56566424 Strategic Management of Mitchels BZU Layyah Campus

REPORT ON BUSINESS POLICY & STRATEGIC MANAGEMENT OF

MITCHELLS FRUIT FARMSPRESENTED TO MR. RASHID SAEED PRESENTED BY: MUHAMMAD IHSAN UL HAQ AKHTAR HUSSAIN CHUGHTAI ADNAN ASLAM KHAN KHIZAR SAEED SOHAIL ZAFAR SAFINA SAHAR MUHAMMAD RASHID MBA (MORNING) 4th Semester SUBJECT: MB-09-02 MB-09-22 MB-09-28 MB-09-19 MB-09-29 MB-09-31 MB-09-41

BUSINESS POLICY & STRATEGIC MANAGEMENT

Department Of Business Administration BZU, Bahadur Sub Campus, LayyahMay 23, 2011

Business Policy & Strategic Management of Mitchells Fruit Farms

Department of Business Administration, BZU Layyah Campus

Page 2


Dedication is a devotion to whom we love, who our benefactors are, who pray for us and who made us capable of doing all these under this head, there are three personalities, which are our FAMILY, our TEACHERS & our FRIENDS. So we have devoted our report to our beloved Parents, Brothers, Sisters, loving Friends &

WELL

WISHER MR. RASHID SAEED


Page 3


TABLE OF CONTENTSS. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Topic Introduction Objective Products Market shares Vision & Mission Corporate Philosophy Situation Analysis Structural Analysis Value Chain Analysis Swot Analysis Competition Analysis Existing Strategies Market Trends Market Growth BCG Matrix References Page Number 06 06 07 08 09 10 10 13 15 19 21 21 25 25 26 27


Page 4


EXECUTIVE SUMMARYMitchells is the oldest food company in Pakistan. Mitchell's objective is to provide its customer with healthy, innovative and best quality food that will tempt their appetite at all times. The success of Mitchells brands is the result of the corporate emphasis laid upon Quality Control reinforced by Research & Development. PEST analysis is used to assess what environmental factors are affecting the organization, which of them is most important and how they will effect in next years. It is an indicator of political, economical, social and technological influences on organization. The PEST analysis concerned with broad aspects of the environment while there is always a set of external influences, which are more immediate, and directly affecting the organization. The structural analysis draws on Five Forces approach prepared by Porter. Value chain analysis is widely used to determine where cost improvements could be made or value creation improved. This process involves the analysis of all the activities starting from the raw material provisions to the distribution of final product. The competition is very fierce among the competitors so Mitchells always get the first mover advantage and still the leader of market. Corporate level strategy focuses on strategies for corporation consisting of more than one business. Mitchell's fruit farms limited, for instance, comprise several businesses, including groceries, confectioneries and chocolates business. Firms compete directly with one another at what is called the business level of strategic management, so we will focus on crafting successful competitive strategies. Operation level strategy focuses at how to develop capabilities in process execution that will yield competitive advantages for a firm. This involves applying strategic management concepts to what is known as the operations level, the level at which work inside the organization actually takes place. Trends are changing rapidly, so nobody knows the customer who will buy our product today will buy it tomorrow as well as or not. At this time quashes are in MATURITY stage. Now there is no more growth in squashes industry due to consumer preferences and other factor is customer are very price conscious now.


Page 5


INTRODUCTIONMitchells is the oldest food company in Pakistan. It was established in 1933 by Francis J. Mitchell under the name of Indian Mildura Fruit Farms Ltd. After the country gained independence in 1947, the company's name was changed to "MITCHELLS Fruit Farms Ltd." with the brand name of "MITCHELLS". It is head quartered in Lahore, Pakistan while the farms and factory are situated at Renala Khurd, in Okara District of Punjab, Pakistan. Countrywide sales are managed by fully computerized and inter-linked regional sales offices ensuring a smooth distribution system with nationwide coverage. Highly qualified executives, using modern management tools, handle marketing, commercial, financial and accounting functions from the Head Office in Lahore.

MITCHELLS OBJECTIVESMitchell's objective is to provide its customer with healthy, innovative and best quality food that will tempt their appetite at all times. Above all, Mitchells also promise convenience & variety at affordable prices.

