Raja Muneeb Anwar5753-FMS/MBA/F12

SMM Project Report Al Jannat BakersTo Prof. Imran Qureshi

INTRODUCTION:

The firm which is being chosen is a bakery located in Rawalpindi, its name is Al Jannat Sweets and Bakers. It is located in the center of Rawalpindi i.e. Milaadnagar. The area is famous for Milaads. The nearby areas are Westridge, Raja Bazar, Fawara Chok.

HISTORY:

The bakery was founded by the person belonged to same area, named Mr. Abdul Shakoor. It was founded in 1997. The place for the shop was on rent, but later on, it had been purchased by the owner. Since then, the bakery is running successfully. Now this bakery is surrounded by Allied School, a flour mill, two gas stations and two banks.

NAME:

The name of the bakery is Al Jannat Sweets & Bakers.

BRANCHES:

This bakery has only one branch.

MANAGEMENT:

There are four people working in this bakery. All of them are the sons of Mr. Abdul Shakoor. The bakery is supervised by the eldest son Mr. Maqsood.

OPERATIONS:

This bakery is currently dealing in all the bakery items like sweets, biscuits, snacks, fries, beverages. As well as, this bakery is famous for its burger and shawerma. This bakery is

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currently operating in prime location of its area. The manufacturing of the bakery items is done by another participant, under a contract with the owner of bakery.

PEST Analysis:

PEST analysis is the combination Political, Economic, Social & Technological factors. These factors have become the combination of different variables lies in them. PEST analysis can be found in extended external environment where other entities are indirectly linked with the organization. For example Civil Courts & Police etc.

Political Factor:

Political factor includes the variables related to government, judiciary & the steps taken by them. These variables tell us that government makes decision, how laws passed and have been implemented so far & how crime rates and terror rates have been risen or fallen. In a business like bakery, these variables heavily influence as a recent example of food authority that the step been taken by the government for the hygienic environment and health and safety measures of different hotels, restaurants, bakeries etc. recently. As a result, many big domestic chains of hotels and bakeries have revealed unhygienic to health as they don’t care of health measures in their kitchens.

Secondly, the chicken is big bakery item, it is used in sandwiches, patties, in roasting, in baking, in shawerma, in pizza etc. Some government personnel had their own poultry farms and they created a huge monopoly in the supply of chicken by blocking the supply to raise the price of the chicken. So that, the chicken products in a bakery, became expensive.

As the government controlled terror and criminal activities, sales of the bakery products become increased. It is because the less crime rates caused an increase in the service timings of bakery. Bakeries now are opened till late night.

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Forecast:

The decrease in the rate of crime has initiated the ease in owning new business because doing business is now safer. It can be arisen in the future.

Economic Factor:

Economic factor consists of all the variables related to economy i.e. GDP, GNP, Interest Rate, Monetary Policy, Per Capita Income and Purchasing Power. While in the businesses like bakery, the purchasing power of the people is very high as many of the bakery items are under the range of the people consisting Middle Bracket and Lower Middle Bracket.

GDP effects a lot in this business, for example if GDP increases then there will be less necessity of imports. Which results an increase in utilization of domestic products, hence these products have less manufacturing costs. Ultimately the bakery products become easy to purchase.

In contrast, GNP effects negatively on such businesses. Because of the rise in GNP, the price of the products becomes increased. Foreign remittances are the part of GDP.

As the interest rate increases, the price of the products increases relatively due to the impact of interest rate. 7% interest rate was set by the government this year, which was the lowest in last 42 years.

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The value of rupee was the highest in 2010 as compared to dollar in 2014.

GDP growth rate was 4.14 in 2014, which was the highest among last five years.

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Per capita GDP calculated was 818.87 in 2014, the highest in last five years.

Pakistan’s CPI was raised above 200 points by the end of 2014, which was approximately 130 points in 2010.

Now it is much easier to own a business in Pakistan now as compared to 2011.

