National Foods Limited

Topics: Financial ratios, Financial ratio, Marketing Pages: 13 (4134 words) Published: April 9, 2013
National Foods Limited. Pakistan.
National Foods was established in 1970 as a spice company. Its aim was to make hygienic food, foster health and contribute towards personal attractiveness, so that people would be able to experience a more rewarding life-style. National Foods developed innovative food products based on convenience and quick preparation in line with modern lifestyle and yet retains traditional value through its diverse collection of food products. The wide range of National Food products acclaim across the world due to their freshness, taste, hygiene and value for money. It is aim of National Foods to be a Rs. 50 billion food company by the year 2020 in convenience food segment by launching the products in domestic and international markets.

Task 1

External Analysis:

1. PEST Analysis:

(a) Political: Government is supporting food industry due to its potential and increasing demand of convenience food items by consumers. Food products’ good quality is assured by implementation of law like Pakistan Pure Food Ordinance 1960 and others are mainly concerned with processing and manufacturing of food products. These laws are not fully enforced and they do not take into consideration the quality of raw material to be used. This negligent attitude is a threat for the safety of consumers and towards the image of Pakistani food items in the world. (b) Economic: Cost of inputs is continuously rising due to inflation in the country. Electricity tariffs are now highest in the world. As a consequence, it’s not just food industry but every industrial sector of Pakistan is suffering. The inflation and hence high prices affected industry as people are not using packed spices to save money or else using packed spices on special occasions only.

(c) Socio Cultural: There is a change in the preferences of consumers as they are now opting convenient food items. Women have started working to support their families financially apart from handling family responsibilities and they now prefer dishes which take less time to cook. Therefore the demand for readymade spices is increasing. People now take interest in cooking delicious meals at home instead of going to restaurants and they all look forward for convenient cooking using readymade spices.

(d) Technology: Computer software like ERP, SAP helps to improve operating efficiency of company and hence costs are being reduced. All industries working in Pakistan have better facilities of water treatment plant. These days food industries in Pakistan have realized their corporate social responsibility towards environment and it is expected that companies will acquire technology for treatment of waste in near future.

2. SWOT Analysis:
The ‘opportunities’ and ‘threats’ are external factors of SWOT analysis.

(a) Opportunities:
Despite National Foods’ global presence, new market segments need to be exploited. There is a huge portion available for National Foods to develop and capture the international market share. New businesses of current business nature are of high potential opportunity. For Example, National Foods has started producing jams, pickles, kheer mix, custards and ketchup etc etc. National Foods can produce its own raw material to reduce cost and to control quality of input.

(b) Threats:
Inflation in Pakistan is biggest threat to National Foods which is resulting in less sales and hence less profits. New brands’ emergence with heavy advertisement can also be a threat to National Foods as it might capture market share of National Foods. National Foods uses special machinery for production which is imported and Government has set up quota system on import of machinery. Company is not able to import this machinery beyond a specific ratio. Company needs to find an alternative as this quota system is a threat to company.

3. Porter’s Five Competitive Forces:

(a) Threat from New Entrants: Government has not fixed any entry barriers....
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