In-house slogans of mitchell'sThere are three in-house slogans that are permanent in nature. Apart from these slogans, one slogan is called the slogan of the month. Three permanent slogans are as following: 1. love with customer love with company 2. Customer happy, company prospers. 3. Customers help us grow.

The slogan for the target marketThe slogan for the target market of the Mitchell's is as under: Giving the New Generations a Fresh Start... From Our Orchards to Your Table

Institutional ClientsMitchells has successfully catered to the demands of its prestigious clients such as the Pakistan International Airlines (PIA), leading five star hotels and clubs, Utility Stores Corporation, Canteen Stores Department, main stores and reputed restaurants in major cities.


Page 6


Products:1) Grocery Products 2) Confectionery Products 3) New Products

1) Grocery Productsi) ii) iii) iv) v) vi) vii) Jam, Jellies & Marmalade Squashes & Syrups Ketchups & Sauces Canned Food Fruit Drinks Pickles & Vinegar Bottled Water

2) Confectionery Productsi) ii) Chocolates Sugar Confectionery

3) New ProductsFruitica Orange (Instant Drink) Apple Jelly Junior Fruitica Lime (Instant Drink) Yum! Ketchup 4. Stand-up Pouch (500g) Strawberry 10. Jam Junior TopMilk Fruit & 5. Nut Mixed Fruit 11. Jam Junior6. Luxuree 30g

Fruit 1. Punch

2.

3.

Luxuree 7. 8g

8.

Golden Mist Marmalade 9. Junior

12.

Mango Jam Junior

Jaam-eGolden Yum! Hot & Synthetic Lychee 18. Hayat Apple Ketchup 13. 14. Sweet 15. White Fruit Jam 16. Stand-up 17. Sauce Vinegar Drink Junior Pouch Super Apple Mango Mixed Spinach 24. MilkToffees Fruit Hyderabadi Hyderabadi 22.Anniversary 19. 20. 21. 23. Puree Drink Pickle Pickle


Page 7


Farm FreshnessMitchells has always used farm-fresh fruits and vegetables in its products, since its inception. Mitchells products retain fruits in their pristine form, thus processing the best that nature has to offer.

Co-packingMitchells has always been keeping itself abreast with the modern technology and updating its machinery and equipment with the passage of time.

QualityAt Mitchells, R&D department coordinates with Quality Control department and Marketing department for constant improvement of existing products along with development of new and innovative products.

Market sharesMitchells 40% Shezan 38% Kinza 11% Others 11%


Page 8


VISIONTo be competitive in the growing market as the quality managed company.

MISSION1. To be a Leader in the markets we serve by providing quality products and efficient services to our consumers while learning from their feedback to set even higher standards for our products. 2. To be a Company that continuously enhances its superior technological competence to provide innovative solutions and superior products as per requirement of the market place. 3. To be a Company which combines its people, technology, management systems, and market opportunities to achieve profitable growth while providing fair returns to its investors.


Page 9


CORPORATE PHILOSOPHYThe success of Mitchells brands is the result of the corporate emphasis laid upon Quality Control reinforced by Research & Development. The R & D section prepares new recipes and formulations whereas the QC section ensures selection of the finest fruits and error free processing and packaging, thus ensuring that all products live up to the consumers high expectations. Human Resource is also of the pivotal importance for the Management and employee skills are constantly being updated through training courses and study tours both at home and abroad.

SITUATION ANALYSIS PEST ANALYSISPEST analysis is used to assess what environmental factors are affecting the organization, which of them is most important and how they will effect in next years. It is an indicator of political, economical, social and technological influences on organization. The analysis of Mitchells is as under:

POLITICAL AND LEGAL FACTORSIndustrial LawsIndustrial laws regarding unions have no impact upon the Mitchells because there is already an independent labor union and officers association in the organization. The company considers these laws in their decision making concerning wage rates, bonuses, and benefits of the employees.

