ACKNOWLEDGEMENT

We would like to express our gratitude to all those who helped us during the whole of our
project. We gratefully acknowledge the help of my supervisor, Mr. Fareedy who offered us
invaluable advice throughout the project. He has spent time and energy to aid in the completion
of this project and none of this would have been possible without his patient instructions,
insightful criticisms and expert guidance.

We would also acknowledge the enormous support and advice received from my Ms. Hadia
Yasir, without whom this project would not have been of the quality that it is now.

Table of Contents
Chapter I: An Insight into Shezan .............................................................................................................................5
Introduction ...............................................................................................................................................................6
Brief History..............................................................................................................................................................6
Vision ........................................................................................................................................................................8
Mission statement......................................................................................................................................................8
Values........................................................................................................................................................................9
Product Mix .............................................................................................................................................................10
Objectives................................................................................................................................................................15
Industry Structure ....................................................................................................................................................16
Porters five forces model .......................................................................................................................................17
Juice Positioning .....................................................................................................................................................19
Competitive strategy ...............................................................................................................................................20
Chapter II: Functional Areas ................................................................................................................................... 21
Research & Development........................................................................................................................................22
Supply Chain ...........................................................................................................................................................22
Procurement ............................................................................................................................................................25
Operations ...............................................................................................................................................................26
Logistics ..................................................................................................................................................................26
Marketing and sales .................................................................................................................................................28
Information systems ................................................................................................................................................30
Human Resource .....................................................................................................................................................31
Organizational Structure .........................................................................................................................................32
Organizational Culture ............................................................................................................................................33
Chapter III: Financial Performance ........................................................................................................................ 34
Financial Analysis ...................................................................................................................................................35
Analysis of Income statement .................................................................................................................................36
Analysis of Balance sheet .......................................................................................................................................38
Profitability ratios analysis ......................................................................................................................................40
Overall Profitability analysis ...................................................................................................................................43
Liquidity Ratio Analysis .........................................................................................................................................44
Financial Leverage ..................................................................................................................................................45
Activity Ratio Analysis ...........................................................................................................................................48
Chapter IV: Analysis of Strategic Viability............................................................................................................. 50

SWOT Analysis ......................................................................................................................................................51

External Factor Analysis Summary .........................................................................................................................54
Internal Factor Analysis Summary ..........................................................................................................................55
Strategic Factor Analysis Summary ........................................................................................................................56
Internal-External Matrix ..........................................................................................................................................57
SPACE Matrix ........................................................................................................................................................57
Plotted SPACE Matrix ............................................................................................................................................58
TOWS Matrix..........................................................................................................................................................59
Value Chain Analysis ..............................................................................................................................................60
Grand Strategy Matrix .............................................................................................................................................61
Portfolio Analysis....................................................................................................................................................62
BCG Matrix .............................................................................................................................................................63
Chapter V: Shezan Strategic Plan ............................................................................................................................ 65
Strategic Plan Overview ..........................................................................................................................................66
Vision ......................................................................................................................................................................67
Mission ....................................................................................................................................................................67
Objectives................................................................................................................................................................68
Corporate Development Stage.................................................................................................................................68
Positioning ..............................................................................................................................................................69
Research & Development........................................................................................................................................71
Procurement ............................................................................................................................................................72
Operations ...............................................................................................................................................................72
Marketing and Sales ................................................................................................................................................73
Logistics ..................................................................................................................................................................74
Human Resource .....................................................................................................................................................75
Organizational Structure .........................................................................................................................................76
Organizational Culture ............................................................................................................................................76
Information Systems ...............................................................................................................................................77
Applied Models .......................................................................................................................................................78
New BCG Matrix ................................................................................................................................................78
McKinseys 7-S Framework ...............................................................................................................................79
References .................................................................................................................................................................. 81
Annexures ................................................................................................................................................................... 82

EXECUTIVE SUMMARY
Shezan International Limited was incorporated in 1964 as Pioneer in juices in Pakistan, having mission to produce
the largest food processing unit to meet the countrys local as well as export needs. Since then it
has continued to provide quality products to its customers with products and packaging
innovations. This report covers broad areas of marketing, finance, management and operations of
Shezan international limited.
An important part of this report comprises of financial analysis of Shezan international limited
with its two major competitors Nestle and Tops. The analysis of the company is done through
different measures and tools of analysis used by analysts in order to analyze companies. These
measures include the analysis financial statements, short-term liquidity analysis, capital structure
and solvency ratios, return on invested capital ratios, asset utilization ratios and analysis of profit
margin ratios etc. The study covers all the aspects usually considered by the stakeholders of the
company. The profits and losses, liquidity position, changes in owners equity, movements in
assets and liabilities, and all such factors will discussed later in the report.
Another important portion of the report comprises of the current operations of the company,
which is the strategic management. A comprehensive detail is provided about the companys
strategies devised to maintain and develop the product line of juices. The results have been
interpreted and critically analyzed to propose new strategies for the improvement of Shezan
international.
We also have analyzed the current business strategies of Shezan international and based on the
results of financial ratios and other market and industry analysis, we have proposed some new
strategies.
These new strategies aim to build a better image for Shezan international. In addition to its
image, the proposed strategies will also help in achieving lower costs through better distribution,
efficiency in operations and revamped marketing plan to better position and sell Shezan juices.
The strategies will help Shezan juices to compete with firms like Nestle.

Chapter I:

An Insight into Shezan

Introduction
Shezan International Limited is a Private Limited Company, with the main objective to set up an
industrial undertaking for manufacturing of juices, squashes, sherbets, jams, pickles and
preserves from fruits and vegetables. Shezan International Limited was conceived as a
joint venture by the Shah Nawaz Group of Pakistan and Alliance Industrial
Development Corporation of U.S.A. The agricultural background of the Pakistani sponsors
induced them to establish this agro-based industry. Taking advantage of abundance of fruits
available in Pakistan and the advanced technology provided by the American partners, Shezan
became a pioneer in the field of converting fruits into pulps, concentrates and juices. Today
Shezan is the largest food processing unit having developed and installed the capacity to meet
the country's local as well as export needs

Brief History
Shezan Company was incorporated on May 13, 1964 as a private limited company, with the
objectives as set out in the Memorandum of Association in general and in particular to set up an
industrial understanding for manufacture of juices, squashes, sherbets, jams pickles and
preserves from fruits and vegetables. Nature has blessed Pakistan with an ideal climate for a
wide range of delicious fruits. Over the centuries Pakistani experts have acquired and developed
unique strains of exotic fruit varieties, unmatched for their rich flavor and taste Shezan
International Limited was conceived as a joint venture by the Shah Nawaz Group of Pakistan and
Alliance Industrial Development Corporation of U.S.A in1964. The agriculture background of
the Pakistani sponsors induced them to establish this agro-based industry. Taking advantages of
abundance of fruits available in Pakistan, and the advanced technology provided by the
American partners, Shezan became pioneers in the field of converting fruits into pulps,

concentrates and juices. Today Shezan is the largest food processing unit having developed and
installed the capacity to meet the countrys and export needs. In 1971 the Shah Nawaz Group
purchased all the shares of Alliance Industrial Development Corporation with the permission of
the Pakistan Government. The Company has since shown sustained growth in both the domestic
and exports fields. The Company has been steadily expanding its production capacity over the
years. In1980-81 a separate unit was installed in Karachi which now caters for Karachi, Sindh
and export demand. A new bottle filling plant was set up in1983 in Lahore unit increased the
capacity five-fold. An independent Tetra Brick Plant was commissioned in 1987 making us the
leading manufactures with comprehensive range of production in the fruit processing field in
Pakistan

Vision
To be known as leader of quality products in the region. Dedication to quality is a way of life at
our company. In its activities the company will pursue goals aimed at the achievement
of profitable business .these results will be derived from the dedicated efforts of each employee
in conjunction with supportive participation from management at all levels of the company. To
pay its role in the economic development of the country and to enhance quality of life of
its people
The vision statement should be brief and simple enough to understand by the stake holders. It
should be specific and depict the clear picture of the company.

Mission statement
Our mission is to provide the highest quality fruit and vegetable related juices and products to
retail and food services customers.
We will accomplish this by maintaining a tradition of pride in our products, growth through
innovation, integrity in the management of our business and commitment to team management
and quality improvement process.
The current mission statement of Shezan international is very market oriented where as in recent
perspective the use of customer oriented mission statements are better to understand by the
customers as well as they are easy to attach with them emotionally.

Values
Integrity & Ethics
Shezan has an open disclosure policy and transparent processes. All business activities
transactions are carried out honestly and with fairness; results are achieved through
demonstration of honest and ethical behavior
People
Have passionate people with intelligent and firm approach towards business. To facilitate these
people Shezan gives them challenging opportunities, training, and fun loving environment,
necessary resources and facilities. Public recognition of talent is a priority.
Innovation
Innovation is the way of life at EFL. It is valued, encouraged and rewarded in all aspects of
operations.
Safety, Health & Environment
Shezan manages and utilizes resources and operations in such a way that the safety and health of
their people and neighbors.

Product Mix
Shezan International offers variety of products. Shezan is one of the giant in the business and its
portfolio consist several products. It majorly operates in the Pickles, Sauces, Salad dressing
sector, Juices, Ketchups and Jams. The company is involved in the processing, manufacturing,
trading and selling of these items.
AllPure:
ALL PURE is a new series of juices of Shezan international, it is filled with the all pureness of
natural fruits. Shezan International range of All Pure juices claim to enrich the senses of the
consumers with the new, healthy and fresh taste of 100% pure juice. To experience true essence
of nature All pure is the best option because it helps you to embark your taste buds with the
sensation of sweetest fruits.
It is available in the following flavors,

ORANGE

MANGO

GRAPES

PINEAPPLE

TROPICAL

APPLE

Bottled Juice:
Shezan International bottle juice is very popular and is liked by all age groups particularly
children. Shezan bottle juice claims to reenergize and revitalize the body, mind and soul of the

10

consumers. It is Pakistans most favorite and iconic juice drink that provide ultimate pleasure
and freshness.
Regular Juices:
Shezan international is providing the perfect balance of good taste. Their regular juices are
available in variety of flavors and they are considered as a good choice by the consumers to
complement a light snack. It is available in five flavors.

ORANGE

LYCHEE

APPLE

PUNCH

LEMON BARLEY

Twist:
Twist is Shezan International another juice brand that is available in attractive, slim and easy
packaging, Twist juices are considered as a must have in ones house. It is available in the tasty
six flavors.

APPLE

RASPBERRY

PINEAPPLE

FRUIT PUNCH

MANGO-STRAWBERRY

MANGO

11

Syrups:
Shezan International has a variety of flavors for their syrups. They can be mixed with water to
provide flavorsome and quench thirsting refreshment. These are available in the following
flavors.

SAMARKAND

SANDAL

POMEGRANATE

ROSE

LIME CORDIAL

Vinegar:
Shezan International produces good quality synthetic vinegar which is available in the market in
various sizes.
Sauces:
Shezan International has very reputable sauces (ketchups) in the market. Their tomato ketchup is
a must for every meal. They are available in different sizes starting from sachet to 10 kg drum.
Green Chilly and tomato onion sauce is also produced by them.
Jams:
Shezan international made their Jams and Marmalades from the fresh and handpicked fruits and
that is the reason why Shezan International has been known in the market for its quality.

