International business

IMPORTS AND EXPORTS

BETWEEN

PAKISTAN

AND

SOUTH KOREA

Subject: BUSINESS STRATIGES

Course Instructor: Sir Amad

Subject Credit Hours:3 Hours

Following Students are the participants to prepare & finalize this Feasibility Analysis!

Student

Roll No:

Student ID

Muhammad Adil

45 REG

S4F13Mcom0045

M.Com

4th Semester

BEST REGARDS

TO

OUR PARENTS

WHO LOVE, AFFECTION & PRAYERS HAVE BEEN A SOURCE OF INSPIRATION AND ENCOURAGEMENT FOR US!

Table of Contents

Section No:

Section

Page No:

01

Executive Summary

01

02

The Business

04

03

Management Team

08

04

Legal Company Structure

24

05

Ownership & Intellectual Property

26

06

Industry Analysis

29

07

Business Strategies

33

08

Operational Strategies

41

09

Porters Five Forces & BCG Growt Matrix

46

10

Critical Risks Factors

54

11

Appendix

56

Acknowledgment

With the name of ALLAH who is the most beneficial & merciful and He enable us to complete this business proposal to overcome our semester requirement.

Then we thanks to our Entrepreneur Mr. Amad who guide us in very beautiful & nice way. The supervision of Sir Faisal has provided us a lot of experience to get the view of actual market.

We are very thankful to Sir AltafAlam Sir Irfan, Sir Naeem& all other honorable teachers who share their experience & knowledge with us to complete this project in very efficient manner.

In last, we are much respected for those students who provide us encouragement to complete this business feasibility report.

Muhammad Adil

JUNE 9th / 2014

[Type the document title]

(Confidential )BANANA CRAZEE= A Product by I

Section 01:

Executive Summary

Our company Frito Enterprises will produce a unique and different product for the market to change the trend of the people from vegetable snakes to fruit snakes. We will provide specific unique products to our targeted customers for their maximum level of satisfaction. There is no any firm who produce Fruit Snacks till now in our national market. We will offer these new trended products at moderate prices for the customer benefit.

The Opportunity

Pakistani Market exports & demands fruits in huge quantity, but there is no any firm is present at here for the manufacturing of Fruit Snacks. We will provide to him fruits in various tastes, like apple, banana, orange, etc in roasted, snakes & chips form.

If we will proper launch this business, then we may be in condition to change the market trends within the 10 years. If we will change the trend of the market then we will consider as Trend Maker for the Snacks Industry.

Competitive Advantage

There is huge gap is present in the market for the fruit snacks. We have no any direct competitor at local & national competition till now. Our product will be unique in the market; we will easily achieve economies of scale with the next 12 years who provide us least cost with maximum profit. Following are our major indirect competitors in the snacks industry but all of them producing vegetable snakes as:

Lays

Golden Chips

Smiths

Kolson

Super Crisps

Krincles

Pringles

All of these firms are the heavy weights of the market and have the great influence on the behavior of the market. All of these are our indirect or may be future competitor for us. Most of these firms have a great market share, but not like Lays who is the leader in the Snacks Industry.

Target Market

If we offer this product in the market then our basic target market will be youngsters of colleges & universities who enjoy these kinds of product. When we will get a successful response then we launch this product of specific city where college or university exists. In our first attempt, we will target three cities within the 7 months to the first launching.

In general sense, we have comprehensive market because every aged person has a reasonable demand of the chips. If we will target maximum colleges & universities of the Punjab within our first three years of launching then we will achieve a reasonable & stable place in the Snacks Market.

Management Team

For the managerial affairs of Frito Enterprisez, we have to choose best one management personalities from the market who will supervise us. For the effective management, we have following managerial posts as:

CEO/Chairman

Board of Directors

Finance Manager

Accountant

Marketing Manager

Production Manager

Quality Inspector

Coordinator

HR Manager

Asst. Cost Manager

Other Staff Members

This will be our best try to choose well experienced & well qualified management team in the larger interest of the business success. But our major focus is finance & marketing heads that provide value & brand equity in the market. We will provide sufficient benefits to our employees because we believe that firms employees are our assets.

Financial Projections

According to the Snacks Industry, we are unable to demand a huge capital from the market. But for the proper launching of business, the total required capital of business is Rs. 100 Millions. According to our analysis we have to require 7 investors which will act as the owner of the Frito Enterprisez. For the operations of firm, we will demand Rs. 50 Million as initial investment to startup the business and Rs. 25 Million in IInd year & also Rs. 25 Million in IIIrd year.

For the return on investment, we plan a strategy as ROI Policy; we will provide maximum return to our investor. We will distribute 3% to 14% return on the net profit to our 7 investors who will act as the owner of our business. We will distribute return on investment in 2nd year to the establishment of business. According to the ROI Policy, we will divide Net Profit of the firm after taxation & other expenses among the whole investors.

