Tapal by idrees IUGC
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  • 1.
    • STRATEGIC MANAGEMENTTAPAL TEASubmitted To:M. Ekhlaque AhmedSubmitted By:Kiran SaleemNameah QuidwaiMaria Mehboobtable of contentS.NOTopic Page #1Testimonial42Business ScopeRegionsFunction And ApplicationsCustomersAdded Value53External AnalysisMarket Structure:Communication Channels:Change And The Effect:Market Size: Competition MatrixProduct Life Cycle Stage:Distribution Structure: Driving Forces Top Ten External Trends And Their Impact:74Internal AnalysisSWOT AnalysisThreats And Weaknesses Which Could Be Converted Into Opportunities And Strength The Customer: Basis Of Business:The Relative Importance Factors:Rating Against Customer Buying Criteria (Evaluation Table)Customers Buying Criteria: Price..%, Quality Attributes ..%Impact Of Issues On Strategic Profile235Business ObjectivesVision & Mission:Suggested Mission:Suggested Vision: Objectives:Competitive Innovation336Key Issues357Action Plan368Unorthodox Strategies38
    TESTIMONIAL:<br />We thanks The Great Al- Mighty ALLAH for showing us, the strength and courage for all the challenges through out our journey in exploring the wonders of this visionary and dynamic subject of “Strategic Management”. Indeed, we are grateful to our instructor Mr. M. Ekhlaque Ahmed, whose dedication, guidance and enthusiasm for the subject always persuaded a challenge for us to become and prove that, how good we are business managers. We had at most optimum, placed our sincere efforts and sheer hard work to satisfy our mentor with this report. We would always like to remember and honor with gratitude toward our family & friends, in supporting and motivating us during days, we felted low and finally, the TAPAL people specially, Mr. Imran Ali, Mr Zeeshan Gunatara and Ms. Touba whose endless support glimpsed a ray of hope and success to this project. <br />Thank You,<br />Kiran SaleemMaria MehboobNamrah Quidwai<br />
    • BUSINESS SCOPE:
    Tapal is the national tea brand and competing in Pakistan against the multinational brands and the smuggled tea i.e. open tea. In Pakistan people really needs an excuse to have a cup of tea and such is the tradition of tea drinking in Pakistan that every special moment is enhanced with the presence of tea and where there are these moments Tapal brand is there.<br />It is almost 60 years when Tapal was launched and since that time Tapal is has always passionately delivered the excellence to its customers. Whether the company’s motto of uncompromising quality, or a continuous quest towards innovation and improvement, the warmth and the passion they put in to tea is what makes Tapal one of the leading tea brand in Pakistan. Tapal is also ISO 9001: 2000 certified.<br />Tapal tea always catered to the demand of the diversified tea consumers by launching numerous brands of conventional tea and also the unconventional blends. Tapal has the strong heritage of innovation and they the pioneer in creating the unconventional tea market. Tapal wants to increasingly cater to the demands of its customers.<br />Regions:<br />Tapal has divided itself in to two region one is in Pakistani local market other is exported brands. <br />Region 1:<br />Local market:<br />Southern region------Sindh and Baluchistan<br />Northern region------Punjab, Kashmir and NWFP<br />Region 2:<br />Export:<br />New YorkChicagoTexasFloridaSaudi ArabiaHong KongGreeceKoreaCanadaSpainGreat BritainAfghanistanAustraliaCaliforniaGermanyMuscat<br />Tapal tea has two manufacturing plants one in Korangi, Karachi catering 70% of the production to meet the southern needs and other is in Raiwand, Lahore catering the 30% of the production to meet the northern parts need. There are total 9 warehouses in Pakistan.<br />Function and applications:<br />What are the needs of the customers?<br />Needs of the customers vary from region to region that is why Tapal has different variations in product like Danedar, Mezban, Family mixture, shades of green, chenak, tezdam and ice tea. The Tazdam and Family mixture are the hot favorite demand in northern region and while the others are more popular in southern region.