1
Table of Contents
I. EFE Matrix ............................................................................................................................ 2
II. IFE Matrix.............................................................................................................................. 3
III. Long term Objectives of the Company ............................................................................ 3
IV. Strategic Analysis and Choices ......................................................................................... 4
V. Matching ............................................................................................................................. 5
1. SWOT matrix ......................................................................................................................... 5
2. I/E matrix ............................................................................................................................... 8
3. Space Matrix .......................................................................................................................... 9
VI. Decision Stage ................................................................................................................... 12
VII. Strategy Map .................................................................................................................... 14
VIII. Strategy Implementation ............................................................................................. 17
IX. Conclusion ........................................................................................................................ 18
2
I. EFE Matrix
Opportunities Weight Rating Weighted Score
1 Inflation rate decreased to 11.08% from 12.55% 0.08 2 0.16
2 Better access to remote areas due to CPEC 0.09 2 0.18
3 Increasing technological advances may reduce cost of
0.12 3
production of urea 0.36
4 Export avenues 0.07 4 0.28
Threats Weight Rating Weighted Score
1 Natural gas Depletion (0.5 Trillion cu m of natural gas
0.12 4
remaining as of 2016 ) 0.48
2 competitors providing B2B as well as B2C business 0.10 1 0.10
3 Water shortage(15 million acre feet remaining) 0.09 2 0.18
4 Uneducated Farmers 0.12 3 0.36
5 Growing production Capacity of Engro Fertilizers (950 KT per
0.10 2
annum as of 2006) 0.20
6 14.6% increase in fuel prices from 2018 to 2019 0.11 1 0.11
7 (average 104.69/litre to 119.95/litre) 0.00 0 0.00
Total EFE Score 1.00 2.41
3
II. IFE Matrix
Strengths Weight Rating Weighted Score
1 Strong financial position with 20:80 Debt to equity ratio and 0.95
0.12 4
current ratio. 0.48
2 Established brand name and loyalty 0.09 4 0.36
3 Diversified investment portfolio 0.08 3 0.24
4 Recognized CSR activities (Rs. 85 million spent in 2018) 0.10 3 0.30
5 Well Established Distribution network (65 sales districts having
0.11 4
170 ware houses,3300 dealers all over the country) 0.44
6 Constant supply of phosphoric acid (375 thousand tonnes of
0.10 4
industrial phosphoric acid per year) 0.40
7 Market leader with 53% share of urea and 52% share of DAP. 0.08 4 0.32
Weaknesses Weight Rating Weighted Score
1 Inappropriate tenure MD of 3 years in accordance with planning
0.06 2
duration of 5 year. 0.12
2 Reliance on depleting natural resource 0.08 1 0.08
3 14.6 % Increased Transportation cost in 2019 0.12 1 0.12
4 Cultural conflicts (mixture of civilians and army personnel) 0.06 2 0.12
Total IFE Score 1.00 2.98
III. Long term Objectives of the Company
Following are some objectives that company has officially declared in their agenda.
a. Enhance agricultural productivity through balanced fertilizer application.
b. Maintain industry leadership.
c. Expand sales.
d. Create / enter new lines of business to augment profitability and achieve sustained
economic growth.
e. Enhance operational efficiency to achieve synergies.
f. Costs Economization.
4
We believe these to be in accordance to their vision and mission and check some of the boxes
from SWOT matrix given in the next section of this report. Although most of the objectives can
be considered financial in nature since their achievement can be measured in monetary terms.
The only non-financial objective is Enhancing operational efficiency to achieve synergies, which
can be measured in terms of increased production. In addition to these, we offer some other
nonfinancial objectives that might be helpful to the company.
a. Improve technological operations to increase efficiency in production.
b. Mixing the culture among employees to develop a better work environment.
c. Improve consumer relationships to strengthen brand loyalty.
IV. Strategic Analysis and Choices
In our IFE and EFE matrix, we found out that FFC scored 2.41 in the EFE matrix while it scored
2.98 in IFE matrix. The average score in both matrices is 2.5 which shows that while FFC has
good internal control but it still lacks a little in dealing with external threats and opportunities. In
other words, the firm needs to devise strategies to effectively take advantage of existing
opportunities and minimize the potential adverse effects of external threats.