After the achievement of the breakeven within 2.64 years (32 months), we will make huge profit for our investors. The profit generation in this business is not difficult due to less cost on all inputs of the production, especially raw material. We have 45% ratio of Gross Profit on the sale of each unit with respect to their Sales Price.

Exit Strategy

Success is not always the fate of any business. For the exit strategy to our stakeholders, we will apply following strategies as:

Sale of Business to any Heavy Weight of Snacks Industry with Product Formula

To merge Frito Enterprisez with any other Industry related Firm

Bank Raptly Slip to our all stakeholders

Section 01: Executive Summary

BANANA CRAZEE= A Product by Frito Enterprisez~ 1 ~

Section 02:

The Business - Description

Our Opportunity

Business is the name of profit earning through legal activities. The most important parameter towards profit making is the presence of an opportunity gap in the market because homogenous products have a great sense of competition as compared to heterogeneous.

For the Fruit Snakes, we have a great opportunity in the national market because there is no any producer is present here who provide this trend to the people & earn sufficient revenue. The international brand Pringles is present who provide caned banana chips at the limited level with very high price.

Description of Business

We Frito Enterprisez will facilitate to people by fruit snakes in packets at the reasonable prices and obtain sufficient value from them. Now, people enjoy their life with potato chips, snakes, popcorns, chocolates, etc. but we will provide them a concept of Fruit Chips or Fruit Snakes which will be better for their health.

Our initial product will be Banana Crazee A Taste of Nature (banana chips) in the market to get an overall response of people towards Fruit Snakes. There is no any direct competitor is present in the market but a lot of indirect competitors are also present who are the price makers & trend changers.

The first mover advantage in the Snakes Industry goes to Super Crisp who was the king of this industry for 25 30 years. Then 10 years ago, Lays A Product of Pepsi Co. entered into the market and replaced the Super Crisp into Lays French Cheese. Due to huge network, extensive promotional activities & international brand equity Super Crisp lost their market share to Lays.

We have a great threat of take over & market crash from Lays as multinational brand. If the Lays want to tackle our product then 2 years time period minimum will be required due to their policy matters. For any multinational brand, it is not easy to launch a new product in the specific market within the few days or months because their strategies & policies recommended by their higher authorities which is time consuming task.

Pakistan is a consumer market and our consumer is price conscious not quality or product conscious. Frito Enterprisez will provide our products at reasonable prices to capture the sufficient value from our customers. We will consider as First Mover Advantage in the snakes industry relevant to fruit snakes. There are so many broad chances towards the success of this product.

Vision Statement

We want to satisfy our customers by the taste of nature

Mission Statement

We want to offer our dedicated and innovated products to customers for their maximum satisfaction as our ultimate goal. We want the growth along with our customers, staff, employees, suppliers and all other business associates by greater value

Major Objectives

For the 15 20 years in the future, our firm Frito Enterprisez will achieve following major objectives from the target market as:

To known their brand as Frito Enterprisez within the next 6 years at national level

To provide a quality product to consumer at reasonable price

To loyal the customers towards brand & capture brand equity from them

To consider that employees are our assets who provide us their services in honest way

To change the mind of people from vegetable snakes towards fruity snakes in the snakes industry with in next 10 years

To attain at least 30% market share of snakes industry within the next 10 years

To compete in the market on quality behaviors, not on price strategies

To earn minimum 30% profit on each unit from the day first

To establish their own national distribution network within next 12 15 years

To nationalize our firm at least 20 years to their existence

To maintain the harmonic relationships with their suppliers for the quality concerns

To provide a sufficient return to investor from our net profit

Competitive Advantage

We are offering a unique product to market with good quality, excellent taste & at reasonable price which will attract to consumer. We are fully free in this segment of the snakes industry till next two years minimum. And two years is enough time to grasp the huge market value. The major threat to our product is take over from Lays, but it will be not easy for Lays. Because multinational brands never want to lose their reputation in the host market through negative propaganda towards other home product.

In the case of Lays threat, we have national slogan of Be Pakistani, Buy Pakistani, which will provide us way to capture the market share. And, we are offering Halaal Food to market under the Islamic Values. It is in our common observation that some years before, Lays had a blame of Pig Fatty Oil in their chips, and Lays faced huge financial crises due to this unethical activity in the Pakistans Market. These will be ours strong bases to walk in the snakes industry.

Another competition strategy is also present that we will merge themselves into Super Crisps. This merger will provide us low fixed cost, national distribution network, brand name of Super Crisp, etc. due to this merger Super Crisp may will be again attain the huge market share like in past.

Current Status

Now, if we launch our product to 3 4 major cities of Pakistan which provide us the actual behavior of our product towards people. Due to this limited launching strategy, we will prevent ourselves from the huge loss which may occur in big launching. As the first mover in the fruity snakes industry, may we will face various initial costs but all of these costs will be cover within very small next period because our profitability on each unit is so much for the investor.

