The University of Nottingham The School Business Studies

OPERATIONAL STRATEGY OF NESTLE BEVERAGES IN PAKISTAN

Submitted by: Saad Ahmad Khan

The dissertation submitted in partial fulfilment of the requirements for the completion of MSc Operations Management

July 2007

Table of Contents
Topic 1) Introduction What is strategy? Rationale Research objectives Research questions Company background and products of focus Structure of the Report 2) 3) Methodology Literature review Manufacturing strategy Logistics strategy and Distribution Strategy Warehousing strategy Sales strategy Corporate strategy 3) 4) Existing Products in the Beverages Sector Existing operations strategy Manufacturing strategy Logistics strategy and distribution strategy Warehousing strategy Sales strategy Corporate strategy Page No# 5 5 7 8 8 9 11 12 14 15 23 30 36 42 47 48 48 50 54 58 60

5) 6) 7) 8) 9) 10) 11) 12) 13)

Competition in the beverages sector Competitor strategy Discussion and recommendations Conclusion Bibliography Appendix 1 Appendix 2 Appendix 3 Appendix 4 (Complete product list) (Warehouse Sheikhupura) (Warehouse Kabirwala) (Warehouse Lahore)

62 65 69 79 81 85 91 92 93

Introduction What is strategy?

Strategy from a traditional point of view can be divided into four main points Plan: Its usually a top down traditional approach. It is developed consciously and implemented. It is derived through a rational and analytical process Ploy: It is a subset of plan involving a bit of game play. Usually its a manoeuvre threatening action with little intention of implementation. Position: This is the relationship of company with its environment. This usually includes strengths, weaknesses, Opportunities and threats Pattern: Its usually a stream of actions which shows a consistency of behaviour and can be intended or unintended. Protective: is usually internally determined and involves culture, ideology, characteristics shared by members of company. This is usually what determines norms and values. What is operation strategy and how does it vary from operations management? In a traditional set up operations were related to the day-to-day activities while strategy addresses the issues involving long time planning. In the present set up the way a company handles its day-to-day operations has had increasing effect on its long-term performance thus developing the field of operation strategy. In the not so far past the issues related to operations were not given their due importance. With the introduction of new ideas such as Total quality management (TQM), ISO 9000, Supply Chain Management (SCM) it was realized that much if not all research was oriented towards operational functions. This on the one hand made managers realize how they could increase profit. On the other hand Managers realized

that getting operations to work efficiently not only increases the efficiency but also reduces cost while giving an improved quality and service. Now we come to the differences between operations management and operational strategy. The boundary between operational strategy and management is a little sketchy but they have different characteristics and deal with issues in different manners. Operations management is itself the activity of managing resources and processes that produce and deliver goods and services. Were, as operations strategy is not concerned with individual processes but the entire business transformation that comes about by change in them. So while Operations management deals issues that are relatively immediate, narrow, specific and mostly tangible. Operations strategy is far reaching, broader and generalized. Operational strategy is comprised of overall cooperate strategy as well as the emergent strategies that emerge through operational experience. Thus it can be said that it utilizes both top down and bottom up approaches. Operational strategy can be divided into two parts for any company. The first part deals with the strategy required for smooth and efficient running of the internal part were as the second deals with the external elements of operational strategy. The purpose of operational strategy is to efficiently link the companies internal and external operations. The market prospective (external part) of the operational strategy is usually tackled by the input from marketing. They use the market segmentation concept to see what the customers needs are, what the companies market position is and what actions the competitors are taking. These are then translated into performance objectives or can be referred to as required performance. The strategic decision of operational strategy takes into account all the resources available (tangible or intangible), all operational capabilities possessed by the company and all operational processes taking place till completion. These are translated into decision areas for operational strategy. So operations strategy is the

vital link that integrates efficiently the exterior and interior part of all the companies operations. So the definition of operations strategy is

The total pattern of decisions which shape the long term capabilities of any type of operation and their contribution to over all strategy, through reconciliation of market requirements with operational resources References Operational strategy; Nigel Slack, Michael Lewis Kim Hoa Tan , introduction to operations management lecture, course operations strategy.

Rationale
The rationale behind the intended area of study is that the Pakistan is fast growing economy that has a lot to offer to any multinational organization. The trends in the country are changing these days from small and medium scale businesses to larger multinational and cooperate style businesses. Combining this with the cheaper operating cost, less stringent taxing laws, large market and cheaper skilled labour makes Pakistan a very lucrative option for any organization. The dairy business has changed a lot since the independence of Pakistan in 1947. The major change came in the last 10 years when finally the multinational were able to break the power of the local Gawalas. (Gawalas are milkmen that own cows and drop milk at your doorstep usually quite cheaper compared to packaged milk.). Gawalas are still the largest shareholder in overall milk consumed in the country but slowly the packaged milk is catching on. In recent years nestle has strategically placed itself between the Gawalas and the end consumer. So that they buy from the Gawalas and keep them happy as well as selling to the consumer at lower prices than before. Nestle have 65% diary based products,

and traditional Gawalas are major and direct suppliers. Nestle encourages them to bring high quality milk by offering various incentive, giving gifts and developing good relationship. Nestle also provides animal health care to Gawalas to participate and contribute in their progressive development. They have recently imported a large number of cows from Australia that they are selling at quite a nominal rate to their suppliers. This not only improves the quality of the milk but also increases the quantity besides keeping the suppliers happy. Another very important aspect behind the strategic research in Nestle Pakistan ltd is that it is the market leader in diary, confectionaries and coffee drinks and I plan to work in the company itself. This research will help me to understand the corporate culture and the strategies currently employed and the improvement that could be made to help the company grow in the national environment.

Research objectives
The objective of the report is to study the existing operational strategy of Nestle Pakistan ltd with reference to beverages and to critical revue it giving opinion on were I think things could be done better differently. This will also include a comparison to the strategies of other companies in Pakistan using functional benchmarking. The objectives will be to study in depth all the channels utilized from the very start of the process to the actual sale. 2 To study the strategies employed and developed for the beverages offered by nestle. 3 A look at strategic and operational issues involved with operating in a Asian country like Pakistan 4 Criticize and improve on Nestls current operational strategy

Research questions
1. The background of nestle in Pakistan 2. Insight into the current nestle strategy with respect to the beverages

3. The strategies of main competitions in the beverages sector 4. Critical revenue of nestle strategy and benchmarking of this strategy with those of its competitors. 5. Recommendation on improvements.

Company background and products of focus

In the 1860s Henri Nestl, a pharmacist, developed a food for babies who were unable to breastfeed. His first success was a premature infant who could not tolerate his mother's milk or any of the usual substitutes. People quickly recognized the value of the new product, after Nestl's new formula saved the child's life, and soon, Farine Lacte Henri Nestl was being sold in much of Europe. In 1905 Nestl merged with the Anglo-Swiss Condensed Milk Company. By the early 1900s, the company was operating factories in the United States, Britain, Germany and Spain. World War I created new demand for dairy products in the form of government contracts. By the end of the war, Nestl's production had more than doubled. After the war Government contracts dried up and consumers switched back to fresh milk. However, Nestl's management responded quickly, streamlining operations and reducing debt. The 1920s saw Nestl's first expansion into new products, with chocolate the Company's second most important activity Nestl felt the effects of World War II immediately. Profits dropped from $20 million in 1938 to $6 million in 1939. Factories were established in developing countries, particularly Latin America. Ironically, the war helped with the introduction of the Company's newest product, Nescafe, which was a staple drink of the US military. Nestl's production and sales rose in the wartime economy. The end of World War II was the beginning of a dynamic phase for Nestl. Growth accelerated and companies were acquired. In 1947 came the merger with Maggi seasonings and soups. Crosse & Blackwell followed in 1960, as did Findus (1963),

Libby's (1971) and Stouffer's (1973). Diversification came with a shareholding in LOreal in 1974. Nestl's growth in the developing world partially offset a slowdown in the Company's traditional markets. Nestl made its second venture outside the food industry by acquiring Alcon Laboratories Inc. Nestl divested a number of businesses between 1980 and 1984. In 1984, Nestl's improved bottom line allowed the Company to launch a new round of acquisitions, the most important being American food giant Carnation. The first half of the 1990s proved to be favourable for Nestl: trade barriers crumbled and world markets developed into more or less integrated trading areas. Since 1996 there have been acquisitions including San Pellegrino (1997), Spillers Pet foods (1998) and Ralston Purina (2002). There were two major acquisitions in North America, both in 2002: in July, Nestl merged its U.S. ice cream business into Dreyer's, and in August, a USD 2.6bn acquisition was announced of Chef America, Nestle came to Pakistan when it started a collaboration with Milkpak group. Milkpak then was the strongest dairy product company in Pakistan. It was owned by Syed Baber Ali foundation already the market leader in the Packaging industry and the representative of Tetra Pak in Pakistan. Syed Baber Ali brought Nestle to Pakistan and established the initial set-up for their Company. He still owns about 29% of their share while another local investor Chawala Group owns 20%. Nestle remained purely diary product till 1994. Then entered into food business and diversified it portfolio into non-diary products. Now the list of nestles products in Pakistan includes dairy, infant dietetic, beverages, confectionary, culinary and water (For the complete list of products refer to the appendices 1). The area of focus of this report will be the beverage. Nestle currently has the following beverages Milo RTD (ready to drink), Pure fruit juices and Frost juices. The market has a lot of competition in the juice sector. Currently the strongest competition is coming from local companies like Haleeb, Shezan and Pepsi. The operations strategy of Nestle in Pakistan especially in the beverages sector has emerged quite recently. So has a lot of potential for change unlike Unilever, which has been in the market for quite some time and suffered a lot when they tried to change their Operations Strategy under MD Musharaf Hai. 10

References www . nestle .com

Structure of the Report

The report will split the Operations strategy of Nestle in the Beverages sector into its constituent strategies. Which will include the Manufacturing strategy Logistics strategy Warehousing strategy Distribution strategy Sales strategy Corporate strategy

Firstly the author will study the literature related to all these strategies. After in depth study the author will be critiquing the existing written work and looking for similarities and differences between the different authors it will be followed asserting his own views about the subject area. After developing the literature review the author will follow by a methodology that will be a logical plan about how he wishes to achieve his objective. Research will then be conducted on the specified topic including a study on the existing strategy of Nestle in the specified field and also on the competitions strategy in the Beverages sector. The case study that is formed will then be presented in a format that easy to understand and comprehend. Finally the analysis and Results will be derived from all the above topics. This will be followed by the conclusion, which will identify the key areas were improvement could be made and areas were Nestle is performing up to standard.

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Methodology
The objective of this report is to critically analyse the operations strategy of Nestle. Keeping in mind the ground realities of Pakistan and the competition in the sector of beverages. This will be done by first researching literature on operations strategy available. The literature review will include research by a number of researchers who have conducted research specific to this topic. Material for research like Journals, Books and Internet sites will be searched to come up with data for this research. This data will then be segregated into the portions of operations strategy. And sorted and displayed in a systematic manner so it reflects the cutting edge management and strategic techniques used in Multinational environment presently. The areas of interest for literature review will include the following constituent strategies Literary research Manufacturing strategy Literary research Logistics strategy Literary research Warehousing strategy Literary research Distribution strategy Literary research Sales strategy Then this will be used to tailor the factual research on ground from Nestle and also its competition in the Country. This research will focus on specific product of both which will be described. The data for the existing operations strategy will be acquired through interviews and presentation from Nestle and the Competition. This data will be presented under separate headings of. Existing operation strategy of Nestle Competitions Business strategy In case of unavailability of some data due to its sensitive nature or the companys reservation, market survey could be conducted to paint a picture of companys strategy. Individuals with previous experience in the company but presently not

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affiliated with it could also be interviewed to come to some understanding of unavailable data. Summing this up with the data of any new improvements initiatives taken recently could be very effective to reach the desired result. This will be followed by a discussion and recommendation portion, which will start by painting a picture of Pakistans current business environment followed by a critical analysis of Nestls existing operations strategy in the light of The Literature review The Countries business environment The operations strategy of competition Recommendations will be suggested under the same portions. This will be done keeping in mind the literature review and factual on ground realities in Pakistan. All the research will be summed up in the conclusion in manner of case study, painting the picture of Nestles operation strategy. The areas for further research will also be identified here keeping in mind the research done prior.

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Literature review
The literature review will be divided into five different sections. Each of these sections will be a integrate part of the operations strategy. These parts are as follows Manufacturing strategy Logistics and Distribution strategy Warehousing strategy Sales strategy Corporate strategy

Firstly the author will study the literature related to all these strategies. After in depth study the author will be critiquing the existing written work and looking for similarities and differences between the different authors it will be followed asserting his own views about the subject area.

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Manufacturing strategy
The first question that comes to mind after reading the term manufacturing strategy is what is manufacturing strategy? It has been defined in different manners by different people. It is your need that defines Manufacturing strategy for you. What needs to be understood is that manufacturing strategy is not a built solution that can be adapted to any organization in any market segment. Its actually a tailor made solution or as I should say an adapted solution for the specific needs of the particular organization in question. As Raffaella Cagliano Nuran Acur and Harry Boer (2005) tell us in their paper about different manufacturing research undertaken by different individuals and organizations. Stobaugh and Telesio (1983), identified three types of strategy low-cost, technology-driven and marketing intensive strategies. Hayes and Wheelwright (1984), developed a four-stage framework based on the strategic role, external integration and openness of the manufacturing function. Richardson et al. (1985), developed a classification of business units according to six mission statements and four manufacturing tasks Kotha and Orne (1989), defined, a framework comprising eight types of strategy based on three dimensions: process structure complexity, product line complexity and organisational scope. Miller and Roth (1994) found three groups of manufacturing task-based strategies, which they called the caretaker, innovator and marketer. De Meyer (1990) identified three groups based on the same variables as Miller and Roth (1994) high performance product groups, manufacturing innovators and marketing oriented. Sweeney (1991, 1993), studied the way companies respond to competitive challenges, found four types of strategy: marketer, innovator, caretaker and reorganizer. Ward et al. (1996) developed a taxonomy addressing environmental fit. They identified include niche differentiators, broad differentiators, cost leaders and lean competitors. 15

Cagliano (1998), identified six configurations of manufacturing strategy, based on competitive priorities: manufacturing innovators, caretakers, technology exploiters, cost minimizes, high performance producers and marketers Kathuria (2000), indicated different groups of small manufacturer labelled as: do all, speedy conformers, efficient conformers and starters. Frohlich and Dixon (2001) tested and extended Miller and Roths taxonomy on the basis of the IMSS II sample, using competitive priorities as clustering variables. Identified three additional manufacturing strategies, which they labelled idlers, servers and mass customisers.

