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Strategic Analysis of Mitchell’s Fruit Farm Ltd.

Objective of Analysis
• Our objective is to strategically analyze Mitchell’s tactics to utilize value chain efficiencies and market trends and impact of those tactics on the company’s financial indicators

Road Map
• In 1947, as a result of emergence of Pakistan, Mitchell’s lost three fourth of its market to India • In 1957, the Mitchell’s family sold majority of its shares to the Pakistani investor’s • Sophisticated food processing machinery was installed and additional products were added to a growing range of preserves, fruit, drinks, juices, canned fruits, sauces and vinegar • In 1980 came the sweetest chapter of all with diversification to confectionery industry

• In 1983 Mitchell’s golden jubilee was celebrated with a fan fare and a chocolate bar, appropriately named as "Jubilee" was launched to commemorate the event • In the year of 1994 it was ISO certified, the first food company to be certified • In 2001, Mitchell’s launched moulded chocolate and launched products like gift box of pralines, golden hearts and top milk was accepted by consumer.

Mitchell’s Prodcuts

15 products Squashes and syrups .• • • • • • Jam Jellies and Marmalade .22 products Ketchup and sauces .20 products Canned food – 19 products Fruit drinks – 13 products Bottled water – 2 products .

5. PRESERVES MARKET Shezan Salman’s Ahmad Rafhan National . 4. 3. 2. Shezan 2.Competitors • SQUASH MARKET 1. Sundip • 1.

• SAUCES AND TOMATO KETCHUP MARKET 1. National • 1. 2. Rafhan 5. Shezan 2. 4. PICKLE MARKET Shezan National 3. Ahmad 3. Shangrilla Ahmad . Knorr 4.

• CONFECTIONERIES MARKET 1. B. Nestle 6. Kidco 5. Hilal 4. Candy land 2. Mayfair 3.P .

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• The capacity of the plant is not determinable as it is a multi product plant • Capable of producing several interchangeable products • The farms of MITCHELL’S Fruit Farms Limited are also occur between renal Khurd and Okara • The farms of the company lying on the area of 450 acres.FACTORY OF MITCHELL’S • The production facilities and factory offices are situated in the Renal Khurd district near Okara • This place is about 115 kilo-meters far from the head office of the company in Lahore. • The distance between renal and Okara district is round about 13 km .

Importance of Location • Renala Khurd is home to the food processing company "Mitchell's Fruit Farms Limited“ • It has orchards of guava & citrus running b/w the lower bari doab canal and the Multan Road • This region is also well known as a major producer of sugarcane & rice • These crops can be cultivated due to abundance of water supplied by the lower bari doab canal & smaller water channels. .

tomato. sugarcane. Mitchell's Fruit Farms Limited • The orchard runs for about 6 miles . guava & grapefruit orchards.• Okara District is famous for its fertile lands. belonging to the food processing company. rice and maize crops • Oranges and Mangoes orchards are famous • Okara District is also famous for the lemon. peaceful natural environment and green fields of potato. wheat.

• Following fruits are being cultivated / grown at Mitchell’s own agriculture land. • Lemon 100% • Grape Fruit 100% • Sevlik Orange 100% • Tomato 30% • Garlic 30% .

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quality control plays a key role in every step of the process • Quality Control staff • Up-to-date laboratory • Two line-control labs for the Groceries and Sugar Confectionery divisions • Incubation lab • Updating of employee skills by training • Acquisition of new technology • Re-evaluation of its quality control and quality assurance system Management .Quality Control & Training • From selection of the finest fruits. to processing and packaging.

Core target market includes ages between 15 – 30 • Age: 10 and above for chocolate and confectionery Family Life Cycle: Young. Lower Upper. Middle Upper. Upper class .Target Market: up to 80 years. Lower. Children and Old people Psychographics: Middle.

3. 6. 7. 4. Malaysia Singapore Indonesia England Philippine China Germany .COUNTRIES WHERE MITCHELL’S MAKE IMPORTS • • • • • • • 1. 2. 5.

MAJOR IMPORT ITEMS OF MITCHELL’S • • • • • COCOA BUTTER COCOA POWDER HPK OIL (HYDROGENATED PALM KERNELS) METAL CAPS PINEAPPLE CONCENTRATE .

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• Packaging material. tomatoes. colours and flavours. vegetables. fruits.Packages Pvt Ltd • Different types of chemical because of their low quantity are purchased from the domestic market • Engineering solutions .LOCALLY PURCHASED ITEMS The following are the major items that MITCHELL’S Fruit Farms Limited purchase from the domestic market: • Raw material includes spices.