Foreign TradeThis factor is very much important for the Mitchell's fruit farms limited. It is because the Mitchells is importing many raw material items from different countries of the world. These items include cocoa powder, cocoa butter, lecithin, tin, aluminum foil, pectin, metal caps, lemon concentrate, hydrogenated palm kernels and pineapple concentrate. The major importing countries are Philippine, Germany, china, Indonesiaand Malaysia. Most of the foreign suppliers are working with Mitchell's from last many years. And there are collaborative relationships between Mitchell's and foreign suppliers. The Government doesnt provide any support to import these raw materials and any relaxation in import duty upon the imported raw materials. So if Government bring any change in its foreign policy, then it will be very much important to cope with that.


Page 10


Environmental Protection LawsAlthough the laws regarding environment are not very sophisticated in Pakistan but even if they become so, they will not be hampering for Mitchell's fruit farms limited, because in Mitchell's, there is very sophisticated system for the drainage of the wastes.In the wastes, there is not any such item that may be harmful for the environment.

Taxation PolicyThe Mitchell's fruit farms are a public limited company. The company is paying all sorts of taxes that are due to the Mitchell's. As the honesty is the dominant value of the company, all the payments to government are made fairly and honestly.

Employment and Government StabilityEmployment is not a matter of high concern for the organization because it is already following all the labor laws. But recently the Government increases the wages of the employees but Mitchell's has not affected by that, because the minimum wage limit in Mitchell's is Rs. 3000 that is high from the minimum wage limit of the government of Pakistan..

Economic FactorsAmong the many of economic factors some are more important for Mitchells; the detail of these factors is in following:

Interest RatesInterest rates increase and decrease has significant impact upon the financial performance of the Mitchell's, because the company has take loans from the banks. It is also noticeable that the company takes the long term loans from the banks on the regular basis. So, if in the future the interest rates increase, it will be unfavorable for the Mitchell's. But such increase is not expected in near future.

InflationIn the short run, the effects of inflation are minimal on the performance of the Mitchell's. But if we take it in longer perspective the inflation in the country will increase the cost of production, which will increase the sale price. And at high sale price the product will become in-competitive in the international market as the company is involved in the export. So the pan of export will be adversely affected by the inflation.


Page 11


Disposable IncomeWithin the country the demand will be affected if the disposable income will be reduced. There are lot many substitutes of the groceries products of the company. But other than its direct use, these are also used in bakery and confectionery items and so many other foods whose demand is dependent on disposable. So any decrease in disposable income of the consumers will also be affecting Mitchell's fruit farms negatively.

Socio-cultural factorsSocio cultural factors like demographics; income distribution, life style etc. can also affect the company in different ways. Lets see which of them are more concerned to Mitchell's fruit farms limited.

Life Style ChangesThe consumption of jams, jellies, marmalades, squashes, sauces, pickles and squashes is very much related with the life styles of people. Now people, all around the world, are becoming more and more health conscious. They are well aware that a high consumption of heavy foods will increase the cholesterol, which leads to heart disease.That is why, a significant change in the consumption of foods is being observed in last many months. As the growth rate of fast food industry is spectacular in the country. That is most favorable for the Mitchell's. it is because more consumption of fast foods will increase the demand of Mitchell's products.

Level of EducationLevel of education is directly related with awareness and health consciousness. In countries where education rate is high the people more like the nutritious products. InPakistan, as well as in foreign markets the rate of literary is increasing which will effect the organization positively. High level of literacy will lead to high level of nutritious products consumption and people started switch towards the products that are more favorable for their health and fitness.

Technological FactorsTechnology in food industry is very important for the maximum output, product standardization and hygienic process of production. The technological factors, which are more concerned with Mitchells, are as under:


Page 12


Government Spending on ResearchUsually in order to support some industry and improve economy, government allocates some fund to R & D. Unfortunately our government doesnt have any money for R & D.Due to this non-serious behavior of government this sector along with others, is suffering very much. There is more need of R&D work in this industry in Pakistan than any other industry. It is because of the sensitivity and importance of this industry in our lives. It is a fact that our food industry is very poor in the field of technological advancement. Mitchell's is well aware of this fact, the company has the best and most advance technology in the respective industry. Mitchells continuously upgrading it on annual basis. The 15% of total net profit invest on the automation of the technology every year.

New Discoveries and DevelopmentsIt has already mentioned that Mitchell's has the best technology for the operations of the business. Mitchell's is competing the market with its qualitative and innovative products. All these are possible as the result of intense R&D, new product developments and new recipes for the fulfilling the changing needs and wants of the market.