Financial position, brand name, distribution network and market leading capabilities are FFC’s
major strengths that’s why they are given 4 whereas transportation cost is a major weakness
that’s why it has been given 1 along with reliance on depleting natural resource. FFC has utilized
it's strengths to a good extent.
5
V. Matching
1. SWOT matrix
Weaknesses
Strengths
1. Inappropriate tenure MD of 3
1. Strong financial position
years in accordance with
with 20:80 Debt to equity
planning duration of 5 year.
ratio and 0.95 current
2. Reliance on depleting natural
ratio.
resource.
2. Established brand name
3. 14.6 % Increased Transportation
and loyalty
cost in 2019.
3. Diversified investment
4. Cultural conflicts (mixture of
portfolio
4. Recognized CSR civilians and army personnel)
activities
(Rs. 85 million spent in
2018)
5. Well Established
Distribution network (65
sales districts having 170
ware houses,3300 dealers
all over the country)
6. Constant supply of
Threats
phosphoric acid (375
thousand tonnes of 1. Natural gas Depletion (0.5 Trillion cu
industrial phosphoric m of natural gas remaining as of
acid per year) 2016 )
7. Market leader with 53% 2. competitors providing B2B as well
share of urea and 52% as B2C business
share of DAP.
3. Water shortage(15 million acre feet
remaining)
Opportunities 4. Uneducated Farmers
5. Growing production Capacity of
1. Inflation rate decreased to Engro Fertilizers (950 KT per annum
11.08% from 12.55% as of 2006)
2. Better access to remote
areas due to CPEC 6. 14.6% increase in fuel prices from
3. Increasing technological 2018 to 2019 (average 104.69/litre to
advances may reduce cost
of production of urea. 119.95/litre)
6
After analyzing the strength, weaknesses, opportunities and threats to FFC, we can now
make strategies by using TWOS matrix.
Strengths Weaknesses
1. Strong financial position 1. Inappropriate
with 20:80 Debt to equity tenure MD of
ratio and 0.95 current ratio. 3 years in
2. Established brand name and accordance
loyalty with planning
3. Diversified investment duration of 5
portfolio year.
4. Recognized CSR activities 2. Reliance on
(Rs. 85 million spent in depleting
2018) natural
5. Well Established resource.
Distribution network (65 3. 14.6 %
sales districts having 170 Increased
ware houses,3300 dealers all Transportation
over the country) cost in 2019.
6. Constant supply of
4. Cultural
phosphoric acid (375
thousand tonnes of conflicts
industrial phosphoric (mixture of
acid per year) civilians and
7. Market leader with army
53% share of urea personnel)
and 52% share of
DAP.
Opportunities SO Strategies WO Strategies
1. Inflation rate 1. Ability to start up a new 1. Should utilize
decreased to 11.08% Venture. (S1, O1) CPEC to
from 12.55% 2. CPEC can be used to ease reduce
transportation to remote transportation
2. Better access to cost.
remote areas due to areas. (O2, S5)
(O2, W4)
CPEC. 2. Technological
3. Increasing advances can
technological help devise
advances may reduce new ways to
cost of production of produce urea
urea. that doesn’t
involve
natural gas.
(O3, W3)
7
Threats ST Strategies WT Strategies
1. Natural gas Depletion 1. Invest in acquiring gas 1. Invest in
(0.5 Trillion cu m of reserves to ensure acquiring gas
natural gas remaining constant production of reserves to
as of 2016 ) urea. (T1, S7)
ensure
2. Invest in new plant to
2. Competitors providing B2B constant
increase the capacity
as well as B2C business of production. (T5, production of
3. Water shortage(15 S1) urea. (T1,
million acre feet 3. Better W3)
remaining) installation 2. Invest in new
and utilization
4. Uneducated Farmers plant to
of water plants
5. Growing production to reduce increase the
Capacity of Engro wastage of capacity of
Fertilizers (950 KT water. (T3, S1) production.
per annum as of 4. Establish (T5, W1).
