 0.10 --- --- --- ---
Legal, political and regulatory 0.05 4 0.20 1 0.05
factors of host country.
Inflation Rate. 0.08 2 0.16 3 0.24
Competition from SHAH 0.15 4 0.60 3 0.45
HYGENICS
Raw material cost increased. 0.10 3 0.30 4 0.40
Smuggled products and local 0.07 3 0.21 4 0.28
competition.

Total 1.0 2.42 1.77

Internal Factors
Costly Products. 0.15 --- ---- --- ---
Customer’s Loyalty. 0.15 3 0.30 4 0.60
Micro level retail outlets 0.10 4 0.40 1 0.10
Latest state of the art facilities 0.10 3 0.30 3 0.30
and technology.
Market share of 41% 0.12 4 0.48 3 0.36
Committed to business ethics,
safety, health, environment and 0.10 --- --- --- ---
community.
Strategic Alliance 0.15 --- --- --- ---
International brand strength. 0.08 4 0.32 3 0.24
Operational Complexity. 0.05 --- --- --- ---

Total 1.0 1.8 1.6

Grand Total 4.22 3.37

58
4.8 PEST Analysis

PEST analysis is used to assess that what environmental factors affecting

different organization and which of them are more important and how they
affect the organization. It is indicator of political, economical, social and
technological influences on organization.

Political & Legal Factors

As far as the Shah Hygenic Pakistan Limited concerns according to them

that political instability have do affect but not particularly Shah Hygenic
Pakistan Limited same as it affects any other  organization around and
specially they are in consumer products business which never make them
out of business.

In case of legal factors, any trade policy or import duties is not affecting
particularly Shah Hygenic Pakistan Limited. In Pakistan right now
following liberalization policy under SAP by IMF made which they have
to waive off all restrictions and moreover due to huge investment by Shah
Hygenic Pakistan Limited no government can afford to create hurdles in
the way of an organization like Shah Hygenic Pakistan Limited.

And they don’t have to go for only lobbying or what so ever as not action
of Pakistan government has affected them adversely as such.

59
Economical Factors

Economical factors affect Shah Hygenic Pakistan Limited in the same way
as it affect any other organization like current economic situation in
Pakistan and inflation has reduced consumer’s disposable income too,
which in turn has reduced the purchasing power of consumer but affect is
same for every organization and according to them Shah Hygenic Pakistan
Limited have edge that they have targeted all possible segments through
their vast product category i.e. the width and length too. So one way or
other they find way to cover it up.

Capital Markets

In other economic factors like “interest rates” and “inflation” has affected
the borrowing ability of organization but Shah Hygenic Pakistan Limited
stayed unaffected as a company having business in billions and when in
need of financing no single bank can fulfill the need, they have to make a
consortium to finance Shah Hygenic Pakistan Limited and with very good
credit standing and very low risk definitely they get the lowest or justified
interest rate as well.

Socio-Cultural Factors

In socio-cultural factors, factors like lifestyle changes and level of

education affects an organization. In case of change in lifestyle, the world
has converted into global town now and people have readily access to
every sort of information and they are becoming more quality conscious.
Now more concerned towards environmental issues now and demand more
social responsibility on the part of organizations now. To cope up with all
these factors now Shah Hygenic Pakistan Limited which always
maintained the quality standards needs to work towards other social factors
like social responsibility and environmental concerns like SHAH
HYGENICS did in its Arial campaign and image of a society responsible
organization.

60
 Technological Factors

In technological factors comes R&D first and foremost that how much an
organization spending in terms of product improvement or development of
new products or improvement in production process or in the raw material
etc. and what is the trend in the industry as Pakistan is not that big and not
very much innovation seeking as the other developed countries. Yet they
keep on finding new ways of doing things and new things as well they
continuously launched variants in brands etc. and moreover in the market
like Pakistan in product categories of consumer products “rates of
obsolescence” is not very high rather very slow so no great pressure to
launch new products,.

Other than the factors smuggling affects Shah Hygenic Pakistan Limited’s
sales very negatively. This issue would be discussed more in detail in the
problem statement.

61
 Chapter 5

Recommendation & Conclusion

Conclusion

 During the summer training, I came to know about various aspects of

P&G.One strategic management tool that P&G uses to stay ahead of its
competition is the effective and efficient utilization of SWOT analysis.
This involves specifying the goals and objectives of the business as well as
identifying the internal and external factors that are favorable and
unfavorable in achieving the goals and objectives. These analyses are
based on the company’s case study as well as the industry trend.  Because
of the segmentation and size of the company, P&G faces a lot of domestic
and foreign regulatory threats and distribution systems where foreign
competition tries to imitate P&G’s brand names for the seek of misleading
consumers for self profit. This threat of foreign brand imitation is due to
weak foreign business laws and regulations.     

      P&G’s strength includes: strong financial position both in the domestic

and foreign markets. The company was the 25th largest U. S company by
revenue in the early part of 2007, and the 18 th largest by profit.  This is
why the company is one of the most admired companies in the United
States. Also, the company has the ability and capability to push innovation
to commercialization faster than any other competitor in the industry; even
though it faces competition from Johnson & Johnson, Kimberly Clark,
and Unilever, it’s been able to move products and services from the
innovation phrase to commercialization faster; P&G has effective and
efficient manufacturing processes which include total quality management
as well as just in time inventory systems; this has enabled the company to
save on inventory costs; and this cost saving is generously passed on to

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consumers in a form of high quality and lower prices of goods and
services.