What this tells us is that manufacturing strategy is a very large field and a lot of research has taken place during the years to improve it. In my opinion the logical way to go about manufacturing strategy is to see what has to be kept in mind while developing it for any organization. C.A.Voss (2005) has one of the most direct approaches toward manufacturing strategy, which is of much importance. The writer divides the strategy into three approaches which when inter connected form the manufacturing strategy.

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Competing through manufacturing: C. A Voss believes that manufacturing firms should compete through its manufacturing capabilities, to come up with marketing strategies to fulfil the needs of the market place. This helps by identifying the limited yet decisive factors that are set as goal for all internal partners. (The diagram gives a list of factors that come under this heading) Strategic choice in manufacturing: These choices comprise of two areas process and infrastructure. It is based around the paradigm in the need to attain internal and external consistency. When done properly it can create coherence between internal and external customers. This can compare the whole operations strategy to market positioning. Best practice: Its focus is to become prominent in manufacturing strategy. There is also evidence that this can cause major problems, especially in companies, which are not practicing best practice. Best practice usually starts in small isolated pieces such as just in time, MRP II, FMS, TQM, concurrent engineering and business process re-engineering. Best-practice approaches are nothing without proper implementation. Identifying and deciding to implement best practice will not by itself guarantee improved performance. Partial implementation, failure to achieve calculated performance and abandoned programs are quite common. Manufacturing strategy like any other strategy requires constant assessment to see were the weak areas lye and how they could be improved. G. Keong Leong develops a quite handy tool for this purpose and Peter T. Ward (1995) called the Six Ps of manufacturing strategy. They think it would be useful both to researchers who are striving to observe manufacturing strategy empirically and to practitioners who are assessing their own manufacturing strategy or that of a competitor

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Six Ps Planning: Assures a fit between manufacturing goals and actions and those of the larger organization Proactiveness: Anticipate new manufacturing processes and technologies and implement long-term programmes to acquire capabilities in advance of needs Pattern of actions: The observed stream of decisions of a manufacturer over a time in nine categories: capacity, facilities, process technology, vertical integration, production planning and control, quality systems, organization, workforce, and new product development Portfolio of manufacturing capabilities: It reflects competitive strengths possessed by the manufacturing function and their relative importance. Programmes of improvement: The set of structured, time-phased, and evaluated actions, which are implemented to improve the manufacturing capability of the firm. Performance measurement: The systemic means by which manufacturing is evaluated. In the authors opinion these are the judgement criteria, which should be kept in mind while evaluating any manufacturing strategy. This in gulfs all the in-house evaluations of the organization of the organizations own manufacturing strategy or the competitor for that matter. If we try to define the basic types of manufacturing strategies I would have to agree with Raffaella Cagliano, Nuran Acur and Harry Boer (2005) when they say that there are four major types of strategies and each has its own manufacturing strategies. Four types of strategies: Market-based strategy. Market-led organizations seek to differentiate themselves by offering high product quality, superior customer service and high flexibility and product variety Product-based strategy. Product-led organizations seek to compete through product innovation and improvement. 18

Capability-based strategy. These seek to improve and innovate their capabilities (technologies, knowledge, competencies). Price-based strategy. These companies operate in mature product markets, where the success factors are a good price-quality ratio together to adapt somewhat to specific customer requirements.

Raffaella Cagliano, Nuran Acur and Harry Boer come to a conclusion that traditional manufacturing strategies are losing their edge and now the shift is towards a dynamic, process-oriented perspective. The conclusion also states that the product-based strategy is the most commonly used manufacturing strategy its also the most established over the years, capability based is gaining importance, Market based is having trouble establishing it self and the price based strategy is not used now (comparatively). (Bozarth and McDermott, 1998) believes that more research needs to be done on the internal connections between manufacturing strategy and external environment that leads to manufacturing decisions If we study all these progresses made in manufacturing strategy over the years we come to see how people exactly saw their objectives when they developed new techniques for manufacturing strategy. Usually when a need is felt for improvements in manufacturing strategy senior managers look at the history of their organization and identify the important past and current strategies. They begin by proposing a representation of manufacturing strategy, through charts. John Mills, Andy Neely, Ken Platts and Mike Gregory (1998) have given a strong idea of developing strategy charts. They have divided them into three parts strategic events, chart axes and Priori biass that enable the chart to achieve manufacturing objectives, strategic importance, linkages between strategic areas; they can be easily updated and can also be identified for current strategies.

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Strategic events They are corporate goals; supportive cost, time, quality and flexibility goals must be developed for manufacturing. The chain of decisions dealing with these come under strategic decision. Chart axes Time was chosen for the horizontal axis to enable past and planned events to be included and to enable the chart to be updated easily. For the vertical axis a top down strategy hierarchy was preferred because it was the most traditional precedence of strategic levels in practice and in the strategy literature. A priori bias Pettigrews (1992) framework for business strategy has helped in identifying proposed charts. It comprises of processes, and how strategy can be made which includes both external factors such as economic/business, political, and social environments and internal factors covering the enterprises resources and capabilities plus its cultural and political facts. After the strategy chart has been made, the processes starts from collecting the data to implementing the strategy. Certain attributes such as strategy communication, validity and comprehensiveness all are taken into consideration. Later on a number of potential improvements are also recommended Another way of looking at manufacturing strategy is to separate the process of its development and its content. Manufacturing strategy is dependent on a number of things such as cost, quality, dependability and flexibility these are the competitive factors that form the organizations manufacturing strategy to keep them in the market. When we discuss the factors that keep the company competitively in the market we should not forget the product design. John F. Dalrymple and Martin Spring (2000) tell us in their research about connection between product design and its customisation. People simply conflate low volume with customisation, although the authors believe low volume often implies high variety, it may or may not coincide with 20

customisation. This is very true as the organization moves towards lower volumes the variety does increase and personally customized products are the focus meaning high variety. There are two groups of research studies on manufacturing strategy configurations. The first focuses on foundations of the theory and survey. The second type of study stems from the generic strategies. Chin-Fu Ho (1996) is of the belief that a contingency theory approach should be used to optimize manufacturing performance. The question is what is contingency theory. Contingency theory approach: is that organizations should focus on there strategy to optimise performance taking into consideration the environmental factors to. A contingency model should incorporate both environmental uncertainty and the managerial choice model.

Certain factors that influence this strategy are environmental uncertainty, perceived uncertainty, implications of risk and its measurements, uncertainty risk and flexibility, manufacturing flexibility etc

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In the end I would like to finish by saying that in all the above-mentioned journals it states the different definitions given by different people and strategies offered by them. It states that a company with a good manufacturing strategy has to have a good marketing strategy for the progress of its product in the market. Due to increase in competition and the economic instability every company has to have a greater focus on both be it a large organization or a small businesses. Manufacturing strategy is defined as decisions and plans affecting resources and policies directly related to the sourcing, production and delivery of tangible products.

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Logistics strategy and Distribution Strategy

There are a number of ways to achieve a market leadership position in your business sector. The different ways to achieve market leadership include distinguishing factors such as price, quality, lead-time, delivery reliability, product diversity, customisation, direct deliverability etc. To select the right mix that translates into Market Leadership is not only difficult but an ever-changing task. Marcel Mourits and Joseph J.M. Evers (1996) are of the opinion that intensive competitions all round the world is the reason for logistics gaining so much importance in all round business strategy. Its what separates you from your competitors and gives you a competitive edge over the competition. There is no hard and fast rule for logistics strategy design thats what makes it fluid and so rapidly changing. Its not easy to establish a distribution strategy for activities like transhipment, maintenance of inventory or work in progress inventory. The authors have developed a dedicated support distribution planning support system. This they think could provide to all logistics activities. They put it in between abstract mathematics and concrete problem situations as faced by logistics designers. Subsystems of the distribution planning support system are 1) Integrated planning support framework. This integrates dedicated analysis models in a design method with a focus on the structure and the development process 2) User interface that should facilitate the use of models by non-experts The author does caution that the model does not include fixed costs associated with plant establishment at any specified location. With the coming of the age of computers virtually every thing has changed, this includes distribution as well. Organizations entering the market need this technology to stay ahead in the game. David Pollitt (1999) is of the same belief he believes that to enter into this new age requires five main changes in any companys strategy

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1) Confronting the realities of Globalisation That means Companies really need to understand that emerging markets need to be tapped wherever they are located. This needs to be done as quickly as possible as others may not hesitate. 2) Crafting a new agenda for product innovation This as rightly said by the author is the primary tool in the retention of modern customers and development of new ones. This requires manufacturer to develop new strategy by utilizing the new technologies currently available. This also means more R&D, marketing and integration of customer provided data and the manufacturing 3) Resolve the customer paradox In my opinion one of the most important points would be this one here. Even though the product quality is increasing still the customers want more. They arent satisfied with the currently coming new product. 4) Integrate the global supply chain The supply chain is the vein that runs in the body of the business. The need is always to provide customers in a flexible and speedy manner 5) Align the organization to compete in the twenty-first century In the authors opinion the higher management needs to continuously focus on the improvements that could be made in the existing strategies by the current technological achievements. They cant keep their market grip without this. David Pollitt point is also reinforced by the bare fact that the customers are now spread all over the world. The creation of strategy for the logistics and distribution operations also has to cater for realities like raw material and labour being comparatively inexpensive in the third world nations. Alain Halley follows. Customer service Sector-based competition 24 and Alice Guilhon believe that the stages that led to the creation of logistics strategy are as

Increased competitive pressure Technological transformation of transportation Change in distribution channels Pressure for survival Change in distribution, supply and delivery channels Information system Sector-based deregulation With the coming of the computer age they are being used in all business operations. The difference between managements and there flexibility Reflects on whether the computer can be used in distribution, Samuel Eilon (1995) defines this flexibility as the rate at which the management is prepared to adapt to change. There should be an easily distinguishable line separating the two types of management tasks: operational management and planning and control. Operational management Operational Management deals with the day-to-day running of the business. This requires a lot of management skill and computer applications a few examples of these would be vehicle scheduling, inventory control etc Planning and control Planning and control deals with operations that require a longer time comparatively. Some examples of these tasks would be market evaluation, price policies etc Samuel is of the belief that clearly Computers do not provide solutions to all management problems. There are a number of operations problems in which there is a need for online facilities, both for computational purposes and for information retrieval. There are numerous other applications, particularly in planning and strategy evaluation, for which an online computer is not required, and indeed for which there is a need for the firm to have only reasonable access to a computing facility, but not necessarily to own it. technical and technological standardization Transport

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Computers are especially of importance when the number of products increases, with this increases the absolute number of products in inventory increases, which in turn means that, the inventory value and cost also increases. B. Andries and L. Gelders (1995) have derived a means to solve this problem the negative spiral of increasing logistic costs and decreasing efficiency as they call it can be countered by good localization of order penetration point, a time-based strategy downstream of the order penetration point and the use of concepts like commonality, load and throughput-oriented order release. The order penetration point They define order penetration point as the stage in the production line from where production is on order. Production in after the order penetration point is for general purpose and based on forecast data while production or assembly behind the order penetration point is dedicated to a customer. The production downstream the order penetration point The control and planning of this part of the line depends on the order penetration point. The author are of the belief that objective of the planning is to maximize the service level while keeping the lead time beneath the promised lead time which is usually requested by the client. A very good example of a good thought of Logistics and distribution strategy is the case of Design to Distribution Limited. They are one of Europes largest electronics subcontract manufacturers. The company has transformed itself from a supplier to a contract electronics manufacturer. To compete in the current market, the company needs to achieve high levels of service delivery, a tight business controls and an uncompromising attitude to quality, in all its processes. Design to Distribution Limited uses advanced benchmarking practices to measure processes internally. The business model uses the principles of leadership, policy and strategy, people management, resource management, processes, self-assessment, customer satisfaction, people satisfaction and impact on the society.

