 principles of management

 project name
 DARAZ

Submitted to
Dear sir umer ayub
Date
20.5.2021
members
 O NAME  STUDENT
ID
 AHMAR ARSLAN  S2021001019

 AHMED IKRAM  S2021001001

 MUHAMMAD  S2021001017

ZAIN

 AMINA  S2021001011

 YOUSRA  S2021001020

 LUBABA  S2021001014

ABDULLAH

Outlines
I. Introduction
II. Swot analysis
III. Bcg matrix
IV. Five forces model
V. Which strategy they use
VI. Conclusion
Introduction
Daraz.pk was founded by a fashion retailer in 2012 by Munib Mayr in Pakistan. Initially Daraz
was funding and work came from rocket internet but in later in 2015 Daraz was upgraded to a
marketplace and a business model. Later on, it extends its network in South Asia. In 2018 a
Chinese company Ali baba (e-shopping company) acquired Daraz. Daraz is providing its
services in Pakistan, Bangladesh, Sri Lanka, Nepal and Myanmar. Daraz is a biggest e-
shopping platform in South Asia providing the best quality products. Head office of Daraz.pk is
located in Karachi. Now Daraz is with more than 10 million customers in the world. There are
more thousand warehouses that are providing the quality products to the customers within the
delivery time that is given by the Daraz. Daraz.pk is providing more than 8 million products in
more than 100 categories and it delivers about 2 million packages in the countries in which it is
providing its services.

Internal and external

Analysis

Daraz.pk as we know is the biggest online shopping platform and has taken the throne in the
online shopping field in Pakistan. Let’s run some analysis on this online shopping giant mainly
its internal and external analysis.

External analysis: -
So before knowing a company from outside we should
know what the company’s actual purpose is. Daraz is an online shop which provides from basic
needs to almost everything to its customer. Some people find it a hassle to visit different shops
to buy a specific item of there own liking, this process can be tiring because when out physically
you have to visit different shops to see what kind of design a person likes. Its becomes very
inefficient considering how much human energy and even fuel is wasted in this process.
However online shopping saves this hassle and effort for us. Daraz has its own verified big
sellers like Samsung, Orient, Haier selling various things on daraz so the person is simply some
clicks away to see thousands of designs.

At the start only the giant and verified sellers had the ability to open shops at daraz and sell
their products. The managers of daraz wanted to expand their products selling from there
shops. For example, Samsung is best known for there electrical appliances especially their
smart phones. Now it’s pretty obvious that Samsung won’t make customization accessories for
phones like phone cases, pop out phone holders, headphones etc. These kinds of things were
only sold by different markets that didn’t have much recognition or aren’t much known. So daraz
took this “opportunity” (opportunity in the external analysis means a positive trend in the
external environment) and let pretty much anyone be a seller at daraz. This was a huge
improvement step due to which daraz market got expanded to a huge extent. Although having
such a good impact it also had its respective “threats” (threats in the external analysis mean
negative trends in the external environment). Knowing that anyone could be a seller a lot of
scammers took this opportunity and started doing fake sales and spreading corruption.

Once again managers found this as a huge troublemaker knowing that the young generation
can differentiate between a real and fake ad of a product but not the old generation due to
which issues started to arise and people slowly lost their trust on daraz. The daraz
management team then decided to add a rating and review section on each ad and even the
shop itself. This was a huge relief for online shoppers knowing how well a specific product is
and how do other customer like themselves feel about it thanks to the review section. These
were some external analysis on the online shopping giant and some “opportunities” and
“threats” they faced in the past. Daraz currently has over 25 million users, 2 lakh active sellers.
According to daraz itself they currently are capable of providing immediate access to 10 million

products in more than 100+ categories.

Internal analysis
Now if we talk about the Internal analysis about daraz.pk. We
get to know more about the company from the inside. We get to know the different internal
aspects of company like there “resources”, “capabilities”, “core competencies”, “strength" and
“weaknesses”.