STRUCTURAL ANALYSISThe PEST analysis concerned with broad aspects of the environment while there is always a set of external influences, which are more immediate, and directly affecting the organization. The structural analysis draws on Five Forces approach prepared by Porter. It is a structured mean of assessing the competitive environment.

PORTER FIVE FORCESThreat of New EntranceThreat 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; like Mitchells has more than 800 crore paid up capital. So we can say that groceries-manufacturing unit is highly capital intensive and because of high capital investment it has high risk for new to enter into production.

Suppliers PowerAll organizations have to obtain resources and provide goods or services. The suppliers can affects on strategic freedom of an organization and can influence the margins of that organization. In Mitchell's fruit farms; there are two types of suppliers. One is a local supplier, and


Page 13

Business Policy & Strategic Management of Mitchells Fruit Farms others are foreign suppliers. We can evaluate the power of suppliers with the help of following important points that cannot be ignored: a) As well as the foreign suppliers are concerned they have power of bargain because the material is not available locally and the buyer dont have any option other than import, 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. b) As well as the local suppliers are concerned they have small fruit farms. Food companies are highly capital intensive so they dont have any power because they cant do forward integration. c) There are large numbers of fruit, vegetables, 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. d) Another reason of no influence of the suppliers over the Mitchell's is that the company itself producing large amount of fruit, vegetables, milk and butter. The in this way, backward integration reduces the power and influence of suppliers of the raw material. e) 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, so every supplier want to work with the Mitchell's.

Buyers PowerThe buyers dont have any power, because the prices of the products are fix, but high competition among food companies leads the company to face problems in the price competitiveness.

Competitive RivalryOrganizations will also be concerned with the extent of rivalry between themselves and competitors. The extent of competitive rivalry depends upon the nature of four forces described earlier. It could be concluded from previous discussion that the food market is highly competitive. And the degree of competition in the industry is increasing day by day.


Page 14


VALUE CHAIN ANALYSISValue chain analysis is widely used to determine where cost improvements could be made or value creation improved. This process involves the analysis of all the activities starting from the raw material provisions to the distribution of final product. That is why it is necessary to understand the complete procedure of production and distribution.

ORGANIZATION VALUE CHAINAll these activities are broadly categorized into two main heads, which are Primary activities and Support activities.

Primary ActivitiesThe primary activities of the organization are grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales & services.

Inbound logisticsFruit, vegetables, sugar, packing material and other raw material items like chemicals, salts milk and butter perform the inbound activity in Mitchell's. This activity should be efficient in order to increase recovery rate by obtaining good quality raw material. So in order to ensure the high quality of raw material, following measures are taken by the Mitchell's. 1. The company has its own orchards, animal farms for the acquisition of high quality fruit, vegetables, milk and butter. 2. There is a well-equipped lab for testing the quality of raw material, packing materials and other chemicals that are used in the production process. Before storing the raw material, the approval of quality control department is essential. 3. In case of 30% of damaged fruit and vegetables, the quality control department of Mitchell's disapproved the material and the commercial department refused to accept the raw material. 4. There is an approved list of suppliers from the quality control department. The commercial department is bound to procure the raw material from only the listed suppliers of the company. This list is made after assessing and evaluation of many factors of the suppliers like their market repute, capacity of production, quality of raw material and their past performance in the market. 5. Frequent visits are also made to the production facilities of the suppliers by the executives of commercial and quality control department for the inspection of the quality and other related considerations.


Page 15


OperationsThe operations are the production process of groceries where the major value addition is made. For ensuring the production process of the products according to the international quality standards, the Mitchell's take the following steps. 1. All the production process from transferring the juices and raw material to production hall from juice stores to the packing of the products is completely automatic. The Mitchell's invest huge amounts of profits for serving this purpose every year. 2. The Mitchell's was the first company who achieve such high level of automation in its relevant industry. The company is serving the industry as the trend setter. 3. During the production process, the well trained lab technicians inspect the production process and its quality before the packaging of the final products. 4. Even after the packaging, the few items of the lot bring into the quality control department for further inspection of quality in the labs of the department. 5. Few items are preserved even after the approval of its quality, to check its shelf life and use as reference in case of any complaint from distributors or customers. 6. After ensuring all sorts of considerations, a written permission is given to stores & planning department from quality control department to float the products in the market.