<br />Customers always seek variety in tea. Some like strong flavor, some like aroma, some prefer quality and some wants aroma. Availability and price are also the important factors for the choice of a brand.<br />Customers:<br />Tapal’s target customers are people of urban and rural areas whose belong to the lower class, middle class and upper class. But the major share of Tapal is in rural market that is 68% where the daily income of the people are very low and they can hardly afford proper meal a day that’s why they prefer to have tea in low cost.<br />Added value:<br />For adding value to the product Tapal tea lots of promotional activities like offering the special gifts (Mug), free sampling, gifts in tea Pack (sooper biscuit and every tea whitener), lucky draws, deals, coupons, relationship story competition, ATL and BTL activities and etc. Promotional activities also attract the non customers to use their brand.<br />They also work closely with their tea suppliers for the better quality of the tea imported from international market and also give incentives to the distributors for the promotion of the brand.<br />
    • EXTERNAL ANALYSIS
    • 2. Market structure:
    Strong tasteMedium tasteLight tasteHealth consciousMezban Chenak Tezdam Pearl dustsRed RoseRoyal Surhan Dawn Family MixtureVital chai Lipton tea bagsLoose/ UnbrandedDanedar Lipton Yellow LabelSupremeTetley worldVital Chai DD tea bagsTetley tea bagsLipton tea bagsJasmine TBsElaichi TBsLemon TBsGulbahar Clear green teaLoose/ Unbranded<br />Communication channels:<br />Distributor/ OOHRetailerManufacturerInternational Modern trades(Metro/ Makro)Armed forces & export channelsRetailersUSD/CSD<br />Change and the effect:<br />The emergence of the Modern Trade is opening new ways for reaching the customers. This may attack the direct selling technique and mat effect the conventional distributors.<br />Armed forces are the niche but they are contributing a good amount<br />Population growth rate: Market is growing due to increase in population. According to economic survey the population growth rate is 2.196 % per annum and tea consumption is 1 KG per capita.<br />Rate of exchange: as money is being devalued the dollar value is increasing That why exporting is beneficial for the company. <br />Import duties: Increase in Import duties up to 11% has put pressure on company since it has increased the input cost.<br />Smuggled tea: Tea being smuggled from Afghan border has captured the market up to 47%.<br />
    • Market Size:
    Market growth rate in terms of volume (past)(in tons)<br />Market segments 2005-06 2006-07 2007-08 2008-09 Growth rate health conscious146151158165.54.1%taste conscious strong503815242554667571234.12%taste conscious medium47514803484248900.99%taste conscious light9250895376984281018903.09%Overall growth 3.075% <br />Market growth rate in terms of value Rs. (past)<br />Market segments 2005-06 2006-07 2007-08 2008-09 Growth rate health conscious11680000013590000015800000018205000015.95%taste conscious strong1385477500017300250000218668000002570535000022.94%taste conscious medium137779000016810500002057850000229830000018.70%taste conscious light2312700000030520320000374026400004465076000024.63%Overall growth 20.6% <br />Assumptions for growth:<br />Increasing population by 2.196% will expand the market<br />Shift in Economy of Pakistan: Due to inflation buying power of individual has been effected that has resulted in the switching from lunch to Tea with Roti. <br />Health conscious: People are becoming more aware about healthy and fit life so it is assumed that this segment will grow in near future.<br />Communication channels like Internet, TV, Radio, Billboards etc are helping in creating the awareness in the customers about the arrival of new products and the benefits associated with it. It also helps the company to know about the consumer need through interactive channels.<br />Shift in the segments: Cannibalization effect between the medium and the light taste.