First, we have resources it is known as the organizations assets that are used to develop,
manufacture and deliver products to its consumer. So as we know that daraz is an e-
commerce/online shopping app it’s pretty well known that there source of financial income are
from the orders placed and the ads. According to daraz they call it “Daraz commission”. It’s a
small percentage of commission deducted by daraz when we buy an item from there online
shop. The percentage of each commission also depends upon the type of the product and
which category the item falls under.  Daraz.pk has a good online store with a very good amount
of options in the app. Their duty is to maintain the app and deliver us the products. Daraz has
had very less reports of late delivery and even if there were some reports its usually because of
the natural causes, political issues or basically problems they can’t really fix.

On the other hand, we have daraz.pk’s capabilities it is known as the organizations skills and
abilities in doing the work activities needed in its business. Daraz is primarily an online
marketplace where consumers and vendors can interact. Daraz duty is to provide a good app
developing software and excellent customer service. daraz is fairly lacking behind in customer
service but their app performs excellent in various amount of aspects.

Let’s talk about daraz's core competencies.  It is defined as the organizations Major value
creating capabilities that determine its competitive weapons. Daraz was one of the first online
shops in Pakistan so it already has gained immense number of trusted customers which also
recommend other people. But if we replay history we saw blackberry going down because they
were too confident of the number of customers they gained and apple took the opportunity to
improve and develop and blackberry went down easily. However, daraz didn’t repeat the foolish
mistake. They kept improving their software and one of there biggest core competencies is to
begin the trend of online shopping in Pakistan and there extremely easy to use user interface
and the ability of letting anyone do the selling in the app and not just the giant successful
organizations.

Daraz’s strength is pretty much one of its core competencies. Strength in an internal analysis
are the activities the organization does well or its unique resources. Weakness also goes hand
by hand. It is the activities the company doesn’t perform good at or lacks the resources to do.
Daraz as we know also bears the duty of delivering the ordered object to the consumers
address. They didn’t posses any delivery system due to which they partnered up with TCS and
Leopards a courier service to deliver their goods. But this service was turning very costly for
them and there were a lot of reports of late delivery and other issues so this was one of daraz’s
weakness which they managed to fix by introducing their own delivery service called DEX. It’s
the first logistics company for e-commerce operations in Pakistan. So DEX is basically a
strength of daraz that fixed its weakness. Daraz had a lacking customer service issue which it
still does to this day but they have introduced the ability of online chatting with customer care
unit through there app. It’s a little time consuming but it gets the job done. So, customer service
is a little weakness daraz is working to fix on. What we basically discussed all above are the
complete analysis of daraz.pk. internal and external. This whole study of the analysis of a
company is called Swot analysis

SWOT analysis: -
It is defined as an organizations strength, weaknesses opportunities
and threats.

This study is basically a combination of both internal and external analysis of a company.

BCG MATRIX?
The BCG MATRIX was created by Bruce D. Henderson for the
Boston Consulting Group in 1970. This chart was created with
the purpose of helping companies analyze their different
business units or product lines. The analysis helps these
companies to allocate resources where they are most
appropriate as well as to use the results in brand marketing,
product management, strategic management, and portfolio
analyses. The chart is a graphical planning tool, where the
company’s products and services can be plotted to help make key business decisions. These
decisions include whether to keep a particular business unit, sell it or to invest more in it. The y-
axis of the graph represents rate of market growth while the x-axis represents market share.

STARS
As the name makes clear, stars are those business units that have a large market share in a
fast-growing industry. These product lines have a clearly visible market or niche leading path
and require large amounts of funding to ensure that they can fight of competitors and maintain
their growth rate

Cash cows
The product lines that fall within this category enjoy a large share of the market in a slow-
growing industry. This means that they are able to generate revenues in greater amounts than
the investment required to maintain their business

The question marks

The unknowns (also called question marks or problem children) are those business units that
have a smaller market share in a high-growth market. This is where most businesses will start
from and at this point the business unit has the potential to grow market share and turn into a
star or lose further marker share and turn into dogs when the growth of the market itself
declines. Careful study and analysis are required for business units in this category to assess
their potential and worth. If any potential is seen then further investment can be made into
them.