Outbound logisticsThe management subcontracts the outbound activity, and the distribution is through dealers. The products of the Mitchell's directly supply to the distributors of the company. But the supply of production is also take place by the regional sales offices of the Mitchell's. They also serve as the warehouse of the company.

Marketing & salesAs far as marketing and sales is concern, there is an export and marketing department, who control and monitors the activities of regional sales offices of the company that are situated in Lahore, Islamabad and Karachi. These regional sales offices are responsible for effective distribution of the products of the company. The marketing department is responsible for the marketing and promotion of new and existing products of the company.

ServicesThe nature of the products not requires any significant level of services for the customers. However, there is a formal system for taking corrective actions upon the complaints of the


Page 16

Business Policy & Strategic Management of Mitchells Fruit Farms customers. Proper feedback is given to the customers who have any complaint regarding the quality of the Mitchell's products.

Support ActivitiesThe support activities can be divided into four groups, which are procurement, technology development, human resource management and infrastructure.

ProcurementAs the prime inputs of fruit, vegetables, sugar are available locally and some material has to import from abroad. So procurement for long time is not possible in case of raw material, which is locally available. Where as the material that has to be import the company has a lead-time of 2-3 months. So the planning and stores department is sufficiently performing the activity of procurement with the collaboration of commercial department.

Technology developmentR&D and Process development researches are very important in food groceries industry in Pakistan. So in the company value chain, this thing should be emphasized much, rather it has a big contribution in total value addition. The Mitchell's working on the technology development on continuous basis. The most advance and automation of the plant and machinery is the top priority of the Mitchell's fruit farms limited.

Human resources managementHuman resource management involves the training and development of workers and employees in order to increase their productivity and efficiency. For this purpose company make their employees to work with the senior worker to get the experience, apart from this on-the job training, they have separate training program for new employees. The company has good planning, quality control systems and future orientation, which although does contribute directly in value addition and increase the effectiveness of whole process.

InfrastructureThe company has a strong distribution system in the Pakistan. The Mitchell's has more than 270 distributors in the country for ensuring the product availability and supportive promotion activities. Apart from the strong distribution system, the entire necessary infrastructure is available to the Mitchell's. Mitchell's is the only one food processing company in the Pakistan who has all the


Page 17

Business Policy & Strategic Management of Mitchells Fruit Farms production facilities at single location. This include from orchards to the warehouses of the finished products.

AnalysisAll the value creation does not happen in the organization itself rather much of it can be occur in the supply and distribution chains. So the whole process needs to be analyzed. For this purpose we can divide it into three areas: suppliers, organization and channel members.

SuppliersSuppliers play a very vital role in total value creation. The whole of the profitability depends upon the quality of raw material; if supplier does not provide the good quality of raw material, then the desired level of quality of products cannot be achieved. The price structure of the country demotivates the grower to produce better quality of fruit, vegetables, sugar cane and other raw material items. But good relationship with the suppliers, fair and prompt payment can enforce the grower to cultivate better variety. It is exercising by the Mitchell's already.

OrganizationWithin the organization the value addition activity is focused on groceries production, which is their core competence. In order to provide the superior quality of groceries to customers, total quality management system is practicing by the Mitchell's. Although in the production of the products, Mitchell's role is spectacular in its industry. But when we talk about the market development and marketing and promotional activities of the Mitchells, we will come to know that this particular area is lacking behind the other market players. Without the marketing support Mitchell's cannot achieve its goals and objectives successfully.

Channel MembersMitchell's fruit farms limited has strong footing in the market because of its quality products and good repute. The company is full aware about this strong point, and the people of Mitchells are getting benefits from this strength. The customers of the Mitchell's are loyal with the company and make purchase of such products that are labeled Mitchell's. There is strong distribution channel in the country that is the strength of the company. The company also directly deals with the large customers like PIA, KFC, PIZZA HUT, MCDONALDS, HOLIDAY INN, and many other prestigious institutions of the country. Apart from these institutions, Mitchell's deals with the large retailers itself like PACE, HKB stores, UTILITY STORES, CANTEEN DEPARTMENTAL STORES, SHEZAN BAKERS and so on. So in this way we can say that company targeting its customers not only by the


Page 18

Business Policy & Strategic Management of Mitchells Fruit Farms distributors but also go directly to retailers and other institutions for creating value for the business operations of the Mitchell's.

