Answered: within the country. Ministry of…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 3P

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Read the following case and conduct strategic position bring out business model components and competitive advantage. The economy of Pakistan is rift with small-to-medium-sized enterprises (SMEs). This simply reflects the entrepreneurial spirit of managers within the country. Ministry of Economic Affairs, Economic Affairs Division Pakistan estimates SMEs with fewer than 20 staff make up some 96% of all businesses in and 86% of these have fewer than five staff. Pak-Juices is a local company that produces award-winning spirits and spring water that uniquely utilizes pure water from northern regions of Pakistan. Established in the 2008, by advertising executive and now company CEO Aslam Qureshi, it started exporting in 2013 and today its products are sold in the top restaurants around the world. Significantly, says commercial manager Amjad Khalil, export sales surpassed domestic for the first time in 2015 (full year). There are two ways a firm can grow first organic growth (sell more of what it makes) and growth by acquisition. Pak-Juices is still a small firm (albeit with dynamic entrepreneurial management) and growth by acquisition may be some time in the future yet. So organic growth is the key for the firm, regardless of whether it becomes an object of acquisition itself. But how? Growth can also occur (or be planned for) by two strategic growth paths new product development (NPD) and new market development (NMD). This is often a choice, one or the other. Factors such as the nature of the product, demand function, experience and skills of management, and the nature of both the market and the marketing help to determine which pathway is more appropriate for management to take the firm. Some academics would advocate only choosing NPD or NMD and, only when satisfying its ‘now’ (current products in current markets), when ‘market penetration’ strategies are no longer contributing to growth. Pak Juices Pvt Ltd. is so ambitious it is doing both NPD and NMD at the same time. Pak Juice Pvt Ltd. knows what business it is in consumer food and beverage and specifically, discerning spring water segments with its premium line of products. It determines both the markets (geographical) and the segments it chooses to compete in. As a ‘consumer good’ Pak Juice Pvt Ltd. must understand product decisions. Product positioning and branding decisions are critical to capture the minds, hearts and wallets of a firm’s target audience. A product that does not have a clear position in the customer’s mind consequently stands for nothing in a marketplace with many substitutes. Pak Juice Pvt Ltd. Has positioned its premium product with a set of product attributes that are different to that of substitutes, including long standing substitutes with high brand awareness. Utilizing the information presented in the case conduct a strategic analysis of the company, present its business model and competitive advantage. You may use tools as appropriate to conduct analysis.

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