<br />Technological impact: New state of the art machineries will increase the production and will help in developing new innovative products<br />Shipping cost: As the raw material is received from foreign countries the supply chain department checks its quality at various levels and this costs high that’s why we are assuming that this cost will be shifted to consumer resulting in high price. <br />Import duties<br />Market growth rate in terms of volume (future)(in tons)<br />Market segments 2008-09 2009-10 2010-2011 2011-12 Growth rate health conscious165.51731811904.71%taste conscious strong571235976062550655904.72%taste conscious medium48904945501050871.33%taste conscious light1018901055901098001145893.99%Overall growth 3.7% <br />Market growth rate in terms of value Rs (future)<br />Market segments 2008-09 2009-10 2010-2011 2011-12 Growth rate health conscious18205000021106000024435000028500000016.11%taste conscious strong2570535000031075200000381555000004788070000023.05%taste conscious medium229830000027115000003237000000377625000018.01%taste conscious light4465076000057697750000728826000008926842000026.01%Overall growth 20.8% <br />ANALYSIS<br />The growth rate of health conscious group increased by 4.71% and also the price will increase over time.<br />In strong taste market will grow by this 4.72% because we will be emphasizing the north region (especially in the rural market of Punjab).<br />Medium taste segment is mature segment and it is being cannibalized by the light taste and tea bags. So we analyzed that there will be negligible increase in this segment.<br />Light taste market will grow because of the introduction of more innovations in tea bags so we have analyzed that this segment have potential to grow more. <br />Competition matrix<br />CompetitionHealth ConsciousStrong Taste Medium Taste Light Taste Overall1Tapal9% 39% 25% 27% 100%2Unilever(Lipton & Brooke bond)10% 41% 20%29% 100%3Tetley-- - 100%100%4Vital-60%40%-100%5Loose/ Unbranded2%39%39%20%100%Historical growth4.1% 4.12% 0.99% 3.09% 3.075% Projected growth4.71% 4.72% 1.14%3.99% 3.7% Profitability ++ ++ + ++ ++ <br />ANALYSIS:<br />Tapal and Unilever is having neck to neck competition. Tapal needs improvement in strong taste, health conscious and light taste category. Over all business is in profit.<br />
    • Product life cycle stage:
    Market SegmentIntroductoryGrowthMaturityDeclineHealth consciousStrong TasteMedium TasteLight Tastevariety seekerConvenient seeker<br /> Tapal Industry<br />ANALYSIS<br />Health conscious, light taste and convenient seeker is growing both the industry and Tapal.<br />In strong taste Tapal is behind the industry because its competitor is already on the top of the mind of north customers.<br />Medium taste is at maturity but soon it will be on declining stage if measure are not taken.<br />Variety seekers is on introductory stage and yet it is not able to develop the taste.<br />
    • Distribution structure:
    % Tea Market2008 2012 DISTRIBUTOR 65 60 MODERN TRADES 7 13 USC/CSD 10 7 OOH 18 20100 % 100% <br />ANALYSIS:<br />Tapal tea is linked with number of distributors that are around 400 since the time this brand has established. <br />GAP- they are catering only 114,000 outlets while competitor is catering almost 450,000 of the outlets. OOH is only 18% which they should increase as its contribution in the profit is high. As Tapal intended to decrease the % sales through utility store it will ultimately result in less support from the government. <br />
    • Driving forces
    • 3. Social and Cultural Forces
    Pakistan is a country where one can find diversified culture. The norms and traditions vary in from culture to culture but the common thing in our Pakistani culture is hospitality. People are always welcomed and served with cup of tea in every event, festival or even on normal days. Taste varies from culture to culture; in accordance with this factor Tapal launches its different flavors and taste for different regions. Like strong taste is preferred in Interior Punjab and Sindh, where as in urban areas the preference is towards the light taste.<br />
    • Political and Legal Forces
    The political factor is also affecting the Tpal. As Tapal imports its raw tea from international market the increasing taxes and duties results in the high cost of tea. Another important factor is smuggled tea. Tea is smuggled from Afghanistan and is sold at the less prices but the Government of Pakistan is being restricted due to scarcity of resources. <br />
    • Technological Forces
