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CASE STUDY

PROCESSED AND PACKAGED MILK INDUSTRY IN PAKISTAN


(IN CONTEXT OF ENGRO FOODS)

COURSE: CONFLICT STRATEGIC MANAGEMENT


CASE STUDY
DR. BELAL AHMAD (7860)

Q1- Evaluate the dominant economic traits of the processed and


packaged milk industry in Pakistan?

Pakistan is the fifth largest producer of milk with industry volume comprising
different dairy products reached at US$26 billion in urban and rural areas on
the increasing population and domestic local consumption, a research report
said.
Market Size & Growth: According to Tetra Pak index the consumption of milk
in 2008 was reached at 258 billion liters & was projected to be reached at
282 billion liters in 2012. The total growth of processed and packaged milk
reached at 58%.
Number of Rivals: Currently there are more than 25 dairy processing plants
but Nestle is one of the biggest rivals/competitor for Engro.
Scope of Competitive Rivalry: Nestle and Engro is the biggest rival and both
of these firms are currently competing at National level.
Product Innovation: In the processed milk industry packaging and skimmed
milk can be consider as the product innovation.
Supply/Demand Conditions:
integrations is required.

To meet up supply conditions backward

Vertical Integration: It will give a positive impact on Supply/Demand


conditions and will play a vital role to cut down the cost.
Economies of Scale: Its important for industry since the processed milk is
processed on large scale to reduce the cost. Firm success depends on how
bigger the market share companies captured. At the initial stage its
necessary to have some learning or experienced about the process.

Q2: Apply the Five Forces model of competition to analyze the


overall attractiveness of the processed and packaged milk industry
in Pakistan:

Q3: What are the drivers of change in the processed and packaged
milk industry of Pakistan? How are these drivers likely to affect the
industry in the future?
New research from Tetra Pak forecasts that flavored milk consumption will
grow at more than double the rate of white milk globally between 2012 and
2015. Consumers are increasingly turning to tasty, nutritious and
conveniently packaged flavored milk as an alternative to other beverages,
creating opportunities for dairies to improve profitability.
Pakistan Dairy Development Company registered as a limited company,
generally known as Dairy Pakistan
it is a platform for representation of
milkman who keep animals and supply fresh milk directly to urban families
usually on a contract. This platform consists of representation and policy
support from the Government, Industry and the farmer groups whereby core
leadership is provided by the private sector by virtue of their expertise and
policy support from the Government, Industry and the farmer groups
whereby core leadership is provided by the private sector by virtue of their
expertise
The White Revolution It envisions the dairy sector as serving an engine of
economic growth for the country and taking the responsibility to drive the
development of the socio-economic landscape of rural Pakistan.
Economy of scale is so large that rivals firms need to market their products in
many cities to gain enough volume to cut down the cost.
Product Innovation is necessary so that buyers get more attract towards the
product in terms of packaging and at some extent the thickness of milk.
Market Innovation: To aware the buyer about the process and the
technologies which are used for processed milk.

Changes In cost is necessary to compete with the rivals cause if the rivals
apply the backward or vertical integration it will affect the cost, it will change
the dynamics of the country.

Q4: Create EFAS for Engro foods:


External Factors Analysis Summary EFAS
External Strategic
Factors
Opportunities

Weight

Rating

Social responsibility

0.1

0.3

4-a

Profitability

0.15

0.6

4-b

Growth rate

0.2

0.8

4-c

Demand in domestic
and international
markets
Relationship with
Vertical Market
Threats

0.1

0.4

4-d

0.05

0.05

4-e

0.1

0.4

4-f

0.15

0.6

4-g

0.1

0.1

4-h

0.05

0.15

4-i

Substitute product
Competition from
Others in Market
Position of Supporting
Brand Products
The White Revolution
Total Weighted
Score

4-a: Integrated farming and livestock development

Weighted
Score

3.4

Comment
s

4-b: Continuous profit increase in dairy and juices


4-c: Dairy and juices making rapid progress In the UHT milk market, Engro
Foods has grown exponentially in the past seven years and is now the
market leader. Growth for the company is now coming from conversion of
consumers to UHT milk from the open (non Tetra Pack) milk.
4-d: Increasing demand locally and internationally
4-e: Partnering with Tetra Pak Pakistan and strong relationship with local
farmers
4-f: The threat of substitute is always there in the food industry. Companies
usually focus on niche area in which they have competitive advantage. In
food industry there is more competition in the food industry so, threat of
substitute in food industry is more.
4-g: Numerous big brands competing in the same market
4-h: Supporting brand products in the marketing mix have dwindling revenue
4-i: Government initiative to increase package milk demand locally and
internationally

Sources:
www.tetrapack.com
www.engrofoods.com