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Muhammad Ahmad Iftikhar K&N’s Health and Happiness for Pakistan

14L-5238 (A)

Cases in Management

Case summary

A fully integrated poultry enterprise is established in 1964 names K & N’s (Khalil and

Naushaba). Now ran with his son Adil K. Sattar. Projected sales of 2011 in the region of

US$250 million. They just overtook all worse economic conditions in the Pakistan andbuild a very strong enterprise even the international visitors admired their performance.

But still they are looking ahead as the sattars recognized a lot to accomplish they started

exporting Arab countries. Moreover they analyzed the main demand with economic

conditioned customers is in well-established countries like US and UK, where a lot of

Muslims are living and are even curious about Halal meat.

The company is fully vertically integrated as they have their own feed mill and producing

their own bird. Quarter millions of birds are used in company’s own farm and rest is

placed with contract growers. Some part of logistics were also being own by the company

to be more cost efficient. Case explains how efficiently they have managed to find gaps

in the market and gaps that are not yet filled relating to customer needs and health

benefits. They offered some international products like nuggets, croquettes and burger

patties more over some products that are not usually easy to made in home such as tikka

and barbeque seekh kabab. There are some products in view of Muslims are made usually

through a Haram process so K&N’s just take this out by revealing a video in their website

in which birds are being slaughtered in truly Islamic way.

K&N’s has a very strong and reliable new product development process which includes 4

stages. Those effective four stages increases their chances successful development of anew product. K&N’s did not positioned itself against typical wet-market neither they ever

degrade wet-market. Their only focus is to provide “safe and Healthy chicken”.

They also support their chicken stores even they were proved costly in the beginning

because this idea gives opportunity to deeply understand the consumer behavior and to

penetrate in the market. They have also introduced “The K&N’s Way Club” to accelerate

their penetration and encouraging their existing customers to turn their most loyal

customer.

K&N’s seems very keen to grow in foreign markets as very interesting stats of growingdemand of Halal food in US, UK and France. For this purpose Pakistani government is also

seems supportive to help them grow outside the country.




14L-5238 (A)

Cases in Management

PEST Analysis:

Political

Politically some subsidiaries are being providing to promote poultry domestically.

Keri Lugar bill in which huge amount of funds are committed to promote dairy and

poultry so this industry can rise by these opportunities.

No incentive is currently providing to meat exporter.

Economical

Heavy taxes no subsidiaries

Fluctuating prices

volatile demand

Social

Religious issues put doubt on customer minds that birds are properly slaughtered

or not.

Consumer trend issues 90% of customers like to purchase chicken from wet-meat

shops

Technological

Day old birds are now produced

Average weight of birds can be increased or decreased Immense demand can be balanced if farms are operating efficiently with new

technology.




14L-5238 (A)

Cases in Management

SWOT ANALYSIS:

TOWS:

First strategy is relating w2 with O1 they need to start a campaign in which they

show videos of their whole slaughtering process in a complete religious way. These

kind of campaigns can be conducted in hyper star, metro and other places where

people used to visit regularly. This strategy will help in awareness, penetration and




14L-5238 (A)

Cases in Management

customer satisfaction. This will ultimately help K&N’s to cure the damage cause by

those people who think these kind of meat are haram.

W3 –O2 their access to market is limited because of wet meat trend as the

educational level is increasing people become more health conscious so that will

help K&N’s as they are positioned for safe and healthy chicken.

Company has been successful so far?

Yes! I think company is successful so far after facing worse economic and cultural

problems. Reason for this immense success is they have efficiently fill the market gaps,

vertical integration gave them a good opportunity to save a lot of money and control

quality at the same time. More over the example like how Hyper Star uses K&N’s as their

loss leaders, loyalty program, quick serve meat and many other opportunities that has

taken very intelligently so far.

Key Challenges:

Imported Chicken

Electricity

Rapid Price Fluctuations

Wet-Market as in Barrier for further development of industry

High Inflation

Improvement in the general level of Education

Less Productive Workforce

Options to these Challenges:

Imported chicken only face 16% import duty while local manufacturers cost 35%

of tax including 16% sales tax. So Mr. Khalil want government of Pakistan to give

some incentives to exporter and decrease some of the duties. Well in the end of

the case minister shows a positive response to Khalil’s request.

Un-planned electricity is a very big problem and only option to over-come this is

to have a Backup generator or to produce own electricity well both of these

options are very costly and it can disturb the whole cost structure of the company.

In wedding season as the demand of chicken increased the price also increase by100% but on the other hand K&N’s needs to be a price consistent so they have to

forecast demand and prices which makes them bit higher comparing to other value

added chicken suppliers. There is no specific options provided in the case for this

challenge.




14L-5238 (A)

Cases in Management

The challenge of high inflation is controllable to some extend but it affect the

quality and productivity no solution is being presented in the case for this

Adil stated that he is hoping for increase in educational stats in Pakistan he believes

that this will help consumer to understand the positioning of K&N’s. I believe it too

because right now most of consumers are just following through Halal Haram thingand curious how the birds are being slaughtered in the plant after some time as

K&N’s is making aware about its processing of birds to general public they will gain

trust eventually and this will help in getting good sales and market share as well.

Cheaper labor is available in Pakistan but it need to be productive and efficient as

well which is very difficult and costly to hire.

I would like to go with less productive workforce because I think this is the most

controllable problem K&N’s needs to trained their labor in a way they will prove verycost effective for them. A very inspiring example comes in my mind when I talk about

productive workforce before manufacturing and during manufacturing, the CEO of

Tata motors decides to change the typical mindset of Tata motors because they are

going to made a breakthrough car (NANO). They started giving spiritual and technical

training to their labor this can help in changing view of typical labor and allows them

to think in a productive way more over training will boost their moral and

commitment.

So here in case of K&N’s I would like to give focus on training of their labor this can

help them I same way as in example discussed above.

Why not other challenges- if we talk about the wet meat which is their basic

challenge I would not suggest to start spreading a bad mouth about them as almost

90% of customers uses wet meat so spreading rumors like poor quality or anything

like that can hurt that 90% of market share. So this would not a good idea I appreciate

how K&N’s tackle this thing by just saying “safe and Healthy Chicken”.

Electricity, price fluctuations and inflation are some-how being ignored for the time

being as they are uncontrollable.

Level of Education I think this will improve but it requires time to change view about

the value added chicken and wet meat. So this is another thing that can be ignore

Imported chicken this challenge is seems to be solved in the given case so that why I

did not choose this.




14L-5238 (A)

Cases in Management

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