    Technology is also harnessed at Tapal to benefit the consumer. Tapal was the pioneer in soft packaging and round tea bag. They imported this innovative technology and established a fully automatic facility under the guidance of their founder, Adam Tapal, where soft packs were produced for the first time in Pakistan. Few years back Tapal has improved the technology to hard packaging. At this facility tea is blended and packed in hygienic conditions, untouched by human hands whilst the hard packing technology keeps tea fresh and packaging costs economical. <br />
    • Economic Conditions:
    Change in economic have a major impact on tea industry. Inflation plays a major role on the strategies used by a company due to two main reasons. Firstly, inflation affects the consumers’ psychology and they become more selective in their purchases. Secondly, inflation results in rising prices for the raw materials purchased by Tapal, which in turn increases the cost of production. This factor plays a major role especially if the increase in cost cannot be transferred to the consumers in the form of raised prices.<br />
    • Top ten external trends and their impact:
    TREND POTENTIAL IMPACT TAPAL UNILEVER VITAL TETLEY Traditional Hospitality culture of Pakistan Increase in sales volume and sales revenue yes yes yes no Technological Trends Increase in costIncrease in efficiency Yes Yes Yes Yes Covering the market adjacent to Afghan border dominated by smuggled loose tea. Increase in sales and revenue Yes yes yes No Growth of rural markets and focus of companies on this area Increasing competition, Price Erosion Yes Yes Yes No Application segmentation Customization Yes Yes No No Traditional Hospitality culture of Pakistan Increase in sales volume and sales revenue yes yes yes no Technological Trends Increase in costIncrease in efficiency Yes Yes Yes Yes Covering the market adjacent to Afghan border dominated by smuggled loose tea. Increase in sales and revenue Yes yes yes No Growth of rural markets and focus of companies on this area Increasing competition, Price Erosion Yes Yes Yes No <br />
    • INTERNAL ANALYSIS:
    • 4. SWOT Analysis
    Strengths<br />
    • Open culture
    • 5. Strong relationship with the distributors
    • 6. Expertise – Tea Blending.
    • 7. Short term credit policy i.e. efficient ROI
    • 8. Commitment for Quality
    • 9. Efficient production capacity at southern region
    • 10. Decentralized
    • 11. Single product manufacturing company i.e. just Tea
    • 12. Credit Policy of 7 days
    • 13. No liabilities.
    Weaknesses<br />
    • Limited budget and investment in the business
    • 14. Weak coverage in upper northern areas of Pakistan
    • 15. Less retail outlet coverage
    • 16. Less resources as compared to No. 1 competitor
    • 17. HR department is still in developing process
    • 18. No customer complain center within the company.
    • 19. Inefficient production capacity at northern region.
    Opportunities<br />Growing rural market and export<br />Initiatives in price pack category as to capture value from price sensitive customers<br />Newer segments introduced with entry of new brands which still have huge potential for growth<br />Central and upper Punjab has tremendous potential for growth and profitability<br />Tea prices are become high in loose tea market <br /> Green Tea market is growing because of medical benefits of tea.<br />Customers are shifting from cola drinks to low cost drinks <br />Threats<br />Abolishment of Subsidy given by Govt. on Tea Import <br />WTO (World trade Order) opening local markets for global competition.<br />International MTO launching newer brands with high margins at reduced price for our price-sensitive economy proving serious threat in near future<br />Attraction for new entrants in the industry <br />Complementary goods are going more and more expensive then before i.e. Milk, Sugar etc.<br />Illegal imports under umbrella Afghan transits trade.<br />Internationally increasing  tea prices<br />High inflation rate within country <br />Shortage and increasing prices of electricity.<br />Threats and Weaknesses which could be converted into Opportunities and Strength <br />Internal AnalysisExternal Analysis<br /> <br />Less retail outlet coverage while competitor’s coverage is very highGreen Tea market is growing because of medical benefits of tea.Capturing loose tea market through innovation & competitive pricesCompetition is still weak in south coastal areas.StrengthThreatsOpportunities Weaknesses<br />ANALYSIS<br />Tapal is 1st national brand but it lacks in financial resources since they are only in tea business. Its HR policies need to be revised. Company is not interlinked with the other regional areas. Customer complaint centre should be introduced. They should introduce low profile product in “DHABBA”<br />