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Paul Rafferty (1995) explains how he used self-assessment model as a business model. It is a model that links all the aspects of the business, enabling the company to drive continuous business improvement through total quality management. Design to Distribution Limited success in moving into a multi-client, open marketplace could not have been achieved without the focus on customer service and process disciplines which total quality management brings. This shows that a lot of strategies could be used to improve distributions that were not specifically designed for it. Strategy like the Evolutionary solution strategy could be used to improve distribution of all kinds. As A. Augugliaro, L. Dusonchet, M.G. Ippolito and E. Riva Sanseverino (2004) write in their paper that tthese are optimisation strategies. This allows a strategy to grow naturally and is founded on three basic principles: (1) The recombination (implemented by the crossover operator); (2) The natural selection; and (3) Diversity by variation (implemented by the mutation operator). The heart of physical distribution is a strategic choice for any organization. This is given importance relative to sales strategy. In comparison to sales these channels for product distribution and after-sales service are quite important to attain a competitive advantage as compared to the competition. As any strategic decision selection of the channel that distributes the organizations product depends heavily on the product characteristics as well as the manufacturers characteristics. Three selection criteria need consideration when selecting any such channel according to Arvinder P.S. Loomba (1998) these are as follows Distribution structure: in the authors opinion is the managements decision of selecting a particular type of distribution channel to serve designated end-user markets decisions must be based on sales maximization, cost minimization, and goodwill control. Distribution intensity: in her opinion is the decision concerning the number of intermediaries to be involved with the distribution channel. Depends on several factors including the number of consumers targeted, consumer volume potential, 27

availability of channel intermediaries, significance of the purchase, level of channel control requirement, channel intermediary and consumer contact requirements and geographic and industrial concentration of the market Distribution management: here deals with the decision to employ price and other marketing-mix variables to influence the performance of distribution channel components. Only when you judge a supplier on these guidelines can you actually access the strategic importance of the managements decision. When we discuss distribution we should also touch the market entry modes. Market entry mode is also strategic decision that requires an in-depth knowledge of the type of market in question and how to target this market segment. Distribution plays an important role in this general practice. The differences in the macroeconomics of different countries are quite large and need to be taken in consideration while designing a distribution strategy. So a good distribution strategy must therefore be able to cater for the specific requirements of each countries national environment.

In the end I would like to comment that if we implement proper supply chain management we could cater for all new technologies in the logistics and distribution scenario. Coupling this up with a system that reduces delivery time is the key to success in this sector. Especially when operation-streaming lining, cost reduction and reduced delivery time are gaining so much importance. The supply chain concept as rightly put by Bernard J. La Londe and James M. Masters
(1994) is when two or more firms in a supply chain enter into a long-term

understanding. The firms could be buyers, sellers, vendors or any sort of service providing third party. What this relationship needs is trust and a lot of it, as they will share a lot of information for this relationship to be fruitful. What the parties need to understand is that a lot of changes will have to be made for this corporation but once they successfully integrate they could achieve results like service improvements,

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reduced lead-time and cost reduction. Even the benefits would have to be shared down the supply chain. Now what needs to be understood is that implementing supply chain is not as easy as it seems there are a number of issues as well. The major problem is developing the trust required for such a relationship as a lot is at stake here. Even if the trust is developed the complexity of the system becomes so problematic that a lot of attention has to be paid to make simplify and amend it.

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Warehousing Strategy
What does warehousing strategy mean and what do people have in mind when they implement it in their corporate strategy. What we need to realize is that changing market trends have led to a lot of competition, and in order to remain competitive with the changing environment companies have to be more competitive, responsive to customers, deliver value added products. Now companies need to have the early market entry advantage or have a distinguishing feature that distinguishes them from the competition. This could be by location, size, offerings, costs, supply chain etc. To compete companies know have a strong software that is the most powerful tool available ERP. The ERP is only as strong as its implementation in any organization and its implementation requires time and expense. Yun Zeng, Roger H. L. Chiang and David C. Yen (2003) believe that any ideal ERP should be: Flexible Comprehensive Modular and open Beyond the company Simulation of reality Multiple environments required

Its data collection system support searches in manners that are: Subject oriented Data integrated Time variant Non-volatile

Focus on the integration of ERP and data warehousing is being taken into account to achieve more success.

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Another very powerful tool for the warehousing is the Geographical information system. This software is a system for managing and integrating multi facility warehousing and production systems is distributed in a very large area. The software system has been designed to maximize information transfer into diverse general warehouse settings. The efficacy increased with the use of the software. The Geographical information system platform offers unique capabilities that increase the problem solving capabilities of the system. Warehouse management software is pushed to the limit in conditions of dealing with a large number of warehouses in a larger geographical region. The concerns of the management are usually related to nature of stored items and regulation. These concern are usually due to the limitation of capability that translates in to standard operating procedures. David A. Johnston, G. Don Taylor and Ganesh Visweswaramurthy (1999) believe that the geographical information systems based software described in their paper offers the capability to manage spatial and graphical information, as well as how to review and use the information. The software system can be used to locate, manage, and pick and drop stock on a number of locations. They believe that the system could also be used ensure that the warehouse system remains efficient under steady-state operating conditions. More research needs to be done on the following areas of concern To determine the efficiency of the software. The methods used to allocate inventory optimally inside a warehouse.

The data ware housing even without the ERP system in the present business environment should at least be designed keeping the following in mind as Catherine Ma, David C. Chou and David C. Yen (2000) Is organized to serve as a neutral data storage area Is used by data mining and other applications Meets specific set of business requirements Uses data that meet a predefined set of business criteria

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They also propose that it have capability like online analytical processing which is software that allows managers to rapidly see the new coming data. Data mining and Data visualization are another couple of facilities quite important in the opinion of the author. They allow patterns of data to be identified quite quickly from a large data size and could be represented in demonstrating charts such as histograms and plot scatter. When such tools are utilized data warehousing can be a converted from an exercise to a competitive advantage for the organization. It transforms data into information in an intelligent manner useful for the entire organizations management. With the coming of the JIT concept, warehousing strategy is shifting from its traditional doctrine. Now only the planning of the warehouse processes is usually kept in-house in more dynamic companies. While the rest of the tasks like allocation of resources, manpower and finances pertaining to warehousing is outsourced to supply chain partners. The challenge now is not physically moving material from one place to another but also the movement of information through the entire manufacturing and sales cycle within the supply chain. This starts with the purchase of material and goes up till the actual sale of the product. More and more companies now outsource logistics facilities to get a better result from there competitors. With JIT, purchasing seems to move away from the traditional role by establishing and managing supplierpartners relationship more strongly. Michael S. Spencer, Dale S. Rogers and Patricia J. Daugherty (1994) believe that the conclusion derived from the implementation of the JIT principle could be used to: Evaluate potential suppliers and future prospects. Identify trends in the usage of third-party logistics services. Determine specific evaluative criteria, This could be used to select the Best partner for warehousing operations If the company does intend to keep the warehousing operation in-house, then modern techniques should be used to make it as efficient as possible and the leading technique here would be the Cross-docking. What is cross-docking? A simple definition of cross-docking is consolidation of supplies from a number of suppliers or

32

manufacturers and then dispatching them to a common destination without actually stocking them in the warehouse. Key elements that compose cross-docking are integrated resources, no stockholding, and sequenced operational process. Crossdocking is important due to its service offering, cost reduction, fewer inventories cost and reduction in logistics cost as a whole. There are a number of other technologies that have grown under the umbrella of Cross-docking they include Stock consolidation, processing centres, just in time, product customisation, satellite tracking, bar code tracking, etc. Ewen Kinnear (1997) believes that there are broadly two manners in which crossdocking could be employed: Product sort. Final destination sort.

Ewen Kinnear idea of product sort model is that the original sending location dispatches the complete consignment of one product code covering all final destinations. The transhipment centre will receive a series of these product consignments and break them down into common final delivery orders. In the final destination sort model however the original sending location will pick and label each consignment for the final target location at source An ineffective organizational structure can be an obstacle to the development and management of logistics. Firms are still trying to maximize utilization of their resources instead of investing productively on new technology and equipment. Mark Goh and Parooj Pinaikul (1998) believe that Electronic Data Interface could be a very effective tool in the modern business environment. EDI and information systems are the keys to superior logistics management and are crucial in improving the efficiency of logistics activities and it can even reduce the demand for better transport infrastructure.

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Peter van Laarhoven, Magnus Berglund and Melvyn Peters (2005) are of the opinion that the top management needs to take steps to improve the existing warehousing strategy. The steps need to be taken in Top management involvement Contracts Corporations Dynamics

To come up with a warehousing strategy that compliments the existing business strategy of any company. A very good example of designing an operational warehousing strategy would be that for the Olympics game. The design such a complicated warehousing strategy requires a lot of input. Ioannis Minis, Marion Paraschi and Apostolos Tzimourtas (2006) paper is on the design of the organization, processes, and systems of Olympic logistics and warehousing. They developed a methodology that has been designed to develop strategy and tactics of logistics operations for Olympic games. This format for the development of logistics and warehousing takes into account Olympic-specific characteristics, host country characteristics, as well as lessons learned from previous games. It can also be used to provide guidelines to reinforce the experiential knowledge of the past to plan the logistics operations for the games and similar large-scale events. Ioannis Minis, Marion Paraschi and Apostolos Tzimourtas have designed the warehousing operations to offer design principles, such as model venue planning, standardization of materials used, the establishment of the Logistics Command Centre, as well as independent administration function. It can be quite useful regardless of the specific characteristics of the host country. Authors proposed design process provides rules that may be applied to guide the set up of operations for future games. Their approach comprises the generation, analysis and evaluation of strategic alternatives, the development of core business processes and the prediction of resource requirements.

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Some characteristics that can be focused upon for improved operations. Other requirements like ones based on weather and country, Size, Demand diversity and uncertainty, equipment management and firm schedules can also be tackled in this standard

Mark Goh and Parooj Pinaikul (1998) believe that Effective and efficient supply chain management has become focus for many firms. Search results reveal that firms prefer responsive suppliers, And that most of the logistics costs incurred are on transportation and warehousing. Firms with logistics departments are focusing on upgrading their logistical systems and are more pervasive in using technology to manage logistics as compared to firms without formalized logistics departments. The factors hindering logistics development include inefficient information systems, transportation problems, and the lack of management expertise. Logistics managers need to be competent in modern technology and possess logistics specific skills.

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Sales Strategy
Operation efficiency and effectiveness does come under a lot of question these days. Businesses are continuously working for improvements in the effectiveness and efficiency of their operations. Sales operations come under increasing questions because they deal with promotional expenditures, such as advertising, personal selling, public relations, and sales promotions. They were traditionally among the most difficult marketing costs to analyse or justify on a profit versus cost basis. There have been significant sales impact due to, sales promotions such as coupons, samples, premiums, contests, point-of-purchase displays, and frequent-buyer programs, which is why they are widely employed by manufacturers and retailers. Usually each of these promotional activities has a particular benefit or objective. Srini S. Srinivasan and Rolph E. Anderson (1998) believe that sales promotion activities initiated by any sales organization can be divided into three categories: (1) Consumer promotions; (2) Trade promotions; and (3) Retailer promotions. Srini S. Srinivasan and Rolph E. Anderson believe that the short term profitability of the sales promotion are one thing, the management needs to strategically plan the promotions in a manner that not only have long term benefits but also these benefits need to be accounted when conducting cost benefit analysis. Ian Wilson believes that in a lot of organizations even the responsibility of marketing lies on the shoulders of the sales force. These are the organizations that rely heavily on the sales force because of large sales targets. The sales are the core competency of these organizations. The sales force gives presentations and also is the face of the company in front of the customers. This is realty for a very large number of companies in Pakistan. Especially in the engineering sector but companies like nestle and most other FMCG multinational organizations keep them apart

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There are a number of studies that are focused on population segregation of consumer and the sales strategy. This in my opinion is quite important as all your sales efforts come to nothing if you dont plan on who would be using your product and how to attract them. Thats what sales strategy is. The study by Nora Lado (2004), Ester Martnez-Ros and Ana Valenzuela is based on export sales volume by destination based sales strategy. They find that the importance of exporting experience and proactiveness is very high in determining high export sales volumes in every regional market except for those psychologically close. But there is a high proof that, different marketing strategies depending on the region lead to high export sales volumes. What is a good sales strategy and how could we develop it in any organization. The point to note here would be how do you sell your product. Sales negotiations need to sell a value, not the price of the product. Thats what the company needs to make their sales people realize. Ron DAndrea (2005) research on high performance sales and of performing sales people brings to light a number of issues that should be taken into account when evaluating any sales person. She found out that high-performing sales professionals respond to this challenge more effectively than the rest. Throughout the sales process, they execute sales negotiation strategies that build the perceived value of their solutions and help their customers justify paying higher prices. As a result, their agreements help build their companys bottom line. Her research finding I think are of great importance and should be studied by all sales executives. Research findings are as follows: Average performers: Position their product on a price/performance basis only, and shift discussion quickly to a price, playing field Demonstrate low initial price proposals that leave little room for subsequent negotiation Feel relatively powerless in sales negotiations and therefore sell premium pricing with low conviction

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Respond quickly to the customers stated wants (usually a lower price) Strive to get the customer the requested price concession quickly and in full, often receiving nothing of value in return

High performers: Position their product/service as part of a solution to a strategic customer problem. Show reluctance to shift discussion away from value playing field, and to price issues without confirmation of needs Demonstrate high aspirations through high initial price proposals (within the range of reason) Share only information that supports their value-added positioning Feel relatively more powerful, and therefore sell premium pricing with strong conviction Probe deeply to uncover and address underlying needs that increase the value of the offering Concede on price late in sales process, slowly and reluctantly. Receive value in return when concessions are made In my opinion her six points on high performer sales men are quite interesting and could be used quite effectively for value based sales negotiations strategies. These points can also be used in the day to day lives of managers to make better value based sales and shifting the focus from price to value for business. In the world me move around the business environment is very complicated much more than it was three or more decades ago. Competition is the name of the game now and its not steady either its increasing steadily. In such a business environment managers are the key to any achievement. They must create an environment, which makes employees feel trusted and empowered to make decisions. With the rise of inter connected operations and globalisation, information distribution to the customer and the supplier is gaining much more importance. Organizations that have Sales as their core competence are focusing on learning and increasing their intangible assets. This might be the only way to remain competitive.

