HISHAM PACKAGING
Contents
SWOT analysis:....................................................................................................................................2
Porter Five Forces Model:....................................................................................................................4
Strategy to sustain business growth:....................................................................................................6
Bibliography...........................................................................................................................................8
SWOT analysis:
SWOT assessment involves the study of an institution’s capabilities, vulnerabilities, chances, and
challenges. It’s mainly done to identify the strengths and opportunities of the company with
respective to the industry. This also help the corporation to identify its weaknesses and threats in
order to develop strategies to overcome and convert these threats and weaknesses into the
company’s strengths and opportunities.
Strengths:
Specialties are assets which a company does exceptionally effectively or even in a manner which
sets it apart from its competitors. Consider the benefits the firm has over its competitors.
Employee excitement, exposure to specialized assets, or a comprehensive set of manufacturing
methods are all examples of this.[ CITATION Aga12 \l 1033 ] In the case of Hisham packaging, there
are numerous strengths. As a company is the sole supplier of corrugated boxes for packaging
purposes with almost 70 percent of sales with in the country and exports 30 percent to
neighboring countries. The strength of the company is its strong customer base with uniliver,
Coca-Cola, Pepsi, Nokia and others as major supplier. The company has the privilege as a major
supplier to sell to new multi-national companies. For making the strong customer base, Hisham
packaging has to use latest and the state of art technology. This technological advancement has
become the strength of the company. As due to more reliable machinery and technological
equipment the company has achieved economies of scale that is difficult to be achieved by the
other packaging companies. Also due to sales and high investment in the company, the company
is able to attain a high financial backing. Like in one of the previous years the group is able to
maintain a turnover of about $500 million. The use of the advanced technology and strong
technical backup has become a key in maintaining the corporation’s strength.
Weaknesses:
The company's weaknesses, like its powers, are inherent characteristics, therefore focus on its
personnel, resources, procedures, and operations. Analyze whatever the company could do
differently and how the company should stop doing. Major weakness of Hisham Packaging is
related to storage and logistics. Due to no paper mill in the country the company has to purchase
almost 150 containers from other countries for its daily usage. Although the company has
1000000 square feet of space available for storage, the company sometimes face the storage
issues. The reason behind this is storage space is limited but the orders from multinationals are
continuously placed. The other major weakness that the company is facing in recent times is
employee turnover issues because the majority of labor in the company are mainly South Asian.
Due to improvement in the economic conditions in these countries mostly labor turndown their
jobs and move back to their country of origin. Another weakness of Hisham Packaging is the
nature of the product. As it is bulky in nature the company cannot export it too far away
countries like to European countries. Also due to bulky nature the company uses cargo ships for
its product’s transport which costs the company even more like it increases the dunk yard storage
cost and other related costs as compared to using other medium like air transport etc.
Opportunities:
They usually arise from circumstances beyond the company and necessitate future preparation.
They might happen as a consequence of developments in your sector or the technology they
deploy. The firm's aptitude to detect and capitalize on opportunities might have a big influence
on its potential to flourish and compete in its sector.[ CITATION Fra13 \l 1033 ] The major
opportunity that Hisham Packaging enjoys is the formation of carters. As the company Hisham
Packaging profits from cartel groupings as well, since they collaborate and help one another
when they run out of core materials or equipment replacement bits. The cartel is thought to give
a 20-25% pricing rise for bigger clients since lesser cardboard box providers are unable to fulfil
their regular supply requirement and quantities. If there is no cartel, each exchanger can lower its
rates by 30% in order to acquire a larger client, resulting in harmful competitiveness. It is an
opportunity for the company as if there were no carters then the company’s profit would decline
by significant numbers.
Threats:
Whatever that could have a detrimental impact upon the business externally, like production unit
issues, economic fluctuations, or perhaps a shortage of competent people, is indeed a danger.
Identifying risks and taking steps to resist it is critical; else, company worry to become a target
and slowing down the organization's growth. As the company has a strong growth potential in
the industry the company faces a threat of possible new entrants in the industry. [ CITATION
Cap12 \l 1033 ] Also the possible new entrants might have better solutions of storage and
transportation issues which might affect the company’s future sales and ultimately its
profitability. The new regulations and product standards provided by the International
Corrugated Case Association ICCA has changed the way of producing things.
Porter Five Forces Model:
It is a method for discovering and judging five contrasting components that propel each industry
to discover an organization's shortcomings and powers. This model can be used to assess the
level of rivalry within a company and to enhance an organization's great efficiency in any
industry.
The Sector's Contest:
The number of rivals plus its capacity to harm a business is the first of five factors. The more
competitors a company has, or even the diversity of unique items but also discounts it offers, the
weaker it becomes. Distributors and consumers look for a firm's rival if it can provide better
services or a better price.[ CITATION Asa12 \l 1033 ] .When fair rivalry is less, on the opposite side,
a corporation has more power to charge a cost markup and set transactional terms in attempt to
boost earnings and profitability. In this case, there is no competition as the Hisham packaging
use new technology that will enable the company to achieve the economies of scale. Due to more
advance technological usage the company is able to maintain the customers as compared to the
other industry.
Potential of New Entrants into an Industry:
The sector has an impact on the introduction of new competitors for corporation’s long viability.