• Mitchell’s has divided the whole country into three regions and there are about more than 270 distributors.Distribution • Premier is responsible for managing the distribution system of the company. .

Mitchell’s target middle. Very good repute and image of the company 2. 3. Best high quality of the products. the strategy makers use premiumpricing strategy • The reasons of adopting this strategy are: 1.Pricing • Different pricing strategies are used for different products • Normally. upper middle & elite class of the total food market .

7 % • Pakistan has a population of over 170 million • consumer with middle income class estimated at about 25% of the total population • With a share of expenditures on food and beverages estimated at 42% of income .Trade Trends • The traditional food retail sector comprise about 95% of all food retail stores in Pakistan • While the modern retail sector (hypermarkets. etc.) make up the remaining 5% • Pakistan GDP is about 20 trillion Rupees • GDP growth is about 2. discount stores. supermarkets.

2% . CAGR forecast to 2016 = +8.8%.Headline Industry Data • 2012 food consumption growth = +7.2%. CAGR forecast to 2016 = +12.9%.3% • 2012 soft drinks value sales growth = +14.8% • 2012 grocery retail sales growth = +20. CAGR forecast to 2016 = +9.

SWOT .

TOW’s Matrix .

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Porter’s Five Forces Threat of New Entrants: • Threat of entry depends upon the extent to which there are barriers to entry • A food company requires a big manufacturing unit which requires a huge capital investment • Groceries-manufacturing unit is highly capital intensive and because of high capital investment it has high risk for new to enter introduction .

• local suppliers have small fruit farms. . so the supplier charge the high prices and transaction is done through banks by opening letter of credit and buyer also has to bear high transportation cost and import duties.Supplier’s Power: • Foreign suppliers have power of bargain because the material is not available locally and the buyer don’t have any option other than import. food companies are highly capital intensive so they don’t have any power because they can’t do forward integration.

• There are large numbers of fruit. sugar and other raw material suppliers so the buyer checks the quality of suppliers’ products and make contract with any one which meet their requirements regarding quality as well as price • Another reason of no influence of the suppliers over the Mitchell's is that the company itself producing large amount of fruit. vegetables. so every supplier want to work with the Mitchell's . vegetables. milk and butter. backward integration reduces the power and influence of suppliers of the raw material • Mitchell's has very good repute in the market since from the 1933. another fact is that Mitchell's is the market giant in its industry. In this way.

Buyer’s Power: • The buyers don’t have any power because the prices of the products are fix • Competition among food companies leads the company to face problems in the price competitiveness .

• And the degree of competition in the industry is increasing day by day.Competitive Rivalry: • It could be concluded that the food market is highly competitive. • Which may cause Mitchell’s to change it’s premium pricing strategy .

Substitute: Consumers have following options: • Nestle • Shezan • Haleeb • Ahmed • Salman’s .

Impact of Strategies in Financial Terms .

Financial Indicators Analysis .

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Sales breakup .

respectively • Exports recorded an 81% increase in value . 1.794 million • This rise was supported by groceries and confectionery sales showing an upward trend of 49 % and 9%. 1.Review • Overall economic conditions in the country did not improve over the previous year • As a result managing the manufacturing operations with frequent Electricity and Gas outages amidst low economic growth together with high inflation remained an unending challenge • The costs of main Raw & Packaging materials as well as Energy continued to rise necessitating selling price adjustments • The company's net sales recorded a growth of almost 30 % rising from Rs.377 million to Rs.

37 million in the previous year. 147 million. 38 million • Short term running finances secured: Rs 154. to Rs. • Improvements in the Supply Chain and sound management of Working Capital helped in limiting increase in financial charges from Rs.728 in 2010 .794.• Optimization of costs and operating margins helped in increasing Operating Profit from Rs. 107 million to Rs.581 in 2011 Rs 166.615.

2011.• As a result of all the efforts After Tax Profit for the year was Rs 73 Million compared to Rs 46 million in the corresponding period last year • The Company manages liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities • At September 30. the Company had Rs 390 million available borrowing limits from financial institutions • Rs 13.580 million cash and bank balances .

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Financial Ratio’s Analysis .

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company should focus more geographic locations .Conclusion • • • • Mitchells is in growing sector Growing population of Pakistan Caters basic necessity good Inflation. per capital income and power tariffs are causing problems • Showed rapid growth in export.

• Company identified right tactics to increase operating profits and increase working capital efficiencies to perform above industry average • Company has strong history and brand name • Most of company’s products are still relatively young in industry ( chocolates. juices and other confectionery) • A good future prospect .