    • The customers’ most important wants are aroma, color, taste, packaging and availabilityThe customer: basis of business:
    Competition score 9Company know it and working on it<br />Aroma is the most important aspect<br />We score it 9<br />Key strength is the well managed supply chain tea department who assured the quality of tea.Weakness is that no complaint centre is available<br />
    • The relative importance factors:
    • 20. FactorsAbsolutely Critical5 Very Important4Quite Important3Nice to Have2Not significant1Don’t Want it0AromaMind blowingStrongFreshnessPackagingAir tight JarSachetpouchesPriceaffordablepremium priceAvailabilitynear storesmodern tradeCommunicationATLBTLCustomer serviceThrough internetMailPhoneColorDark LightTasteStrongMediumlight
    • 21. Rating Against Customer Buying Criteria (Evaluation Table)
    QUALITY & PRICEThis BusinessUnileverTetleyNon Price         Attributes affecting WEIGHTAGE Customer Choice % Product Related70%      1. Aroma201818152. Freshness201718143.Packaging107964.Color108845.Taste10886Service Related30%   1.Customer Complain Service104832.Availability107823. Communication10794Total100%76 8654Has Quality Gone Up/Down (+/-)In Past 4 Years Relative Price Today (Rs.) 440-500 / KG490-550/Kg400-470/KgRelative Price 4 Years Ago 260-370/kg280-385/Kg240-370/Kg<br />Quality & PriceThis BusinessUnileverTetleyNon Price   ranks      Attributes Affecting WEIGHTAGE Customer Choice % Product Related 70% 7.84   7.98 5.81  1. Aroma 20 3.6 3.6 3 2. Freshness 20 3.4 3.6 2.8 3.Packaging 10 0.7 0.9 0.6 4.Color 10 0.8 0.8 0.4 5.Taste 10 0.8 0.8 0.6 Service Related 30% 3.36   3.42 2.49  1.Customer Complain Service 10 0.4 0.8 0.3 2.Availability 10 0.8 0.8 0.2 3. Communication 10 0.7 0.9 0.4 TOTAL 100% 11.2 11.4 8.3 <br />
    • Customers Buying Criteria: Price..%, Quality Attributes ..%
    Question its Cost<br />Keep it up<br />BetterTasteAromafreshnessSamePackagingColorCommunicationWorseCustomer complaintsAvailability10%20%Improve Fast30%<br />Relative Performance Rating<br />Do not SweetAttributes Important to Customer<br />
    • Impact of Issues on Strategic Profile
    Issue NumberIssue 1Issue 2Issue 3Issue 4Issue 5Issue NameWeak distributionIncrease in import dutiesPriceShortage of electricityHRdepartment Customers+++++Regions++Market segments+++Products (prices)/services+++++Strategic Management++++++++Product Creation Process+++++Sales Acquisition Process++++Operations (Production/Logistics)+++++Customer base Management++Technology++++Plant & Equipment+++Distribution Channels++<br />
    • BUSINESS OBJECTIVE:
    a. Vision & Mission:<br />The management and the employees of Tapal Tea (Private) Limited is committed to:<br />Satisfy stakeholders and be a benchmark for Quality, Creativity and Ethical values in business<br />Achieve leadership in all the categories of core business and diversify in areas which compliment the core business.<br />Provide products and services that meet customers’ requirements, expectation and agreements relating to all aspects of Tapal Integrated Management System.<br />Define and update measurable objectives and continually improve the effectiveness and performance of the Quality, Health, Safety, Environment, food Safety and IS (Information system).<br />Prevention of injury and ill health by continuously identifying hazards and reducing risks to people, facility and business.<br />Ensuring that the Tapal processes and products are environment friendly and do not contribute to polluting the environments in any manner.<br />Adhere to all applicable legal, statutory and other requirements that relate to Tapal products, services, health and safety.