For the marketing concerns with respect to our competitors, we will promote our brand and products by various promotional activities and extra benefits to distributors, retailers and also to ultimate consumers. But it will be necessary for us to establish strong & solid distribution network for the consumption of our product on each & every level.

Section 02: The Business (Description)

Section 03:

Management Team

For any organization, management is a first and last pyramid to handle the various operations & matters of the organization. We, Frito Enterprisez is familiar with this important aspect of the business. For the managerial affairs we will choose best one management personalities from the market who will supervise to our business. The well trained & well qualified staff of the organization is the responsible for their success. On the other hand, losers persons of the management staff may responsible for the failure of the organization. For the effective management, we have following managerial posts as:

CEO/Chairman

Board of Directors

Finance Manager

Accountant

Marketing Manager

Production Manager

Quality Inspector

Coordinator

HR Manager

Asst. Cost Manager

Salesperson

Other Staff Members

Organizational Structure

(Frito Enterprisez Organizational Structure)

(Business ConsultantHR ManagerLaw FirmAudit Firm) (Complainant Officer) (Labor + Skillman) (Salesperson) (Asst. Cost Manager) (Finance Manager) (Quality Inspector) (Marketing Manager) (Production Manager) (Accountant) (CEO / Chairman) (Coordinator) (Advisor) (Banker) (Investor)

Section 03: Management Team

Section 04:

Legal Company Structure

Our Firm Frito Enterprisez

Our firm Frito Enterprisez will be a Private Limited Company under the Companies Ordinance, 1984. According to the law, a private limited company is an association of at least 2 but may not exceed 50 members. This form of firm is restricted from the right of its members to transfer their invested part within the company. It also prohibits to any invitation to the public to subscribe their shares or debentures. It will be registered under the Companies Ordinance, 1984 and corporate taxation law. All the members will entertain with the limited liability.

All the members especially investor & bankers join this organization under the Partnership Act, 1932. Under this law, partnership is a voluntary association of two or more persons, who contribute their money, property, time, skills knowledge, energy, ability & experience to carry on business for the profit/loss sharing among each other. The partnership itself have no any legal separate entity, all of members will partners under the head of some specific voluntary kind of firm, which is registered by any law.

Legal Status of Frito Enterprisez

The legal structure of our firm Frito Enterprisez will be a company as private business of various investors, bankers & skilled based persons who invested their money, time, experience & abilities on risk basis & demand high rate of returns against them. The investor with 35% to the total investment & banker with 25% of the total investment will be the members to board of directors without any kind of eligibility criteria. And, CEO/Chairman, Coordinator & Legal Advisor will invest their skills & experiences with the specific selection criteria. Our firm has skilled based investment & money investment portfolio at the time with the different rate of returns on the total invested money & abilities.

In our partnership relationship, we have a lot of partnership deeds. All the partnership deeds (agreements) should be disclosed in the first or statutory meeting of the board of directors. The partnership deeds regarding CEO/Chairman, Coordinator & Legal Advisor will be discussed in this meeting.

At the 5th of each month, firm will issue a special kind of document Fritoz Newsletter a letter which will describes the firm news, policies, rules, regulations, strategies, plans, goals, objectives & achievements of the whole organization. The duties & responsibilities of each staff member will be mention in it which may increase or decrease on monthly basis. The confidential matters will never to be disclosing in this document. This is a public document for our inner structure of Frito Enterprisez.

Frito Enterprisez

Head Office Address:

Frito Enterprisez,

73 / A, Century Plaza,

Near Centre Point (Mini Golf),

Lahore, Punjab 35000

Assembly Line:

Frito Production Unit,

Near Suzuki Falcon Motors,

Lahore Road, Sargodha

Section 04: Legal Company Structure

Intellectual Property

Our firm, Frito Enterprisez have no legal status till now, but we will register themselves as soon as possible in the first aspect of the business.

When we will register ourselves, then we will use this monogram as the identification logo of the firm. On each & every product or service offer by us will have the mono. This monogram is the Trade Mark for us as the legal status of the firm. It will be our first preference that we will show this trade mark on every offer product in the market.

After the launching of product, we will give legal status to our production process as patent. In general sense, we will register our assembly line with the name of Frito Assembly Line. The purpose to get legal status for our production process is to eliminate the competitor role towards the copy us. Our production process is the basic secret for our firm.

Section 05: Ownership & Intellectual Property

Section 06:

Industry Analysis

Industry Description

People demand the product according to their intuitions & preferences. We know that the 3rd World Countries are very habitual to adopt the Western Culture. Likewise, Pakistan is also in line with those countries which have big potential do exist for investment in the Snacks Industry in Pakistan as the Demand or Growth rate is very high. Annual Growth Rate of Snacks Industry is estimated at the rate of 20 % - 30 % per annum.