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This in the view of Alan D Smith and William T Rupp (2003) requires a functional relationship between sales performance and other factors such as individual motivation, resistance to change in the sales organizations structure and strategy. This change requires a strategy for its implementation in these times of high communication levels. The author believes that motivation is one critical factor affecting sales performance. Not only that resistance to change in an organizations structure and strategy directly affect motivation level in organizations as well. I agree the more motivated the employees are the more they accept of trying new strategies. But I do caution here that rapid changes in organization structure and strategy could lead to undesired effects. This is because these are both the representative of stability in any organization. The brand gives a product a certain additional value. This value adds a certain amount of premium price so that it can be sold at a higher value. This value is added in the business profitability, which allows the business to further grow and develop better products. Tihomor and Ranko stankek (2003) tell us that the basis for the market brand value is the memory of the customer. Now if the customer shows more inclination to one brands marketing mix as compared to another brands it goes on to show that the selected brand has higher market value. It is the authors belief that brand has a direct link with perceived quality which is comparatively more dominant In the mind of the consumer than its physical characteristics. So the importance of brand is much more than traditionally believed, its a valuable asset for the company and it should be managed, developed and used properly. This presents the choice of strategy providing a company with competitive power, and ensures the companys long-term survival. When you try to understand the Psychology and sale shopping many factors can affect the mindset of the consumer Price perceptions, thresholds and attributions Consumer protection Motivation

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These are but just a few of them Erica J. Betts and Peter J. McGoldrick (1996) believe that there are a number of factors that motivate people to shop some of them are listed below from a study they conducted Excitement and atmosphere. Competition. Risk Guilt relief. Fear of missing out. Reduced prices and the bargain.

Besides perceived quality as explained by Tihomor and Ranko stankek (2003) these factors also affect the customers shopping habits. If they are used properly could help sales strategy of the company. Much of the focus of corporate and academic attention has been on developing innovative entry strategies for the new developing countries markets. The retail and distribution system in countries China, India and Pakistan are all unique. With the entry of foreign retail sector however foreign companies seeking to implement Western-retailing processes are unlikely to realize the full potential of these markets. This can only be achieved if they take into account the shopping behaviour patterns of the countries general population. A lot of further research needs to be done to create a strategy that is in line with the target markets choice. S. Nicholas Samuel, Elton Li and Heath McDonald (1996) have come to the conclusion that for the purpose of formulating their marketing strategies, Organizations must first define the target markets profile. Then decide how their operational activities will be positioned in relation to the existing and coming competition in the identified target market. Theoretically, the cost of shopping is recognized to have three main components: The transport and time costs of getting to and from the shop (a fixed cost);

40

The time cost of purchasing within the shop (a primarily variable cost); and The pecuniary cost (price) of purchase (a variable cost).

All these need to be addressed to get a proper business strategy in any new entry country specially the developing countries. What the readers need to understand is that Sales is an art and it can be focused by infinite means. These are but just a few ideas of what to keep in min when accessing or formulating any sales strategy.

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Corporate strategy
It is the mother of all strategies. It is from which all strategies originate and in which they sum up to form the organizations over all business strategy. In the resent years a shifting trend has been seen from traditional business strategy towards a greener and more clients oriented strategy. When I say client-oriented strategy I mean a strategy that is both beneficial for the business and the general population of the business area and clients in particular. Business ethics have been developed by many companies to stop exploitation and set targets for cleaner environmental friendly processes and products.

Business network improvement is one of the primary requirements for any organization. ERP is one of the most powerful tools that make you realise exactly what your organization is capable of and how effectively you are handling your resources. M.P. Jaiswal and Anjali Kaushik (2005) paper on the effectiveness of enterprise systems at business network level presents the best practice case highlighting how business network systems could be redesigned using enterprise systems to strengthen bonds with business partners and to enhance value for the consumers. This paper examines the business potential of business network redesign. Its a case study focused on a company HLLNet that has just extended its ERP system to establish transactional and relationship-oriented Business Network and has achieved significant improvement in business performance not just within the organization but also for all partners in the chain. The advantages include reductions in inventory, improvements in cash flow and a negative working capital due to improved flow of information across the chain. They have also attained better policies and new implementation such as vendor-managed inventory. The research gives new ideas or rather a new implementation of existing ideas for adoption of ERP systems across the chain, along with a redesign of Business Network. The authors have shown how an improved ERP system can improve and contribute significantly in adding value for end consumers.

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Henry Yu Xie and David J. Boggs (2006) research on branding strategy from the point of view of a Western organization entering a market in a developing country brings together two research streams, market entry strategy and branding strategy, with particular reference to corporate branding versus product branding strategy. They research shows that choice of branding strategy is determined by five major factors and three variables, which are given below. Their eight contributing factors are as follows: P1. The broader the stakeholders interests, the more likely firms operating in emerging markets are to choose corporate branding. P2. The more corporate image is emphasized by stakeholders in emerging markets, the more likely entrants from developed countries are to choose corporate branding. P3. The more complex a target market in an emerging economy is, the more likely entrants from developed countries are to choose corporate branding. P4. The higher the costs of marketing in emerging markets, the more likely entrants from developed countries are to choose corporate branding. P5. Market entrants selling industrial products in emerging markets are more likely to use corporate branding than those marketing consumer products. P6. The size of a firm entering the emerging market is positively associated with the probability of choosing product or corporate branding. P7. The length of a firms relevant experience is positively associated with the probability of choosing product or corporate branding. P8. The extent of a firms international experience is positively associated with the probability of choosing product branding over corporate branding. I believe that in a rapidly developing business environment, their framework, which is derived from thorough good research, will offer solid on ground marketing intelligence to planners for international markets. These eight factors do need a right directional orientation for future research. Their work does offer framework for the development of concept of an important element of marketing strategy in the new challenging market conditions.

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Heather Elms (2006) paper on corporate responsibility in central and Eastern Europe is a good benchmark to access any business organization. It deals with examining the corporate social responsibility in Central and Eastern Europe. It basically gives a critical view with characterization, explanation, and critique on the existing strategy of number of multinationals in the area interviewed. There has been a lot of focus on corporate responsibility in Europe in the recent years. The interest of European countries as well as a number of other countries in such issues leads us to believe that there is a growing interest on the contributions made by companies in the context of corporate responsibility. The author has used local knowledge and research has been made on secondary materials from multinational and local companies in the region. She believes that there are a number of growing activities taking place-showing examples of and perspectives on corporate and stakeholder responsibility in central and Eastern Europe. The paper suggests that CSR should be understood as corporate responsibility to stakeholders, rather than as corporate charity, public relations, or marketing, and that any lack with corporate responsibility in Central and Eastern Europe are associated with lack in stakeholder responsibility. She goes on to propose that in a market in which stakeholders place value on ethical behaviour, corporate responsibility becomes very important as wells. What we deduce from this paper is that without stakeholder responsibility, corporate responsibility will not develop in Central and Eastern Europe as well as the rest of the world. She however, goes on to write that there are examples of such corporate stakeholder responsibility growing in the region. In my opinion Central and Eastern Europe is an ideal region were corporate and stakeholder responsibility could be studied. As its quite close to the developed world and developing at quite a rapid pace. She tells us of the World Banks recent study of approximately 150 corporate executives each in Hungary, Poland and Slovakia suggests that 66 percent of the executive interviewed in Hungary identify CSR as complying to existing regulations 80 percent of executives interviewed in Poland identify CSR as ethical conduct and 55 percent in Slovakia link CSR to addressing stakeholder concerns.

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Marylyn Carrigan, Isabelle Szmigin and Joanne Wright (2004) write in their paper on ethical consumption in older markets how marketers are recognizing the value of older consumers. Their research on the attitudes and behaviours towards ethical consumption is being conducted giving an idea as to how things are being used. From the collection of individual interviews/surveys conducted it is being made clear that older people share a sense of moral responsibility in their purchase behaviours. They are even willing to either engage in purchasing the product or boycotting it. It was observed that as a group they should be considered as an important target market for ethical marketing organization. Who wish to benefit from their collective sense of social well-being? The author when defining the term ethical consumer describes that they have used this term for both companies and consumers. They considers ethical consumerism to be buyer behaviour that incorporates all the principles of environmental consumerism and more; ethical consumers can also be regarded as people who are aware and are influenced by environmental or ethical considerations and keep them in mind when selected products. The writer then gives the example of the British population of older shoppers and goes on to say that they are extreme as far as their shopping trends go. In there purchasing patterns it is observed that they still spent lavishly on new products and brands. They are still in the market for plenty of luxurious items such as cars, vacations, alcohol and financial services. This actually goes on to prove that not only is shopping trends dependent on age but also cultural backgrounds, nationalities, religions and traditions must be taken into account when focusing a strategy on them. Summing this up with Jay Wang (2005) research tells us a detail of how customers nationalism or nationalistic attitude towards buying can be countered in a global consumer market. He goes on to say that the concept of consumer nationalism makes it quite easy to understand the framework of customer dynamics. It also provides the right understanding of the entire elements that come into play when the organizations feel threatened by nationalistic attitude of the customer. The author gives a specific detail of process by which multinational businesses and their corporate reputation might be affected by such nationalistic attitude. 45

Then he derives result from his proposed model. In his opinion there are options available to protect and maintain corporate reputation in the event of consumer nationalistic behaviours. At the conclusion he gives a general recommendation for attaching the source with diplomacy in such a manner as befitting the crisis for proactively managing consumers perception of brands as he calls it. He also proposes national association as an effort for pre-crisis communication strategy as he calls it can be a very effective tool as it focuses more on prevention that on rectification as done by a number of other approaches in the scenario. But as we are well aware nationalism goes hand-in-hand with globalisation, so consumer nationalism cant be ignored at all. What we need to understand here is that a deeper understanding of what consumer nationalism is and how it may affect multinational businesses environment. More research needs to be done in this field as globalisation becomes more and more important for business survival. The writers concept of corporate susceptibility and its components was quite well thought of and also highlights the centrality of corporate reputation in any national outburst. The suggestion on how to deal with an outbreak of nationalism is quite appropriate but further research in this would be much helpful for complete understanding is this issue. Purba rao (2002) article points that South East Asia is an emerging market for manufacturing in the coming decade. She believes that there are new opportunities in this part of the world. Now when the manufacturing shifts to developing countries it usually brings a significant burden of the environment of that area. This is because the companies are not conscious and the checks are not present as in the developed world. This is why a number of larger corporations have incentives for their suppliers by guiding, and funding them to be green. According to the author a resent survey has been carried out in certain countries to bring insight in these greening processes. This is also to inspire business, government and communities to create an environmental friendly product and process lines

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Existing Products in The Beverage Sector

As discussed earlier Nestle entered the Pakistani market after acquiring the strongest packaged milk company of the time Milkpak Ltd in 1979. Nestle remained a purely diary company till 1994. Then after studying the potential in non-dairy entered into food business and diversified it portfolio into non-diary. As nestle plans an operations strategy for all its product in the product portfolio similarly they cant be separated at the operations strategy level so from here on we have to take them onward as Nestles general operations strategy. The items that we are focused on I.e. associate with the beverages in the Nestle portfolio are.

MILO RTD
To cater for consumer convenience, MILO RTD (ready to drink) was launched in 1995 and is available in 200 ml and 125 ml pack sizes. It is an ideal alternate to summer drinks and is popular with all age groups, particularly among children and consumers who are nutrition conscious or have an active life style.

FROST
A well-known fruit drink brand FROST was introduced in 1986. Positioned as a cold drink and alternate to other soft drinks, its strength lies in the convenience attached to its usage.

NESTL Fruit Juices

Encouraged by the consumer response to NESTL Orange Juice launched in 1996, the category of NESTL Juices was further expanded with the introduction of Mango and Mango-Orange in 2000, followed by Apple Nectar in 2002. In 2003, based on consumer insight and to broaden the range further, NESTL Pineapple Nectar was introduced. To offer more variety to consumers, Red Grapes Nectar was launched in 2005. Nestl juices category has gained substantial market share and is a preferred choice of consumers.

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Existing operational strategy

As the structure of the report we divide the existing operations strategy of nestle into five parts as well. These are Manufacturing strategy Logistics strategy and distribution strategy Warehousing strategy Sales strategy Corporate strategy

Manufacturing strategy
Nestle is a fast moving consumer good company. Most of Nestls products are produced in Pakistan. The products we are dealing within this report are produced in the Sheikhupura factory. This is the factory located about 25 kilometres from Lahore city. The Sheikhupura plant is very highly automated. The juices are mass-produced to the demand here. The demand it generated by forecast that gets its input from sales and marketing. The forecast is generated by their ERP system called the Globe, which is a form of SAP. As Pakistan has a hot climate especially in the June, July and August months, a seasonal trend is seen is the demand for juices. Juices are made from concentrates. Some ingredients are imported and others are locally acquired. The ERP is a quite state of the art. It plans for forty-five days cycle. The orders are manually dispatched, as the local supply chain partners dont have SAP. EDI link is also not present as most of these vendors are not that well established. So once the ERP generates production plan the operational buyer does the ordering from the Factory.

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The process of juice manufacturing is quite simple. The concentrate is imported, this is then re-hydrated, pasteurised, packed and taken to warehouse for incubation period. This is all an automated process and at no time does the juice come in contact with air or any outside germs. The production of juices here is about 30,000 tons per annum. The standard push strategy is employed after manufacturing with quite some inventory levels. Quality is considered to be the top priority and is considered as a performance measurement. Other performance indicators are down time, safety, orders lost and defects. There are always programmes being initiated for improvements in the Sheikhupura factory The in charge of production in General manager production, who is based in Head office at Lahore. Reporting to him is the Plant manager who is in charge of the manufacturing activities of the plant. Manufacturing department is also a party to new product development. There is a special team that consist of marketing, product development and manufacturing that decides on new products and their development. They assess the demand of the new products through surveys and information sharing within group companies. Another very important element in the new product development is the competition and their recent development.