12

Shezans sweet, yummy and delicious Jams can be had at breakfast, Lunch, Dinner or any time.
Shezan Jams are available in the following flavors.

PLUM

ORANGE

MANGO

MIXED FRUITS

STRAWBERRY

APPLE

Quench:
Quench is a product of Shezan International that provides a solution to heat in seconds, open the
sachet, mix with cold water and get instant rejuvenation. It is available in the following two
flavors.

LEMON & LIME

ORANGE

Squashes:
Shezans quick mix squashes are present in every household particularly in summers. They
provide the immediate revitalization to the consumers and are available in the following flavors

MANGO

LEMON BARLEY

POMEGRANATE

ORANGE

13

Mango Nectar:
Mango nectar by Shezan is extracted from Pakistans premium and best quality mangoes. It is
delicacy fit to savor, It is 100% pure and is best alternative to sodas and soft drinks.
Pickles:
Shezans pickles and delicious chutneys provide something special and extra to every meal in
every household. It is available in different sizes and many flavors.
Ispaghol:
Shezan International has also started to produce Husk because it is very good for the health. It is
used by the consumers for two reasons one being it slows down the absorption of food during
digestion therefore minimize the intake of calories and second being it takes the edge off hunger.
It makes you slim, smart and healthy and that is why it has been number one choice by the
consumers.

14

Objectives
Objectives are the steps which you take in practical to get or achieve short term as well as long
term goals. The objectives can be of three categories depending upon the time frame attached or
associated with that goal, it may be short range, medium or intermediate range and long range.
As it has been so clear by the mission statement of Shezan international that what are their major
and prime objectives but let us list them here again to make it quite clear, simple and easy to
understand.

To put its all efforts to become industry leader in the industry.

To keep focused and determined to provide best quality fruits and vegetables product

To be committed to provide excellent and quality juices and nectars to their consumers

To keep an eye on the fruitful investments and opportunities in new projects

To achieve better production facilities

To manage the operations of the company in effective and efficient way

To cope up with the technological advancement and keeping up to date

15

Industry Structure
The beverage industry of Pakistan has seen many rise and fall but one can say with full assurance
that it has growing with the years. The industry consists of the product categories such as soft
drinks, juices, syrups, milk and squashes, although Shezan international doesnt have all these
mentioned categories yet it falls under the beverage industry. According to the Stats there are
currently 170 units operating and both upstream and downstream industries have on rise and are
growing significantly. There is very high profit margin in the industry and has witnessed a
significant increase over the years.
The growth of this sector has been hit badly with the decrease in purchasing power of the
consumers. Inflation and conditions of Pakistan has caused the growth a bit slow. Poverty has
been increasing in Pakistan and thus the purchasing power is decreasing with the years. The
competition has also increased in few years due to easy import of the products.
Research has also shown us that the term of health consciousness is widening its arms very
rapidly and just because of this consumer prefers to have low calorie and diet juices or squashes
rather than the regular ones.
Future growth of this sector and industry is more likely to rise on a slower pace because of the
intense competition between the local and imported products. The more innovative products will
come up in the market making consumers to think twice to purchase a product.
Distribution of the products is more likely to increase up to the far rural areas with time and this
factor is very important in the growth of this industry. It is more logical to think in a way that
people will get aware and aware about the products and thus the increase in sales and revenues
will occur which in turn will make this industry grow.

16

The overall industry attractiveness and industry structure is better illustrated by Porters five
forces model:

Porters five forces model

Potential entrants
Other stakeholders

Low switching costs

economies of scale

Unions, government

favourable government

etc.

policy

Suppliers

Degree of rivalry

Buyers

Large number of

Many competitors

buyers like nestle,

(nestle, country, tops

tops, country.

etc)

Low switching

costs
Substitute raw

Large no. of
buyers

Substitutes like

Low product

nestle, country

differentiation

available

Growing industry

Low switching
costs

material

Threat of

Substitutes

Similar tasting juice

(country, tops, nestle)

Same price

Same identity.

The juice industry is attractive for new market entrants. The reason being that due to high
demand it is easy to achieve economies of scale. The government policies are also favourable for
the industry and the exit barriers are not too high as well.

17

The buyer strength in the industry is however is high. Many substitutes are available and the
switching costs are low. The same is for supply side which is good for producers as it means less
bargaining power of suppliers. Supplier switching costs are low and firms can and do forward
integration.
As far as substitutes are concerned, there are number of substitutes available. These juices are
really close substitute offering the same benefit. The competing brands also have a similar
product identity or perception. The industry is growing as new entrants are continuously coming
in. This has increased the competition to a great deal.

18

Juice Positioning
Positioning is the perception of a product or service in the mind of the people. Positioning of a
product allows it to be seen or perceived in a certain way by the target audience. To have a
successful strategy and product, effective positioning must be done. Without strong positioning
no matter what the product is, its going to fail.
Shezan international has positioned Shezan as a low quality affordable juice drink. The
perception has been created in the minds of consumers that Shezan is an affordable juice with
good taste. To support this positioning strategy, Shezan has been priced reasonably well below
the competing high quality juices like nestle.
The target market for Shezan is the middle income group and lower middle. The people Shezan
is targeting are mostly young adults and teenagers. The placement of the product has also
contributed to its low quality positioning. Mostly Shezan juices can be seen at small retail stores,
school cafe and canteens. The presence of Shezan in superstores and big markets is nonexistent.
This may be due to the placement strategy or due to the shelf space in stores.
The company has also created this perception through various advertisements showing young
teenagers drinking and getting refreshed by the juice. These school and college going students
also symbolise that its not expensive and is pretty affordable. The price of the juice is also one
of the lowest in the market hence making its perception of low quality juice.
Another factor contributing to this perception is the taste. The juice is made from artificial
flavours and sweeteners thus making its taste give a perception of cheap low quality juice. The
packaging has also contributed to this type of positioning. The juice pack are very basic in design
and lack any creativity.

19

In todays juice industry, companies have started increasing their fruit concentration as the
people are demanding it. The juices with high concentration of pulp are perceived as better
quality. In case of Shezan people associate it as low quality because of this low concentration of
fruit pulp.

Competitive strategy
Shezan has the highest production capacity as compared to its competitors. Shezan is very strong
name and can afford to have super production facilities.
Shezan international is using cost leadership strategy in which all of the efforts are made to
minimize the costs and to provide the masses with your low cost product. Shezan with this
strategy is quite successful in the market and is able to cope up with the competition quite
effectively and efficiently. On the other hand Nestle uses the differentiation strategy. It attacks
the market with differentiated products but on high price thus providing room for Shezan to
sustain in the market with targeting low income segment massively.
The strategy of Shezan gives advantage as there are number of suppliers in the market that
supply material to the industry. But Shezan gets its raw material from its on farms to get the
advantage over its competitors and to reduce the suppliers bargaining power (Backward
integration). Shezan provides the same product as its competitors are providing, as bargaining
power of buyer is low and many

20

Chapter II:

Functional Areas

21

Research & Development

At Shezan International, the company uses the best technology and continues to strive towards
acquiring best technology. The companys major objective is to have sustainable technological
advantage over their competitors. For this reason they continually search and research for
improvements in their manufacturing practices and technologies. They also want their plant to be
of international standard so they can support their claim of being an international firm. Shezan
has excellent manufacturing facility for juice productions. Their machines are not outdated. They
also have world class packaging system bought from tetra pack. This ensures their product to
remain safe and healthy. The R&D department in Lahore continuously works on developing new
product offerings. They also continuously work on improving their current product by changing
ingredients.

Supply Chain
Supply chain management encompasses the planning and management of all activities involved in
sourcing and procurement, conversion, and all logistics management activities. Importantly, it also
includes coordination and collaboration with channel partners, which can be suppliers, intermediaries,
third party service providers, and customers. Supply chain comprises of all the activities necessary for
making and delivering the product to consumers. A basic model of supply chain can be seen in the
following diagram.

22

The Shezan international uses a similar supply chain model for its juice manufacturing. The
supply chain of Shezan consists of raw materials, supplier, manufacturer, distribution and
customer.
In juice manufacturing, acquiring of raw materials is a key task. To make the juice of highest
quality, the raw materials that are being acquired must be of the highest quality as well. The
main ingredient in making juice is obviously the fruit pulp. Getting the best quality pulp at
affordable rates is very important. Shezan international for this purpose have set up their own
farms from where they get the most of their pulp. This ensures them the quality they required and
cut the costs as they dont have to pay to any third party. This backward integration has allowed
shezan to have a competitive advantage. The raw materials take usually 1-3 days, while materials
other than pulp take longer. Apart from the pulp, juice manufacturing requires other raw
materials such as citric acid, concentrates, colour, preservatives, sugar and packaging. The
company usually stores 7 days worth of raw materials and adjust it as per demand.

23

The suppliers of Shezan international are the people from whom they acquire the raw materials.
These include their own farms, other ingredient suppliers and packaging company i.e. tetra pack.
The juice making process is a continuous process so the inventory is usually ordered in advance.
Sometimes delays are caused due to lack or delay in supplies. This can be due to late orders or
lack of quality of raw materials. Therefore shezan has to keep more inventories then required.
The manufacturing is done at the various plants in different areas of the country. Shezan has a
separate packaging plant as well. The manufacturing process is continuous flow process.
The factories operate as per demand. Manufacturing plants uses several supplies and convert
them into finished product. The process of manufacturing will be explained in detail in
operations section. This finished product is then packed using the tetra pack machinery and is
then thoroughly checked for quality. Packaging is done in different sizes from 250ml to litre
packs. Then these completed units are stored in local facility before being distributed to their
customers and wholesalers.
The next step in the supply chain is distribution. This is perhaps the most important of the steps
and requires great planning. Shezan international has set up their distribution offices in large
cities like Lahore, Multan, Faisalabad, Peshawar and Karachi. Reason for having more offices in
Punjab province is due to its demand and population. Shezans distribution is partially done by
the company itself and rest is outsourced. In Lahore the company has its own distribution
network and handles all by itself. For all other cities they have outsourced distribution. The
regional offices in other cities are responsible for acquiring the supplies and getting them
distributed through the use of third party distributor.

24

The distributors in Faisalabad and Multan use their own warehouses for the storage of Shezan juices and
they reserve the distribution rights in respective cities. These distributors further give these products to
small distributors which causes various problems. It increases the cost of distribution making the juice
expensive and also causes the delays in the supply chain. When the product doesnt gets on the retail
shops in time then Shezan has to bear stock out cost.
The last step in the supply chain is the customer. The customer of Shezan is the distributor and large
wholesalers. Shezan supplies directly to them and they are further responsible for providing the end
consumer. Shezan also directly supplies to some large supermarkets and retailers. The end consumers get
their juice from every location where the distributors supply the product. This also increases costs and
delays distribution.