Most of the children, teenagers and young people are the target market of the product and we have the experience that the eating habits of the target market is rapidly changing and they like to have snacks all the time. Further potato and corn snacks are labeled as a meal replacement and being a light fast food is becoming popular. The life style is improving and going to be changed and also because of satellite invasion the demand is bound to register a considerable boost.

Now, people are enjoying with the potatoes & corn chips in so many flavor but we want to change the trend of nation from vegetable to fruit chips which are better for health. The opportunity for our new trend product is present in the market. We want to get benefit from this gap and make a profit.

Industry Size

In common practice, there are four phases present in the market regarding the Product Life Cycle, Introduction, Growth, Maturity & Decline. Every sector of the economy is based on this principle. The size of our industry is so large because each kind of person likes snacks. There are few firms who fulfill this demand ay national level. We have a golden opportunity to enter in this market with some heavy investment & take over the trend.

The demand of the present market is met by the mix of Branded and Unbranded Chips available in the Market. There is 60% of the population which is Brand Loyal. However remaining 40% of the Un-branded Market can be attracted through heavy Advertisement Campaign.

On the basis of data collected and present survey of the market, current total market is estimated at 2,000 Tons of Chips which is segregated as follows:

Segments

Share %

Quantity (Tons)

Branded

60

1,200

Unbranded

40

800

Total

100

2,000

Industry Attraction

The Snacks Industry of Pakistan is on growing phase and has a lot of potential to absorb firms easily. The window of opportunity is open for us with the high growth rate. The Annual Growth Rate of Snacks Industry is estimated at the rate of 20 % - 30 % per annum.

Under the export prospects for the next decade are very promising given the sustained and continued expansion of the Fast Food Industry abroad. Further Tariff cuts under Trade Agreements are anticipated. Low per Capita consumption of Fries in the overseas market is a strong indication of future demand. These upcoming symptoms have a great potential to make huge profit.

Profit Potential

Profit generation is the basic parameter to execute the business. The sales trend of crisps and snacks is increased by 10% between 2000 and 2005 to at their peak at 2,386 million. A decline of 3.5% in 2004, however, took retail sales to 2,303 million due to the implementation of taxation structure of retailers.

According to our analysis, we are producing unique product which will provide us a huge profit after the achievement of our breakeven with in maximum 4 years to their execution. The behavior of Pakistans Market towards the unique products is so attractive. So, there are so many chances to the generation of profit from this sector.

Target Market

Targeting a market is a critical factor in the marketing strategy of a company. The target market should be in accordance with the companys goals and objectives. The target market for Snacks Industry is comprehensive by nature because the children, teenagers and young people are the target for our industry. Home, rather than school, is the most popular destination for eating crisps and savory snacks, with seven in ten children (70%) consuming them at home, against around half (48%) who eat such snacks at school.

According to our marketing strategy, we will target first of all to colleges & universities of major three cities. After the possible response from these cities we will take next step towards other cities. After one to spot launching, we will start our work for the establishment of national distribution network. We will establish this network within next 10 12 years, which include each & every street of the Pakistan.

Competitive Position

The competitor analysis for Snacks Industry of Pakistan regarding marketing affairs is easily understandable by this table, which provide segmented percentages as,

Super Crisp Super Crisp is the market leader with maximum market share of almost near 40%. Now they are in big threat due to lays. The age segment for Super Crisp ranges from 5 20.

Golden Chips The sale price of golden chips is Rs. 5. They are targeting to Sec B & C.

Kolson Chips Kolson successful products include Slanty. They have chips but they are not successful and usually not regularly available.

Pringles Pringles is imported from other countries by P&G. They are hygienic, best quality crisps and they are quite expensive. Pringles are targeting to Sec A1 & Sec A2.

Chips Manufacturing Plants Currently in Operation

Following are the major and leading Producers of Potato Chips (Crisps) in Pakistan. The Crisps are being produced by direct Potato Cuts/slices and also by Extrusion Process. However, there is not a single Frozen French-Fries Producing Company / facility in Pakistan.

Sr. No:

COMPANY NAME

BRAND NAME

1-

Standard Foods (Pvt.) Limited

Golden Chips

2-

Tripple EM (Pvt.) Limited

Super Crisps

3-

Kohinoor Smith (Pvt.) Limited

Smiths

4-

Consolidate

Kolson

5-

Trading Enterprises

Krincles

We know that all of these firms are operating in the vegetables snacks not in fruit snacks like us. It will be a competitive advantage for us to produced a unique product for the market and generate heavy profits. All of our competitors are strong but in condition to change the trend of the market due to their brand reorganization at the national or international level.

Section 06: Industry Analysis

Section 07:

Business Strategies

We are producing Consumer Goods which are purchased by ultimate user from retailer outlets for their own personal usage. Within the head of consumer goods, we are producing Convenience Goods most of the time these goods are purchased in small quantities and have a low unit value. The profit margin on convenience goods is not so much as like other kinds of goods.