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Logistics and Distribution Strategy

Nestls production in Pakistan is quite large this could be estimated by their production figures of beverages. Liquid beverages are produced at an annual volumes approximated: 30,000 tons for juices Milo ready to drink 250,000 tons for liquid milks The products from the production lines are shipped to the warehouses where they are stored during the incubation period. The products are then shipped to the customers as per request. Hundred and fifty trucks are dispatched nation wide from these warehouses to the customers. The customers are the distributors, which in turn supply the products to the retailers/consumers nationwide. Warehousing is looked after by the Group Distribution Operations Manager who reports to the Supply Chain Manager for the transportation of the product. Nestle has contracts with a number of service providers. The company strategy for logistics is quite simple. Its outsourced all logistics activities. Nestle does not own any trucks for the transportation of the products. They have outsourced logistics to four major transporters who provide trucks on a daily basis. These four transporters have a total of 120 trucks that are owned by them and are dedicated for the transportation of nestle products. These trucks account for about half of the daily shipments. The rest of the half is still hired from transporters market. The truck hiring is not the responsibility of Nestle. Trucks are hired by the transporters from the truck market and supplied on daily basis. The transporters are paid on 'per trip' basis according to mileage. Trucks currently being used for the transportation of Nestle products are six wheelers with twenty feet containers and ten wheelers with forty feet containers.

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The Group Transport Manager who reports directly to the Supply Chain Manager heads the transportation department. The standard truckloads and loading patterns for all products are defined by Nestle and strictly followed all transporters. It is also made clear that all transit losses are charged to the transporters unless provided a valid reason for them. The responsibility of the supply chain is the delivery of the product to the distributor. The company is not responsible for the delivery of the product from the distributor to the retailer. This comes under the Distribution Department and is the job of the Outsourced distribution centres. The distribution strategy of nestle is standard Distribution strategy for virtually all multinational FMCG in Pakistan. They outsource their distribution to a single distributor in an area. This business is responsible of keeping enough stock to support the area for a weak. As deliveries from warehouse come after one week, so the vender-withheld inventory is in play, which is quite good for the FMCG Company, as they dont give credit. They charge it to the distributor on delivery. It is the job of the distributor to supply all products to the retailers in the area. The distributor and the Area manager together do the retail mapping. They find new retail outlets and also assess the availability of products at the existing retail outlets. The distributors are given a certain share of sales of the stock they purchase from the Company. Traditionally this percentage is some where between five and ten percent. All expenses of distribution like transport, manpower required and stock maintenance in the warehouse is the responsibility of the distributor. Nestle has a very well defined distribution strategy. The man in charge of distribution is National Sales Manager (NSM). The country is divided into three zones a zone manager is responsible for distribution in each zone. They are reply to the NSM directly. The three distribution zones are; North Central South 51

These three regions are further divided into 15 sales regions and each of these regions has a local distribution. These are the name of all major cities of Pakistan. 1. Quetta 2. Quetta coastal belt 3. Karachi east 4. Karachi west 5. Hyderabad 6. Sukkur 7. Multan 8. Sahiwal 9. Lahore 10. Gujranwala 11. Jehlum 12. Islamabad 13. Islamabad outstations 14. Peshawar 15. Peshawar outstations There is a regional manager responsible for distribution in each of these regions they are delegated the task of observing the distributor. These managers are also responsible for setting the sales targets for their distribution centres. The manager set the target by keeping the past sales, market trends and demand forecast in mind. The entire process of distribution from the distributors warehouse to the market is outsourced. Total distribution is being done through distributors. Total number of distributors in Pakistan is 90 Total distribution points in the country are170 Average lead time 16 hours The distributors in total have about 2,200 delivery vans that deliver the products to the retailers in their respective regions/cities.

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The over all distribution strategy is quite satisfactory. It goes to Nestls credit that all their distributors are quite happy with them. They manage their relations with them very well.

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Warehousing strategy
All activities related to Material Handling for Finished Goods to the point of sale assets are covered under Warehousing Operations in one set-up. As in all operations the same procedure is followed in all company Warehouses. Nestle has five warehouses in Pakistan. These warehouses are located at strategic positions that help nestle with its storage and logistics operation. The warehouse management system being used is SAP (system application product for dada processing). It not only properly utilizes the warehousing capabilities but also helps coordinate with other Operations. The company warehouses can be divided into two broader categories: 1. 2. Internal (adjacent to factories) External (outside locations)

Following are five Warehouses of Nestle in Pakistan 1. Warehouse Centre Sheikhupura 2. Warehouse Centre Kabirwala 3. Warehouse Centre Lahore 4. Warehouse Centre Islamabad 5. Warehouse Centre Karachi LOCATION OF Nestle

Warehouses on MAP
CHINA
N TA NIS A GH AF

NWFP

NWFP

DC- ISD

DC-SKP
PUNJA B
` BALOCHISTAN N BA LUCHISTA

DC- LHR

IRAN
SINDH
SINDH

DC-KBF

IA IND

Universal Aqua Factory

Karachi Factory DC- KHI

F&H Co-Packer

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Standard Operating Procedure

Material Handling under Warehousing Operations covers these areas. Inbound Operations Outbound Operations Stock Management 1. Inventory Management 2. Internal Stock Movement 3. Pick-Face Replenishment This SOP is applicable to all the above-mentioned warehouses.

Distribution Centre Sheikhupura

This warehouse is located within the boundary wall of nestle factory in Sheikhupura. Its very close to Lahore which is where the head office of Nestle Pakistan is located. Being twenty-nine kilometres from Lahore makes this even more important as Lahore is the second largest city of Pakistan located right at the border with India. The total area of Warehouse centre at Sheikhupura is 199,218 square feet In this warehouse, the standard operation is that Inbound activities continue three shifts 7 days a week. Outbound activities continue three shifts 6 days a week. Inventory calculation is carried on daily basis for certain SKUs and at weekend all SKUs inventory is carried and reconciled. This distribution centre deals in liquid products and confectionaries. These are dispatched nation wide from this particular warehouse. The powder products that are made in Sheikhupura factory are transported and stored at Lahore warehouse and this operation is carried out at a daily base. An extension of this warehouse planned in the near future.

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The lay out of this warehouse can be seen in the Appendices 2

Distribution Centre Kabirwala

The Nestle warehouse at Kabirwala is also located in the factory premises. This is quite close to another market area of Khanewal. The total area of this warehouse is 8,122 square metres. The general operations of this warehouse are handled as listed. Inbound activities continue for three shifts 7 days a week. Outbound activities (which mainly includes shifting to LDC) also continue for three shifts 7 days. While for external customers it works for 6 days, two shifts. Inventory is carried out on daily basis, for all SKUs The chief area of dealing at this warehouse is a powdered goods, the outbound operations here comprise primarily of dispatching products to south zone. While for transport to other zones the warehouse dispatches goods to Lahore distribution centre. This warehouse also has a cold storage as it has to deal with butter. As this is located close in a rural area and farmers that provide the plant with milk are located in this vicinity. In case of butter the stock is kept with raw material. The packing is received only at time of dispatch. Layout of this warehouse can be seen in Appendices 3

Distribution Centre Lahore

The warehouse of Nestle at Lahore is approximately 50 Km from the Sheikhupura production plant. It has an area of about 140,900 square feet. It is comprised of five building. Out of these five buildings two support racking systems while three are without racking. Warehouse in Lahore deals with powdered products that are shifted here from Sheikhupura and Kabirwala warehouses. The general operations of the warehouse are as follows Inbound Operations are carried out two shifts 6 days. Outbound Operations are also carried out two shifts 6 days.

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Inventory is conducted daily for all SKUs. Layout of this warehouse can be seen in Appendices 4

Distribution Centre Islamabad

The Nestle warehouse is located about one kilometre from Islamabad Water Factory, which is, located in sector I-9 the total Area13, 500 square feet. This warehouse deals in water products (retail 500ml) and bulk water (3 gallon, 5 gallon). Retail water is dispatched nationwide as well as to Afghanistan from this warehouse. Bulk Water is also dispatched from here for Rawalpindi and Islamabad customers. The general operations of the warehouse are as follows. Inbound Operations are carried out for 3 shifts, 6 days. In case of no bulk water production these go down to 2 shifts, 6 days. Outbound Activities are carried out for 2 shifts 6 days Inventory is carried out on daily basis for all SKUs

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Sales strategy
Compared to the other players in the beverages market Nestle places immense importance on the companies sales force. They are a focus of heavy investments and training plans. The management is of the belief that if the sales force performance is extraordinary it will reflect directly on the sales of the company. This is what pushes them to spend so heavily on the training of representative before they ever enter the Sales field. This practice is not practiced by any of the other multinational FMCG Company in Pakistan. They have segregated sales in a number of parts. Water sales are now being promoted with water coolers free of cost. The people getting free water coolers however have to make a promise of a minimum purchase of water from Nestle. Retail sales come under the regional sales managers. Sales to companies like McDonald are handled separately from head office in Lahore. What is to be noted that sales force turnover according to the management is much low compared to the rest of the industry. When I was working for Uni-lever in Lahore I become aware that the entire order booking sales representative force of Nestle had been given HHD (hand held terminals) This is a particularly sophisticated piece of equipment that is given to the sales force during the day. It has the record of all products and Skus and the prices and schemes associated with each. When they came in the evening after order booking activities these were connected to the system and the data was transmitted real time to the higher management. Which became aware of the activity done by all representatives and distribution. The equipment was quite expensive at that time. This was quickly copied by Uni-lever and was quite successful. The sales promotions are quite rapid they plan them effectively as well. For example in the winter months when the consumption of juices drops they offer retailers incentives on purchase. In a country like Pakistan your local shopkeeper has a lot of influence on your daily purchase. That does reflect on their sales figures as well.

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The sales management structure is lead by the National manager sales. Reporting to him are Zone managers of the three zones North, south and Central. Then area sales executives are designated to their particular area and are reporting to their zone managers. They are also responsible for the area sales and managing supervisors and sales force to their maximum potential.

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Corporate Strategy
Corporate strategy is the mother of all strategies. It is from which all strategies originate and in which they sum up to form the organizations over all business strategy. In the resent years a shifting trend has been seen from traditional business strategy towards a greener and more clients oriented strategy. When I say client-oriented strategy I mean a strategy that is both beneficial for the business and the general population of the business area and clients in particular. Business ethics have been developed by many companies to stop exploitation and set targets for cleaner environmental friendly processes and products. Nestle came to Pakistan when it started a collaboration with Milkpak group. Milkpak then was the strongest dairy product company in Pakistan. It was owned by Syed Baber Ali foundation already the market leader in the Packaging industry and the representative of Tetra Pak in Pakistan. Syed Baber Ali brought Nestle to Pakistan and established the initial set-up for their Company. He still owns about 29% of their share while another local investor Chawala Group owns 20%. Nestle remained purely diary product till 1994. Nestle corporate strategy like most Multi Nationals in Pakistan is quite mature. They have a state of the art ERP SAP that helps in all operations from ordering of raw material to production, forecast, Warehousing, Logistics and Sales. Its a very well integrated software that keeps the management well aware of all progresses and plays a vital part in their over all business strategy. The clients that nestle targets are upper middle class. With the economic development this particular class is growing in number and that also reflects in their revenues. The current strategy of nestle as I see it is to produce unique products in accordance to changing consumer preferences. The products produced will be of superior quality commanding premium prices, which will be in accordance to companys superior image.

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This strategy is to be achieved with the help of Nestle strong marketing abilities and strong cooperation from channels, which will help distribute the superior quality product to match the needs of the consumer. Nestle follows an international divisional structure, in which a separate division is created to which all of its foreign subsidiaries report. This structure enables geographic interests and product interests to be represented at the same level. However, its more difficult to coordinate information between domestic product division and international division. The management style is supportive and participative whereby managers are more approachable and provide constant consulting with subordinates encouraging their suggestions and carefully considering their ideas when making decision. Managers of Nestle also set challenging goals, expecting subordinates to perform at their highest level also convey a high degree of confidence in subordinates. The long-term goal for Nestle is to gain a long-term profitability and a well-built corporate image. For this purpose they implement a proper training and compensation program. Nestle started off from being a food processing company. Its strategy as a company has changed since the past few years. Nestle rests its strategy implementation on four pillars; Innovation/Renovation, Operational Efficiency, Communication and Sales & Distribution. This is done for a sustainable growth rate, which is 22%. According to this targeted growth rate Nestle has achieved 60% of its sales target for 2006 in the first quarter. Nestls target is to become a 14 Billion company by 2014. This will enable it to become the largest multinational of Pakistan.

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Nestles Competition in the beverages sector

The competition in beverages sector that Nestle deals with is tough. Initially when nestle entered this market segment local producers were scarce. Only Shezan was the competition. But over the years the competition has grown. A lot of companies are entering this market. The edge Nestle had over small local producers is that it also deals with pure juices, which are gaining market share as awareness about nutrition is increasing. Recently though Haleeb foods has entered the market with a lot of force and can now be considered the major competition for Nestle. The list of Competitors and a brief over view of their products is as follows.

1. Haleeb

Haleeb Good Day

It offers consumers a range of 100% pure juices with the essence of four fruits in each glass, without any added sugar, flavours or preservatives. Good Day has six premium juices (apple, pineapple, red grape, mango, orange, and mixed fruit) give you the absolute experience in taste and revitalizing energy. Packed in 6-layered Tetra Pack Brick Aseptic packaging. Key Benefits of the product are that it is Guaranteed Clean/Bacteria Free, Pure Natural Juices, No Sugar Added, No Colours Added, No Preservatives Added and Aseptically Packed.

Haleeb Funday
It is a delicious juice drink for kids, enriched with calcium, and vitamins A, C, and D. Part of Fundays charm is the unique and fun names of the juices, Aamonka (mango) and Arrochee (peach and lychee). An exciting treat, packed with health and great taste, Funday juices will surely be an instant success with kids. Packed in 6-layered Tetra Pack Brick Aseptic packaging, with sensory straw.