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Corruption Index of Pakistan is now 29 points, which was 23 points in 2011. It shows that government shows some laziness in eradication of corruption, which has been risen since 2011.

Forecast

The economic indicators show the positive signs like GDP growth rate, per capita GDP, interest rate, etc. are the favorable signs to own a new business or to enhance the current business in future.

Social Factor

Social factor consists of geographic, demographic, psychographic variables. Demographic variables are also called the physical characteristics of the population whereas psychographic variable consists of attitude, norms, values, lifestyles etc.

In the business like bakery, the social factor is a key element for running a business, because once you have researched and segmented the population, there will be zero percent margin of error and there is no way back. It is because you have to be conscious about the taste of the people or either this taste is being influenced by a positive attitude or not, either this taste is up to the norms and beliefs of the people or not. So you cannot put wine on the display in a country like Pakistan. Most of the people perceive it negative when the owner of a bakery sells olive oil in a bottle resembles to the bottle of wine.

In previous five years, the trend of the bakeries turning into cafes is quite at peak. It appeals more people than the normal bakeries. That’s why the taste has been developed in people influenced by the trend. So that Bread & Butter, Rahat and Tehzeeb have their own cafes. Whereas, Pizza is now being sold in bakeries, more as compared to the Pizza brands.

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Forecast

As the current taste of the people tends toward westernization, this culture will forego longer in future. So the business should focus on the current norms of the customers which drive their taste.

Technological Factor

Technology has influenced the world from last 2 decades. Even a layman has the technical knowhow of the smallest mechanical part. Different softwares have been introduced to make a work much easier and convenient. So that everyone should know how to run these softwares.

Big bakery chains, which have their branches spread all over the country, have their one server which observes all the activities of all the bakeries. So the technology here has influenced the operations of this business. Better technological infrastructure makes a better and positive technological atmosphere.

Different barcode readers, digital counters with conveyer belts have been introduced in Bakeries to decrease the workload.

Forecast

Technology is now used in every single discipline of business. So the technical knowhow should be necessary for the survival in future because the competitors and new entrants would have more technological arsenal as they have launched their business in this era. The inventory keeping software should be installed in the bakeries for the ease of employee and the customer as well.

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BCG Matrix of Al Jannat Bakers along with Competitors (2014):

Companies 2014

1st Jan-30th June 1st July-31st DecR.M.S

Sales (Million Rs.)R.M.S Sales

(Million Rs.)

M.G

Ideal Bakers 1.16 3.6 0.91 3.4 -4%Paradise Bakers

0.92 4.2 1.02 3.2 -29.6%

Al Jannat Bakers

0.85 2.4 0.97 2.4 0%

Awan Bakers 0.64 3.8 0.67 3.5 -9%Asia Bakers 0.57 2.7 0.67 2.4 -12%

Total 16.7 15Avg. R.M.S 0.82 0.84Avg. M.G -11.5%

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BCG Diagram:

Assumptions:

In the above graphical representation of the BCG Matrix, it has been assumed that three of the competitors lie in War Horses. These are Al Jannat Bakers, Paradise Bakers and Ideal Bakers. They are performing slower than the economy. These competitors have high market share and still they have a potential to generate revenues.

One competitor lies in Dodos i.e. Awan Bakers. It has the least market share and has the least growth chances.

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One competitor i.e. Asia bakers, lies between Dodos and Cash Cows. It has again the least market share but the chances of growth are probable, it is on the risk whether it might grow in the future or not.

Reasons:

According to the owners of their businesses, the downfall in their sales decreased last year especially in the second half, due to the major political instability caused by the sit-in of PTI. This affected a lot in their sales.

As well as, the rising fuel prices last year caused the rise in transportation cost, due to which the owners had to increase the sale prices of their products. The Dollar rate was rising and that caused an increase in the prices of imported products.

Third main reason which was found after observing and surveying that the location of the most of the bakeries was not ideal for them. Secondly, they hadn’t adopted modernization in their businesses according to new trends. That’s why their sales were on the verge of steep decrease.