According to the term Marketing Research the systematic design, collection, analysis & reporting of data relevant to a specific marketing situation facing an organization. We have conducted marketing research through questionnaires in our target market.

Survey Research the most widely used method for primary data collection, is the approach best suited for gathering descriptive information. A company that wants to know about peoples knowledge, attitudes, preferences or buying behavior can often find out by asking them directly. The questionnaire of our marketing research is attached in the Appendix.

Product Feasibility & Strategy

Our product Banana Crazee, the modified form of Banana Chips in the national market of Snacks Industry will may change the trend of people from vegetable snacks towards the fruit snacks. Thats why the slogan of our product is Banana Crazee the taste of nature.

In our initial launching, we are introducing two products of Banana Crazee with different tastes to understand the behavior of the market & customer towards the fruit snacks as,

BANANA CRAZEE Saltiest

BANANA CRAZEE Chill Up

Banana Crazee Saltiest:The salty flavor of snacks especially for kids & health conscious people who avoid from the high fats & sugar. The neutralized iodized (0.025%) salt will be added in this product for the taste & ultimate flavor.

Banana Crazee Chill Up:The chilly flavors of snacks for young people especially for girls who demand something chill in their food. Various kinds of masalas and magnesium salts will be added in this product for the taste.

We are introducing two packing for both flavors as,

Mini Pack Banana Crazee = 30 Grams with Rs. 20/= for consumer

Midi Pack Banana Crazee = 65 Grams with Rs. 35/= for consumer

Product

Taste

Weight

RP (For Mini Pack)

RP (For Midi Pack)

Banana Crazee

Saltiest

30 Grams

Rs. 20/=

Rs. 35/=

Banana Crazee

Chill Up

65 Grams

Rs. 20/=

Rs. 35/=

* RP = Retail Price price for ultimate consumer

* The Firms Profit + Distribution Channels Profit = Retail Price (RP)

The product analysis regarding their ingredients will be shown on the product design (prototype) which is attached in the Appendix. The analysis of ingredients is determined by the Forensic Department of Pakistan. The report of Forensic Department provides a satisfaction to our product regarding the reverse engineering matters of our product, which are impossible due to their unique kinds of tastes & items in it.

According to our price analysis, which is shown on next pages, we are in condition to generate a great profit from each unit sold down in the market. The Trade Price (firms price for their customers) is shown in this table as:

Product

Weights / Quantity

TP of Each Unit

Master Packing

TP for Master Pack

Banana Crazee Saltiest

30 Grams / Mini Pack

Rs. 17/=

48 pieces

Rs. 816/=

Banana Crazee Chill Up

30 Grams / Mini Pack

Rs. 17/=

48 pieces

Rs. 816/=

Banana Crazee Saltiest

65 Grams / Midi Pack

Rs. 29/=

24 pieces

Rs. 696/=

Banana Crazee Chill Up

65 Grams / Midi Pack

Rs. 29/=

24 pieces

Rs. 696/=

* TP = Trade Price firms price for their customers

* Master Packing = Cartons

* Mini Master Packing = (Rs. 17 48 pieces) = Rs. 816/=

* Midi Master Packing = (Rs. 29 24 pieces) = Rs. 696/=

Marketing Strategies

We are discussing four marketing strategies which will may valid for next 15 years of the business life. All of these strategies are based on the time period to launching the product in any city or part of the Pakistan.

Initial Launching Marketing Strategy

Phase Marketing Strategy

General Marketing Strategy

National Marketing Strategy (Appendix)

All of these strategies have following terms which are used by Frito Enterprisez for their marketing plans & promotions as:

Discount Package

Free Scheme

Extra Benefits Allowance

Discount Package under this sales promotional package, we are giving various kinds of discounts to distributors, retailers & also consumers for attract their attention towards us. The discount range in this package is 2% - 15% according to time & situation.

Free Scheme under this sales promotional package, we are giving free units (in master packing) on the master packing sales of cartons in big quantity. This scheme is valid only for distributors & retailers. The range of master packing is varies from 1 carton 7 cartons.

Extra Benefits Allowanceunder this promotional package, we are offering so many kinds of various things which will provide benefits to retailers & consumers not to distributors. Following things are giving under this package as:

Product Display Stands

Publicity & Advertisement Material

Display Allowances

Discount Cards to Loyal Customers

Extra Discount to Anyone (0.5% - 3.0%)

Initial Launching Marketing Strategy

When we want to launch our product in any area of the Pakistan, then this initial strategy for marketing & promotion will be implement for the penetration into the market as soon as possible. Before 10 days to launching the product in any area, we will start our promotional activity which includes, pamphlets, Banners, FM Adz, Cable Adz and Sign Boards Flexes. The quantity for this promotional budget will vary with respect to the specific area & our promotional budget. All of this promotional campaign will manage by Marketing Manager.