SWOT AnalysisStrengths1. Mitchells fruit farms limited is the oldest food processing company of Pakistan. The companywas incorporated in 1933. This is a distinctive feature of the company because all other food-processing companies start their operations at least after the independence of Pakistan. 2. In 1998, Mitchells achieve another destination: ISO 9001 certification, and at no better time than the successful completion of sixty-five years of bringing quality products to the consumers. It is a matter of human pride that the Mitchells has become the first food company in Pakistan to achieve this prestigious distinction. 3. Today, in Pakistan, Mitchells is the only major company with fully- integrated operations having its own growing and processing facilities at one location. Modern, high-volume industrial equipment, professional management and a trained workforce ensure that Mitchells maintained its lead. 4. In 1983, Mitchells golden jubilee was celebrated with great funfair. A chocolate bar, appropriately named jubilee, was launched to commemorate the event. Mitchells is the pioneer in Pakistan for chocolate production. 5. Molded chocolate (praline) is very popular in all over the world but till 2001 no national company was producing molded chocolate in the country. So Mitchells launched molded chocolate with the successful commissioning of a molded line in 2001. 6. The process of toffee making was automated in 2000 with PLC-based machines/systems, to ensure uniform quality of products. Mitchells is the first national company that takes this step. Thus, the modernization of operation has always been top priority with Mitchells. 7. Mitchells is the single national company that has so large product mix.

Weaknesses1. The management style that has adopted by the company is bureaucratic. Degree offormalization and centralization is high. 2. The promotion mix of the company and advertisement programs is not very good. It is justifiable to say that company is not so much serious in promoting its brands. The company only enjoying the good repute of the brand name Mitchells.


Page 19

Business Policy & Strategic Management of Mitchells Fruit Farms 3. There is lack of short term and long-term decision-making regarding production schedules, purchasing decisions and marketing programs. 4. As we know that there is severe competition in the food industry, but still the availability of Mitchells products is very poor. 5. Company is offering fewer discounts as compare to other relevant industrys companies like Shezan, National, Rafhan, Salmans and Ahmed to retailers and distributors.

Opportunities1. Increasing proportion of working women, school going children and office going men increase the size of target market of the food industry. These factors cause growing demand of jams, jellies, marmalades, sugar free products and caned vegetables and juices open a wide window of opportunities for MITCHELLS Fruit Farms Limited. 2. As the rural populations of the country tend to migrate to cities for multiple purposes, for this trend enhanced the market size for the food processing companies. It is also an opportunity for the MITCHELLS Fruit Farms Limited to avail this opportunity and get benefits from this growing market. 3. Now people are much conscious about their health and fitness as before the past. They have tendency to use the foods that are nutritious and best for their health. So this market trend is also creating new horizons for the food processing companies. 4. It is fact that the market size of fast foods and snacks remarkably. As the many products are the complimentary for these kinds of fast food and snacks item. This thing is growing the demand of tomato ketchup, sauces and preserves. 5. There is an opportunity for the company to increase the depths of its existing products categories. For example, company may introduce the squashes, sauces and tomato ketchup in more packaging like in buckets as this strategy has adopted by other competitors of the company. The company may introduce the pet bottle of 1.50 ml like Jam-E-Sheren and Rooh Afza. It will expand the target market of MITCHELLS Fruit Farms Limited. 6. Other very open opportunity for the company is that the company may invest in new product categories like mineral water, cheese, snakes and other dairy products.

Threats1. The competition in the food processing industry is much severe than the past. Now the many national companies are joining hands with multi-national corporations for additional support in terms of marketing activities, production expertise and financial resources.


Page 20


COMPETITION ANALYSISThe competition is very fierce among the competitors so Mitchells always get the first mover advantage and still the leader of market. It has major share in the market. Direct competitors: Shezan squashes Indirect competitor: red syrup, instant drinks

EXISTING STRATEGIES Corporate level strategiesCorporate level strategy focuses on strategies for corporation consisting of more than one business. Mitchell's fruit farms limited, for instance, comprise several businesses, including groceries, confectioneries and chocolates business. Mitchells involve more than one business is said to be diversified.