2006) Consumer dealing
by opening up
6. 14.6% increase in fuel direct dealing
prices from 2018 to centers. (T2, S1,
2019 (average S5)
104.69/litre to 5. Education of the
farmers can be
119.95/litre)
provided to
overcome spoiling
of fertile land and
soil testing can be
done to further
identify the needs
of the soil. (T4,
S1, S4)
8
2. I/E matrix
THE IFE TOTAL WEIGHTED SCORES
Strong Weak
4.0 1.0
High
4.0
THE EFE WEIGHTED SCORES
Fauji Fertilizers
Coompany
Low
1.0
Since FFC scored 2.41 in EFE weighted score and 2.98 in IFE weighted score, so our
company lies in V quadrant. That means the company will use Hold and Maintain
strategies. That means company can use intensive strategies like market development,
product development, related and unrelated diversification.
9
3. Space Matrix
We have marked FFC on the following criteria in order to get a better knowledge of where it
stands in a space matrix. Based on the results, the strategic requirements will be clearer.
Internal Strategic Position External Strategic Position
Financial Position (FP) Stability Position (SP)
Return on investment +5
Rate of inflation -5
Liquidity +6
Working capital +5 Price range of competing -1
products
Barriers to entry into market -2
Inventory turnover +3
Earnings per share +4 Ease of exit from market -6
Price earnings ratio +5 Price elasticity of demand
-6
Risk involved in business -5
Competitive Position (CP) Industry Position (IP)
Market share -1 Growth potential +3
Product quality -1 Profit potential +2
Product life cycle -3 Financial stability +5
Customer loyalty -2
10
Capacity utilization -1 Resource utilization
+5
Technological know-how -2 Ease of entry into market
+1
Productivity, capacity utilization +6
Financial Position and Competitive Position are ranked in comparison to Engro Fertilizers
Limited which is the second largest company in terms of market shares. Stability Position and
Industry Position are based on industrial analysis.
FFC Engro
Return on Equity % 43.25 38.3
Gross Profit Ratio % 26.40 32.3
EPS- Basic & Diluted Rs. (in millions) 11.35 13.0
Price Earnings Ratio Times 8.18 5.3
Inventory Turnover Times 11.7 7.7
Ratio
Market Share (Urea) % 53 34
Capacity (Urea) Tons 2,522,000 975,000
Since the industry is Government regulated, there is not much price elasticity and its effect on
demand. There high barriers to entry as fertilizer industry requires large amount of investments
and quality control. Since very high amount of capital is required, it will become hard to
liquidate as well since most of it will be invested into fixed machinery such as heavy machinery.
So we can say there are barriers to exit as well. Profit potential is not very high in this industry
unless mass production is done. This is because prices of fertilizers are government regulated.
The detailed analysis can be done via porter 5 forces which is attempted in assignment 2.
11
The Calculations are as follow:
Financial Position: +5+6+5+3+4+5= 28/6 = 4.67
Industrial Position: +3+2+5+5+1+6= 22/6= +3.67
Competitive Position: -1-1-3-2-1-2-1= -10/6= -1.67
Stability Position: -5-1-2-6-6-5= -25/6 = -4.17
On x-axis, the value becomes: -1.67+3.67 = +2
On y-axis, the value becomes: -4.17+4.67 = +0.5
FP
Conservative Aggressive
Fauji Fertilizers Company
7.0
5.0
3.0
CP 1.0 Fauji Fertilizers IP
Company IP
-7.0 -5.0 -3.0 -1.0
-1.0 1.0 3.0 5.0 7.0
IP
-3.0
-5.0
Defensive -7.0 Competitive
SP
This information tells us that FFC lies in 1st Quadrant where it can use aggressive strategies that
include: Forward Integration, Backward Integration, Horizontal Integration, Market Penetration,
Market Development, Product Development, Related and Unrelated Diversification. The
position of FFC tells us that it can use weak integrative strategies.
12
VI. Decision Stage
From the above information gathered via Space matrix and I/E matrix, following generic
strategies are obtained that suits FFC the most:
1. Market Development
2. Product Development
3. Market Penetration
4. Related Diversification
5. Unrelated Diversification
6. Backward Integration
7. Horizontal Integration
8. Vertical Integration
These strategies can be specified into following strategies:
1. Starting up a new venture.
2. Utilization of CPEC to enable access to remote areas of Pakistan and to reduce
transportation cost.