When we launch our product into the market, then we will never target to the distribution network of this specific area, we will directly target to retailers & consumers who provide us value. This penetration strategy wills breakdown the monopoly of distributor regarding our product. We will introduce our product at initial level to colleges & universities of the specific area. The canteens of these institutions will provide us demand in students & also in local market.

Under the Discount Package, we will provide 15% discount to our retailer or canteen owner on retail price (RP) of each master packing for either (Mini- or Midi Pack). Under the Free Scheme, we will offer him 2 Free Carton with 10 Mini Pack Cartons & 1 Free Carton with 10 Midi Pack Cartons. It is the fully choice of retailer or canteen owner either he select Discount Package or Free Scheme but not both.

Under the Extra Benefits Allowance, we will provide him 1 stand on the net purchase of 3 cartons of anyone master packing. If he wants to purchase more than 3 cartons, then we will provide him 2 stands on the net purchase of 5 cartons. At least one stands is compulsory for each retailer or canteen owner. We will provide one banner to each retailer and 100 pamphlets without any kind of cost for their counter display on each delivery.

If we conduct any Spot Activity for consumers then we will provide him 40% discount on the retail price. This spot activity must be sponsor by Frito Enterprisez may on the behalf of some retailer or any other entity. For the conduction of spot activity, our Marketing Manager will manage whole campaign.

This strategy will be valid till after 30 days to the introduction of the product in the market. After 30 days, we will move towards the next scheme.

Phase Marketing Strategy

After the 30 days to the launching of product, we will implement the Phase Marketing Strategy. Under this strategy, we will provide 10% discount to each retailer on retail price (RP) under the activity of Discount Package. If he want to enjoy with the Free Scheme, then 2 Free Cartoons with 10 Mini Pack Cartons & 1 Free Carton with 10 Midi Pack Cartoons. This scheme is same as like in previous strategy. Like previous strategy, it will be the fully choice of retailer or canteen owner either he select Discount Package or Free Scheme but not both.

Under the Extra Benefits Allowance, we will provide him 1 stand on the net or credit purchase of 3 cartons of anyone master packing. If he wants to purchase more than 5 cartons, then we will provide him their demanded number of stands. At least one stands is compulsory for each retailer or canteen owner. We will provide one banner to each retailer and 100 pamphlets as promotional activity to their counter display on each & every delivery.

If we conduct any Spot Activity under the Phase Marketing Strategy for consumers then we will provide him 40% discount on the retail price. This spot activity must be sponsor by Frito Enterprisez may on the behalf of some retailer or any other entity. For the conduction of spot activity, our Marketing Manager will manage whole campaign.

This strategy will be valid till the allocation & deal of any distributor in the specific area. Under our projection analysis, we will get no more time to the allocation of any distributor for our product. According to Market Analysis, we demand just maximum 5 months for the execution of any distribution in specific area, where we already has launched our product.

General Marketing Strategy

When we have our own distributor in the specific area where we have already launched our product, then we will implement our General marketing Strategy. This strategy is just valid for Distribution Network, if in any case the distribution network will may not establish in the specific area within 5 months to launching of our product. Then we will continue the previous strategy till we establish our sole in this area.

Under this Discount Package, we will provide Rs. 1.5/= on Mini Pack &Rs. 3/= on Midi Pack, on each unit without any kind of carriage expenses. And, distributor will provide Rs. 1.5/= on Mini Pack &Rs. 3/= on Midi Pack, on each unit to retailer, all carriage expenses of distributor will less from this profit margin of retailer. Except from this profit margin on each unit, we will provide 1 Free Cartoons with 10 Mini Pack Cartons & 1 Free Carton with 15 Midi Pack Cartoons under Free Scheme.

Under the Extra Benefits Allowance, we will offer following this to each distributor as our authorized dealer in the specific area, which jurisdiction is allocated by our Marketing Manager.

All the expenses of carriage till the delivery in the hands of the distributor

He have ability to demand sufficient stands according to their requirement

He have ability to demand enough promotional material as their requirement

All the advertisement expenses will be bear by the firm

Firm will allocate a sufficient balance for the retailers as their Display Allowance which given on the behalf of the distributor

The Usage of Display Allowance is in the hands of distributor with specific evidence

The Marketing Manager have ability to give 0.5% to 3.0% extra discount to any distributor on the behalf of their huge delivery & repeat sales behavior

If we conduct any Spot Activity under the General Marketing Strategy for consumers then we will provide him 35% discount on the retail price. This spot activity must be sponsor by Frito Enterprisez just on the behalf of our distributor who gain the profit 5% of the total sales in this spot activity as their profit margin. For the conduction of spot activity, our Marketing Manager will manage whole campaign.

This strategy will be valid for the implementation of new strategy for any distributor.

Pricing Strategies

We knew that price competition is the core element in the free economy. For setting prices of products various kinds of supply & demand forces shows their behavior in the general market. The companies are not freely independent to charge their prices from customers according to their demand.