Last reason of decreasing sales was the use of technology. There was no inventory management system in the bakeries, nor did they maintain their accounts and records of their sales properly. They didn’t have any barcode readers, CCTV cameras and magnetized security systems installed in their bakeries.

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BCG Matrix of Al Jannat Bakers along with Competitors (2015):

Companies 2015

1st Jan-30th June 1st July-31st DecR.M.S

Sales (Million Rs.)R.M.S Sales

(Million Rs.)

M.G

Ideal Bakers 1.23 4.8 1.36 5.5 16%Paradise Bakers

0.81 3.9 0.73 4.0 -4%

Al Jannat Bakers

0.78 3.7 0.69 3.9 3%

Asia Bakers 0.68 3.3 0.62 3.4 5%Awan Bakers 0.57 2.7 0.46 2.5 -6%

Total 18.5 19.6Avg. R.M.S 0.81 0.77Avg. M.G 5%

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BCG Diagram:

Assumptions:

In the above graphical representation of the BCG Matrix, it has been assumed that Ideal Bakers lies in Stars. It is performing well with the highest Relative Market Share and the highest growth rate. Whereas Al Jannat Bakers lies in Dogs, having less Average Growth Rate and less Relative Market Share.

One competitor lies in Dogs i.e. Paradise Bakers. It has less Relative Market Share and has less Growth Chances.

One competitor i.e. Awan Bakers, lies in Dodos. It has again the Relative Market Share and the least Growth Rate. It has very less chances to progress.

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Reasons:

According to the owners of their businesses, the downfall in their sales decreased last year especially in the second half, due to the major political instability caused by the sit-in of PTI. This affected a lot in their sales. But now their business is doing well.

As well as, the rising fuel prices last year caused the rise in transportation cost, due to which the owners had to increase the sale prices of their products. The Dollar rate was rising and that caused an increase in the prices of imported products. The Dollar rate fell down this year and the fuel prices became less.

Third main reason which was found after observing and surveying that the location of the most of the bakeries was not ideal for them. Secondly, they hadn’t adopted modernization in their businesses according to new trends. That’s why their sales were on the verge of steep decrease. Some of the bakeries have adopted the modernization in their premises and also they have started working on the current trends.

Last reason of decreasing sales was the use of technology. There was no inventory management system in the bakeries, nor did they maintain their accounts and records of their sales properly. They didn’t have any barcode readers, CCTV cameras and magnetized security systems installed in their bakeries. Still there is less use of technology in these bakeries but it hasn’t affected their sales much this year.

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SWOT Analysis

SWOT analysis can be done by looking at both internal and external environment. Strengths and weaknesses would be analyzed through looking at internal environment, opportunities and threats would be analyzed through looking at external environment. We can do SWOT by our Factors of Production and Porter’s Five Forces Model. Internal analysis can be done by Porter’s Value Chain Analysis.

Factors of Production

Land

Labor

Capital

Entrepreneurship

Information

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Porter’s Five Forces Model

SWOT Analysis of Al Jannat Bakers

Strengths

Prime location on main road including a supermarket and a school. Only bakery in the area having shawerma stall placed in the bakery premises. Having imported products placed in the bakery. Daily arrival of fresh, healthy and hygienic products. Varieties of cakes and pastries. Experienced personnel. Only bakery which is in the service till late night. Having different traditional sweets which give them a competitive edge. Oldest bakery in this area, that’s why it is reliable.

Weaknesses

Problems in selling bakery products as they are perishable so needs to be sold in the similar day.

Few bakery products in the product lines.

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They don’t have their own kitchen so that they rely on imports. Imports incur more cost as compared to the cost of production of similar products in own

kitchen. Diabetic patients avoid most of the bakery products so that they don’t visit to the bakery. Lack of technological advancements in the bakery, no security systems installed and

there’s no cash counter. Opening a bakery is still at high risk due to crime activities in that certain location. No power backup system installed in the bakery which creates a lot of problems in

storing products. There is not any other branch of the bakery.