3. Technological advances can help devise new ways to produce urea that doesn’t involve
natural gas.
4. Acquiring gas reserves to ensure constant production of urea.
5. Investment in new urea production facility to enable market growth.
6. Developing ways to reduce water usage to tackle the problem of shortage of water.
7. Establishing Consumer dealing by opening up direct dealing centers.
8. Education to the farmers can be provided to overcome spoiling of fertile land and soil
testing can be done to find the necessary ingredients for the soil.
Now we can organize the strategies into groups.
13
A. Water Efficiency Research B. Sui Gas Alternative Research
1. Developing new ways to
reduce water usage to 1. Technological advances can help
tackle the problem of devise new ways to produce urea
shortage of water. that doesn’t involve natural gas.
2. Education to farmers can
be provided to overcome 2. Acquiring gas reserves to ensure
spoiling of fertile land and constant production of urea.
soil testing can be done to
find the necessary (O3, W3, T1, S7)
ingredients for the soil.
(T3, S1, S4, T4)
C. CPEC Utilization D. New Venture
1. Utilization of CPEC to enable access to 1. Starting up a new venture.
remote areas of Pakistan and to reduce
transportation cost. 2. Investment in new urea
2. Establishing Consumer dealing by production facility to enable
opening up direct dealing centers market growth.
(T2, S1, S5, O2, S4, W4) (S1, O1, T5)
Now let us move toward strategy mapping with a few assumptions:
i. Company has finite resources and does not have production capacity to cater to a new
market.
ii. Company has a functioning R&D department capable of devising new ways to produce
urea at a cheaper cost, both financially and environmentally.
iii. With a new production plant, company can have enough urea to cater to a new market.
iv. The company will divide the strategies in 3 phases, first one of which will be reducing
the cost on urea production which will include two choices of either funding the research
to find ways to reduce water usage or look for the sui gas alternative for urea production.
Second phase will include new venture that will hold the implications of the research
supported in phase 1. Third phase will include utilization of CPEC which will be possible
with the increased production attained by the new production plant in phase 2.
14
VII. Strategy Map
Phase I
A. Water Efficiency Research B. Sui Gas Alternative
Research
Phase II
D. New Venture
Phase 3
C. CPEC Utilization
15
Water Sui Gas
efficient Alternative
Rsearch Research
Strengths Weight AS TAS AS TAS
1 Strong financial position with 20:80 Debt to 0.12 3 0.36 4 0.48
equity ratio and 0.95 current ratio.
2 Established brand name and loyalty 0.09 0 0.00 0 0.00
3 Diversified investment portfolio 0.08 0 0.00 0 0.00
4 Recognized CSR activities (Rs. 85 million 0.10 4 0.40 1 0.10
spent in 2018)
5 Well Established Distribution network (65 0.11 0 0.00 0 0.00
sales districts having 170 ware houses,3300
dealers all over the country)
6 Constant supply of phosphoric acid (375 0.10 0 0.00 0 0.00
thousand tonnes of industrial phosphoric acid
per year)
7 Market leader with 53% share of urea and 0.08 1 0.08 3 0.24
52% share of DAP.
Water Sui Gas
efficient Alternative
Rsearch Research
Weaknesses Weight AS TAS AS TAS
1 Inappropriate tenure MD of 3 years in 0.06 0 0.00 0 0.00
accordance with planning duration of 5 year.