We allocate our prices or customers & consumers on the following basis according to this given below pattern as:

Price / Cost

For Mini Pack (in rupees)

For Midi Pack (in rupees)

Total Variable Cost

7.35

14.15

Carriage Expenses

0.50

0.50

Selling Commission

0.50

0.50

Total Cost Per Unit

8.35

15.15

Fixed Cost Reserve

1.00

1.00

Firm Profit

7.65

12.85

Trade Price (TP)

17/=

29/=

Distributor Margin

1.50

3.00

Retailer Margin

1.50

3.00

Retail Price (RP)

Rs. 20/=

Rs. 35/=

Weights (in grams)

30 Grams

65 Grams

* Total Variable Cost = represents the cost of product which firm bear to produce a product which will be discussed in the Appendix

* Carriage Expenses = all the expenses which firm will bear to transport the product in the hands of distributor or retailer

* Selling Commission = Rs. 0.50 or each unit will be equally divided into the Marketing Manager & specific Salesperson who sold this unit

* Fixed Reserve Cost = a reserve which may used for any affair of the firm may be for the recovery of Fixed Cost by the instructions of CEO/Chairman

* Firm Profit = This is the Gross Profit Margin of the firm which will used to pay various kinds of expenses & fixed costs to the operations of the Frito Enterprisez

* Trade Price = a firm price for their customers but not for their retailers

* Distributor Margin = a gross profit for the distributor to operate their business

* Retailer Margin = a gross profit for the retailer which may includes the carriage expenses from distributor

* Retail Price = a price for the ultimate consumer who purchase our product from the retailer elsewhere in the Pakistan

Promotional Strategies

Most of the promotional strategies are discussed in the product feasibility & strategy but for more common practice, we also discuss various modes of promotional activities which choose by our firm for themselves under the limitations of their budget.

We will start our various promotional activities since 10 days before to the initial launching of our product in the specific area market. In our first 3 years, we will use following promotional modes to convey our message towards the general public as:

Pamphlets

Banners

Voucher Billing Pads

Sign Board Flexes

FM Band Advertisement

Local Cable Advertisement

After the 3 years to the launching of our product, when we feel we are in better condition to handle our brand value then we will target National Media for our promotional advertisements. We will target PTV, Geo Network, Express Network and Duniya Network in possible time. Our first preference for the national advertisement will be the prime time.

For the day first to next 5 years, we will provide following promotional activities & customers behaviors activities for the loyalty of our brands as:

Toll Free Number on backside to product design

E Mail ID + Web link on the product design

Complaint Officer in the Head Office, Lahore

Garments with labeled promotional adz (as t shirts, bands, etc)

Shopping Bags

Calendars

Key Chains, etc.

Section 07: Business Strategies

Quality Control

Frito Enterprisez is Quality Conscious organization, for the proper allocation of quality affairs in our production process we are hiring a Food Quality Inspector for our own organizational quality affairs. He will be responsible for the quality techniques which may implement on the production operations. It is our first preference to produce minimum variation output for our customer. For the quality enhancement program, we follow those techniques which are less costly & greater beneficial for us.

Quality Statement

The quality is an integral part of our commitment to world class products. Our aim is to provide zero defected and zero variation products to our consumers

Section 08: Operational Strategies

For the Quality Enhancement Program in the Frito Enterprisez, we will use the Statistical Process Control (SPC). According to SPC, we will use a statistical method for separating variations from the special cause to natural cause, for the elimination of the special cause variations and minimizing the natural cause variations on the continual basis improvements in the production process.

Section 10:

Critical Risks Factors

Management Risks

Production Wastage

Labor Conflicts

Low Coordination

Leg Pooling Environment

Conflicts in Board of Directors

Conflicts in Directors & Investor/Banker

Low Level Management Problems

Marketing Risks

The Market Breakdown

Any Market Crash

Lays As Competitor

Conflicts with Distributors

Decline in the Industry

Sudden Change in Trend

Operating Risks

Wastage During the Production

Low Quality of Bananas

Conflicts with Suppliers

Less Coordination in A/L

Less Working Environment in A/L

Conflicts b/w A/L Staff

Financial Risks

Less Capacity for Fulfill the Demand in first 5 years

Financial Crack Down in Market

Political Instability

Law & Order Instability

Extra Money Utilize for Quality Enhancement

High Wastage Dumping Cost

Energy Crisis

Lays Financial Take Over

Intellectual Property

Govt. Banned Policies

Decline in Goodwill by Competitor

Stolen of Trade Secrets

Legal Copy of Copyrights

Public Rules & Regulations

Other Risks

High Taxation

Inflation Trends in the Market

Decline in the Value of Money

Rising Prices of Raw Material

Govt. Food Department Conflicts

Appendix

10 Years Capital Requirements

Section 10: Critical Risks Factors

PORTERS FIVE FORCE MODEL

The Bargaining Power of Buyers

The power of buyers is the impact that customers have on a producing industry. In general, when buyer power is strong, the relationship to the producing industry is near to what an economist terms among op son y - a market in which there are many suppliers and one buyer. Under such market conditions, the buyer sets the price. In reality few pure monopolies exist, but frequently there is some asymmetry between a producing industry and buyers. The bargaining power of the buyers is low in the country. Because what so ever is producing by the companies it is accepted by the consumers. There is no involvement of the consumer in deciding the taste of the soft drink.