(The individual elements of the supply chain are explained)

Procurement
Procurement refers to the all set of activities that take place in the purchasing of goods or
services.
Shezan international has its own fruit farms for the raw material that is used in the production of
their products. All of the raw material is purchased by procurement department after strong
quality check and assurance. The raw material coming for their most of the products is fruits and
vegetables. It takes two to three days to reach Shezan international from the farm. All of the
department working at Shezan international are well integrated and well-coordinated thus
planning department and store department quite effectively perform their tasks and the activity of
procurement is sufficiently performing with the collaboration and integration of different
departments.

25

Operations
The manufacturing process of juices at Shezan International takes place from the raw materials,
First of all the raw material which is fruit is brought to the factory premises, from there the raw
material after checking and inspection by the team is done. The fruits are graded before they can
send further. Only the fruits which are up to the requirement of Shezan are moved ahead to the
production area.
The raw material is sent to the boiler to extract pulp from it, the process of heating makes pulp
from the fruits which is essential element for the making of juice. From here the pulp just made
is sent to the plate heat exchanger where the process of cooling takes place, the temperature is
lower down to 4degree Celsius allowing pulp to dry, cool and get soft.
The dry, soft and cooled pulp is stored to the pulp storage tank. It is then further moved ahead to
the mixing tank where the process of mixing takes place, in this area sugar, preservatives, food
colours and citric acid is mixed with pulp to make the final product.
The mixing process takes place for relatively long time so that the true essence and taste should
be achieved. After mixing the products are sent to the packaging area where attractive packaging
of Shezan juices takes place and are shipped out of the factory to distributors and retailers.

Logistics
According to porters value chain model, logistics can be categorized as inbound and outbound. The
inbound logistics consists of acquiring raw materials and outbound logistics are concerned with
distribution. Shezan international inbound logistics consists of acquiring raw materials from their farms.
The fruit pulp is one of the major inputs and is supplied by Shezans on farms. All other raw materials are

26

supplied directly to the manufacturing plant by their respective suppliers. These various other raw
materials are preservatives, food colour, flavour enhancer, sugar, and citric acid and packaging materials.
The outbound logistics consists of distribution network. Distribution is responsible for making the
product available to end consumer. In Lahore Shezan owns their own distribution network and supply
through their own vans. Agents are also hired for this purpose so they can acquire and market to new
retailers. In all other cities, the distribution is outsourced to third party. Company has formed regional
offices in Multan, Faisalabad, Peshawar and Karachi. Shezan supplies juice to large wholesaler in various
regions who in turn further give the product to other small distributors. These large wholesalers own the
product and reserve rights to distribute. These wholesalers also have their own cold storage where they
store the product n their own expense. Agents are also hired for distribution to certain category like retail
stores and staple food stores.

27

As seen in the above diagram, Shezan uses various methods of distribution to reach final customers. Use
of agents and wholesaler as well as their own logistics help them cover vast area but this strategy
sometimes also backfires through high costs and delays.

Marketing and sales

The marketing and sales department is responsible for making forecasts, establishing sales target
and quotas, making promotional plans, advertising the product and satisfying the end users
need. Marketing mainly focuses on the 4Ps which are product, price, promotion and placement.
We will be examining each P with respect to Shezan juices.
Product
The first P that we will discuss is product. The product under discussion is Shezan juice. The
product is a revitalizing, fresh and sweet tasting drink. People use juices for the purpose of
nutrition, freshness and quenching thirst. Shezan juice provides all these through their product.
The product Shezan juice comes in 250ml size packs. The packaging material used is tetra pack
which is the best in quality. Shezan offers various varieties of flavours ranging from apple,
mango, orange and mix fruit. The shelf life of shezan juice is almost 6 months. Shezan juice
belongs to the FMCG category and is primarily aimed at teenagers and young adults. The basic
need that it aims to satisfy is quenching thirst and providing freshness.
Price
The second P is the price. The price is what the seller charges in return to satisfying a need. The
shezan juice is reasonably priced and is one of the lowest priced juices in the market. It is
currently being sold at Rs. 10/ 250ml pack. Compared to its immediate competitor country, it is
competitively priced. Broadly looking at the juice category, shezan is the cheapest juice

28

compared to Nestle, Maza, Slice and Fresher. The pricing objectives that shezan juice has
established are:

1. To achieve target sales

2. Profit maximization
3. Competitive pricing
4. Increase market share
5. Sell to masses
The pricing objectives clearly reflect the low price. The company aims at maximizing profits by
selling as many units as possible. They want to capture the price sensitive consumer and want to
increase their share by selling to these mass audiences. Another reason for this low price is the
competition. Juices like country are a close substitute with similar price. Shezan has maintained
its price to compete with it and protect their market share.
Placement
The placement is the distribution of the product. The distribution of Shezan has been discussed in
great detail in the supply chain and logistics model.
Promotion
The last but perhaps the most important P is the promotion. Promotion is the tool which enables
the company to communicate their product and offerings to their target market. It is used to
inform, persuade and communicate the target audience members.
Shezan is mainly using the following media to advertise:

29

o Billboards
o Television
o Radio
o Newspaper
o Broachers
o internet
Shezan has used in stores promotion where they have discounted their juice if purchased in large
quantities. Shezan has also carried out free taste sampling in various locations.
In addition to this Shezan has been promoting their product through increasing their social
reputation and creating value in consumers mind. Shezan has sponsored several events in the
past. They also have participated in relief efforts of flood and earthquake victims. They have also
participated in building of mosques and printing of Quran so i can be distributed free of cost.

Information systems
The use of information systems has become increasingly important in todays world. Companies need to
have the best set of information systems and professional to fully benefit from it. A good information
system can provide company with a competitive advantage. The aim of a good information system is to
create synergy in the organization. It allows information access to all concerned departments and data
availability. Information systems also help in operations, purchasing and marketing activity.
Shezan currently uses software like excel, SPSS and some features of oracle software in their research
and development. Apart from this they have a computerised system for their inventory control and
production handling.

30

Human Resource
Human resource department is made to help people and organizations reach their goals and
objectives and to facilitate the relationship of organization with its employees.

The activities performed by the Human Resource department at Shezan International are very
simple and clear. It is responsible for effectively manage and control the day to day operation at
Shezan international and selecting the system among many systems that will provide efficiency
and effectiveness to the system. The department is also responsible for the hiring and firing of
staff and recruiting the best possible candidate for the company who will in response bring value
to the company and doesnt hurt or damage the brand name Shezan. Shezans HR department
also provide guidelines, norms, rules and regulations which have to be bound by all the
employees irrespective of their seniority or position in the firm. Equal opportunity is also
providing by them and it also ensures its due help in complex decision making like legal
activities and formulation of plans etc.

Recruitment Policies

Shezan International believes in both internal and external postings thus we are going to discuss
them in detail.

Shezan International believes in internal job posting which allows the current staff or employees
of Shezan International for a possible promotion, shifting or rotation and keeping the morale
high.

Self-Nomination:

31

HR department at Shezan publishes newsletter that has detailed job listings in it along with
description and specification. This incorporates nomination of job by self as well as nomination
by the employee or supervisor.

Nomination by Employees Supervisor:

This is rather an informal technique used by Shezan International. It incorporates the nomination
by the external or independent supervisor which nominates some employee on the basis of his
better work.

Shezan International also believes in external job posting. For this purpose the use of media both
print and electronic are used. Ads are published in dailies for job openings along with its detail
and specification.

Organizational Structure
The structure of a company refers to the communication system that has been used in the firm
and the authority that links employees and staff together to serve the organizational goals and
objectives and to achieve the tasks that are provided by the company.

Structure can be described in the form of an organization chart. Shezan's organizational chart
shows that it has functional structure.

Functional: In functional structure people with similar skills and performing closely related
activities are placed together in formal group. They are expected to work together to perform a
critical function for the total organization. Common functional departments of Shezan are:

32

1. Marketing
2. Finance
3. Production
The current structure of Shezan is doing well so there is no need to change it, For such diverse
product company, functional structure is appropriate. People from different areas and with
different skills are put together to work which increases the productivity and bring effectiveness
and efficiency to the firm.

Organizational Culture
Shezan International has excellent organizational culture. The culture is very professional but yet
very enjoyable, the environment is very easy and casual. Shezan international gives lot of
importance to its junior employees and seniors are always ready to listen to their juniors and are
also willing to act upon their advices and suggestions if considered feasible. Employees are free
to pursue and select their goals and objectives and HR department is always there for employees
to provide them with the best guidance. The employees of Shezan believe that it is the company
of reality and understanding, where the employees are never for granted.
Shezan is into the business of diverse products, from juices to jams to ketchups to pickles and
thus they recruit people from different areas which give them opportunity to excel and advance.
The company also offers employment benefits program but the workload is extreme there. The
priority is always given to the job by the staff. The employee working there declares Shezan
international a best place to work in and to make a reputable name in the corporate market, with
a very open career ahead.

33

Chapter III:

Financial Performance

34

Financial Analysis
The part will focus on the operations Shezan International Limited for the fiscal years
starting July, 1st, 2007 to the fiscal year ending June, 30th, 2011. This chapter includes the
analysis of the company through different measures and tools of analysis used by analysts in
order to analyze the situation of a company; these measures include the analysis financial
statements, short-term liquidity analysis, capital structure and solvency ratios, return on invested
capital ratios, asset utilization ratios and analysis of profit margin ratios etc. The study covers all
the aspects usually considered by the stakeholders of the company. The profits and losses,
liquidity position, changes in owners equity, movements in assets and liabilities, and all such
factors will discussed later in the report of the project.
Shezan international Limited has gone through ups and down over the period of analysis
(five years ending 11), but there was an overall trend of growth in the company. The company
holds a good reputation in the market which can be considered as a factor of its rising movement
in share price; its shares are currently been traded at an average price of Rs. 219.
This analysis is based upon the facts collected through the annual financial reports of
Shezan international limited, online information available on the official web site of Shezan
international, and other news sources.

35

Analysis of Income statement

Shezan Income Statement
Sales
Cost of sales

2007
2008
2009
2010
2011
2,174,894 2,468,572 2,728,709 3,528,134 4,221,827
1,489,845 1,691,443 1,974,446 2,591,790 3,130,544

Gross profit

685,049

777,129

754,263

936,344 1,091,283

Distribution cost
administrative costs
other operating expenses
other operating income

289,336
68,213
70,145
-13,240
414,454

368,240
78,951
72,555
-19,880
499,866

443,862
91,449
71,979
-20,155
587,135

580,492
101,413
90,702
-19,448
753,159

629,912
116,605
122,601
-28,798
840,320

operating profit

270,595

277,263

167,128

183,185

250,963

finance cost
share of loss from
associate
profit before taxation
taxation

12,940

8,104

6,542

17,950

40,343

257,655
116,981

760
268,399
107,195

16
160,570
58,099

16
165,219
58,474

18
210,602
70,000

net profit for the year

140,674

161,204

102,471

106,745

140,602

Financial performance of a company can be fairly assessed by an income statement as it gives a

summary of how the business incurs its revenues and expenses through both operating and nonoperating activities. Notes to the statements helps to look things into details.
The five year income statements show that the company is in a good position. The Sales, the
Gross Profit and the Net Profit for the year have shown a continuous rising trend over the last
five years. The Net Profit has increased till 2010 but in 2011 it was decreased. The profits of the
company have massively increased solely and even in comparison with the increase in sales.
Therefore, rising sales is not the only factor of increasing profits; the company has controlled its

36

cost of sales and operating expenses quite impressively even after drastic rise in energy costs and
energy crises in the country.
The rise in finance costs is way too much in the last year which has caused the profit to decrease.
A moreover high cost of sale is another cause of decrease in profits.