Foreign LicenseesIn recognition of its dedication to quality and technical expertise, Mitchells was also given proprietary rights by L. Rose and Company Ltd. of England in 1946 to become the sole manufacturer and distributor of their world famous Roses brand of Lime Juice Cordial and Lime Marmalade in Pakistan and Afghanistan.

Concentric DiversificationAdding new, but related products or services.Mitchells involved in concentric diversification because it has three related businesses that are groceries, confectioneries and chocolates. The raw material, production process, required expertises are very much same. Further more the product lines like squashes, syrups, pickles, jams, jellies, marmalades, sauces, diet preserves, vinegars, candies and chocolates are the product lines that are closely related in context of many business aspects. So we can say that Mitchell's is exercising the concentric diversification.

Backward IntegrationSeeking ownership or increased control of a firms suppliers.Mitchell's fruit farms limited is acting on the concept of backward integration. Mitchell's has its own orchards and dairy farms for the smooth flow of raw material that is used in the production of Mitchell's products. 450 acres of land is used for cultivation of raw material. Following fruits requirements are being fulfilled by Mitchells own agriculture land. Lemon 100% Grape Fruit 100%


Page 21

Business Policy & Strategic Management of Mitchells Fruit Farms Sevlik Orange 100% Tomato 30% Garlic 30% Apart from the Mitchell's own orchards, Mitchell's has sound control over its suppliers. For example, the raw material that is used in the Mitchell's is of two types. First is the raw material that is used in the production process and the second is the raw material that is used for the packaging of the products. Package (Pvt) limited is the sole supplier of the packaging material of the Mitchell's. Mitchell's and packages (Pvt) limited have the same directorships, so in this way we can say that Mitchell's has good enough influence over the management of the packages (Pvt) limited.

BUSINESS LEVEL STRATEGYFirms compete directly with one another at what is called the business level of strategic management, so we will focus on crafting successful competitive strategies. Because competition takes place at the business level, strategic management at this level is crucial to the overall success of the corporation.

DifferentiationIf we closely look at the operations of Mitchell's fruit farms limited, we will come to know that the corporation is practicing the differentiation strategy. Mitchell's has more than fifteen product lines and a large product mix of more than 90 products. The product mix of Mitchell's is the largest one in its respective industry. This fact reveals that Mitchell's is exercising the strategy of product mix differentiation. Mitchell's is charging 7 to 8 percent higher prices of their products as compare to their competitors. Because they consider their products superior as compare to remaining ones.

Customer focusApart from product differentiation Mitchell's is also implementing customer focus strategy. The continuous process of research and development, product differentiation, marketing research and technological innovation make this possible for Mitchells to introduce more than four products in a year. This is a clearer indicator of customer focus that is being implemented by the corporation. The Mitchell's customer is loyal to the company and he wants to purchase the brand MITCHELL'S. So it is necessary for the company to introduce not only innovative products but also gives quick response to its customers.


Page 22


OPERATION LEVEL STRATEGYOperation level strategy focuses at how to develop capabilities in process execution that will yield competitive advantages for a firm. This involves applying strategic management concepts to what is known as the operations level, the level at which work inside the organization actually takes place. We focus on how organizations go about improving their process capabilities, including both total quality management and core process reengineering.

Product DevelopmentSeeking increased sales by improving or modifying present products or

services.The company is focusing on product development not on market development. It may be considered as strength or weakness. Strength in this way that company is giving full priority to satisfy the wants of existing customers. But it might also be termed as weakness of the company because it is keeping the large market remained untouched.

Recommended strategies and implementationWe can say that the food processing industry of Pakistan is one of the most rapidly growing industry of Pakistan. Many new markets players have entered to acquire their share in the market. Although the economic conditions of the country are poorer but the quality of life is towards improvement. This improvement also leaves favorable impact on the tastes of people. Once there was a time when only Mitchell's was running its business in the Pakistan in its relevant industry. Now Mitchell's is facing competition from many national and multinational food companies in the country. Many national companies are joining hands with multinationals for strong footing, financial support and other required professional expertise. Mitchells now is facing many problems in todays world of business. So for avoiding swerve consequences we recommend following strategies to Mitchell's.