2 Reliance on depleting natural resource 0.08 1 0.08 4 0.32
3 14.6 % Increased Transportation cost in 2019 0.12 0 0.00 0 0.00
4 Cultural conflicts (mixture of civilians and 0.06 0 0.00 0 0.00
army personnel)
16
Water Sui Gas
efficient Alternative
Rsearch Research
Opportunities Weight AS TAS AS TAS
1 Inflation rate decreased to 11.08% from 0.08 0 0.00 0 0.00
12.55%
2 Better access to remote areas due to CPEC 0.09 0 0.00 0 0.00
3 Increasing technological advances may 0.12 1 0.12 4 0.48
reduce cost of production of urea
4 Export avenues 0.07 0 0.00 0 0.00
Water Sui Gas
efficient Alternative
Research Research
Threats Weight AS TAS AS TAS
1 Natural gas Depletion (0.5 Trillion cu m of 0.12 1 0.12 4 0.48
natural gas remaining as of 2016 )
2 Competitors providing B2B as well as B2C 0.10 0 0.00 0 0.00
business
3 Water shortage(15 million acre feet 0.09 4 0.36 1 0.09
remaining)
4 Uneducated Farmers 0.12 2 0.24 1 0.12
5 Growing production Capacity of Engro 0.10 0 0.00 0 0.00
Fertilizers (950 KT per annum as of 2006)
6 14.6% increase in fuel prices from 2018 to 0.11 0 0.00 0 0.00
2019
(average 104.69/litre to 119.95/litre) 0.00 0 0.00 0 0.00
STAS 1.76 1.83
From the QSPM, the result for water Sui gas research has come out to be higher, that is 1.83 so
we will fund the research to find out sui gas alternatives. This will be beneficial for the company
as this way company will be able to tackle the problem of depleting natural resource while
17
reducing the cost of production via the new found alternative. After an alternative is found, it can
be implied in the new production facility that is a part of Phase 2 of the strategy.
VIII. Strategy Implementation
Since our strategy map is divided into three phases, we can divide the specific tasks needed to be
done into three phases as well.
Phase 1:
1. The R&D department should come up with at least 3 feasible solutions to Sui Gas
Alternative in year 1 of the strategy implementation.
2. Appropriate safety issues and financial feasibility of each alternatives should also be
discussed.
3. The fertile land located it in northern Punjab should be checked via soil testing techniques
already implied by FFC to recognize the type of fertilizer that needs to be produced to supply
to consumers in that region which will be helpful in Phase 3.
4. Appropriate steps to ensure CPEC utilization by the FFC should be taken.
Phase 2:
1. An appropriate place for the new venture should be decided and the construction should start.
2. The sales and promotion of fertilizers are to be increased and new wholesale dealers should
be contracted.
3. New sales depots should be planned out.
4. Employee recruitment drive should be conducted to fulfill the needs of the new facility and
further expansion of the business.
5. The training programs for new technology introduced should be conducted.
Phase 3:
1. The operations of the new facility should work at 25% of total capacity to check the
feasibility.
2. Sales growth should be monitored for any significant change.
3. The ability of employee understanding of the new technology should be monitored.
18
4. The overall financial growth and well-being of the organization should be measured
quarterly to ensure smooth sailing.
IX. Conclusion
FFC is a traditional organization with highly task oriented work environment. Maybe this is the
reason why it is still at the top position in the market. After a thorough review of the company’s
external and internal environment, we have come to the conclusion that where the company has
outstanding management skills and internal growth, it is not that apt in tackling external threats.
According to the prospectus issued by the company in 2018, they have talked about dealing with
most of the threats mentioned in this report so we can deduce that they are actively surveying
their surroundings for any sort of open opportunity and avoidable threat. This shows the part of
management in the company is active and working hard toward success. Although according to
the recent news, FFC Bin Qasim Ltd., a subsidiary of Fauji Group of companies, has gone in
loss. It is hard to determine the effects of this loss on Fauji Fertilizers as the corporation has such
big investment portfolio and can easily bear some loss. In the next 5 years, we estimate that FFC
will be available to come up with innovative and eco-friendly ways (as mentioned in their
prospectus) to produce fertilizers but due to the economic instability of the company, it might get
a little hard for it to carry out its operations as planned. But with determined management, it
might be able to overcome any barrier. One thing that we found missing in this organization was
its ignorance towards the latest management style which include employee well-being into
account. As it is a task-oriented organization, it pays little to no heed over its employees and this
may result in lack or shortage of human resources in the later year.
Overall, we as a group enjoyed the course as we got to learn many new things and we got to test
our own limitations and boundaries as students. Furthermore, to go in depth of an organization
and finding what makes an organization successful was also an interesting experience for us.