37

Analysis of Balance sheet

Shezan Balance sheet

2007

2008

2009

2010

2011

256,787
25,591
1,938
284,316

292,922
9,915
2,603
305,440

299,770
7,724
2,661
310,979

416,802
7,708
2,588
427,495

423,097
7,690
2,314
433,769

1,348

1,091

18,796

15,081

610,903
59,749

689,438
74,892

755,711
86,291

842,482
135,317

6,997
1,159,55
1
165,627

13,729
42,116
108,186
836,031

38,897
114,255
84,042
1,002,61
5

37,113
74,651
70,844
1,043,40
6

18,183
59,886
99,509
1,191,95
8

14,683
57,656
82,608
1,511,80
0

Total assets

1,120,34
7

1,308,05
5

1,354,38
5

1,619,45
3

1,945,56
9

EQUITY AND LIABILITIES

Share capital and reserves
share capital
reserves
unappropriated profits
Total Equity

50,000
425,000
150,696
625,412

60,000
500,000
176,900
736,700

60,000
583,449
134,371
777,820

60,000
653,022
135,116
848,138

60,000
723,293
169,718
953,011

57,281

51,858

45,962

91,121

71,747

Current liabilities

437,654

519,497

530,603

680,194

920,811

Total liabilities

494,935

571,355

576,565

771,315

992,558

ASSETS
Non- Current Assets
Property, plant and equipment
Long term investments
long term deposits
Current assets
Stores and spares
stock in trade
trade debts
Advances, deposits
,prepayments
income tax recoverable
cash and bank balances

Long term liabilities

38

Balance sheet is one of the three major financial statements of a company, the other two
being income statement and statement of cash flows. It shows the position of the company at a
certain point in time.
The Assets of the company have shown an increasing trend and so have the liabilities and equity.
To further look into the picture we can see that the companys Assets have increased by 73 %,
liabilities by 100 % and Equity by 52.4%. The rise in assets was obviously partly financed by
liabilities and partly by equity but the major portion was the liability one. Liabilities from the
very beginning are the major proportion of the assets.
There is an overall a rising trend in almost every component of the balance sheet. Long
term finance has increased greatly. Trade debts, stock in trade and other stores are the major
proportion of current assets. The company needs to focus on rising trade debts. Moreover the
balance depicts a satisfactory picture of the company.

39

Profitability ratios analysis

Shezan
Nestle
Tops

Gross profit margin

2007
2008
2009
2010
31.50
31.48
27.64
26.54
28
26
29
27
26.98
29.57
28.34
32.22

2011
25.85
26
33.82

Gross profit margin is an indication of the total margin which is available to cover operating
expenses and yield a profit. The gross profit of Shezan in 2007 was 31.50% which has decreased
over the years and in 2011 it was 25.85. Since sales have increased in this period, the reason for a
decreasing trend in gross profit margin is increase in cost of goods sold. Nestls gross profit
margin has also showed an overall decreasing trend whereas the gross profit margin of Tops has
shown an increasing trend.

Shezan
Nestle
Tops

Operating profit margin

2007
2008
2009
2010
12.44
11.23
6.12
5.19
12
12
14
13
9.55
16.50
15.85
19.41

2011
5.94
13
22.39

The operating profit margin is an indication of the firms profitability from current operations
without regard to the interest charges accruing from the capital structure. The operating margin
of Shezan shows a decreasing trend. In 2007 the operating profit margin was 12.44% whereas it
decreased to 5.94% in 2011.this means that the operating expenses

of Shezan has increased

over these years which include distribution cost, administrative costs. On the other hand
operating profit margin of Nestle and Tops has increased over this time period. This means that
they have reduced their operating expenses which resulted in greater profit margins.

40

Shezan
Nestle
Tops

Net profit margin

2007
2008
2009
6.47
6.53
3.76
9
7
10
-1.05
12.60
8.81

2010
3.03
11
12.23

2011
3.33
10
15.52

The net profit margin shows after tax profit per rupee of sales. Sub-par profit margin indicates
that the sales prices are relatively low or that its costs are relatively high.Net profit margin of
Shezan has decreased over this time period from 6.47% in 2007 to 3.33% in 2011. The reason
for this is the increase in the interest charger and other expenses which have resulted into
deteriorating profit margin. On the other hand the net profit margin for Nestle has increased from
9% to 10% and for Tops it increased from -1.05% to 15.52%.The reason for this is the decrease
in Interest charges and other expenses.

Shezan
Nestle
Tops

Return on Assets
2007
2008
2009
12.56
12.32
7.57
11.46
9.34
16.18
-0.84
5.32
4.82

2010
6.59
17.94
7.06

2011
7.23
13.28
10.49

Return on assets measure the return on total investment in the organization. It is sometimes
desirable to add interest or after tax profit to the numerator of the ratio since total assets are
financed by creditors as well as stock holders; hence it is accurate to measure the productivity of
the assets by the returns provided to both classes of investors. The return on assets for Shezan
has decreased over the period from 12.56% in 2007 to 7.23% in 2011. This is solely due to the
decrease in net profit for the company. On the other hand the return on assets of Nestle and Tops
shows and overall increasing trend due to the increasing trend of their profits.

41

Shezan
Nestle
Tops

Return on Equity
2007
2008
2009
22.49
21.88
13.17
2.41
2.07
4.01
-1.14
6.10
5.54

2010
12.59
5.48
8.33

2011
14.75
6.22
12.28

Return on equity measure the rate of return on the stockholders investment in the business.
Return on equity of Shezan has decreased over this time period of five years from 22.49% in
2007 to 14.75% in 2011. The reason for this decrease is the decrease in the net income of the
company over these years. Whereas Nestle and Tops return on equity showed an increasing trend
over the years. Return on equity of Tops has increased tremendously from -1.14% in 2007 to
12.28% in 2011.This was due to a tremendous increase in the profitability of the company.

Shezan
Nestle
Tops

Return on Common Equity

2007
2008
2009
2010
22.49
21.88
13.17
12.59
2.41
2.07
4.01
5.48
-1.14
6.10
5.54
8.33

2011
14.75
6.22
12.28

Return on common equity measure the rate of return on the common stockholders investment in
the business. Return on common equity of Shezan has decreased over this time period of five
years from 22.49% in 2007 to 14.75% in 2011. The reason for this decrease is the decrease in the
net income of the company over these years. Whereas Nestle and Tops return on equity showed
an increasing trend over the years. Return on equity of Tops has increased tremendously from 1.14% in 2007 to 12.28% in 2011.This was due to a tremendous increase in the profitability of
the company.

42

Shezan
Nestle
Tops

Earning per share

2007
2008
2009
2010
2.81
2.69
1.71
1.78
39.81 34.24 66.27 90.69
12.20 14.93 16.45 18.21

2011
2.34
102.94
30.02

Earnings per share show the earnings available to the owners of the common stock. The earnings
per share of Shezan Shows that it decreased from 2.81 in 2007 to 1.78 in 2010 but again
increased to2.34 in 2011 which is a positive sign for common stock holders. On the other hand
earnings per share of Nestle have increased tremendously from 39.81 in 2007 to 102.94 in
2011.this was due to the increase in the profitability and efficiency of operations in Nestle.
Earnings per share of Tops have also increased from 12.20 in 2007 to 30.02 in 2011 because of
high profits.

Overall Profitability analysis

The profitability of Shezan compared to industry is under threat implying that Shezan is not
managing its operations efficiently as the income statements shows that finance cost,
administrative cost, distribution charges, and cost of goods sold and taxes all have increased. The
major reason behind this trend is the rising inflation in Pakistan which has compelled Shezan
costs to rise

43

Liquidity Ratio Analysis

Shezan
Nestle
Tops

Current ratio
2007
2008
2009
1.91
1.93
1.97
0.94
1.07
0.85
2.54
2.79
2.79

2010
1.75
0.85
2.72

2011
1.64
0.80
3.16

Current ratio indicates the extent to which the claims of short term creditors are covered by
assets that are expected to be converted into cash in a period roughly corresponding to the
maturity of the liabilities. The ideal current ratio should be 2:1 which means that the company
can give 2 assets to pay a liability. Shezans current ratio has decreased over the years from 1.91
in 2007 to 1.64 in 2011 but still it is not considered as a threat. On the other hand Nestls
current ratio is very low which has further decreased over this time period. It was 0.94 in 2007
and decreased to 0.8 in 2011. Tops have a very good current ratio which has an increasing trend.
It was 2.54 in 2007 and increased to 3.16 in 2011.

Shezan
Nestle
Tops

2007
0.51
0.54
1.51

Quick ratio
2008
2009
0.60
0.54
0.60
0.37
1.43
1.43

2010
0.51
0.38
1.53

2011
0.38
0.38
1.72

Quick ratio is a measure of a firms ability to pay off short term obligations without relying upon
sale of inventories. The quick ratio of Shezan has a decreasing trend from 0.51 in 2007 to 0.38 in
2011. The reason is that more inventories are being stocked. Moreover Nestls quick ratio has
also decreased from 0.54 in 2007 to 0.38 in 2011. It is also because of increase in inventories of

44

finished goods at year. However Tops has increased its quick ratio in 2011 from 1.53 to 1.72.
This is because more of the inventories were converted into sales.
Inventory to net working capital ratio
2007
2008
2009
2010
Shezan
1.53
1.43
1.47
1.65
Nestle
-6.75
6.59
-3.15
-3.17
Tops
0.67
0.76
0.76
0.69

2011
1.96
-2.08
0.67

Inventory to net working capital ratio measures the extent to which the firms working capital is
tied up in inventory. The inventory to working capital ratio for Shezan has an increasing trend
over this time period because more inventories is being tied with the working capital. In 2007 the
ratio was 1.53 whereas in 2011 the ratio was 1.96.This increase is due to the increase in the
inventory of finished goods which is held. Nestle is also not doing well , it has a negative
working capital ratio therefore the inventory to net working capital ratio is also negative. Tops is
doing good because it has a low ratio which is maintained over the period.

Financial Leverage

Shezan
Nestle
Tops

Debt to Equity ratio

2007
2008
2009
0.79
0.78
0.74
0.98
1.17
0.95
0.29
0.03
0.03

2010
0.91
1.00
0.04

2011
1.04
1.03
0.08

Financial leverage refers to the use of the debt capital in a company to finance its assets. The Share
holders of the company are interested to know the leverage position of a company. Even though debt is
cheaper, it is considered riskier compared to equity and a huge threat to the company. This portion
discusses the risk arising from leverage position on Shezan International Limited. Comparing the

45

leverage position of Shezan with Nestle and Tops we can see that Tops is in a very better
position as it is financing almost 90% of its assets and operations from equity financing. It is not
a highly leveraged firm. Its long term debt to equity is 0.22 so most of its long term investments
and projects are financed by it equity. Shezan on the other hand is financing 100% of its assets
through debt which is very risky

Shezan
Nestle
Tops

Debts to Assets ratio

2007
2008
2009
2010
0.44
0.44
0.43
0.48
0.26
0.31
0.23
0.24
0.21
0.03
0.03
0.04

2011
0.51
0.22
0.07

The debt to assets ratio shows you how much of your asset base is financed with debt. If this
ratio is 100% it means your company is bankrupt. It is very important to keep your debt to asset
ratio in line with the industry. Debt to Asset ratio for Shezan has increased over the years from
0.44 in 2007 to 0.51 in 2007.This means that Shezan has financed its 51% of the assets with debt.
Nestle has maintained the ratio to around 23-24% in this time period. Whereas Tops has a very
low ratio of 0.07 which means that only 7% of the assets are financed by debts.