The fewer attention or expense business requires for a competitor to access a market, the
preferable. The longer it takes to build a competitive rival and create a successful rival, the more
vulnerable an existing firm's situation becomes. Current firms within the market having huge
entrance blockade might have been capable to increase costs and arrange a best agreement if they
could provide higher prices and secure better terms. As the industry or the business is become
more profitable in the recent years, the company feels threats of potential new competitor in the
industry. Also if a new competitor comes into the market place with strong financial backing
then it will might involve the authorities over the cartel issue which will ultimately lead to an
uncomfortable position for the company. [ CITATION Dal14 \l 1033 ] The Hisham group has used a
variety of ways in which the company will reduce the risk of new competitor in the industry.
Hisham group is continually using new and advanced technological equipment through which
the company has better sustained its position through innovation and cost efficiency. Also the
turnover, customers and skilled employees are the key points in obtaining and bringing
monopolistic competition in the industry.
Power of Suppliers:
The succeeding aspect of the fifth force model analyses how simply providers may increase
manufacturing prices. It is determined by the quantity of providers of a commodities' or
company's critical parts, how different these manufacturing elements are, and how much
changing to a different supplier would expense a company. The fewer suppliers there are in a
sector, the more reliant a firm seems to be on suppliers. As a consequence, the vendor gets
greater clout, is greater likely to increase production income and pursue further monetary gain.
When a company has a wide variety of counterparties or replacements available from
competitive providers on both sides, it may keep material costs low and enhance revenues. In
Hisham case, as there is no paper plant in the country so the company has to import it from other
countries. The company is purchasing from the supplier and switching supplier will cost more
than paying to existing supplier. The major factor behind not changing of the supplier is the
transportation cost. As the company might get the materials at low cost from other companies but
the transportation cost is the factor behind the tradeoff of choosing the supplier near the
company.
Power of Customers:
Clients' aptitude to push lower costs, its quantity of strength, has been one of the 5 elements in
the equation. The volume of consumers a business possesses, economic value of every client, as
well as the cost of acquiring additional clients or niches again for firm’s offerings always has
significant impact. Since workgroup is reduced yet stronger, every client has greater negotiating
leverage to get better pricing and packages. [ CITATION Mek14 \l 1033 ] This may become simpler
to a firm having a large number of little items, self-contained customers to increase rates and
increase revenues. The Hisham customers are mainly multinationals so dealing with them or
increasing prices might have an adverse effect on the customer retention.
Threat of Substitutes:
The substitute group is the last of the five troops. Alternative goods / assistance which may be
utilized in lieu of such a corporation’s goods and operations pose a threat. Businesses that create
items which have no equivalent rivals will be able to boost pricing and obtain better conditions.
As for FMGC there is no close substitute for the product.
Strategy to sustain business growth:
Hamza should use a number of strategies in order to sustain the business growth of Hisham
packaging. Hamza should adopt the market penetration strategy in some areas in order to boost
the sales volume of the company which will ultimately increase the market share of the
company. Through this the company will attract more customers to the company which will help
the company to better sustain its position. Also due to cartels, the company is not been able to
sale the product or service to small customers. By providing goods to these local or small
customers, the company will not only increase the customers and sales volume but also increase
the customer loyalty to them. Though penetrating in the existing markets with cartels network in
it might become challenging for the company but offering the best quality products at lower
price in the market will change the customer’s perspective for future purchases. Also by using
new technological equipment the company will attain the economies of scale and hence will
offer a better product at a reduced price. This will ultimately give the company a competitive
edge over the others. Another option to keep the customers in other countries is to take over the
leading or potential leader of packaging companies in that area. [ CITATION Cap12 \l 1033 ] Like if
the company will take over the company in Oman who is investing heavily in the technological
upgrades, will not only save the company’s customers but also allows the company to sale the
other countries. This will increase the company’s storage ability but also will increase the reach
of the company in new markets. The next strategy that the company will adopt in this case is
market development. In order to grow in future the company will increase its sales to those
markets that are still not reached by the company. In this case as the company’s sales manager
tells that by exporting goods to neighboring countries like Oman, Qatar, Saudi Arabia and other
north African countries. By doing this the company will be able to export much in these
countries without incurring much transportation cost. Like the opportunity that the company
recently got in Saudi Arabia, as one of its packaging company caught fire in the factory which
has led to sudden stop to all activities hence bringing shortage in the market. That’s the right
time to cash. As the production has stopped the company may export its product to the country
and making future agreements with the companies there. This will not only help the company to
boost the sales volume but also allows the company to make or develop a position in the eyes of
the customers. This will not only help the Saudi companies to fulfill the orders that are pending
and maintain their position in the market but also serve as a bridge in connecting the company
with the Saudi giant multinationals. Company may offer finished goods, semi-finished goods to
these companies at a better price than its competitors. Also the company should pull out itself
from the cartels association.[ CITATION Fra13 \l 1033 ] As in Hamza opinion it is unethical but also
the company is suffering a lot from joining the cartel association. The company’s response time
has increased as a result of consulting with other members while making the offer in response to
a quotation. Also some members of the cartel group are making secret agreements with the
customers that is reducing the price by offering discounts to them. This will affect the company’s
sales ultimately. Also the company will achieve the growth if they will be able to maintain the
skilled labor in the company.
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