<br />Establish effective arrangements for communicating with all stakeholders throughout the food supply chain regarding all applicable aspects of Tapal Integrated Management System<br />Suggested Vision: <br />To be a benchmark of Quality, Creativity and Value Innovation, achieve leadership in the beverage manufacturing industry which compliment the core business <br />Suggested Mission:<br />Provide products and services that meet customers’ requirements, expectation and agreements relating to all aspects of Tapal Integrated Management System.<br /> Objectives:<br />To attain market leading position and increase the sales in North Region by 5% in 2012 (specially the strong taste brand). <br />Investing to increase production capacity, in order to meet expected demand in coming 5 years.<br />To broaden export functions from 19 areas to 22 areas (3% sales to 5%) by 2013 and improve product existence in International markets. <br />Expanding distribution network to 300,000 outlets all over Pakistan.<br />Define and update measurable objectives and continually improve the effectiveness and performance of the Quality, Health, Safety, Environment, food Safety and IS (Information system).<br />Continuous training and development of the employees.<br />To make the HR department strong by improving the compensation plans (providing bonuses, health care facilities and holiday packages).<br /> Competitive Innovation<br />Bring down the cost through horizontal and vertical business partners; optimize the production capacity to meet the future demand <br />Apply six sigma in complete business processes in order to attain cost leadership<br />Computerization of work.<br />
    • KEY ISSUES
    Weak distribution resulting in missed sales usually in northern areas.<br />Increase in input cost<br />Customer relationship management.<br />MTOs introducing new brands at cheaper price.<br />Family mixture cannibalization.<br />The Five Generic Competitive Strategies<br />Type of Advantage Sought<br />Lower CostDifferentiationChenak DustMezban SachetFamily MixtureDanedar Twin PackTezdum 22gmGulbaharSOG Selection PackTapal Special TeabagDanedar Round TeabagTapal Ice TeaBroadRange of BuyersNarrow Buyer SegmentOr NicheMezban Dust 125gm<br />
    • ACTION PLAN ( For next year)
    WHAT HAS TO BE DONE References HOW RESULT Customer Complain SWOT analysisCustomer buying criteria Should develop customer complain centre Customer satisfaction/loyalty Improve distribution network Distribution matrixCompetition matrixKey issue Improve relationship with the distributors in north and seek new distributors Increase sales and brand image in north and increase market share Improve communication with external customers Market structureSWOT analysis More advertisements and promotional activities Will become top of the mind Brand awareness Outlet coverage ObjectiveSWOT analysis Should be available in key areas of cities. Convenient purchaseGreen tea Project market growthSWOT analysis Create awareness by arranging workshops in educational institute, offices and fitness centers Can become the cash cow for the companyFamily mixture cannibalizations Cause and effect analysis Improvisation in taste Sales will increase Hr department SWOT analysisObjective Arrange training programs for sap and ERP and other new technologies being installed. Effective output. Introduction of new SKUCause and effect Introduction of danedar sachet for affinity group New market segment Related diversification SWOT analysis Join venture with tarang milk to introduce new instant tea For new customer to make tea in a convenient way. Cost effectiveness Competitive innovation Six sigma application Wastage reduction Efficient data sharingCompetitive innovationObjectivesIntroduction of WAN Decentralization<br />
    • UNORTHODOX STRATEGIES
    • 22. Introduction of Tea dispensers for Home and offices to make instant tea like previously used for the filtration of water.
    • 23. Strategic alliance with Tarang tea whitener for introducing the new sachet with innovative concept of instant tea.
    • 24. Introduction of new flavors i.e. tea with essence of ginger, tea with ilaichi and tea with masala.
    • 25. Introduction of tea bags for strong tea lovers who are convenient seekers as well.