Shezan
Nestle
Tops

Long term Debt to Equity

2007
2008
2009
2010
0.09
0.07
0.06
0.11
0.02
0.02
0.03
0.02
0.29
0.03
0.03
0.04

2011
0.08
0.02
0.08

Long term debt to equity measures the balance between debt and equity in the firms long term
capital structure. Long term debt to equity ratio for Shezan had a decreasing trend till 2009
where it dropped to 0.06 from 0.09 but increased in 2010 to 0.11 but again decreased to 0.08 in
2011.This means that a major chunk of long term debt was repaid. Nestle has maintained this

46

ratio to 0.02 over this time period where as fluctuations can be seen in the long term debt to
equity ratio for Tops.

Shezan
Nestle
Tops

Times Interest Earned

2007
2008
2009
2010
20.91
34.21 25.55
10.21
6.01
7.37 12.61
13.37
157.81 482.11 66.42 209.25

2011
6.22
8.05
180.39

Times interest earned measures the extent to which firms earnings can decline without the firm
becoming unable to pay it financial obligations. The ratio for Shezan has declined from 20.91 in
2007 to 6.22 in 2011 which is not a good sign for the company. This is solely due to the decrease
in profits in recent years. Nestls ratio has also declined from 13.37 to 8.05 which is again not a
good sign. Tops Ratio has fluctuated over this time period but since its so high, paying its
financial obligations is not a issue for Tops. In 2011 times interest earned ratio was Tops was
180.39 which means that Tops has excess cash to pay its interest cost.

Shezan
Nestle
Tops

Fixed Charge coverage

2007
2008
2009
2010
6.25
4.70
4.02
3.08
5.16
5.83 10.16
12.16
43.74
121.24 45.35
147.77

2011
2.87
7.96
123.97

Another method to see whether a firm can pay its fixed charges is to calculate the fixed charge
coverage ratio. This ratio for Shezan has an overall decreasing trend during this time period. It
was 6.25 in 2007 and decreased to 2.87 in 2011. The reason is the decrease in the profits of the
company. Nestles fixed charge coverage has also decreased from 12.16 in 2010 to 7.96 in 2011.

47

Whereas Tops fixed charge coverage ratio has increased tremendously from 43.74 in 2007 to
123.97 in 2011. It has excess money to pay off its fixed charges.

Activity Ratio Analysis

Shezan
Nestle
Tops

Inventory turnover
2007
2008
2009
3.56
3.58
3.61
9.4
10.3
9.2
3.70
3.40
4.41

2010
4.19
8.9
4.33

2011
3.64
8.2
4.19

Inventory turnover provides an indication of whether the company has excess or inadequate
amount of inventory of finished goods. When the ratio is compared to the competitors, it is seen
that Shezan ha low levels of inventory as compared to Nestle or Tops. Shezan had inventory
turnover ratio of 3.56 in 2007 and 3.64 in 2011. Nestle has a ratio of 9.4 in 2007 and 8.2 in
2011.Tops inventory turnover ratio has increased over the period from 3.70 in 2007 to 4.19 in
2011.

Shezan
Nestle
Tops

Fixed asset turnover

2007
2008
2009
2010
7.65
8.08
8.77
8.25
2.81
3.15
3.54
3.56
1.71
0.57
0.73
0.83

2011
9.73
3.00
1.05

Fixed asset turnover is a measure of sales productivity and utilization of the plant and equipment.
The ratio for Shezan has increased over the years from 7.65 in 2007 to 9.73 in 2011. This is
solely due to the increase in sales of Shezan. The ratio for nestle fluctuated over this time period
and is low as compared to Shezan. However Tops ratio of fixed asset turnover has increased to
1.05 in 2011 but still it is low as compared to Shezan.

48

Shezan
Nestle
Tops

Total asset turnover

2007
2008
2009
1.94
1.89
2.01
1.79
2.06
2.22
0.80
0.42
0.55

2010
2.18
2.25
0.58

2011
2.17
1.84
0.68

Total asset turnover is a measure of the utilization of the firms assets. The ratio for Shezan has
increased over the years from 1.94 in 2007 to 2.17 in 2011. This is solely due to the increase in
sales of Shezan. The ratio for nestle fluctuated over this time period and is low as compared to
Shezan. It increased till 2010 to 2.25 but decreased to 1.84 in 2011. However Tops ratio of total
asset turnover has decreased to 0.68 in 2011 and is low as compared to Shezan.

Shezan
Nestle
Tops

Average collection period

2007
2008
2009
2010
10.03
11.07
11.54
14.00
14.25
15.22
16.87
18.64
12.41
18.47
14.25
5.50

2011
14.32
19.01
6.02

Average collection period indicates the average length of time the firm must wait after making a
sale before it receives payment. The average collection period for Shezan has an increasing
trend. It increased from 10.03 in 2007 to 14.32 in 2011 which means that now Shezan has to wait
more to receive payments. This ratio for Nestle also had an increasing trend; it increased from
14.25 in 2007 to 19.01 in 2011. As compared to Shezan Nestle wait more days to receive
payment. The ratio for Tops fluctuated but as compare to others it has the lowest ratio of 6.02
which means that Tops has to wait less than other to receive payment for credit sales.

49

Chapter IV:

Analysis of Strategic Viability

50

SWOT Analysis
The SWOT analysis refers to the companys overall strengths (S), weaknesses (W), opportunities
(O) and threats (T). The first two terms are a measure of the companys internal environment
while the latter two are a measure of the companys external environment. These combined
factors are used as a decision making tool for better organization of business actions.
Before Shezans analysis of strengths, weaknesses, opportunities and threats is conducted, it is
important to define each of these terms so that the scope of our analysis is clear.

Strengths: These are the key factors or set of practices / actions that a firm performs
better than its competitors. Essentially these are the core competencies of the
organization.

Weaknesses: Weaknesses are either a set of resources that an organization lacks in or

activities that the firm does not perform well, relative to the competition.

Opportunities: These are a number of chances and circumstances in the external

environment that if utilized would result in favorable performance.

Threats: Threats are categorized as external factors that may harm performance of an
organization.

The following tables highlight some of the key strengths, weaknesses, opportunities and threats
that have been identified based on company interviews and analysis of published stock exchange
reports.

51

Strengths
Strong financial backing, high capital available
Variety of packing and products available in the market
Vast, comprehensive distribution network throughout Pakistan
High inventory turnover rate
ISO certification
Excellent R&D team
Passionate owners, empathizing with employees and managers
Global scale of operations
Brand name value within the country
High operational expertise

Weaknesses
Lack of innovation
Lack of consumer awareness of product quality
Vendor Relationship Management not prioritized
Decreasing Employee Morale
Ineffective positioning strategy
Lack of defined long term corporate planning & strategy
Limited funds for promotional budget
Unable to match competitors in terms of juice flavors
Lack of sustainable, mainstream advertisement campaign
Product strategy and promotion strategy not synchronized

52

Opportunities
Younger demographic, 67% of population, leading to increasing size of target market
Further backward integration, leading to higher profits
Overall size of Pakistani juice market increasing
Increasing demand for low-priced juices in African countries
Increased investment in the food & beverage sector on the stock exchange
Falling value of Rupee, leading to greater quantities demanded abroad
Demand for multitude of flavors
Potential for diversification of business as Shezan has enough capital to expand
Huge distribution network, allowing for piggybacking of products
Modification of operations to keep abreast of new age practices

Threats
Intense competition within the juice manufacturing industry
Increasing trend of having nutritional drinks rather than artificially flavored ones
Political instability
Increasing inflation rate
Non-Islamic tag associated with Ahmedis in Pakistan
Perceived lack of quality
Decreasing power of the brand name Shezan
Market moving towards fragmentation
Social burden of managing huge quantities of waste that arise in juice manufacturing
Rapidly changing technology within the juice manufacturing industry

53

External Factor Analysis Summary

External Factors
Opportunities

Weight

Rating

W. Score

0.15

0.6

0.07

0.21

0.05

0.2

0.02

0.06

0.05

0.2

0.03

0.06

Possibility of further backward integration

0.05

0.15

Potential for conglomerate diversification

0.03

0.09

0.05

0.2

0.02

0.04

0.1

0.3

0.09

0.18

Intense competition

0.04

0.12

Increasing inflation rate

0.02

0.08

Perceived lack of quality

0.05

0.1

Increasing nutritional awareness

0.07

0.14

Market moving towards fragmentation

Waste management

0.03
0.03

3
3

0.09
0.09

Rapidly changing technology

0.02

0.04

Political instability

0.03

0.09

Total

1.00

3.04

Increased demand for low priced juices in

African countries
Increasing size of Juice market in Pakistan
Younger demographic largest segment of
population
Increased investment in food& beverage
companies on stock exchange
Falling value of Rupee, greater quantities
demanded abroad
Demand for multitude of flavors

Distribution network allowing for

piggybacking of products
Modification of operations to keep abreast
of new age practices

Comments
Increased exports to
Africa
Expand network
Targeting younger
demographic
Current shareholders
satisfied
Capitalizing on
increased exports
Limited set of flavors
Incorporation of fruit
farms in portfolio
conduct feasibility
Multiple products using
same channels
Technologically not up
to date

Threats
Non-Islamic stigma associated with
Ahmedis in Pakistan
Decreasing power of the brand name
Shezan

Distance Shezan from

religious views
Revitalize through
increased brand image
Improved IMC for
counter-measures
Good margins despite
rising costs
Build on brand image
Need to position juice
as a healthy alternative
Need for multiple lines
Good sense of CSR
Need for new age
practices
Corporate stability
despite political
environment
-

*Analysis of the table is provided in conjunction with the internal-external matrix analysis

54

Internal Factor Analysis Summary

Internal Factors
Strengths

Weight

Rating

W. Score

Comments

Financially strong

0.15

0.75

Variety of products

0.03

0.09

Comprehensive distribution network

0.09

0.36

High inventory turnover rate

0.02

0.08

ISO certification

0.03

0.09

Excellent R&D team

0.05

0.2

Passionate owners

0.03

0.12

Global scale of operations

0.1

0.4

Brand name value

0.05

0.15

High operational expertise

0.02

0.06

Ever expanding reach

Shezan still recognized
positively
Efficient performance

Lack of innovation

0.05

0.1

Unable to innovate

Lack of awareness of product quality

0.1

0.2

Vendor Relations not prioritized

0.05

0.15

Decreasing Employee Morale

0.02

0.04

Ineffective positioning strategy

0.03

0.06

Need to communicate high

fruit concentrate
Need greater
communication with
vendors
Need motivational
techniques
Need to reposition Juice