The Bargaining Power of Suppliers

A producing industry requires raw materials - labor, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if powerful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industry's profits.

All the sellers of the raw material are in India and other part of world. If any of the suppliers raises its prices, we can shift to another supplier.

Barriers to Entry / Threat of Entry

It is not only incumbent rivals that pose a threat to firms in an industry; the possibility that new firms may enter the industry also affects competition. In theory, any firm should be able to enter and exit a market, and if free entry and exit exists, then profits always should be nominal. In reality, however, industries possess characteristics that protect the high profit levels of firms in the market and inhibit additional rivals from entering the market. These are barriers to entry.

There are no barriers to entry in the soft drink processing industry, because the machinery, labor and raw material is readily and easily available in the country. The retaliation level of the companies in the industry is very low. Because the companies have generations of the loyal customers

New entrant to a an industry bring new capacity a desire to gain market share and position and quite often , new approaches to serving customer .new player means price will pushed down ward and margins squeezes . Its resulting means profitability will be low in long run. (This decisions was.by Michel E porter, completive strategy 1980 pp7-33

Rivalry

Rivalry among firms refers to all the actions taken by firms in the industry to improve their position and gain advantage over each other. The market structure of the soft drink industry is oligopolistic. All the companies in the industry are charging the same prices against there products. If any of the company enhanced the prices of the soft drink, all the companies followed the same path. The firm with high strategic stakes in achieving success in industry genially are destabilizing because they may be willing to accept below average profit margins. There are few firms in the industry like coke cola, thump up, Zaire masala, etc. and all the firms are competing on the basis of the huge marketing campaigns in the media to established themselves hold position or expand . (Our goal is to shrink the profit pool and take the biggest slice .by Kevin Rollins, president and COO, dell Inc. The magazine THE MARKETE Feb. 2010).(global marketing warren &mark2005 4thedu pg.505)

Threat of Substitutes

In Porter's model, substitute products refer to products in other industries. A threat of substitutes exists when a product's demand is affected by the price change of a substitute product. A product's price elasticity is affected by substitute products - as more substitutes become available, the demand becomes more elastic since customers have more alternatives. A close substitute product constrains the ability of firms in an industry to raise prices. (Michel E porter, completive strategy 1980 pp7-33)

The direct competitor of the Pepsi drink and indirect competitors are fresh juice tea coffees but it is costly in the country, so we can say that there is threat from the substitute product

The BCG growth Share Matrix

Boston Consulting Group (BGC) pioneered an approach called portfolio techniques that attempted to help managers. Balance the flow of cash resources among their various businesses while identifying their basic strategic purpose within the overall portfolio. The market growth rate on the vertical axis indicate the annual growth rate of the market in which the business operate (kotler 2005,pg.94.john.A .richard .B strategic management by 2011 edu.ch 8.)

(Sources of information www. ayushveda.com)

As mentioned above, this study aims on analyzing the products and services offered by PepsiCo. The BCG matrix approach is based on the product life cycle concepts which can be utilized to identify what priorities should be given in the product portfolio of a business level. The product portfolio analysis of the PepsiCo using BCG Matrix analysis. Accordingly, PepsiCo is consisted of 5 major brands: Gatorade, Quaker, Pepsi products, Frito-Lay and Tropicana

Question mark

With this, it shows that the products that belong to the question mark are Gatorade, Pepsi cola and also Tropicana. Because of the emergence of different healthy drinks and beverages in the global market, the market share of Tropicana and Gatorade are being threatened. Accordingly, question mark category means that these products have a low share of a possible high growth market and may become a star product because of the positive response of the customers. (Annul reports 2009)

Star category

As can be seen in the figure, the services that fall in star category are is the pay-is Pepsi brands. The star category shows the products with a high share of a gradual growth of market and these products have a tendency to produce high amount of profits.(annual report2009)

Cash cow

The next category that can be seen in the figure is the cash cows. Herein, the products are considered to have a high share of a slow growth market (Annul report 2009)

The PepsiCo, services that can be considered in the cash cows are the Quaker

Dog

Lastly, it can be seen that walker potato crisp, diet Pepsi and Frito-Lay are products that can be considered in the dogs category. It can be said that PepsiCo has been able to market their products and increase their market share and market growth by using different strategies and approaches. The company enhances the market share of their brands by considering different marketing entry modes.