Another unique strength of P&G is its pool of skilled labor. In a

Congressional briefing luncheon hosted by the Athena Alliance and the
Congressional Economic Leadership Institute held at the Rayburn House
Office Building in Washington DC in June 2006; P&G’s Corporate
Director of Innovation Capability mentioned, “P&G has 9,000 R&D
associates including 1,100 PhDs.” This clearly explains the tremendous
success of the company. The company’s pool of highly skilled employees
in the industry has given it the edge to lead in the innovation of over 40
product categories for which it holds more than 27,000 patents. The
Director of Corporate Innovation Capability added “Our research and
development organization is fluent in a broad range of competencies
including chemistry, engineering, materials science, biological sciences,
medicine, and mathematics.”

Also, P&G has a track record of producing high quality products which is
very difficult to match or beat. Consumers want high quality products at
reasonable and affordable prices, and this is the main reason why P&G is
the driver of the consumer product industry worldwide.  P&G’s innovative
products and services have helped consumers save a lot of money on
dental hygiene and on other health care products.

Just about everyone wants a bright healthy smile, but not everyone can
spend $600 for the dental visits needed to achieve whiter teeth. And unlike
the stereotypical eureka moment, a lone P&G scientist didn’t accidentally
stumble onto the Crest White Strips formula late one night at the lab. What
we did do was work backward from the consumer need for a convenient,
affordable solution to whiter teeth. We brought together a diverse team of
experts across our technology centers who were at the leading edge of their
fields from our flexible films group, adhesive group, dental experts from
our oral care organization and bleaching experts from our laundry
business. And through solution focused R&D, we delivered Crest White
strips with a level of tooth whitening that surpasses anything else available
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in the retail market, and consumers pay only $35. (P&G Corporate
Director of Innovation Capability).

            Some weaknesses of P&G include: Lack of effective distribution

system in some segment as well as poor location in some foreign countries
and high cost of inputs. Another area of weakness is the employment of
foreign based local management who doesn’t have any international
business experience. This makes collaboration with headquarters a little
difficult because of their inexperience in the global business arena.

            P&G’s opportunities include: Well defined market niche, just in

time manufacturing technology, wide range of demography, and the
removal of trade barriers in some foreign countries. The removal of trade
barriers in some foreign countries has enabled the company to operate
competitively without much government intervention. Trade barriers
historically has been known to be one of the biggest threats for most
multinational businesses because of hostile takeovers by some foreign
governments, difficulty of entry, corruption among government officials
and bribery, and unhealthy business environment.

            Threats include: New entry into the household product industry,
use of substitute products, increased trade barriers in some developing
nations, unfavorable business laws and political instability. Investors do
not like uncertainty.  They want to ensure that there is democracy and
stable government in whatever country they invest and most importantly,
they should be able to repatriate their profits without many restrictions.
This has been a threat to most businesses as well as P&G.

            A series of innovation systems that are now common practices in

corporations across America including extensive market research, the
brand-management system, and employee profit-sharing programs, were
first developed at P&G; however, two key innovation systems will be
discussed. These include the “AskMe Enterprise” and the “Corporate
Standards System.”

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It is important to analyze and contrast these two key innovation systems
within P&G.  I have decided to choose the AskMe Enterprise innovation
system because innovation begins with ideas or brainstorming sessions
among the subject matter experts, and AskMe Enterprise innovation
system provides that capability.

MY LEARNING
While doing my summer training in one of the recognized organized retail
my basic learning was how FMCG organizations do work and how that
make decision for there future expansion plans. As I was part of a well
growing expansion plan that is franchisee and business development. So in
these two month I had a very tough learning as well as challenging but that
challenge thought a lot and my experience is as follows.

(i) Learning about FMCG industry:- As in that two month I

had been a part of FMCG Company and I came to know
about FMCG industry. There is a cut throat competition
in the present scenario among the FMCG companies. It
is very difficult to retain the customers in the present
scenario. The companies are really doing their level best
in satisfying the changing need and demand of
customers.
(ii) Supply chain management:- Supply chain management
is like blood circulation in body. Without that blood
circulation retail can not survive and how that supply
chain makes retail effective. Because demand is equal
to supply is the first rule of any market so that first and
basic rule is to be competed by supply chain because a
market can not wait for the products to come in to
market so an effective supply chain can make retailing
effective.
(iii) Public relation:- As my job was to meet with the
existing retailers and to have a interaction with them so

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 that is job of public relation and in these two months I
learnt that how to have a formal interaction with the
client and how to have an interaction to make one
convince. I learnt that to make some body convince one
has to come in to level of communication to some one
convince.
(iv) Dissatisfaction of retailers: - As my task was to meet
with the retailers so during my project I meet with
several retailers and find a dissatisfaction level among
them. Most of the retailers were not happy with there
type of work and they were agree with that they need
more margin rate on the products and time to time they
also demand for the schemes on the products. The
retailers wanted to have a regular meet with the top
level management of P&G once at a regular interval of
six months to solve out their problems.

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 References

 Annual Reports
 Marketing Manuals
 www.wikipedia.com
 www.ShahHygenic.com
 www.igisecurities.com.pk

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