Lack of defined long term corporate

planning & strategy

0.05

0.1

Hire outside consultants

Limited funds for promotional budget

0.02

0.06

Lack of flavor variety

0.03

0.06

Promotional budget as a
function of sales
Introduce more flavors

Lack of mainstream advertisement

0.02

0.04

Increase budget

0.03

0.06

Synchronize both

1.00

3.17

Excellent financial track

record
Good utilization of products
Multiple products
distributed
High efficiency
Sign of quality
Ability to produce new
designs
Good commitment

Weaknesses

Product strategy and promotion

strategy not synchronized
Total

*Analysis of the table is provided in conjunction with the internal-external matrix analysis

55

Strategic Factor Analysis Summary

Key Strategic Factors

Weight

Rating

W. Score

Duration

(O) Demand increase in Africa

0.15

0.6

Long term

(O) Increasing market size

0.05

0.2

Long term

(O) Backward integration

0.05

0.15

Intermediate

(O) Large younger demographic

0.05

0.2

Long term

(T) Non-Islamic stigma

0.03

0.06

Short term

(T) Decreasing brand value

0.07

0.14

Intermediate

(T) Nutritional awareness

0.07

0.14

Long term

(T) Increasing competition

0.05

0.15

Intermediate

0.1

0.4

Long term

(S) Global operations

0.1

0.4

Long term

(S) Huge distribution network

0.05

0.2

Long term

(S) R&D

0.03

0.09

Long term

(W) Positioning

0.05

0.1

Short term

(W) Product quality awareness

0.03

0.06

Intermediate

(W) Vendor relationship

0.05

0.1

Intermediate

(W) Corporate strategy

0.07

0.14

Long term

Total

1.00

3.13

External Factors

Internal Factors
(S) Financially strong

56

Internal-External Matrix

Total
EFE
Score

Total IFE Score

Strong
Average
(3.0-4.0)
(2.0-2.99)
I
II
Shezan

High
(3.0-4.0)
Medium
(2.0-2.99)
Low
(1.0-1.99)

Weak
(1.0-1.99)
III

IV

VI

VII

VIII

IX

Scores of 3.17 & 3.04 show that Shezan is placed in the first quadrant, meaning that it is in a
strong position to avail the external opportunities using its strengths and to minimize weaknesses
and threats using a combination of strategies listed in the SFAS.
I-E matrix shows that Shezan is in a position to grow and build; It is recommended that
Shezan consider backward integration, which would result in maximum utilization of the current
position of the company and allow it to grow through concentric (linked) diversification in a way
as to capitalize upon the current opportunities in the market through its strengths. [Further
strategy planning is provided in the TOWS matrix]

SPACE Matrix
*Internal: (-6 worst, -1 best) | External: (6 best, 1 worst)

Internal Strategic Position

External Strategic Position

Competitive (CA)

Industry (IS)

Product Quality
Market Share
Brand Image
Life Cycle
Average

-1
+5
-4
+6
-3
+2
-3
+3
-2.75
4
Total X Axis Score = 1.25

Financial (FS)

ROE
Working Capital
Inventory Turnover
Leverage
Average

Suppliers
Growth potential
Degree of rivalry
Substitutes
Average
Environmental (ES)

-2
+4
-1
+1
-1
+3
-4
+4
2.0
3
Total Y Axis Score = 1.0

57

Technology
Inflation
Variability
Barriers to entry
Average

Plotted SPACE Matrix

Conservative

Aggressive

(1.25, 1)

Defensive

Competitive

The suggested strategy based on the SPACE matrix analysis is that of the aggressor and as such
positive, proactive steps should be taken by Shezan to ensure further growth.
It should also be noted that the suggested strategy based on the SPACE Matrix is in line with the
analysis of the I-E Matrix, hence providing further strength to the overall strategic plan.

58

TOWS Matrix

IFAS
\
EFAS

Opportunities (O)

1. Demand increase in Africa

2. Increasing market size

3. Large younger demographic

4. Backward integration

5. Falling Rupee value

Threats (T)

1. Decreasing brand value

Strengths (S)

Weaknesses (W)

1. Financially strong

1. Lack of innovation

2. Global operations

2. Product quality awareness

3. Huge distribution network

3. Vendor relationship

4. Brand name

4. Positioning

5. R&D

5. Corporate strategy

SO Strategies

WO Strategies

1. Increase supply to Africa

1. Look for newer markets

(S2,O1)

(W1,O1)

2. Buy farms to increase

backward integration

agreements (W3,O2)

(S1,O4)

3. Establish consistent strategy

3. Create more availability in

the market (S3,O3)

to market (S4,O2)
5. Increase operations overseas
(S1,O5)

incorporating foreign exports

WT Strategies

1. Establish a new corporate

1. Utilize foreign expertise in

image (S5,T1)

innovation (W1,T5)

(S1,T2)

2. Develop healthy juice

alternatives (W4,T3)

preferences (S5,T3)

(S3,T4)

3. Focus on brand building

(W2,T1)
4. Benchmark with industry
leaders (W5,T4)

5. Use brand equity as quality

5. Perceived quality

5. Establish 5 year plan

ST Strategies

4. Cover a wide area of region

4. Increasing competition

4. Reposition juice to new target

(W5,O5)

3. Understand consumer nutrition

3. Nutritional awareness

for supply chain (W5,O4)

4. Leverage brand name to cater segments (W4,O3)

2. Incorporate patriotic themes

2. Non-Islamic stigma

2. Reestablish vendor-firm

assurance (S4,T5)

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5. Partner with local Islamic

spokespersons (W5,T2)

Value Chain Analysis

Firm Infrastructure
Shezan applies hierarchical set-up within
formalized management structure
Human Resource Management
New employee initiative, OJT, mentor
programs and remuneration strategy
Technology Development
Continuous research initiative, flavor
development and automation change
Procurement
Backward integration allows, purchase of fruit
from self-owned farms

Support
Activities

INBOUND
LOGISTICS
Fruit Pulp
Packaging

OUTBOUND
LOGISTICS

MARKETING &
SALES

SERVICES

Establish Centers

Celebrity Endorsement
Retail promotions
Sales training

Customer Feedback

OPERATIONS
Heat exchange
Mixing
Packing

Profit
Margin

Distribute juices

Primary Activities

Activity

Valuable?

Rare?

Substitutes?

Difficulty of Imitation

Inbound Logistics

Yes

Yes

Few

High

Operations

No

No

Many

Medium

Outbound Logistics

Yes

No

Few

High

Marketing & Sales

Yes

No

Many

Low

Services

No

No

Many

Low

Identified Sources of Competitive Advantage:

60

Inbound & Outbound Logistics

Grand Strategy Matrix

Rapid Growth

Quadrant II

Quadrant I

Shezan

WCP

SCP

Quadrant III

Quadrant IV

Slow Growth
*WCP=weak competitive position; SCP=strong competitive position

The Grand Strategy Matrix, which is made by overviewing all the other matrices, shows that
although there is rapid market growth (local & abroad), Shezan is in a weak competitive position
when comparing it to market leader Nestle as well as other strong competitors like Olfrute. It is
suggested that Shezan utilize the previously mentioned strategies and reposition itself in such a
manner as to improve its competitive position in the minds of the consumers. This, it is felt is
necessary for survival and is the single biggest change that needs to be implemented.

61

Portfolio Analysis
Business Unit Strength
High
High
I.A

Medium

Low

Shezan

Medium
Low

Portfolio analysis depicts that Shezan international is competing in the industry which is very
fast growing, the market share of Shezan is medium to high. It is evident that economic and
political factors are not stable but still the conditions are favouring Shezan International. It also
incorporates the competitive strength and relative market share in which Shezan is excelling.
After analysis it has become clear that Shezan should opt for funding according to matrix and
can use Invest/Growth strategies. It would be also viable for Shezan to go for selective strategies
because of the nature of the business in which it is competing.

62

BCG Matrix

The BCG matrix method tells us that what priorities should be given in the product portfolio of a
business unit. BCG matrix shows different products of Shezan placed in different quadrants with
respect to the market share and the business growth rate they have. These products include ALLPURE, Twist, regular juice and Rose syrup. ALL-PURE lies in the first quadrant and is
categorized as a star because it has a high market share and a high business growth. Star products
are also knows as market leaders. Shezan Twist lies in the second quadrant and is categorized as
a question mark. These products are called question marks or problem child because they have a

63

low market share but a high business growth rate. The strategy to deal with these products is to
divest these products. Shezan regular juice lies in the third quadrant and is categorized as cash
cow because of high market share and low business growth rate. These products are milked and
usually their profits and reinvested in other products. Rose syrup lies in the fourth quadrant and
is categorized as a dog. These products have a low market share and a low business growth rate;
the best strategy for these products is to liquidate them so that other brands dont suffer from
those products.

64

Chapter V:

Shezan Strategic Plan

65

Strategic Plan Overview

A strategic plan is formed upon the basis of the analysis conducted and as such the plan is only
as good as the analysis which serves as the foundation for strategy. The analysis conducted using
the matrices will serve to shape the proposed strategic plan for Shezan.
The three major factors that have emerged from the matrix analyses are:

Shezan needs to reposition its juices to become more competitive in the market

Shezan needs to capitalize on its strong financial muscle to diversify in fruit farms

Shezan needs to further expand its distribution network to sustain competitive advantage

It is understood that these factors relate primarily to marketing, supply chain and positioning
(also a subset of the marketing function), hence the major focus of the plan would be changes
within the marketing and supply function, along with a repositioned Shezan Juice line; however
since in todays business world and within Shezans structure, most functional departments are
interrelated and need to present a consistent front to attain strategic advantage and hence the
proposed strategic plan brings about changes in other functional areas as well in accordance with
the new strategy.

66

Vision
To be known as the leading quality provider of nutritious food products in the region. Providing the
products and services of the highest quality by adhering to international standards is the primary
objective. Shezan international will maximizing shareholders value by being a good corporate citizen and
recognized as a preferred employer serving the country through economic development. The company
shall contribute to the environment with implementation of green technology. By following best business
practices and ethical behaviour and adopting transparency in its working, Shezan shall become a role
model for the industry.

Mission
Serving the customer needs through manufacturing of highest quality fruit and vegetable based juices and
products. The company aims at being recognized as leader in the industry by maximizing customers,
employees and shareholders value. To accomplish this, maintaining a tradition of pride in our products,
growth through innovation, integrity in the management of our business, and commitment to team
management and quality improvement process. Giving back to environment and becoming a preferred
corporate citizen shall be our priority.

67

Objectives

To be the leading company in the industry.

To have a transparent process through open disclosure policy.

Have passionate people with intelligent and firm approach towards business.

Provide challenging opportunities, training, and fun loving environment, necessary resources and
facilities to our employees.

Invest in technology to lead the competition.

Stand committed to sustainable business growth and ensures 100% compliance of CSR by
ensuring the safety of our people, assets and the community in which we operate.

Serve the public through poverty alleviation programs and building farming expertise.

Serve the consumer in every way possible.

