Habib

Oil
Mills
Introduction
Habib Oil Mills (Pvt.) Ltd. "HOM" is the largest FMCG Company
exclusively in the vegetable oil & fats sector in Pakistan. The
company produces premium brand cooking oils and
hydrogenated cooking mediums, and markets the products
through its own distribution network, which covers almost all
commercially viable markets nationwide.
Incorporated in 1954-55, Habib Oil Mills (Pvt.) Limited was
initially established as an oil expelling unit. The present
management took over the unit in 1978. The company has
strong financial background and has sizable infrastructure
managed by professional staff. It enjoys excellent relations with
its bankers and is considered liquid on all financial
considerations throughout its performance. It has proven track
record in this business and has plans for targeted prosperous
growth in future.
The marketing policy of the company envisages development
of brand loyalties among the customers and consumers
through their continued involvement and participation in series
of several promotional activities run by professional staff and
consultants. The products enjoy vast popularity and brand
loyalty and stand first in terms of market share in this sector
nationwide. The company has achieved a growth of over 500%
in last ten-year period, which is primarily attributed to its
consistent quality care and driving successes from application
of needed market strategies.

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Mission Statement Of Habib Oil
"Our aim is to become the trend setters in
promoting healthy living through providing quality
food products.”
Components present:
1) Concern for public image:
Promoting healthy living
2) Self concept:
To become the trend setters .

Proposed Mission Statement

Our aim is to become the trend setters in Pakistan promoting
healthy living through providing quality food products and also
maintain this position. We demands openness and honesty
throughout operations to prompt trust, and integrity.
Employees are encouraged to bring forth new and better ideas
for improved performance. We strive to provide products and
services of superior value to meet the expectations of our
internal and external customers.

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INTERNAL FACTOR EVALUATION
Internal Factor Evaluation (IFE) Matrix is a strategy-formulation tool
summarizes and evaluates the major strengths and weaknesses in the
functional areas of a business, and it also provides a basis for identifying and
evaluating relationships among those areas.

Assign 1 to 4 rating to each factor to indicate whether that factor represents;

1 = Major weakness
2 = Minor weakness
3 = Minor strength
4 = Major strength

Weigh Rating Weighte

Key Internal Factors
t s d Score
STRENGTHS
A respectable position in the eyes 0.11 3 0.3
of the consumers
Market Leader 0.08 4 0.2
Habib’s slogan 0.06 3 0.06
Loyal customers 0.08 4 0.32
Production facilities 0.07 3 0.21
Efficient supply chain 0.1 4 0.32
management system
Pricing 0.04 3 0.18
Strong sales and distribution 0.12 4 0.48
network
WEAKNESSES
Centralized Decision Making 0.12 2 0.24
Huge amount of Import 0.14 2 0.2
Lack of company-owned R&D 0.08 1 0.08
Total 1 2.59

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ANALYSIS
The total weighted score of IFE Matrix is 2.59 which is above industry average.
It means that company’s internal position is good. Factors like efficient supply
chain management system and sales and distribution network are getting
higher weights and company’s rating to these factors are also very strong.
It appears from this analysis that Habib is overcoming its weaknesses
quite fairly with its strengths. Such as strong distribution network, production
facilities and efficient supply chain management system.
When we analyzed the weaknesses, centralized decision making and huge
amount of import are the weaknesses that need to be overcome.

EXTERNAL FACTOR EVALUATION

The EFE matrix is the strategic tool used to evaluate firm existing
strategies, EFE matrix can be defined as the strategic tool to evaluate external
environment or macro environment of the firm include economic, social,
technological, government, political, legal and competitive information.

The EFE matrix is similar to IFE matrix the only difference is that IFE
matrix evaluate the internal factors of the company and EFE matrix evaluate
the external factors.

Assign 1 to 4 rating to each key, that indicate how effectively the firm's current
strategies respond to the factor, where

4 = the response is superior

3 = the response is above average
2 = the response is average
1 = the response is poor

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Weight
Weig Rating
Key Internal Factors ed
ht s
Score
OPPORTUNITIES
Setting Refineries 0.12 4 0.48
Local production of Raw Material 0.1 3 0.3
Untapped rural Market 0.09 4 0.36
People are becoming more health 0.11 3 0.33
conscious
Population growth 0.05 3 0.15
THREATS 0
Unbranded edible oils 0.08 3 0.39
Lower pricing by competitors 0.15 3 0.45
Intense competition in the industry 0.13 3 0.24
Reduction in the purchasing 0.1 2 0.2
power of people due to inflation
International brands are entering 0.07 2 0.14
in the market
Total 1 3.04

ANALYSIS
The total weighted score of EFE Matrix is 3.04 which is above industry
average. It appears that Habib is responding in a good way to existing
opportunities and threats in the industry. The average weighted score shows
that Company’s performance is good but not outstanding in the industry.

When we analyze the EFE Matrix by separating the opportunities and threats,
we found that Setting up Refineries and emerging modern trade
departmental chains like Macro and Metro carry more weights and Habib’s
rating to these factors is also very good means Habib is taking full advantage
to these opportunities. After that, Local production of Raw Material 0.10
weights each and company’s rating to this factor is 3. These are the areas
where Habib needs improvement to take advantage of the market
opportunities.