The dogs
The dogs are those product lines or business units that have a smaller market share in a
mature and slow-growing industry. Usually, these product lines manage to earn what is put into
them, breaking even and maintaining the market share

DARAZ
DARAZ effectively and efferently make its position on the top of the customers mind it provides
user friendly interference and easy navigation etc. through which it gains customer satisfaction
DARAZ built strong infrastructure overcome environmental threats using marketing mix and
swot analysis and now flouring and giving tough competion to another retailer

DARAZ is the biggest online product seller in Pakistan than the other companies. DARAZ is the
leading online marketplace in South Asia, empowering tens of thousands of sellers to connect
with millions of customers. DARAZ provides immediate and easy access to 20+
million products in 100+ categories. DARAZ is a mall, a marketplace and a community for its
customers... so the DARAZ have many competitive advantages then others like payments
services return services and internet services so DARAZ is preferred by everyone who wants to
gain online service to buy things or selling the products so the DARAZ HAVE star rank in the
online service provider. they may have followed the stability strategy and they should invest in
buying better quality products to serve their customers as the market share increases so the
market growth is the automatically increases

Strategies: -
Strategies are the plans of an organization that how and what is the business to do, how it will
compete successfully and how it will attract and satisfy its customers to achieve its goals.
Strategic management is important to achieve goals because organizations are complex and
diverse.

Marketing strategy used by Daraz: -

‘’Daraz ‘’ is using marketing strategies which are smart business strategies. Marketing
strategies are types of Functional strategies as mostly used in management. ‘’Functional
strategies’’ are activities of functional areas of a business that support the desired competitive
business level strategy. There are five main functional areas of management human resources,
production office, finance and marketing.

‘’Marketing strategy’’ basically focused on to attract the target (customer) or population to buy
products and services. The marketing strategies can be totally innovative or previously tested
strategies. Effective marketing strategies can compete the new entries and make collaboration
with customers. There are different types of marketing strategies used by organizations as per
their requirement. These are following: -

1)Targeting the population

Defining target population is the most important and main component in choosing marketing
strategies. It provides the proper demographics to customers for selecting the products. As
‘’Daraz’’ is apparel and fashion e-commerce industry which is very huge and fast growing.
About targeting and segmentation of daraz, they target men and women of age 18+.They use
marketing strategies as: -

2)Product

Product is the essential component of marketing strategies which attract the customers.

They use marketing strategies by market mix product price, place promotion, and sell branded
products in the category of clothing, footwear, jewelry and accessories of men and women.

3)Price

It offers products at affordable prices and also offers discounts. They use marketing strategies.

4)Place

place it brings products from different manufactures to its online web portal and then delivered
directly at the doorstep of customers.

5)Promotion

. About promotions they promote through advertisement on various websites.

6)Internet marketing

As daraz is an e-commerce business, it uses internet marketing to promote its business.

However, there are many more types of marketing strategies for example, relationship
marketing, undercover marketing, word of mouth marketing, transactional marketing, cause
marketing, Niche marketing outbound and inbound marketing, undercover and buzz marketing,
trade show marketing, freebie marketing and diversity marketing. The main types of marketing
strategies are: -

1)Business to business marketing B2B

B2B E-commerce is the sale of products and services between business by online sales
portal.it is used to improve a company's sales efforts.

2)Business to consumer marketing B2C

Business -to-consumer refers to the process of business selling products and services directly
to consumers with no middle person.

The marketing strategies used by ‘’daraz’’ are business to consumer B2C marketing. Marketing
strategies have made organizations much easier to promote their products and services. They
also limit strategy to target audience which is proper advancement of business by growing E-
commerce sales and rapid growth in internet users though more customers. There are more
opportunities for daraz to flourish its business .so the strategies used by daraz are best form of
advancement of business by the use of technology however there may be technology threats of
hacking systems organization facing.Daraz.pk is efficiently and effectively positioned itself on
the top of customers mind. It provides user friendly interface, easy navigation by which it gains
customer satisfaction. Daraz has built a strong infrastructure, overcome environmental threats
by using marketing strategies and giving a tough competition to other retailers.