Forward integrationGaining ownership or increased control over distributors or retailers.In forward integration we not suggest to mitchell's to gain ownership of distribution system but it is need of the hour to increase control over distributors as well as retailers. The major demotivator for retailer and distributor is fewer profit margins to them. Mitchell's is the company that is offering minimum profit margin to its distributors and retailers. It converts the interests and priorities of distribution channel member to other market players. When the prices of products are high comparatively to competitors it will be necessary for the producer to give attractive margin to distributors and sellers and retailers so that they promote companys products effectively. The increase in trade promotion will also enhance the control of company over its distributors and retailers.


Page 23


Customer FocusThe company is not offering its products in the various packages. For example the competitors of Mitchell's like Shezan, Rafhan, Qurshi, Humdard and Galaxy are offering their products like preserves, ketchups and sauces in buckets but this area is ignoring by the Mitchell's. It will be good for the company to offer its products in more different weightings. It will not only increase the sales of the company but also helpful for market development. It is suggested that company should introduce more flavors of squashes like plum and peach. The squashes and syrups must also be introduced in 1.5 litre and 500 ml packages like Rooh Afza and Jame Shereen. It is also recommended by us to Mitchell's that to be competitive in the market, the company should also preserves like jams, jellies, marmalades and ketchups, sauces in more economy packs for the customers.

Market DevelopmentIntroducing present products or services into new geographic areas.At this time, the Mitchell's fruit farms limited is utilizing its 70 % of total capacity. So there is need to market development. More markets will help company to utilize its full capacity but also increase the profitability and competitiveness of company. Mitchell's can explore new markets not only in the country but also in the abroad. Although the company exporting its products to Middle East, Canada, Gulf, Saudi Arabia, U.S.A and European countries. But in these countries, still need of market development is exist. Still there are many cities in the country, where the product availability of the Mitchell's is very much poor, even in big cities there are many areas in which the company distributors have not access. The company should ensure and improve its products availability.

Related diversificatinMitchell's can diversify its businesses in other related areas of operations. The main reason of going to such diversification is that the company has good repute and vast experience of food processing industry. The customers of the company have brand loyalty and ask for Mitchell's products to retailers. Such kind of diversification will facilitate the company to remain prominent in the market and milk its reputation. We recommend that Mitchell's must go for the business of butter, cheese, mineral water and snacks etc. this will be related diversification for the company.


Page 24


AdvertisementFrom last few months, the Mitchell's is not advertising its products on the electronic media. It is affecting the sales of the company very severely. The main area of focus is trade promotion that is not enough in tough market conditions and competition. More consumer and trade promotion Advertisement on T.V for hammering the minds of Mitchell's consumers. More outdoor advertisement like its main competitors. Significant increase in the number of sign boards, MMT boards and banners on the public places will increase the product awareness and interest of the customers.

MARKET TRENDSTrends are changing rapidly, so nobody knows the customer who will buy our product today will buy it tomorrow as well as or not. At this time quashes are in MATURITY stage. The reason is because it takes relatively more time in getting ready instead of other new drinks. So there is still not any hope to create a new market in this industry. The only strategy Mitchells is using just to retain their existing customer and not looking for new customers. Its basically depend that customer is loyal to the product or not. The customers who are heavy users of squashes might not be shift to other substitute because they are loyal to it.

MARKET GROWTHNow there is no more growth in squashes industry due to consumer preferences and other factor is customer are very price conscious now. They want to have instant drinks to save their time but at cheap rates. So market has been shifted due to other drinks like powdered drink, instant drink, juices and red syrup. So now squashes are lying in CASHCOW because it gives money but not further growth. As Mitchells is the pioneer and still leader in the market so contain major share of market so far.


Page 25


BCG MATRIX


Page 26


REFERENCES www.mitchels.com.pk http://smallbusiness.chron.com http://knowledge.wharton.upenn.edu


Page 27

56566424 Strategic Management of Mitchels BZU Layyah Campus

Documents

corporate

bzu layyah

minimum wage

highly capital

forces approach

fruit farms

structural

regional sales