When we analyzed the threats we found that the biggest threat in the
industry is intense competition and company’s rating is 3. It shows that
competition is the biggest threat for Habib (competition from the local as well
as from unbranded/ loose edible oil) is also severe threats face by the whole
industry.

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COMPETITIVE PROFILE MATRIX
Competitive profile matrix is an essential strategic management tool to
compare the firm with the major players of the industry. Competitive profile
matrix show the clear picture to the firm about their strong points and weak
points relative to their competitors. The CPM score is measured on basis of
critical success factors, each factor is measured in same scale mean the weight
remain same for every firm only rating varies. The best thing about CPM that it
include your firm and also facilitate to add other competitors make easier the
comparative analysis.

IFE matrix only internal factors are evaluated and in EFE matrix external factors
are evaluated but CPM include both internal and external factors to evaluate
overall position of the firm with respective to their major competitors.
Assign ratings values are represent as:

1 = major weakness
2 = minor weakness
3 = minor strength
4 = major strength

Critical
Weig
Success Habib Oil Habib Sufi
ht
Factor
Ratin Scor Ratin Scor Ratin
Score
g e g e g
Price 0.2 4 0.8 4 0.8 3 0.6
Competitiven 0.15 4 0.6 3 0.4 2 0.3
ess
Market Share 0.1 3 0.3 3 0.3 2 0.2
Product 0.2 3 0.6 3 0.6 3 0.6
Quality
Promotion 0.2 3 0.6 4 0.8 3 0.6
Efforts
Customer 0.15 4 0.6 3 0.4 3 0.4
Loyalty
Total 1 3.5 3.3 2.7
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ANALYSIS
From the analysis of CPM, we found that overall rating of Habib is better than
Habib and Sufi. In CPM if Habib’s rating is higher than the competing firms it
doesn’t mean that Habib is better than the second or third. So, we have to
take a look to individual success factors.

If we take a look to individual factors we found that the price, Market share
and Customer loyalty is better as compare to competitors. In product quality
the company’s position is same as the competing firms. But in promotional
efforts Habib’s position is better than Habib. So, Habib has to pay more
attention to the promotional efforts.

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Strengths (S)
1. A respectable position
in the eyes of the consumers
Weakness (W)
SWOT 2. Market Leader 1. Centralized
3. Habib’s slogan Decision
Matrix 4. Loyal customers
Making
2. Huge amount
Of 5. Production facilities of Import

6. 3. Lack of
HOM Efficient supply chain
management system company-
owned R&D
7. Pricing

8. Strong sales and

distribution network

SO Strategies
 Strong sales and distribution
and sales network can be use
to tap rural market (S8, O3)
 Habib’s production facility is WO
very strong if it succeeds to
establish local production of Strategies
Opportunities raw material Habib can  If Habib
improves the
(O) further increase the
R&D it able to
production of cooking oil (S5,
1. Setting Refineries have local
O2)
2. Local production production of
 Habib’s name and image is
of Raw Material raw material
3. Untapped rural very reputable in the
international market help (W3, O2).
Market
Habib to get export potential  If Habib
4. People are
(S6, O1, O2) decrease
becoming more
 Habib’s production facility is import and
health conscious
very strong if it succeeds to focus on local
5. Population establish local production of production of
growth raw material Habib can raw material
further increase the can increase
production of cooking oil the export
(S5,O2). (W2,O1).
 If Habib decreases the price
by lowering its cost, able to
get share in the rural market
(S7,O3).

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Threats (T)
WT
1. Unbranded ST Strategies Strategies
edible oils  Habib can use its strong sales  If Habib
2. Lower pricing by and distribution to compete become self
competitors with unbranded oil in rural sufficient in
3. Intense markets (S8,T1). raw material
competition in  If Habib decrease its prices production, it
the industry by lowering its cost, can cope helps Habib to
4. Reduction in the with the decreasing decrease the
purchasing purchasing power (S7,T4) cost of
power of people  Habib should further production
due to inflation and become
strengthen its brand name
5. Internatio and positioning to increase more
nal brands are threat for new entrants competitive
entering in the (S1,T5) and strong in
market the industry
(W2, T2, T3)

SPACE Matrix

Y axis X axis
Financial strength 3.75 Industry strength 3.50
Environmental stability -3.5 Competitive advantage -1.50
Y axis : 3.75+ (-3.5) = 0.25 X axis: 3.5 + (-1.5) = 2.0

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ANALYSIS
Habib is financially very strong (3.75) and having good competitive advantage
(-1.5) in a growing industry.Habib is in an excellent position to use its internal
strengths. Habib is taking full advantage of external opportunities and
overcoming internal weaknesses and avoiding external threats.