Porter’s five forces of Daraz.pk

Porter’s five forces model is a groundwork scheme for analyzing the level of competition within
the business industry and its strategic developments invented by Mike Elite Porter.

Porter’s fives forces model was developed as a reaction to the popular SWOT analysis.

1. Threat of new entrants

2. Threat of substitutes
3. Bargaining power of customers
4. Bargaining power of suppliers
5. Industry Rivalry

1. Threat of new entrants:

In this industry, the threat of new entrants is relatively low to moderate, because

 Due to high returns, profitable markets attract new entrants which decrease profitability for
all firms in the industry.
 New competitions can weaken your position the lesser the investment and barriers to enter
the market.
 The more the competition’s and hence low profit. To prevent this, high entry barriers should
be created.
 Daraz can be regarded as one of the leader’s online store in Pakistan. Strong collaboration
and self-storage and delivery system.

2. Threat of substitutes:

The threat of substitutes in this industry is high because

 The existence of products outside the existing product boundaries increases the propensity
of customers to switch to alternatives.
 Threat of substitutes arises when buyers are able to find a better product at a lesser price.
 Some existing online competitors are GOTO, 24Hours.pk, iShopping.pk, shophive.com,
naheed.pk, oxl.com.pk, shopline.pk, deeds.pk and ship some directly suppliers and some
physical stores are the main threats to the company.

3. Bargaining power of customers:

Buyers have higher bargaining power in this industry, mainly because

 Also described as the market of outputs, the bargaining power of customer’s is their ability
to put the firm under pressure, which in return affects the customers’ sensitivity to price
changes.
 Low customer bargaining power buyers pay.
 Daraz has been providing customers with every product in its market segments, which has
reduced the bargaining power of customers to a certain extent.

4. Bargaining power of suppliers:

The bargaining power of suppliers in this industry is generally moderate.

 Market of outputs or commonly known as the bargaining power of suppliers is completely a

ball game of the producers, which grants them the aptitude to drive up prices.
 This cost switching depends on certain factors such as the number of suppliers, uniqueness
of the product or services, their dominance in the market and their control over the buyers.
 Strong bargaining power allows the suppliers to sell low quality products at a higher price.
This directly affects their buyer’s packets.
 Large variety of supplier’s product. New entry of new suppliers.
 Daraz is a fast-growing platform in Pakistan because it is introducing new platforms and
making rapid innovations. Therefore, due to its high coverage and high participation rate, it
limits the bargaining power of suppliers.

5. Industry Rivalry:

The competition among existing competitors in this industry is high.

 The intensity of competitive rivalry and profitability is the major determinant of the
competitiveness of the industry.
 The number of online users is growing every day, and every company in the industry is
trying to attract more and more customers by introducing new products. Daraz.pk offers
great discounts on products, which makes competition in smaller online stores tougher, as
not everyone can afford to spend a lot of money on marketing activities and discounts.

Effects of porter’s five forces model:

 Affect a company’s ability to serve its customers make a profit

 They help Arbitrate the competitive intensity
 Affect the overall profitability of the industry

CONCLUSION:
The marketing strategy used by Daraz is corporate marketing to B2C consumers. Marketing
strategies makes the job simpler for organizations to upgrade their products and services.
Moreover, it restricts systems to concentrate on the correct developing business crowd through
expanded internet business supplies and fast development in Internet users across different
customers.

Putting under observation the above topics, we can conclude that there are more opportunities
for daraz to flourish its business so the strategies used by it are best form of advancement of
business by the use of technology however there may be technology threats of hacking systems
daraz might face and when the company uses the Five Forces Model, sometimes they might
affect the company’s ability to serve its customers to make a profit and they can affect the
overall profitability of the industry but they also help to decide the fierce power/strength.
In a nutshell, Daraz should act to convert its internal weaknesses into strengths and external
threats into opportunities because when an organization aligns its internal strengths with external
opportunities, it creates core competencies to meet customer needs.