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Haleeb Tropico
With the quality assurance of Haleeb Foods, Tropico is the premium juice drink, superior in taste and pulp contents, for that invigorating fruity refreshment. Tropico is available in three flavours: apple, mango, and mix fruit. Packed in 6-layered Tetra Pack Brick Aseptic packaging. In positioning the product in the market the company considers "purity" and "Price" as the two main attributes of the product. Currently the company is in the category of high priced and high purity about equal to its greatest competitor Nestle Juice.

2. Pepsi-Cola Brands in Pakistan

Pepsi though not a direct competition for Nestle juices is a very strong Player in the Market and does eat into the juices market. Pepsi came to Pakistan with another very powerful figure Humayiun Akhtar Khan. He is currently a minister and is the son of ISI Chief, Gen. Akhtar Khan. The list of products of Pepsi is as following. Pepsi Diet Pepsi Miranda 7-Up Mountain Due Teem Pepsi is quite well established in Pakistan as well and its Distribution set-up is the biggest in the country.

3. Shezan
The company was incorporated on May 30, 1964 as a Private Limited Company, with the main objective to set up an industrial undertaking for manufacturing of juices, 63

squashes, sherbets, jams, pickles and preserves from fruits and vegetables. The Shahnawaz Group of Pakistan and Alliance Industrial Development Corporation of U.S.A. conceived Shezan International Limited as a joint venture in 1964. 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. In 1971, Shahnawaz group purchased all the shares of Alliance

Industrial Development Corporation with the permission of the Government of Pakistan. Shezan is one of the oldest juice manufacturers and one of the most established one. They dont deal with pure juices but non-the less they have quite a large loyal customer base.

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Competitions Operation Strategy

The competition is increasing all businesses around the world. Any Beverage needs to keep the following points in mind when formulating a working, healthy and strong operations strategy. The key players of the industry are competing with each other on the basis of Price Quality Brand name Availability Margin share for retailers You have to be aware that all of Nestle competitors are much more established and have had a head start comparatively. I see PepsiCo international, its a world leader in convenient foods and beverages, with 2005 revenues of more than $32 billion and more than 157,000 employees. The company consists of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. PepsiCo brands are available in nearly 200 countries and territories and generate sales at the retail level of about $85 billion. Many of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001. PepsiCo offers product choices to meet a broad variety of needs and preference -- from fun-for-you items to product choices that contribute to healthier lifestyles. PepsiCos mission is To be the world's premier consumer product company focused on convenient foods and beverages. Then there is Shezan, which has been steadily expanding its production capacity over the years. In 1980-1981 a separate unit was installed in Karachi which now caters for Karachi, Sindh and export demand. A new bottle filling plant was set in 1983 in the Lahore unit, increasing the capacity five fold. An independent Tetra Brick plant was commissioned in 1987 making the unit leading manufacturers with the comprehensive

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range of production in the fruit-processing field in Pakistan. In the year 1990 it was decided to install a juice factory at the Hattar industrial estate in North West Frontier Province of Pakistan. In order to take advantage of the government incentive the company had to make a separate company and for this purpose a new wholly owned subsidiary of Shezan International Limited was incorporated as Hattar Fruit Products Limited. Complete bottling plant locally manufactured along with four lines of Tetra Pak were installed, three are filling 250 ml juices and one line is for 1000 ml packs. In all respects the subsidiary is now a complete unit and is manufacturing the complete range of Shezan products except for pickles and canned products. Then there is Haleeb one of the fastest growing competitors. They are biting rapidly into the market share of Nestle and developing innovative management techniques for marketing and distribution. When Haleeb entered the market its largest challenge was to convince the consumer of its products pureness. Consumers are concerned that packed products contained preservatives or were somehow not genuine. They believe that unlike fresh juices Haleeb brand contained some additives. Haleeb very innovatively started an early promotional campaign in which, households were given two samples of Haleeb, one for immediate consumption and the other to be consumed four days later. The goal was to demonstrate that while the juice remained packaged it did not require refrigeration. Soon after this campaign Haleeb was positioned as a pure product, processed in a scientific, hygienic manner and consistent in quality throughout the year. It means that even if it is preserved for long period it still remains pure and fresh. That was a big achievement at that time. As in my opinion Haleeb is the major competition for Nestle in the coming years I will from here onward take them as competition and assess their business strategy as competitor business strategy. Not only is Haleeb the strongest competitor but also their product profile is the closest to Nestle own. This will not only make the readers more aware of the competition in juices sector in Pakistan but also make it easier for them to understand As distributors buy the product from Haleeb and transport it from the Warehouses to the retail outlets. So their role is very important Haleeb. Haleebs distribution channel have been built over a very large period of time so they are much more mature. In 66

fact, it took them about 10 years to establish an effective distribution system for their products. Since Haleeb is a convenient to use product, so the best distribution strategy adopted by CDL (Chaudry dairy limited) is intensive Distribution. Under this type of distribution, the task is to make the Haleeb available in each and every outlet. More over as the unit price of Haleeb is lower than competition, which is a huge advantage in Pakistan, so it involves comparatively lower risks and thats why its frequency of purchase is higher then its competition. Another reason for this type of distribution is to compete with Nestle at a stronger footing. Through intensive availability of Haleeb in all the potential outlets the chances of purchase are increased many folds. No doubt that a consumer looking for packed milk can easily switch toward some other available brands at the spot but this strategy does keep them higher in market competition. So they have adopted this style of sale strategy in order to maximize sale. They also rely quite heavily on sales promotion. Its their strategy to make their product more lucrative for the retailers to sell by increasing their margins. Besides their over-all sales strategy is a pull strategy which doesnt bother the retailers and adds to their business volume and reduced operational costs. The marketers are also trying to encourage this pull strategy. The themes of their ads are ask for Haleeb . They direct their promotion at the end user. The intention is to motivate them to ask the retailer for Haleeb. Ads are an effective way to disseminate messages. CDL (Chaudry dairy limited) has an advertisement department dedicated for this purpose. Their job is to recommend a budget to help develop new advertising strategy. They make ads, get them approved and then start their campaign. Its also their responsibility to run the advertising campaigns effectively and efficiently. They have been very effective in utilizing these powerful tools to bring rapid increase in the demand of Haleeb. The most common utilization of their advertisement budget is in the form of adds in print media specially papers, billboards and the electronic media 67

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Discussions and Recommendation

The biggest threat for any multinational in Pakistan is the threat of change of government. The political scenario of Pakistan is highly unstable. No one knows how it will change and what new policies are implemented. This brings uncertainty in the way business can be carried out. Long-term strategies cant be made if the political situation in the home country is unstable. The multinational companies need to use lobbying to get their things done. With the upcoming elections in 2007 there is no surety as to what new policies the new government will bring in. Another uncertainty is whether the old governments polices are still going be carried forward. Every new government brings in new strategies. The new government usually makes sure that the old policies are removed and new policies are implemented. This makes strategy making all the more difficult for companies especially multinationals which need to make long term strategies for their operations. According to our government the following current situation exists in Pakistan: The American Business Council of Pakistan (ABC) a Formal Association of American conglomerates operating in Pakistan, conducts an in-formal business survey annually to assess how their members view investment climate in Pakistan. Following are the key excerpts of the Survey: 93% respondents reported improvement in Domestic Economy. 90% reported increase in their gross revenues in Dollar terms while 84% in rupees 3 4 5 6 7 8 9 88% were optimistic about Pakistan's overall prospects 88% were optimistic about Pakistan's overall prospects. 86% indicated increase in their pre-tax profits. 78% indicated improvement in external political situation 77% reported planning investment in Pakistan. 63% were optimistic about Business Climate in Pakistan. 34% observed improvement in law and order situation.

1 2

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This research shows that although the situation is improving, the change in government can change the entire scenario and the policies, which are currently friendly towards foreign investment. With economic growth at 6.6 percent in 2005-06, Pakistans economy has grown at an average rate of almost 7.0 percent per annum during the last four years (2002/03 2005/06) and over 7.5 percent in the last three years (2003/04 2005/06), thus positioning itself as one of the fastest growing economies of the Asian region. The growth momentum that Pakistan has sustained for the last four years is underpinned by dynamism in industry, agriculture and services sector. The emergence of a new investment cycle with investment rate reaching new height at 20.0 percent of GDP does help also. Therefore, the pre-requisites for sustained economic growth appear to have gained a firm footing during the last four years. At the very onset of the year the economy faced headwinds from rising oil prices, hovering around $ 70 75 per barrel and putting severe strains on the countrys trade balance and the budget. The massive earthquake of October 8, 2005 also caused extensive damage to property, infrastructure, school, hospital etc. and a loss of over 70,000 human lives. The rescue and relief operations and reconstruction of earthquake affected areas also put Pakistans budget under severe stress. Growth has remained buoyant with real GDP growing at 6.6 percent in 2005-06 as against the revised estimates of 8.6 percent last year and the 7.0 percent target for the year. The key drivers of this years growth have been the service sectors and industry. Manufacturing is the second largest sector of the economy, accounting for 18.2% of GDP in 2005-06. Large-scale manufacturing, accounted for 69.9% of overall manufacturing, registered growth of 9.0% in 2005-06 against the target of 14.5% and last years achievement of 15.6%. Although large-scale manufacturing has lost some of the growth momentum but still the high levels of liquidity in the banking system, a stable exchange rate, comfortable foreign exchange reserves, stronger domestic demand for consumer durables, and high business confidence are supporting the growth momentum at high level of 9.0 percent.

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Sobered by the negative experiences of adversarial industrial relations over the past decade, trade unions are increasingly discarding militancy while employers are recognizing the need and benefits of co-opting labour as partners in productivity. Both employers and trade unions are progressively getting involved in bilateral dialogue, as there is a growing realization that common interest of both employers and employees is best served by securing business profitability and growth. Enlightened elements within labour and employees organizations have come together to form the Workers Employers Bilateral Council of Pakistan (WEBCOP). WEBCOP emphasizes the need for an organized and sustained dialogue between employer and labour organizations based on bilateralism where the government adopts the role of a facilitator. Coming back to Nestle. A lot of literature is can be used to assess and then improve the current operations strategy earlier mentioned. The manufacturing of Nestle is an automated process and nestle is very efficient at it. Some benefits are inherit in this sort of manufacturing design, but even then Nestls unconditional attachment to quality, health and safety is not allowing any problem. Although I have just come to know that nestle is thinking about outsourcing special manufacturing. They are currently in the process of making a product range for spices and the manufacturing for this will be outsourced to local vender. Nestle will supply the raw material, packing and technical expertise. The vender will have to do the initial investment and processing. Nestle is promising a three year all manufacturing purchase contract. I think this sort of joint venture would be very helpful in reducing cost and gaining better all out performance. Further more the initial cost of such manufacturing set-up is large nestle will also be able to save that and invest it in their core competency Marketing, Distribution and Sales. A lot of writers have written about the importance of logistics in particular within the operations strategy. As the market becomes more and more competitive the role of logistics becomes ever increasingly more important. New concept as factory gate pricing, fourth party logistics and fifth party logistics are emerging around the world. In Pakistani environment though little has changed in the last ten years while in the rest of the world is using innovative ideas nothing in this segment of supply chain has

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changed here. David Pollitt (1999) idea of competing through logistics should be applied in Nestles logistics. Virtually all companies outsource logistics. Outsourcing is one thing; even companies like Nestle, and Uni-lever havent been able to outsource the logistics properly. Only fifty percent of logistics is handled by the four contract transporters in case of Nestle, the rest of the logistics require trucks to be hired from Market. It is about time Nestle focuses on the shifting of logistics into core competencies. This was earlier a problem with the bad law and order situation of the country but now things are much better. This sort of decision from Nestle could actually give it that extra bit of competitive advantage that it needs to spread and capture the markets that are still untapped in Pakistan. Issues such as backhaul could also be decided to make this operation economically more feasible for Nestle. If I had to make one suggestion only or prioritise one issue of immense importance I would definitely choose logistics in case of Nestle. With the incorporation of computers as Samuel Eilon (1995) proposes this could be very effective. What I propose is that Nestle keep the transportation of goods in between its warehouses, from factories to warehouses and from its own warehouse to distributor warehouse in-house. It should outsourcing distribution activities. I propose this because distribution requires a much intensive knowledge of the areas in Pakistani environment. If not then it should develop its supply chain (logistics) partners so that they can handle the entire logistics operation on their own. Nestle could outsource logistics to companies that could support the entire load of its logistics operation. If you observe the structure of Nestls distribution in depth you would realize that its major presence is only in urban areas. When I was in Pakistan last (2006) year Nestle was searching for distributors for the distributions of Islamabad and Peshawar. They had to get rid of the distributor for some reason. The reason is not the issue what Nestle needs to focus on is how to create long-term relationships in the supply chain.
Bernard J. La Londe and James M. Masters (1994) have already expressed their opinion

on long-term understanding with Supply chain partners. A lot of multinational use 72

some muscle at times to get their way against other partners in the supply chain. This is especially true when the target dates are coming close and the targets are not met. If you want an example of a proper long-term relationship between a multinational and distributor in Pakistan then P&G would be it. Its sole distributor Allied distribution use to work for Uni-lever before P&G had ever entered the Pakistani market. Uni-lever and Allied distribution had some misunderstanding that finally broke their relationship altogether. Allied then went to P&G and asked them to come into the Pakistani Market and is till date their strongest ally in the market and sole distributor throughout Pakistan. So the importance of strong long-term relationship with supplier and supply chain partners is greatly underestimated. Nestle should lay the greatest emphasis on it in the distribution strategy. This would require them to choose the distributors well so they are compatible. The warehousing strategy needs to be assessed in context of two considerations. The warehouse running procedures. Warehouse location. Nestle is currently running five warehouses in Pakistan. If you observe the procedures and you see that its lacking a lot of features that modern warehouses posses. RFID technology is not used which could actually be very helpful with large warehouses. Yun Zeng, Roger H. L. Chiang and David C. Yen (2003) ideas on using ERP in a proper manner should also be used to Computerize inventory calculation and computer-aided calculations. These could abolish the need for daily inventory study. Although in my opinion weekly inventory calculations should remain in place. This gives Nestle management an on ground weekly reality situation awareness. In my opinion nestle should at the least get a feasibility study made on the building of entirely computer controlled warehouse this summed up with Mark Goh and Parooj Pinaikul (1998) believe that Electronic Data Interface could be a very effective tool in the modern business environment, even though the labour prices in Pakistan are low an automated warehouse could actually reduce their warehousing cost and improve their delivery time immensely. This could also help by reducing the stock and thus the