STRATEGIES
 Market penetration and Market development:
It is a good strategy and this can be increased by targeting rural markets
where people are still using unbranded/ loose cooking oil. Habib should
use its efficient distribution network to increase market penetration.
 Product development:
Habib is currently is working on this strategy, recently it introduced
olive oil as people are becoming more health conscious. New product
development is a good strategy. Further new product development can
be a good strategy.
 Backward integration :
Backward integration is like acquiring supplier as the suppliers of Habib
are the raw material providers and Malaysian refining companies,
acquiring supplier is a good strategy because raw material costs 70% of
total cost of production. Acquiring suppliers or join venturing with them
is a good strategy to driven out cost and decreasing cost of production.

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IE Matrix

ANALYSIS
In IE Matrix, Habib lies in the region of Hold and Maintain. Means that Habib
has to maintain and hold its current position.

STRATEGIES
 Market penetration
Habib need to work on market penetration, it should capture rural
markets where people still use loose or unbranded cooking oil. In this
why Habib can further strengthen its position and increase its market
share.
 Product development
Product development is another strategy that Habib is following, product
development is a good strategy to maintain and hold current position.

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BCG Matrix

Star
 Habib Cooking oil
 Super Habib Oil
These are products which have a large market share in a fast growing
industry. Their sales are consistent throughout the year. Their cash
generation is also high and at the same time has a high growth potential,
therefore require larger investments.
Question Mark
 Handi Cooking Oil
 Nayab Cooking Oil
This product of Habib’s requires plenty of additional investment. It was
acquired only a few years ago. Right now it has a small market share in a
market with a high growth rate.
Cash Cow
 Habib Banaspati
This product of Habib has one of the largest market shares in the category
of banaspati. However during recent years there has not been consistent

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growth in the industry. And the company has chosen to decrease its
additional investments.
Dog
 Mayar Banaspati
This is a declining market. Habib’s product has a low market share in this
category. And the company is not considering heavy investment in this
product.

Revenue Profit Market Industrial

Division Revenue Profit
% % Share Growth
1 Habib Cooking oil 500 $125,00
52% 71% 1 3%
,000 0
2 Super Habib Oil 30,
3% $18,000 10% 0.80 3%
000
3 Handi Cooking Oil 50,
5% $15,000 9% 0.47 13%
000
4 Nayab Cooking Oil 20,
2% $200 0.11% 0.1 15%
000
5 Habib Banaspati 350
36% $17,500 10% 0.67 -12%
,000
6 Mayar Banaspati 10,
1% $500 0.28% 0.17 -15%
000
Total 960,000 100 176,200 100

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Grand Strategy Matrix

ANALYSIS
Habib is in an excellent strategic position. Habib should continue its current
strategies.
 As we discussed earlier:
 Market development,
 Market development,
 Product development, Horizontal and Backward integration is good
strategy for Habib.

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QSPM Matrix
Attractive Attractive
Strategy Score Strategy Score
Key Factors Weight
1 Strategy 2 Strategy
1 2
STRENGTHS
A respectable position in
the eyes of the 0.11 3 0.33 4 0.44
consumers
Market Leader 0.08 - - - -
Habib’s slogan 0.06 - - - -
Loyal customers 0.08 3 0.24 4 0.32
Production facilities 0.07 2 0.14 4 0.28
Efficient supply chain
0.1 4 0.4 3 0.3
management system
Pricing 0.04 2 0.08 4 0.16
Strong sales and
0.12 4 0.48 3 0.36
distribution network
WEAKNESSES
Centralized Decision
0.12 - - - -
Making
Huge amount of Import 0.14 1 0.14 4 0.56
Lack of company-owned
0.08 1 0.08 4 0.32
R&D
1
OPPORTUNITIES
Setting Refineries 0.12 3 0.36 4 0.48
Local production of Raw
0.1 3 0.3 4 0.4
Material
Untapped rural Market 0.09 4 0.36 3 0.27
People are becoming
0.11 4 0.44 3 0.33
more health conscious
Population growth 0.05 3 0.15 4 0.2
THREATS
Unbranded edible oils 0.08 4 0.32 3 0.24
Lower pricing by
0.15 3 0.45 4 0.6
competitors
Intense competition in
0.13 4 0.52 3 0.39
the industry
Reduction in the 0.1 3 0.3 4 0.4
purchasing power of

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people due to inflation
International brands are
0.07 2 0.14 3 0.21
entering in the market
Total 1 5.23 6.26
*Strategy 1: Market penetration, capturing the rural markets of Pakistan where people still use unbranded /
loose cooking oil for cooking.
*Strategy 2: Joint ventures with Malaysian companies for the production and refining of raw material, in this
way Habib can reduce its cost of production, because raw material costs 70% of total cost of
production.

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ANALYSIS
From the QSPM Matrix, it is found that strategy 2 is more attractive as the sum
total score of the strategy 2 is 6.26.

STRATEGY 2

Joint ventures with Malaysian companies for the production and refining of raw
material, in this way Habib can reduce its cost of production, because raw
material costs 70% of total cost of production.

Through this strategy Habib can easily get raw material as the raw material of
cooking oil are cotton seed, Soya beans etc are not easily available in Pakistan
by joint venturing with Malaysian companies for the production and refining of
raw material. Habib will be to reduce the cost of production and make the
prices more reasonable in the market.

In this way Habib can also increase its market penetration, by increasing
production and lowering the prices.

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