Maximize customer value.

Demonstrate honest and ethical behaviour by implementing best business practices.

Corporate Development Stage

Among the 10 stages of corporate development which are courtship, infancy, go-go, adolescence,
prime, stability, aristocracy, recrimination, bureaucracy, death; Shezan international is at Prime
where the clearness in vision and mission is very clear, everything is aligned and coming
together in positive manner for the firm. Shezan international is ready to start-up their new
product lines and can afford to have innovation in their products and business.
It is suggested that Shezan International move towards the stability stage in which things will
become easier for the firm. The emphasis will be shifted to R&D from customers and marketing.
Rapid growth will take place but with more maturity and strong brand name.

68

Positioning
As the juice industry is heavily competed, it is difficult to choose the category in which you want to
position your product. One of the major players in juice industry, nestle has launched a low priced juice
increasing competition for Shezan. To compete with this new competition, Shezan has to reposition its
juice to better sell itself. For the repositioning of Shezan, we will use the seven step positioning process.
The first step in this process is to identify a relevant set of competitive products. The relative set of
products contains competitors like nestle, country, fresher and Tropicana. These are considered in this set
because they all have same perception and quality.
The second step is to identify determinant attitudes. These attributes include price, packaging, taste and
nutrition value. The third step involves collecting data about customers perceptions. The current
perception of Shezan is that of low quality and cheap juice. In the fourth step we analyse the current
positions of the products in the set. According to the current position nestle is considered as best tasting
juice and affordable. Nestle is also considered to be the choice of the youth as its trendy and stylish,
Whereas Shezan and country juice are positioned as low quality drinks. The fifth step is to determine the
customers most favourable combination of attributes. The most favourable set of attributes according to
the customer are price, taste and packaging. Shezan has to improve its taste and raise its price to change
its perception.
In the sixth step we consider fit of possible positions with customer segments. Here we reposition our
product according to the ideal fit. In the repositioning of shezan, we recommend that shezan should
increase their fruit concentrate and improve their taste while increasing their price to the competing
brands. The packaging may also be improved and new updated packaging should be introduced which
should change customer perception. the new packaging should be well designed and should reflect the
youth. They need to follow the trend. Improving the taste is also important as people now demand more
fruit concentrated juice rather than artificially sweetened juices. So in our repositioning we will be
targeting consumers who are from SEC A and B between the ages of 12-30. The primary focus would be

69

to get the attention of school and college going students and position shezan as the best quality, trendy
and tasty juice in the market.
The last step involves writing a positioning statement. The new positioning statement will be Shezan, the
taste of freshness.

70

Functional Areas: In accordance with the new strategy in a holistic sense and the new juice
positioning at the smaller scale, a number of changes have been proposed to the functional areas
of business. Each are discussed individually

Research & Development

The R&D strategy should be made by considering the R&D mix. This will help in knowing what
resources should be allocated to research, product development and process. This helps in making
decisions like acquiring new technologies, making strategic alliances and putting in place new processes.
The company can either become technological leader or follower keeping in mind its generic strategy.
In the proposed R&D department, we will like to recommend shezan that they invest more in research
department as the new development of products, new flavour enhancements and better nutritious juices
are being increasingly demanded. The industry is becoming more competitive so there is need for
innovation and to grow companies need to have competitive advantage. The company should
continuously work on new flavours. The R&D department should focus on the changing needs of the
consumer. Through proper research they should be well aware of what the new trends are and what the
consumers want from their juice drink. Then accordingly shezan should develop new juices. Research can
also help in finding new sustainable ways in which juices can last longer. Their shelf life plays integral
part and through research it can be increased.
Shezan also should invest in machinery and other product related technologies. These updated
technologies can improve their operations and can save company quite a lot of money in terms of
efficiency and increased productivity. R&D can help shezan in discovering new ingredients and enzymes
which might speed up the process and can eventually save them costs of production. Storage of products
like juices an important aspect. This can be improved on through R&D as well. For this technological
advancement, shezan should see the industry leader try to follow them.

71

Procurement
Shezan international has a very good procurement department which is well coordinated and
integrated with other departments but there are few things in the system which needs to be
revised. Shezan international is slow down in the process of logistics, the delivery of raw
material that is fruits and vegetables require two to three days to reach the factory of shezan
international which is quite ineffective in todays scenario. The delivery time period should be
enhanced by adding more transport and logistics facilities to the system and the delivery period
should be minimized to maximum of two days.
The other thing which needs serious consideration is that of enhancing and increasing backward
integration. Currently shezan international has few fruit farms and they are just bound to them
but they should increase it by adding more fruit farms to the portfolio, that will enable Shezan
international to work more than the current capacity. Shezan international has the highest
production facilities among its competitors so it is mandatory to convert that opportunity into
strength and milking upon this. By adding more fruit farms to their portfolio, Shezan can also go
for cost minimization and can achieve economies of scale.

Operations
The current production process of Shezan international is quite effective and there is no need to
change it. They have the highest production capabilities among their competitors. Their
machines and plants are technologically up to date and have all the due abilities to cope up with
this technologically driven era. They have all the international standard requirements which
makes them best in the business. They have achieved their this position due to this strict check

72

and balance on their production side because at Shezan they believe that the product which tastes
good will lead the market.

Marketing and Sales

Product
In the product, we are not going to do any major changes. The product would essentially be kept
the same. A little enhancement of flavour would be done by increasing the pulp concentrate. The
rest of the product ingredients will be the same. The packaging of the product however will be
changed. New graphically designed more trendy and up to date packaging would be used. This
will be designed keeping in mind the consumer and target markets lifestyles.
Price
The price of the product would be changed. As our new positioning suggests and modification to
the product, we will increase the price of shezan to Rs. 15/ 250ml pack. This will now be
competitive to nestle. We have changed are competitive set and now instead of competing with
country and other low quality brands, we will be competing with better quality brands like nestle.
Promotion
In the promotion part we would be emphasising more on electronic media, magazines and
internet. The juice will be promoted through TVCs, internet banner ads, print ads and billboards.
In addition in store promotions activity, discounts, coupons and free sampling cars will roam
around the city to promote the juice. Shezan juice will also conduct on campus drives to
influence their target market.

73

It would also sponsor the school cafes. Shezan will also start sponsoring sports and music events
as they are one of the most watched programs. This new promotion strategy will be carefully
devised after studying the media habits and lifestyles of its target market. The primary objective
of this promotion drive would be to reposition the shezan juice as the good quality, nutritious and
trendy drink.

Logistics
The logistics department of shezan is considered as an efficient and effective one. The inbound
logistics seem to be doing a great job as shezan have their own farms where their major raw
materials come from. The transportation of this fruit pulp is done through their own vans. This
ensures timely supply of pulp and keeps the inventory down. So we recommend that shezan stick
with their current way of inbound logistics.
As far as outbound logistics is concerned, shezan has a mix of different strategies. As mentioned
above, shezan supplies all its products through their own system in Lahore. this allows them to
operate efficiently and effectively as it allows them to supply to vast area in Lahore and also
helps in keeping the costs down.
For other cities, the company sells the product to large wholesalers who further sell to small
wholesalers who then distribute it. This process includes intermediaries. Due to them the cost of
the final product increases as the product goes through several channels. The efficiency is also
compromised as delays are caused. Shezan needs to rectify this distribution system for outside
Lahore suppliers.
It needs to appoint company owned agents in different cities who should be responsible of
identifying selling pints and then supply to them as per need. Primarily they need to control the

74

wholesalers by giving them contracts and incentives to distribute efficiently. In the longer run
Shezan needs to set up their own distribution channels in at least big cities where the demand is
high.

Human Resource
Shezan international Human Resource department has certain flaws and weakness which should
be removed to ensure the effectiveness of Human Resource department. HR department of
Shezan is more focused in daily operations which make it weak in term of employees and staff
perspective. The employees want their HR department to guide them towards their career path
whereas the current HR department thinks that their duty is to ensure better communication
between and within department, effective daily operations at the company and recruiting/hiring
the best suitable candidate for the firm but actually HR department is more than that, it is the link
that strongly or weekly bonds the company and employee together. The HR should focus on the
motivation and performance evaluation practices. Employees always need motivation from their
company and that should be done by Shezans HR department. HR department should also
consider incentives for their performing employees as that will bring more value to the firm.
The HR department should also incorporate feedback system, 360 degree feedback motivation
system will be very effective for Shezan as it will help to identify future leaders for the firm and
also in evaluating the performance of oneself. HR department should also highlight the best
performers and also ensure to adopt a systematic approach for sharing of knowledge among
seniors and juniors.
Last but not the least, HR department of Shezan international should apply training programs for
their employees to keep them up to date and to cope up with the current technological trends.

75

More formalised on the job training should be conducted to train the junior employees
effectively.

Organizational Structure
The current structure of Shezan is doing well so there is no need to change it, For such diverse
product company, functional structure is appropriate. People from different areas and with
different skills are put together to work which increases the productivity and bring effectiveness
and efficiency to the firm.

One reason for not changing the current structure is that the functional structure also provides the
chain of command and clear chain of command is important because it increases accountability
and make formal standard operating procedures.

Functional structure also offers qualified supervision and this provide the employees with more
trust, credibility and deep insight to the business. Since everyone is operating in his area of
expertise so the outcome of task or activity will be specialized and more accurate.

Organizational Culture
According to Shezans international employees, Shezan is the best place to work in but yet there
are few things in the culture which need to be a part of it. The first and the most important thing
is the company should opt participatory culture. In this culture the participation of employees
will be more welcomed and will be given more value which in turn will improve the
performance of employees. This type of culture will also help Shezan to keep their employees
motivated and encouraged. Participatory culture will also offer a sense of trust between the
employees and the company.

76

Information Systems
There are many other information systems that can be incorporated to make operations
throughout the company smooth. Shezan can use supplier integration systems which allow them
to be linked with suppliers through the online system. This will help in having inventories filled
when needed just like just in time concept. The suppliers will be aware of the inventory level and
when the inventories are below certain level they will automatically supply it.
Same kind of system can be used for distribution side. When distribution networks will be linked
with the company, shezan will know which distributor has what level of inventory with it. It will
also allow for checking which areas are most profitable.
Shezan can also use softwares like SAP AG., and R3 which allow for credit checking, payment
handling and book balancing etc. Shezan juices can make use of internet and networks to make
the whole system online. This will ensure that every department in the value chain is linked to
each other hence ensuring the alignment of strategic goals and objectives of the company which
is key for having an efficient and effective organization system.

77

Applied Models
The New BCG matrix, along with McKinseys 7-S framework have been chosen to illustrate the
changes that will be brought about by the new strategy for Shezan International.
Although a number of models would help explain the changes and benefits of the new strategy,
these two models best visualize the changes that Shezan will undergo.
New BCG Matrix
Fragmented

ROI

Specialized

ROI

Many

Market Share

Number

Market Share

Stalemate

Of

Volume

Appear

Shezan

ances

ROI

ROI

Few
Market Share

Market Share

Small

Large
Size of Advantage

The New BCG Matrix is used to show the size of competitive advantage and the approaches to
achieve those advantages.