Opportunities

Less Interest rate. Increasing value of rupee. Increasing GDP growth rate. Growing trend towards bakery products. Cashing the ideal location. Needs to go forward to expand the business. Decreasing crime rates. Potential to become big shawerma point in that certain area.

Threats

Growing competitors due to increasing ease of business. Corruption Index Advancements in fellow bakeries in similar area. Diversifying bakery products by competitors. Hoarding and Price Hike of the Chicken. Substitution due to lack of bakery product line. Growth of the leaders in this market.

SWOT Based Strategies:

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SWOT based strategies are related to internal Strengths, weaknesses and external Opportunities, Threats. This strategy is as follows:

SWOT Based Strategy for Al Jannat Bakers:

After analyzing the SWOT of the Bakery, it has been concluded that the company lies in the second quadrant of the Strategic Diagram. The company has certain threats from the external environment i.e. from its competitors.

It has a main strength that it is located in the prime location of the particular area. Moreover, it is the oldest bakery in that area. It is outsourcing a bundle of variety products having good quality.

There is a threat to this bakery related to the infrastructure of the competitors at that area. Although they were opened before this bakery, but they have adopted technical and operational advancements from the beginning in the house. They have diversified their product line in the place but this bakery hasn’t adopted those advancements yet, nor has the bakery diversified its product line according to the trends. The competitors have the storage area in the bakeries, as well as they have kitchens placed, where the fresh bakery products are made. Although the bakery outsources the bakery items, but still there is a doubt that either those products are fresh and hygienic or not.

The company can overcome these threats by using their strengths. They can do so by making their own kitchen, because they’ve a certain space for the kitchen behind their bakery. As they have large number of potential customers so they can overcome these threats

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to retain them easily. So that, they can sell fresh bakery items till late night because it is the only bakery which remains opened till late night.

SCORPIO Analysis:

The company is customer oriented. The company focuses on the customers by selling quality products.

Customer

They should research the need of the customer and analyze them. That what a customer wants, as the customers want fresh variety of the bakery products so that it is necessary for the bakery to target particular customers. They need to analyze that among those customers, which one are actual and which one are potential.

Segmentation

After targeting the customers, the company needs to segment them. Here the psychological segmentation should be done that what is the perception of the customer about the bakery products. Either he wants fresh products or he would go with the old bakery products. So the business needs to think about that. They also analyze the body-language of the customer about the infrastructure of the bakery. From here, they can easily segment them from other customers.

Offering

After segmenting the customer, offering takes its part. How and what sort of fresh bakery products, the business is offering to its customers. They need to offer the fresh products to their customers. As well as, the offering will be made till late night hours. They offer the core product i.e. the fresh bakery items, supplementary products like traditional sweets and the services that they provide till late night.

Position

If the business offer their product to the right customers they have segmented, then it means that they have positioned themselves in the minds of their targeted customers. Positioning means that how a company fits itself in the minds of the customers. So the targeted customers should have positive perception about the offering of the business. So they can have the right position of that business in their minds.

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Retention

Position leads to retention. If the customer has a positive position in his mind about the offering of the business then the business can easily retain its customers at a big level. It is again based on the nature of the product and proper segmentation. They need to segment their customers properly by reaching at this point successfully.

Process/ Organizational Culture

All of the above factors influence the organizational culture. The internal environment should be changed according to the environment of the competitor businesses. The process line should be enhanced, better trained staff and skilled kitchen staff needs to be required. All of the above factors want the organizational culture to be changed accordingly.

Industry

The operations should be changed as the other factors influence it. There should be an improved machinery installed in the kitchen. Enhanced skilled labor are needed, which can work and can do maintenance on that machinery properly. Productivity should be according to the demand of fresh bakery products. A business should think of all of these factors deeply and analyze them properly.

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