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working capital. Though this is a high initial investment notion it could be made practical. David A. Johnston, G. Don Taylor and Ganesh Visweswaramurthy (1999) GIS sytem could be used here to plan long distance logistics. Then if you look at the map of the warehouses you can see that 4 out of five warehouses are in Punjab. I totally acknowledge the fact that Punjab is the highest population province of Pakistan. But if Nestle adopts a plan like that of Uni-lever has adopted they could have been more efficient in their warehousing strategy. Uni-lever has a central warehouse had been created in the central regions of Pakistan its close to their main plant here and distributes all locally manufactured products to smaller warehouses closer to cities. This technique could have reduced the logistics cost considerably not to mention reduce delivery time, which is close to 16 hours now. Michael S. Spencer, Dale S. Rogers and Patricia J. Daugherty (1994) idea of JIT assessment could be implemented so that a pull strategy instead of a push strategy could also be used. This will streamline the warehousing operations. A lot of distributors are unhappy with the push system. Whenever the time for target dates comes close the management pushes a lot of stock in their warehouses to show sales and good performance on their behalf. Here it must be noted that none of the Nestle competitors except Haleeb employ the pull strategy and Haleeb also just barely implements the idea. Nestle should be commended on using the cross-docking technique this does set them apart. Sales is one area were Nestle is at a competitive advantage. None of its competitors give due importance to the training of their sales force. Ron DAndrea (2005) research on high performance sales and of performing sales people brings to light a number of issues that should be taken into account when evaluating any sales person this could be used to evaluate and improve on sales performance. The management system of the sales force is also quite exceptional. The management also welcomes the view of the lowest ranking staff member.

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The structure of Nestls sales division is virtually similar to that of Haleeb and Pepsi but its the training, equipment available to the sales force and their unhindered approach to management that sets them apart. Nestle has still not penetrated the market properly. They need to break their image of expensive multinational company. They need to set up distributions in rural areas as well as urban areas. This requires special price schemes to distributors in rural areas and small retailers so they show interest in putting the company products in shops and displays. The two-product strategy could be used to eradicate this problem given by Klaus Hilleke and Stephan Butscher (1997) Pepsis approach in this context could be quite beneficial for Nestle. They gave freezers to shopkeepers at quite low prices. This policy could also be offered in instalments so its easy for the retailers to avail it. Due to hot climate virtually all round the year this sort of promotion has a high chance of yielding results. It should also be made sure that the product in this promotion be only used for Nestle products.

Nestle hasnt just been focusing on the excellence in operations. Its also displayed a softer side. Its tried to keep the best of its customers and the Pakistan market in general in its mind. They have invested heavily in development projects in the country. Nestle is a company that has established the bar for corporate responsibility in Pakistan. They take the issue of social responsibility very seriously and are considered to be among the forerunners of social issues. This has helped them with marketing as well.

Social Action programs are focused on the following: Child & Mother issues; The Company arranges nutrition programs for undernourished children and mothers through several NGO partners and charitable organizations.

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Donations; the company donates to hospitals and organizations that provide services to the poor. The company has always generously responded to distress calls by the government and NGOs for assistance to victims of flood, earthquake, drought and other natural calamities. Immediately after the earthquake recently hit Azad Kashmir and regions pf NWFP, the company lost no time in reaching out to the affects with its food products worth Rs. 20 million. Water Projects; The Company helps to alleviate the sufferings of rural population, which do not have easy access to clean drinkable water. They do this by undertaking tube well and hand pump installation schemes in selected areas. Dairy Extension Service; Milk Collection & Agricultural-Services

Department of the Company provides free and extensive advisory and support service to milk farmers by educating and training them in good animal husbandry practices, vaccinating and treating their milk animals. They also facilitate purchase of feed supplements, fodder seeds and assisting in breed improvement. This translates into increased milk production and consequently a better income for the farmers. Educational support to underprivileged students; to help improve the quality of education in rural areas, which has remained neglected for too long, the Company, undertakes rehabilitation and refurbishing of primary and middle schools. Particularly those for girls. Three schools were rehabilitated in 2004 and in 2005. In partnership with an NGO the Company has embarked upon a program of School Adoption. In 2004 schools were adopted in Pindi, Dhallon and Sheikhupura, which has led to a significant improvement of educational facilities. They have also helped in provision of teaching aids and teachers training. The school attendance has consequently doubled.

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Potter very nicely puts the forces that come into play when you have competitive products in the market in his research. If we create this model for Good Day we come to the following conclusion.

Threat of new entrants

The competitive threat that outsiders will enter a market is stronger when entry barriers are low, when incumbents are not inclined to fight vigorously to prevent a newcomer from gaining the market foothold, and when a newcomer can expect to earn attractive profits. The threat of new entrants for Good Day Juice is low because only Nestle Juice is covering whole Pakistan as far as the distribution is concerned. A few reasons, which make Nestle better than Good Day, are as follow: High investments Switching cost Saturated market

Entry barriers
There are lots of entry barriers if someone wants to launch juices at a large scale. Further more high investment is required for the machinery and labour with overheads. So entry barriers are high if any new comer like Good Day wants to promote their product at a large scale.

Bargaining power of buyers

Like most emerging markets, Good Day Juice has also entered the market with an aim to become one of the best selling juices in Pakistan. Bargaining power of buyer is high in case of Good Day because of the following reasons: Availability of local and international brands in the field already Price variability Availability

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Bargaining power of suppliers

Suppliers to an industry are strong competitive force whenever they have sufficient bargaining power to command a price premium for their material or components. How ever they can affect the competitive well being of industry rivals by the reliability of their deliveries or by the quality and performance of the items they supply. Bargaining power of suppliers is low in case of Good Day because the availability of fruits and packaging is supplied easily on competitive rates. The existence of Haleeb foods is for the last 25 years. And all the raw material is easily available in the market.

Intensity of competitive rivalry

This is the area of concern. Shezan was one of the earliest manufacturers of juices in Pakistan. They were followed by Nestle, now Haleeb has also entered this market. There is a speculation that Engro another very strong multinational is going to come into the juice sector as well. Engro started as a pharmaceutical manufacturer for the agriculture sector. It has already developed packaged milk in competition to nestle called Olpers. They are currently aggressively campaigning for its success. With Engros strong connections in agriculture they are pushing their products supply chain. This could be quite effective in the juice industry as well. So competition is growing rapidly in this sector.

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Conclusion
In Pakistan Nestle has set the bar for corporate responsibility. They have come up with social action programs like; working for the earthquake relief, working for women in Pakistan, donations for hospitals, building schools, educational support to underprivileged children etc. Nestle does all this but doesnt advertise it. If Nestle starts promoting its social programs and the support it provides to people, consumers would become more confident that it is a company that takes care of Pakistan interest and that f its people. Nestle rests its strategy implementation on four pillars; Innovation/Renovation, Operational Efficiency, Communication and Sales and Distribution. This is done for a sustainable growth rate, which is 22%. According to this targeted growth rate Nestle has achieved 60% of its sales target for 2006 in the first quarter. Nestls sales target in to become a 14 Billion company by 2014. This will enable it to become the largest multinational of Pakistan. Nestls current overall positioning is to be a Health and Wellness Company rather than just a food company. This is because it wants to promote a healthy lifestyle rather than just food. To achieve this objective they are aligning all its products according to their nutritional values. This is achieved by having a nutritional compass at the back of every product package, which tells the consumer how much nutritional value the product holds. The basic problem with Nestle and other large multinationals starts with there shear size. This is because of which Nestle is slow to react to the market. This could hurt Nestle in the coming future as the local companies, which are smaller in size, make quick decisions and reactions to enter or exit the market. This causes Nestle to lose out on a lot of money and profits, which it can save if it reacts fast. The way forward is to spend on technology. Its the one thing the local companies cant keep pace with. Nestle should use and properly implement the ERP system. Summing this up with state of the art warehousing and Electronic data interface could

79

revolutionize the business strategy and their market share. This would also make them more mobile as they would be aware of situations fast giving them a larger reaction time. More time should be spent on developing supply chain partners. Which are strong and as technologically sound as Nestle. If Nestle can establish the right mix in its supply chain partners, competition like Haleeb and Shezan would not be able to compete with them in the same price bracket in the market. Modern techniques in logistics could be used to reduce logistics cost considerably. Virtually all companies outsource logistics. If nestle establishes a better system of logistics using modern management techniques like Cross-docking, RFID and GIS system it could save a lot of operations cost and that would reflect on their profits. This would also improve their availability and lost orders. Nestle has gained enough strength now that it can go into a second product range. These could be lower costing smaller sizes for the major portion of population in Pakistan. In my opinion more research needs to be done on smaller lower costing sizes of nestle beverages so they increase their target market ten folds. This will also bite into the share of their competitors as Haleeb competes on three-price level in the same product.

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Appendix 1

PRODUCTS & BRANDS

DAIRY NESTL MILKPAK UHT Milk Launched in 1981, MILKPAK milk became synonymous with purity. In September 1999, it was launched under the Nestl brand, which further strengthened its position. Backed by a very strong brand name, aggressive marketing and distribution, consistent quality and all year round availability, Nestl MILKPAK milk has become number one selling milk brand in Pakistan. It is available in four pack sizes of 1500 ml, 1000 ml, 500ml and 250 ml. NESTL NESVITA Hi-Calcium Low Fat Milk To tap the fast growing adult well being segment in Pakistan, NESTL Hi Calcium Low Fat (HCLF) Milk was launched in September 2003. Not only did this product offer high calcium, but it also offered the advantage of low fat retaining, at the same time, the natural goodness and taste of milk. The product, which was re-launched under the brand of NESTLE NESVITA in 2005, has become the preferred choice of those seeking healthy lifestyles. MILKPAK UHT Cream MILKPAK UHT Cream was introduced under the MILKPAK brand in 1986. It is available in 200 ml pack size in an attractive slim pack. The consumer trust in the brand name and the product has ensured its dominant share in the cream category. MILKPAK Desi Ghee MILKPAK Desi Ghee was introduced in 1986 in tetra packaging. However, in line with the current market trend, MILKPAK Desi Ghee was re-launched in 870 gm tin packaging in 2000 followed by 75g sachet in 2003. The product was also introduced in 16kg tin packaging to tap the potential of loose desi ghee. NESTLE NIDO One of Nestls largest brands internationally, NIDO was launched in Pakistan in 1990. Since then NIDO has grown from strength to strength to become the mothers trusted partner in catering to her childrens growth and development. Along with the natural goodness of pure milk NIDO is now also enriched with minerals and vitamins that help children excel in the classroom and on the playing field. NESTLE NIDO 1+ The NIDO family was expanded with the launch of NIDO 1+ in August 2005. The product is meant for children from 1-3 years of age. NIDO 1+ contains Prebio1, a natural fibre by Nestl that helps maintain a healthy tummy while providing the nutrition and goodness of milk. Regular use of NIDI 1+ will ensure a healthy child.

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NESTL EVERYDAY To target the large potential offered by the tea-creaming segment, NESTL EVERYDAY tea-creamer was launched in 1992. Supported by integrated marketing, focused distribution with sampling drives and excellent consumer acceptance, the brand has shown strong growth and holds great promise for the future. The brand is available in a variety of pack sizes ranging from 40 to 1000 gm. NESTL EVERYDAY Liquid NESTL EVERYDAY Liquid, leveraged by a very strong mother brand EVERYDAY Powder was introduced to capture the huge liquid milk consumption in tea. Launched in June 2002 in 200ml, it is now also available in 125ml and 375 ml sizes. Year 2005 has seen this brand become a significant player in highly competitive milk market. NESTL Plain Yoghurt Launched in November 2000, NESTL Plain Yoghurt became the market leader and has maintained its position ever since. The stay-fresh seal, printed expiry date and an exclusive distribution system contributed to the immense popularity and success of the product. On account of its nationwide distribution, NESTL Plain Yoghurt is only national player in the market. NESTL Fruit Yoghurt The year 2001 saw the launch of the NESTL Fruit Yoghurt in 3 variants of strawberry, mango and peach with real fruit pieces. This made a pleasant difference for the consumer, as the local competition was only able to offer fruit flavoured yoghurt. NESTL NESVITA Hi-Calcium Low Fat Yoghurt After the success of Plain Yoghurt, Nestl introduced "Hi-Calcium, Low Fat" yoghurt in 2003. The product contains less than 1 % fat and 50 % more calcium than Plain Yoghurt. In 2005 the product was re-launched under the brand of NESTLE NESVITA which has helped to further strengthen its brand image. One 450 gm. cup of NESTL NESVITA Hi-Calcium Low Fat Yoghurt contains 900 mg of calcium, which is sufficient to fulfil the daily adult requirement of approximately 1000 mg of calcium as recommended by the US Food & Nutrition Board (1997). Calcium is essential for stronger bones and teeth and helps combat osteoporosis, especially in women. NESTLE Raita NESTLE Raita was launched in year 2004. It has become an instant favourite with Pakistani cuisine lovers and housewives. NESTLE Easy Whip NESTLE Easy Whip was launched in Oct 2004, in order to meet the needs of urban cream usage. As compared to other available creams, it is the only cream that whips.