78

Shezan International is a giant in the industry with having very strong market share and
competitive advantage in terms of production capabilities.
Shezan international comes under the heading of Volume business where the production of
Shezan products is huge and massive. Shezan international cannot segment or differentiate its
market because of its level of production. It is not possible for Shezan to use differentiation
strategy rather they pursue cost leadership which is considered to be a success for them.
McKinseys 7-S Framework
Structure

System

Strategy

Super
ordinate
goals

Skill

Style

Staff

79

1. Structure: The organizational structure of shezan is functional structure and it is relatively

unchanged.
2. Strategy: The strategic position has already been discussed in great detail, including
vision mission & objectives and how they form the basis of change
3. System: Shezan had strict rules. We have proposed to less standardization of rules.
4. Skill: Shezan should focus more on financial and marketing competencies.
5. Staff: We have introduced new policies to boost employee motivation.
6. Style: The culture of the organization has been made more participative which allows for
360 degree feedback.
7. Super ordinate goals: We have suggested continuous improvement for super ordinate
goals.

80

References
1. Srinivasan, R., 2005, Strategic Management: The Indian Context, Prentice Hall, New
Delhi, pp. 48-84
2. Ahmed Jibran, 2009, Shezan: Business Strategy Proposal. Journal of Scribd, pp. 4-42
3. Porter, M.E., 1985, Competitive Advantage, the Free Press, New York, pp. 482-512
4. Zohaib H. Shah, 2010, Impact of Celebrity Attributes on Purchase Behavior, Research
Thesis, Lahore School of Economics, pp. 11-18
5. Menon, A. et al., 1999, Antecedents and Consequences of Marketing Strategy Making,
Journal of Marketing, pp.18-41
6. Armstrong et al., 1996, Bringing Structural Change through Strategy, London CIPD,
pp.218-267
7. Shezan International Limited, 2007-2011, Published Annual Reports for Stakeholders,
Lahore Stock Exchange
8. Nestle Ltd., 2007-2011, Published Annual Reports for Stakeholders, Lahore Stock
Exchange
9. Murree Brewery Ltd., 2007-2011, Published Annual Reports for Stakeholders, Lahore
Stock Exchange
10. Keller et. al 2004, Strategic Brand Management, Prentice Hall, pp.249-401
11. www.Shezan.com
12. www.ibid.com

81

Annexures

Nestle Income statement

Sales

2007
28,235,393

2008
2009
34,183,847 41,155,822

2010
51,487,302

2011
64,824,364

Cost of goods Sold

20,285,142

25,231,532 (29256902

37,608,733

48,099,046

7,950,251

8,952,315 11,898,920

13,878,569

16,725,318

Gross Profit
Distribution and selling
expenses
Administration expenses
Operating profit
Finance cost
Other operating expenses
Other operating income
Profit before taxation
taxation
Profit after taxation
Earnings per share

-3,538,284
-900,822

-3,890,352
-956,816

-5,238,488
-1,085,121

-5,709,078
-1,311,637

-6,862,113
-1,405,298

3,511,145

4,105,147

5,575,311

6,857,854

8,457,907

584,434
-442,914

557,325
-1,382,138

442,050
-1,091,149

513,081
-819,084

1,050,355
-1,064,233

65,959

61,800

144,145

170,491

159,545

2,549,756

2,227,484

4,186,257

5,696,180

65,202,864

-744,544

-674,590

-1,181,124

-1,583,331

-1,834,507

1,805,212

1,552,894

3,005,133

4,112,849

4,668,357

39.81

34.24

66.27

90.69

102.94

82

Nestle Balance sheet

2007
Equity and liabilities
Authorised capital
Equity

2008

2009

2010

2011

75,000,000 75,000,000 75,000,000 75,000,000 75,000,000

4,111,705 4,388,847 4,426,955 5,581,873 7,612,416

Non current liabilities

Lease obligations
Long term finances
total

119,602
4,028,700
5,758,347

177,582
5,139,875
6,988,758

118,275
4,210,750
6,076,895

55,415
13,690
5,573,750 7,848,050
7,563,787 10,778,988

Current liabilities

5,978,522

5,306,571

8,083,130

9,806,572 16,788,455

Assets
tangible
Longterm loans and advances

10,045,611 10,846,774 11,615,830 14,447,083 21,601,089

80,670
98,544
113,490
125,674
161,982

Current assets
Inventory
Total assets

5,623,823 5,684,078 6,845,528 8,352,923 13,395,017

2,393,306 2,488,573 3,895,038 4,602,019 7,064,170
15,750,104 16,629,396 18,574,848 22,925,680 35,158,088

Working capital

-354,699

377,507

83

-1,237,602

-1,453,649

-3,393,438

Tops Income statement

2007

2008

2010

2011

1285181

1713574

2220715

2578533

3349788

Cost of sales

-3206849

-1206849

-15911385

-1747741

-2216880

Gross profit

346725

506725

629330

830792

1132908

Distribution cost
Administrative expenses
Finance cost
Operating profit

120966
102365
707
122687

120966
102365
707
282687

159907
112989
4466
351968

177976
149906
2507
500403

247735
130892
4350
749931

Other expenses

26311

26311

21379

37661

56026

Other operating Income

15197

15197

35308

61839

90781

Net profit before

Taxation

111573

340854

296616

524581

784686

Tax

125022

125022

100771

-209252

-264765

Net profit after tax

-13449

215832

195745

315329

519921

Turnover

84

2009

Tops Balance Sheet

2007
Fixed Assets
Property,Plant and
equipment
investment property
Long term advances
Long term deposits

Current assets
stores and spares
stock in trade
trade debts
advances
short term prepayments
interet accured
Securities purchased
Investment at fair value
advance income tax
Cash at bank
Total assets

2008

2009

2010

2011

2946626
78207
631
2704
3028168

2946626
78207
631
2704
3028168

2997183
96405
1546
3480
3098614

3074902
111149
4694
14773
3205518

102474
503415
86697
17778
4295
50
69083
25744

102474
503415
86697
17778
4295
50
69083
25744

72384
595396
38885
18936
5545
2087
3787
74704

82235
799342
55285
15343
10752
4506
3836
84132

222140
1031676
4059844

222140
1031676
4059844

552986
1364710
4463324

696290
1751721
4957239

695829

131213
30681
20000
327042
668388

131213
30681
20000
327042
668388

144334
30681
20000
327042
916729

173201
30681
20000
327042
1347693

322227
1177177

2358432
3535756

2358432
3535756

2346692
3785478

2334615
4233232

3440
16202
74865

1072
15769
137529

1072
15769
137529

1633
23713
150156

3258
29619
137616

743801
4092
2438
750331

62247
347640
43680
63473
3534
584
182050
4288
151262
858938
1609269

Share capital and reserves

Share capital
Capital reserve
Contingency reserve
General reserve
Reveneu reserve
Surpless on revaluation
Equity
Non current liabilities
Liabilities subject for lease
Deffered liabilities
Deffered taxes

108440
30681
20000

85

Current liabilities
Liabilities subject to lease
trade and other payables
Short term running finance

2122
367596

2122
367596

Total liabilities

1887
331544
4154
337585
1609269

369718
4059844

Working capital

521353

661958

86

369718
4059844

1050
465750
35544
502344
4463324

1996
536097
15421
553514
4957239

661958

862366

1198207

Shezan
2007

2008

2009

2010

2011

Profitability
gross profit margin

31.50

31.48

27.64

26.54

25.85

op profit margin

12.44

11.23

6.12

5.19

5.94

net profit margin

6.47

6.53

3.76

3.03

3.33

ROA

12.56

12.32

7.57

6.59

7.23

ROE

22.49

21.88

13.17

12.59

14.75

return on comon equity

22.49

21.88

13.17

12.59

14.75

earning per share

2.81

2.69

1.71

1.78

2.34

current ratio

1.91

1.93

1.97

1.75

1.64

quick ratio

0.51

0.60

0.54

0.51

0.38

inventory to net working capital

1.53

1.43

1.47

1.65

1.96

debt to assets

0.44

0.44

0.43

0.48

0.51

debt to equity

0.79

0.78

0.74

0.91

1.04

long teerm debt to equtiy

0.09

0.07

0.06

0.11

0.08

times interest earned

20.91

34.21

25.55

10.21

6.22

3.56

3.58

3.61

4.19

3.64

liquidity ratios

levrage ratios

fixed charge coverage

activity ratios
inventory turnover

87

fixed asset turnover

7.65

8.08

8.77

8.25

9.73

total asset turnover

1.94

1.89

2.01

2.18

2.17

average collection period

10.03

11.07

11.54

14.00

14.32

Nestle
2007

2008

2009

2010

2011

Profitability
gross profit margin

28

26

29

27

26

op profit margin

12

12

14

13

13

net profit margin

10

11

10

ROA

11.46

9.34

16.18

17.94

13.28

ROE

2.41

2.07

4.01

5.48

6.22

return on comon equity

2.41

2.07

4.01

5.48

6.22

earning per share

39.81

34.24

66.27

90.69

102.94

current ratio

0.94

1.07

0.85

0.85

0.80

quick ratio

0.54

0.60

0.37

0.38

0.38

inventory to net working capital

-6.75

6.59

-3.15

-3.17

-2.08

debt to assets

0.26

0.31

0.23

0.24

0.22

debt to equity

0.98

1.17

0.95

1.00

1.03

liquidity ratios

levrage ratios

88

long teerm debt to equtiy

0.02

0.02

0.03

0.02

0.02

times interest earned

6.01

7.37

12.61

13.37

8.05

fixed charge coverage

5.16

5.83

10.16

12.16

7.96

inventory turnover

9.4

10.3

9.2

8.9

8.2

fixed asset turnover

2.81

3.15

3.54

3.56

3.00

total asset turnover

1.79

2.06

2.22

2.25

1.84

average collection period

14.25

15.22

16.87

18.64

19.01

activity ratios

Tops
2007

2008

2009

2010

2011

Profitability
gross profit margin

26.98

29.57

28.34

32.22

33.82

op profit margin

9.55

16.50

15.85

19.41

22.39

net profit margin

-1.05

12.60

8.81

12.23

15.52

ROA

-0.84

5.32

4.82

7.06

10.49

ROE

-1.14

6.10

5.54

8.33

12.28

return on comon equity

-1.14

6.10

5.54

8.33

12.28

earning per share

12.20

14.93

16.45

18.21

30.02

89

liquidity ratios
current ratio

2.54

2.79

2.79

2.72

3.16

quick ratio

1.51

1.43

1.43

1.53

1.72

inventory to net working capital

0.67

0.76

0.76

0.69

0.67

debt to assets

0.21

0.03

0.03

0.04

0.07

debt to equity

0.29

0.03

0.03

0.04

0.08

long teerm debt to equtiy

0.29

0.03

0.03

0.04

0.08

times interest earned

157.81

482.11

66.42

209.25

180.39

fixed charge coverage

43.74

121.24

45.35

147.77

123.97

inventory turnover

3.70

3.40

4.41

4.33

4.19

fixed asset turnover

1.71

0.57

0.73

0.83

1.05

total asset turnover

0.80

0.42

0.55

0.58

0.68

average collection period

12.41

18.47

14.25

5.50

6.02

levrage ratios

activity ratios

90