Situation Analysis

It means to analyze that where a company has been, where it is now, and where it likely to end up

following the current plans

Company:

Contents of Situation Analysis:

1. Environment

2. Product Market

3. Customer Market

4. Marketing Plans

1. General Environment:

Economic condition of Pakistan

Economic condition of Pakistan is disgusting currently. Pakistan is facing liquidity problem now

a day, to cater this problem Govet. is going to contract with IMF. Secondly energy crisis are also

big hurdle in the way of progress. The weekly reserves of Pakistan are $6.74 bln and foreign

debts are $45 bnl. Inflation rate is 25% now a day. GDP growth rate is 5.8% in 2007-08. due to

devaluation of rupee, dollar value is uncontrollable. Now value of dollar is Rs:81.1. markup rate

has reached to 13%, which induce to increase cost of doing business. Pakistan is going to spend

Rs.576 trillion in 2008 on war against terror. Trade Balance of Pakistan is $2.02 bln, Exports are

$1.78 bln and Imports are $3.80bln for the month of September.

Situation of Industry:

Due to economic crises of country Foam Industry is currently suffering and inhibiting growth.

As foam is produced from crude oil waste which is imported from USA, early imports of raw

material made by the industry cost them high, because crude oil price was $100 and above per

barrel, which affected the manufacturing cost, as a result cost of doing business increased. Now

currency devaluation is major problem for the industry because there import cost varies with

value of Dollar. Another problem is they are not able to get average cost of each item. Because

crude oil price is $40.83 but currency’s unstoppable devaluation is causing high import cost,

which has adverse affect on foam industry. But still it is estimated that the foam industry will

experience a growth of 10% per annum for the next five years.

Condition of Company in this industry:

Market share of company in this industry is 37% and they are eager to increase it further. Hard

target set by the management are causing company to grow day by day.

2. Product Market:

First range Product. density

Five star 32

Decent 28

Eagle 24

Rebar 22

Second Range Product:

Margala

Fancy

Vicky

Marina

Third Range product:

Foamax

Super one

Marshall

Rani

Competitor Product:

Master Foam

Molty Double Plus

Master Molty Flex Plus

Master Molty Foam Plus

Master Molty Flex

Master MOLTYFOAM

Commander Plus

Master Commander

Commander Flex

Master Jet

Jet Plus

Jet Flex

Uni Foam:

Uni Foam

Latex  Suprem

Princess

Diamond Foam:

Supreme double

Supreme plus

Sale volume and trends:

Since majority of the population lie in lower and middle class and over the last decade the trend

toward foam is increasing day by day. Secondly as the furniture market grows our sale volume

will also grow. The company has sale outlet in more than 300 cities of the country. Company has

sale volume growth more than 20%.

Market share:

Al-Khair group has 37% market share in the industry, which they are trying hard to improve, in

the same context the company is extending its operation in south of the country especially in

Karachi. This will be done through advertising campaign. The advertisement is done through

electronic media i.e. T.V. channels like on Express and Geo T.V. are major channel of

advertisement.

3. Customer market:

Target market:

Al-Khair target the

Upper class

Middle class

Life style patterns and usage pattern:

Activity

The season of marriages is potential opportunity for us because as demand of furniture

increases, trend toward foam purchasing also increases. Winter season is also good

opportunity for us.

Interest:

The target audience prefers comfortable bed rooms now a day. Secondly foam mattresses

have become symbol of standard.

Opinion:

That mattress should be of good quality at reasonable price.

Usage Patterns and Behaviors:

Foam is part and parcel of daily life of our target audience according to the Director of the

company spend more and less 22 hours a day with foam. For example we sleep on foam

when we drive car we sit on foam office chair is also made with foam.

Customer preferences:

Customers of Al-Khair group are Quality and price conscious but majority are price conscious.

4. Marketing program:

Advertising and promotion program

Al-Khair group spend 10% of their total sales on advertisement and promotional programs.

Pricing practices:

They set their prices by analyzing the total production cost per unit and price strategies of their

competitor especially Master foam. Other competitors are Mahran foam, Diamond foam, Cannon

foam, and united foam. They also offer discount prices up to 23% depended upon competitors.

Relationships with dealers/wholesalers/retailers:

They have the friendly relationship with their dealers, wholesalers and retailers and provide

maximum satisfaction to their customer by providing

Offer reasonable profit margin

Credit facility

Returnable claim

SWOT analysis

Strengths

“Aram full time Guaranty life time” By adopting this positioning they are getting advantages

on their competitors.

Key staff has 25 years experience

Quality product

Latest technology

Customization(according to customer preferences it is not online)

Efficient Production controlling mechanism

Attentive Marketing research department

Products have required credibility in market

Friendly and fair attitude with employees

Management is committed and confident for success of the company.

Good quality product at competitive

Strong relationship with dealers and retailers.

Centralize system of production.

Experiential marketing.

Effective supply chain management.

We have largest production unit in Pakistan. It manufacturers the full range of low and high

density foam.

Weaknesses

Lack of promotional programs

Due to long distance between the head office and production unit its difficult to control

employed labour

No plan for exports of foam.

No use of e-business

No use of direct marketing.

No separate research and development department.

Opportunities

There is positive response of people toward foam usage.

Due to low price of crude oil they are getting raw material at low prices and Profit margin

will be high

Exemption on sale tax

No District Tax is payable on Foam Products manufactured in Azad Jammu & Kashmir for 5

years.

Threat

Worse economic condition of the country is giant threat to the company and industry as well,

because an excellent strategy of the company can be failed.

Political uncertainty of Pakistan has worse effects on business environment. Because it cause

inconsistent fiscal policy

High inflation rate is reducing the purchasing power of the people. Current rate of inflation is 25%.

Devaluation of Rupee cause high import cost.

Energy crisis is major threat because if electricity is not available production is not possible at all.

Company feels vulnerable to reactive attack by major competitor like Master foam.

   

 

 Al-Khair is making use of  the latest available MAXFOAM (Computer monitoring Technology.)