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INFANT DIETETIC LACTOGEN LACTOGEN 1 and LACTOGEN 2 are casein-predominant Infant and Follow up formulae. Locally launched in 1991 in soft packs, LACTOGEN is available in 200g and 400g. It is also available in imported tins of 450g and 1000g. The brand provides both affordability and quality. NAN NAN 1 is a whey-based starter Infant formula, while NAN 2 is its follow up. The local manufacturing of these formulae began in 2001, which was a landmark achievement, as it brought the expertise of producing an internationally renowned high quality infant product exclusively to Nestl Milkpak in this region. This also offers a great advantage to the consumer as a high quality product is now available at the best affordable price. NAN 1 and NAN 2 are available in locally produced 400g soft packs and in imported tins of 450g. CERELAC With local production commencing in 1990, CERELAC has emerged as the dominant player in the branded infant cereal market. Available in six variants, the brand provides balanced nutrition to infants from six months onwards. The variants include CERELAC Wheat, CERELAC Wheat 3 Fruit, CERELAC Wheat Honey, CERELAC Wheat Banana, CERELAC Rice and CERELAC Chicken Vegetable Rice - the latest addition to the CERELAC range. CERELAC sachet of Wheat and Wheat 3 Fruit were added to the range in October 2002, which provided affordability and accessibility to the consumer. NESTL Rice An affordable starter weaning cereal, NESTL Rice offers the flexibility of preparation with a variety of meals. With the advantage of being Gluten free, the brand is available in 125 gm pack and is especially suited to the needs of infants from 6 months onwards. It was launched in 1994. NESLAC NESLAC is growing-up milk formulated specially for young children from 1 to 3 years of age. It contains just the right balance of proteins, calcium, iron, vitamins and essential minerals to cater to the nutritional needs of a growing child during this special age. The local production of NESLAC commenced in 1994. BEVERAGES NESCAF Classic NESCAFE Classic is locally repacked and marketed in 1.4g & 25g sachets, 50g & 100g jar packs and 500g bag & box. The brand enjoys a special position in the countrys coffee consuming segment.

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NESCAF Gold Available in 50g and 100g jars, it offers a sophisticated coffee experience appreciated by coffee connoisseurs. NESCAF 3in1 To cater for consumer convenience, NESCAF 3in1 was launched in 2004. Available in 18g single serve sachet, it offers an inexpensive way of having coffee wherever, whenever and however. NESCAF Gold In order to offer more sophisticated coffee experience NESCAFE Gold is available in 50g and 100g jar pack. This is particularly appreciated by coffee connoisseurs who look for the rich full-bodied taste, coupled with stimulating aroma. MILO Powder Ever since MILO powder was launched in 1994, it has achieved fairly consistent results. MILO is positioned as a milk modifier, both for hot and cold consumption. The product enjoys great popularity, offers a relatively inexpensive alternate to imported products and has an immense potential, particularly among growing children and those involved in active life styles. It is marketed in 200 gm packs and 14 gm single serve sachet. MILO RTD To cater for consumer convenience, MILO RTD (ready to drink) was launched in 1995 and is available in 200 ml and 125 ml pack sizes. It is an ideal alternate to summer drinks and is popular with all age groups, particularly among children and consumers who are nutrition conscious or have an active life style. FROST A well-known fruit drink brand FROST was introduced in 1986. Positioned as a cold drink and alternate to other soft drinks, its strength lies in the convenience attached to its usage. NESTL Juices Encouraged by the consumer response to NESTL Orange Juice launched in 1996, the category of NESTL Juices was further expanded with the introduction of Mango and Mango-Orange in 2000, followed by Apple Nectar in 2002. In 2003, based on consumer insight and to broaden the range further, NESTL Pineapple Nectar was introduced. To offer more variety to consumers, Red Grapes Nectar was launched in 2005. Nestl juices category has gained substantial market share and is a preferred choice of consumers. CONFECTIONERY

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POLO Nestl Milkpak successfully entered the confectionery business in 1996 with the launch of POLO. POLO was positioned as the refreshing sweet with a hole and catered for the younger segment. Over the years its range has been extended to appeal to various age and income groups. NESTL KIT KAT Chocolate is a small but fast growing market segment. NESTLE KIT KAT was launched in 1996 to make inroads in this market. Popular price points and focused marketing activities have shown excellent sales growth, complementing the Companys confectionery business. NESTL KIT KAT Chunky Launched in Pakistan in 2005 KIT KAT Chunky is Nestls giant single wafer version of the world famous brand KIT KAT. The launch was part of the global strategy to make KIT KAT the largest selling chocolate brand in the world. CULINARY MAGGI 2-MINUTE NOODLES Fast to cook, good to eat - MAGGI 2-MINUTE NOODLES were launched in 1992 and in doing so Nestl Milkpak pioneered the category of instant noodles in Pakistan. MAGGI 2-MINUTE NOODLES have special appeal for children, as they are fun to eat and offer a range of appetizing flavours: Chicken, Chatkhara, Chilli, Ketchup and Masala. The product was re-launched in 2003 with renovated packaging to further strengthen its market leadership.

WATER Launched in December 1998, NESTLE PURE LIFE was Nestls first global bottled water brand. Marketed in 0.5 and 1.5 litre PET bottles, it was established as the clear market leader within 3 months of launch, becoming the benchmark for quality of bottled water in Pakistan. With focused attention on distribution, marketing communication and merchandising, NESTLE PURE LIFE soon came to command dominant market leadership, establishing a new price point for bottled water. NESTL PURE LIFE is a part of the product portfolio of Nestle Waters, which ranks as the biggest bottled water company in the world with its renowned brands like PERRIER, VITTEL, CONTREX, POLAND SPRING etc. NESTL PURE LIFE is registered with NSF International USA, an independent quality certification agency, with the authorization to use its mark of quality on the label. It is also approved by PSQCA and carries its mark of certification. NESTL PURE LIFE Home & Office Service

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In 2000, NESTL PURE LIFE established a successful Home and Office (H&O) delivery service, which has substantially grown ever since and has come to dominate the 5-gallon market in major towns, offering greater convenience and better value to the consumers. Successful marketing and sales strategies has provided greater convenience and better value to the consumers. The brand is poised for continued strong growth. AVA & FONTALIA To expand its H&O water delivery business countrywide, Nestl acquired major share holdings in both these businesses in 2001. While AVA is an important national player in the branded bottled water category, FONTALIA is a strong player in H&O service in Karachi. These acquisitions have helped the company in the extension of its H&O service in Karachi and Islamabad. The two factories in Islamabad and Karachi that produce the AVA brand were later merged with Nestl Pakistan in 2003, as was the factory that produced FONTALIA, which was merged in 2005.

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Appendix 2

91

Appendix 3

Pick Face Channel 12 - 21,

Fire Hydrants at Level A Emergency Door Emergency Door
25
2426A 2425A 0224A 0223A 0222A 0221A 0220A 0219A 0218A 0217A 0216A 0215A 0214A 0213A 0212A 0211A 0210A 0209A 0208A 0207A 0206A 0205A 0204A 0203A 0202A 0201A 0324A 0323A 0322A 0321A 0320A 0319A 0318A 0317A 0316A 0315A 0314A 0313A 0312A 0311A 0310A 0309A 0308A 0307A 0306A 0305A 0304A 0303A 0302A 0301A 0424A 0423A 0422A 0421A 0420A 0419A 0418A 0417A 0416A 0415A 0414A 0413A 0412A 0411A 0410A 0409A 0408A 0407A 0406A 0405A 0404A 0403A 0402A 0401A 0524A 0523A 0522A 0521A 0520A 0519A 0518A 0517A 0516A 0515A 0514A 0513A 0512A 0511A 0510A 0509A 0508A 0507A 0506A 0505A 0504A 0503A 0502A 0501A 0624A 0623A 0622A 0621A 0620A 0619A 0618A 0617A 0616A 0615A 0614A 0613A 0612A 0611A 0610A 0609A 0608A 0607A 0606A 0605A 0604A 0603A 0602A 0601A 0724A 0723A 0722A 0721A 0720A 0719A 0718A 0717A 0716A 0715A 0714A 0713A 0712A 0711A 0710A 0709A 0708A 0707A 0706A 0705A 0704A 0703A 0702A 0701A 0824A 0823A 0822A 0821A 0820A 0819A 0818A 0817A 0816A 0815A 0814A 0813A 0812A 0811A 0810A 0809A 0808A 0807A 0806A 0805A 0804A 0803A 0802A 0801A 0924A 0923A 0922A 0921A 0920A 0919A 0918A 0917A 0916A 0915A 0914A 0913A 0912A 0911A 0910A 0909A 0908A 0907A 0906A 0905A 0904A 0903A 0902A 0901A 1024A 1023A 1022A 1021A 1020A 1019A 1018A 1017A 1016A 1015A 1014A 1013A 1012A 1011A 1010A 1009A 1008A 1007A 1006A 1005A 1004A 1003A 1002A 1001A 1124A 1124A 1123A 1123A 1122A 1122A 1121A 1121A 1120A 1120A 1119A 1119A 1118A 1118A 1117A 1117A 1116A 1116A 1115A 1115A 1114A 1114A 1113A 1113A 1112A 1112A 1111A 1111A 1110A 1110A 1109A 1109A 1108A 1108A 1107A 1107A 1106A 1106A 1105A 1105A 1104A 1104A 1103A 1103A 1102A 1102A 1101A 1101A 1224A 1223A 1222A 1221A 1220A 1219A 1218A 1217A 1216A 1215A 1214A 1213A 1212A 1211A 1210A 1209A 1208A 1207A 1206A 1205A 1204A 1203A 1202A 1201A 1324A 1323A 1322A 1321A 1320A 1319A 1318A 1317A 1316A 1315A 1314A 1313A 1312A 1311A 1310A 1309A 1308A 1307A 1306A 1305A 1304A 1303A 1302A 1301A 1424A 1423A 1422A 1421A 1420A 1419A 1418A 1417A 1416A 1415A 1414A 1413A 1412A 1411A 1410A 1409A 1408A 1407A 1406A 1405A 1404A 1403A 1402A 1401A 1524A 1523A 1522A 1521A 1520A 1519A 1518A 1517A 1516A 1515A 1514A 1513A 1512A 1511A 1510A 1509A 1508A 1507A 1506A 1505A 1504A 1503A 1502A 1501A 1624A 1623A 1622A 1621A 1620A 1619A 1618A 1617A 1616A 1615A 1614A 1613A 1612A 1611A 1610A 1609A 1608A 1607A 1606A 1605A 1604A 1603A 1602A 1601A 1724A 1723A 1722A 1721A 1720A 1719A 1718A 1717A 1716A 1715A 1714A 1713A 1712A 1711A 1710A 1709A 1708A 1707A 1706A 1705A 1704A 1703A 1702A 1701A 1824A 1823A 1822A 1821A 1820A 1819A 1818A 1817A 1816A 1815A 1814A 1813A 1812A 1811A 1810A 1809A 1808A 1807A 1806A 1805A 1804A 1803A 1802A 1801A 1924A 1923A 1922A 1921A 1920A 1919A 1918A 1917A 1916A 1915A 1914A 1913A 1912A 1911A 1910A 1909A 1908A 1907A 1906A 1905A 1904A 1903A 1902A 1901A 2024A 2023A 2022A 2021A 2020A 2019A 2018A 2017A 2016A 2015A 2014A 2013A 2012A 2011A 2010A 2009A 2008A 2007A 2006A 2005A 2004A 2003A 2002A 2001A 2124A 2123A 2122A 2121A 2120A 2119A 2118A 2117A 2116A 2115A 2114A 2113A 2112A 2111A 2110A 2109A 2108A 2107A 2106A 2105A 2104A 2103A 2102A 2101A 2224A 2223A 2222A 2221A 2220A 2219A 2218A 2217A 2216A 2215A 2214A 2213A 2212A 2211A 2210A 2209A 2208A 2207A 2206A 2205A 2204A 2203A 2202A 2201A 2324A 2323A 2322A 2321A 2320A 2319A 2318A 2317A 2316A
A re a Produc ts B loc ked

2556A 2555A 2554A 2553A 2552A 2551A 2550A 2549A 2548A 2547A 2546A 2545A 2544A 2543A 2542A 2541A 2540A 2539A 2538A 2537A 2536A 2535A 2534A 2533A2532A 2531A 2530A 2529A 2528A 2527A 2526A 2525A 2524A 2523A 2522A 2521A 2520A 2519A 2518A 2517A 2516A 2515A 2514A 2513A 2512A 2511A 2510A 2509A 2508A 2507A 2506A 2505A 2504A 2503A 2502A 2501A 2532A 2531A 0126A 0125A 0124A 0123A 0122A 0121A

2424A 2423A 2422A 2421A 2420A 2419A 2418A 2417A 2416A 2415A 2414A 2413A 2412A 2411A 2410A 2409A 2408A 2407A 2406A 2405A 2404A 2403A 2402A 2401A

0101E

0102E

0120A 0119A 0118A 0117A

0101D

0102D

0116A 0115A 0114A 0113A

2315A 2314A 2313A 2312A 2311A 2310A 2309A 2308A 2307A 2306A 2305A 2304A 2303A 2302A 2301A

0101C

0102C

0112A 0111A 0110A 0109A

0101B

0102B

0108A 0107A 0106A 0105A 0104A

0101A

0102A

0103A 0102A 0101A

Ambient Open

Offices

Ambient Open

LOADING BAY LOADING BAY

Bin 1.75m 1.47 m 1.22 m

LEGENDS

92

Gate

Gate

Battery Charg. Area

Appendix 4

93